Since late 2009, an EU sovereign debt crisis has been lingering. The ability of most of the so-called PIIGS States ( Portugal, Ireland, Italy, Greece and Spain) to fulfil their obligations under bonds issued to private investors is still unclear. In case Bilateral Investment Treaties (BITs) entered into by these States cover claims in connection with the default on or restructuring of such instruments, this could give rise to unequal positions of creditors, depending on their home State. Not only could this give rise to inequality between non-EU and EU investors, such different positions could also occur between investors in different countries of the EU and even of the Eurozone.
This Article reviews the scope (ratione materiae) of existing intra-EU BITs of the PIIGS States with respect to sovereign debt instruments and restructuring of sovereign debt. The author advocates in this Article a need to amend BITs of EU countries to unambiguously allow for lawful sovereign debt restructuring without compensation being due to investors and to consider the desired scope of a possible new EU investment protection instrument on this subject. Moreover, in view of the 'no bail-out clause' in the Treaty on the Functioning of the EU (TFEU), sovereign debt instruments issued by individual EU Member States should be excluded from the protection under Foreign Trade Agreements to be entered into by the EU and third countries.Journal of International Arbitration