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5th Frankfurt Investment Arbitration Moot Court (2011/ 2012)

PASION

A GREEK BANK(ST)ER?

This case-study is based on a banking litigation which took place between the son of Sopaios and Pasion, the owner of an important Athenian bank, around 390 BC.1 Isokrates, the famous orator, acted as logographer for Sopaios s son during that case.2

We have no reports on the outcome of the case: Historians conclude from the fact that Pasion s bank continued to flourish that Sopaios s son lost the litigation.3 For the purposes of the case-study, we assume that this is what happened. Similarly, we do not know the name of Sopaios s son. For ease of reference, we will call him Sopaides (Son of Sopaios).

We know that a friendship treaty existed between Athens and The Bosporan Kingdom.4 However, the investment treaty is our invention. Other than the arbitration brought under the treaty, the investment treaty is the only invention in this case-study. For the facts of the case-study, the participants will refer to the text of the court speeches by Isokrates (see below).

The case of the son of Sopaios has also found its way into modern banking jargon ( Pasion trap ). However, whether Pasion was really a bankster and Sopaides a defrauded investor perhaps will be clearer after the merits phase of our case which will take place on the day following the Moot s traditional final.

Although the facts of the case and the proceedings take place in the 4th century BC, treaties, customary public international law and case law are those of the 21st century.

1 Pasion s bank features in several speeches of Demosthenes, for example 36 (For Phormio). 2 See translation on Perseus, http://www.perseus.tufts.edu/hopper/text?doc=Perseus:text:1999.01.0144:speech=17; the text of the translation (with references omitted) is reproduced in this case-study for convenience only. 3 See, e.g. Edward E. Cohen, Athenian Economy & Society a banking perspective, p. 81 and p. 205, fn. 89. 4 The text of the original treaty is lost. Examples of Greek treaties can be found in Silvio Cataldi, Symbolai e relazioni tra le città Greche nel V secolo A.C. For the purposes of the moot, the text of this treaty is not of significance.

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A BIT OF BACKGROUND

Athenian Banking

Banking in 4th century Athens was remarkably modern. Recourse and non-recourse asset finance, syndicated loans, leveraging, bank guarantees, currency arbitrage, hedging and tax planning were amongst the products and services offered.

The Athenian banking market was largely unregulated. As far as we know, the only statutory regulation was that Athenian banks were not allowed to be involved in financing grain shipments going to places other than Athens. Other than that party autonomy was king. 5

We know of a number of bank insolvencies, but

at least according to Edward Cohen

these were not due to systemic failures or banking crises.6 However, Demosthenes insinuates in his speech for Phormion that a judgment against the banker could lead to an insolvency and in due course to repercussions for the Athenian economy.7

We also have information of at least one major banking scandal: sometime between 386/5 and 354,8 the treasurers of Athena and of the other gods absconded funds from the treasuries and invested it with several banks to make (ungodly) profits for themselves. When the state required the funds and the treasurers needed the money back from the

banks, the banks had liquidity issues and could not repay the deposits. In order to conceal the embezzlement, the treasurers of Athena set fire to the Opisthodomos (where the funds should have been stored). However, the trick did not work. The treasurers were punished

and the banks fell insolvent.9

Athenian Bankers

Some say that the dishwasher-to-millionaire career is a typically American career. However, Athenian banking allowed for even steeper career paths, which can be described as slave to millionaire to influential citizen .

Pasion himself started his career as slave of Archestratos. Archestratos introduced Pasion to the secrets of banking and Pasion excelled. Archestratos eventually freed Pasion so that he could start his own successful banking business.10 Pasion himself freed his successor Phormion and leased his bank to him and decreed in his will that Phormion should be the guardian of his underage son. He also willed that Phormion should marry

5 See Demosthenes, 35, 13. 6 Cohen, ibid., p. 215 et sqq. 7 Demosthenes 36, 49 and 36, 57 et seq. 8 For the date, see Cohen, ibid., p. 224. 9 Cohen, ibid. p. 215 et sqq., see also p. 114-115. 10 Demosthenes 36, 48 et sqq. Pasion and Archestratos continued to cooperate. When Pasion procured security for Sopaides, Archestratos acted as guarantor, Isokrates 17, 43.

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Archippe, Pasion s wife. Phormion was of non-Greek origin. His Greek was faulty - even

towards the end of his successful career.11

Pasion and Phormion were not unique. Many Athenian bankers were non-citizens, quite a few former slaves. Athenian banking was diverse and international. Pasion s bank had representations in emporia (trading centres) throughout the Aegean and the Black Sea.12 The banks were as international as their customers.13

Maritime Finance

The banks distinguished between land-based and maritime contracts. Land-based loans were not necessarily secured by land. It simply meant that interest was calculated on a temporal basis.14 Interest rates for such loans were commonly in the range of 1% per month (12% per year).15 Maritime loans involved higher interest rates, which were calculated by journey rather than by reference to time.16 Often such contracts were non-recourse and involved an element of risk-sharing: if the ship sank, the creditor would lose its claim against the debtor.17 The text of one financing agreement is reported in Demosthenes, 35, 10 et seq.18 In accordance with trade customs, loan agreements were concluded in writing. As soon as the loan had been repaid, the text of the agreement was destroyed in front of witnesses.19

Athens depended on grain imports for its survival.20 Financing it was of crucial importance.21 Maritime trade was therefore core business for the Piraeus banks, such as

Pasion s.

Bank Deposits

The money used for these transactions was not primarily the bankers' own money. Banks make money using other people s money.22 Customers deposited money with the banker for various reasons (as they do today). Having a bank account was regarded as a sign of being a reliable business person.23 Banking was a personal business and the Athenian banks' discreetness was legendary. Deposits were made without witnesses24 and entered

11 Demosthenes 35, 1; Cohen. ibid., p. 83, fn. 106. 12 Cohen, ibid., p. 123. 13 See, e.g. the dispute reported in Demosthenes 32. See also Cohen, ibid., p. 168-169, it is assumed today that the Massilian investors were the real owners. 14 Cohen, ibid., p. 53. 15 Cohen, ibid., p. 57. The banking year ended on the day of the summer solstice: Cohen, p. 54, fn. 74. 16 Cohen, ibid, p. 54 et seq. 17 Cohen, ibid., p. 161, fn. 210. 18 Loeb Classical Library, Demosthenes Orations, 27 40, Private Cases. 19 Cohen, ibid., p. 125. 20 See Isokrates, 17, 57. 21 See the discussion on grain imports in Cohen, ibid., p. 151 and 140 fn. 126, each with further references. 22 Cohen, ibid., p. 111 et seq; Demosthenes, 36,11. 23 Cohen, ibid., p. 17. 24 E.g. Isokrates 17, 2.

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into the banks' books.25 No receipts were handed out to the customer. The records of the

bank had high evidential value.26

The banks also often acted as intermediaries. It was possible, for example, to invest in maritime business through a bank without publicly appearing as the creditor.27

Phanera and Aphanes Ousia

The Invisible Economy 28

The banks absolute secrecy was key to their success. In Athens, taxation was on property, not on income. Only visible holdings (phanera ousia) were subject to taxation and only the most wealthy class of the population29 was subject to paying taxes. However, taxes for those happy few were exorbitant.30 Many - renowned - Athenians sought to evade taxation (esp. liturgies) by a so-called antidosis (if the tax-debtor could prove another person was wealthier, that other man would then be liable for the liturgy). If a man was not able to escape these obligations, he usually portrayed himself as a good citizen undertaking these duties voluntarily.

It was therefore very convenient that monies invested with a bank were invisible and, hence, not subject to taxation.

However, in some cases the ordinary secrecy was not secret enough. In such circumstances, the monies could even disappear from the bank s records. The verb

describing such transactions was aphanizein (make disappear, erase).31

The Sopaides case allegedly arose from such a transaction.

Athenian Court Procedure

Litigations for private claims in Athens usually involved a two-staged procedure. A claim would be brought before the competent magistrate (which varied, inter alia depending on the nature of the dispute and on whether the respondent was a citizen).32 The magistrate would then refer the matter to a pre-trial determination, either in the form of an anakrisis or a diaita. During the pre-trial determination, the parties would present their evidence, which would then be sealed in echinoi (containers). If no resolution was forthcoming, the case

25 Cohen, ibid., p. 17. 26 Cohen, ibid., p. 136 and p. 125, fn. 57. 27 Cohen, ibid., p. 203. 28 The term is used by Cohen, ibid. p. 191. 29 Both citizens and non-citizens were subject to taxes. Some taxes, however, were only imposed on non-citizens. These were modest. 30On the liturgical system, see Cohen, ibid., p. 194 et sqq.; on tax tariffs, p. 196. 31 Cohen, ibid., p. 206 (erase) with further references in fn. 99. 32 In the case of Sopaides, a foreigner, and Pasion, a non-citizen resident, the competent magistrate was most likely the Polemarchos. However, it is possible that because it was a trade dispute, it fell into the competence of the Thesmothetai. The speech by Isokrates does not give us that information. For the purposes of the case-study it makes no difference.

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would then be assigned to a court and litigated. The parties were limited to the evidence

which had been presented at the pre-trial stage and contained in the echinoi.33

The oral hearing would take place before one of the dikasteria. The judges, all Athenian citizens above a certain age, would be assigned by a lottery immediately before the hearing. This ensured that (i) the judges would not have any special knowledge, either factual or legal, and (ii) the parties would not have time and opportunity to bribe the judges.34 The number of judges assigned to a case was large by modern standards. A lawsuit with a value in dispute such as the one brought by Sopaides would most likely have been litigated before 401 judges.35

Each party then held its speech: first the claimant, then the respondent. The allocated time was measured by a water-clock (klepshydra). The amount of time the parties had for their speeches depended on the sum in dispute and was denominated in choes and amphores.36 During the reading out of evidentiary materials or during witness testimony, the clock would be stopped.

After the speeches, the judges would cast their votes by dropping voting stones into voting boxes. At the time of the case of Sopaides, these voting stones had been replaced by two bronze chips, one with a hollow axis (accepting the claim), and the other with a solid axis (rejecting the claim). The judge dropped his vote into a bronze urn and the other invalid chip into a wooden box. By holding the chips by their axes, it would not be visible which chip was dropped in the bronze urn and which in the wooden box.37 In order to win, the claimant had to get the majority of votes.38 No appeal was possible. A re-trial (anadikía) could be ordered, if perjury of a witness had been proven.39

Foreigners and Non-Citizens

The Athenian justice system differentiated between citizens and non-citizens. Non-citizen Athenian residents (metoikoi) had ius standi, but

at least some of them

could not represent themselves and therefore had to be represented by a patron. We do not know whether Pasion

at the time of the Sopaides trial

had the privilege of acting for himself. We therefore assume that Pasion, like his successor Phormion40 years later, was represented by a friend .

33 For a detailed discussion see, e.g. Claudia Macho, Anakrisis - Vorverfahren und Beweisführung im attischen Prozess (Diplomarbeit, Universität Wien 2010), p. 36 et seq. We would like to thank Ms. Macho for her willingness to allow us to use her thesis as one of the supporting sources for this case-study. As Ms. Macho s thesis has not been published and is in the German language, participants in the moot should rely on the summary given above. 34 Macho, ibid., p.17. 35 Busolt, Griechische Staatskunde, II, p. 1158: 401 judges in cases with a value in dispute above 1000 drachmes. 36 Bulsolt, ibid., p. 1161 fn. 3; according to Aischines, II, 126, 21 amphores equalled the day-light time of one day. 37 Busolt, ibid., p. 1164 38 In the case of a tie, the respondent won. See Aischylos, Eumenides, 740: Athenians added an imaginary stone cast by the goddess Athena in favour of the respondent. 39 Busolt, ibid., p. 1166. 40 Demosthenes 36,1.

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Foreigners, such as Sopaides, would enjoy access to justice under bilateral judicial

assistance treaties (so-called symbola or symbolaí). Another area where foreigners had ius standi before Athenian courts related to díkai emporikaí (trade disputes). Sopaides therefore had standing and represented himself.

In order to secure the attendance of a foreigner in court, he could be brought before the Polemarch and asked to present an Athenian citizen as bondsman. If he did not provide such security, the foreigner could be taken into custody until the trial.41

Lawyers Friends Speechwriters

Athenian litigants were normally not represented by professional lawyers. Either they spoke for themselves, or friends spoke for them.42 Professional orators were discredited as sophists.43

However, the words the parties spoke were often not their own. Professional logographers wrote elaborate speeches which the litigants learned by heart and then held. Isokrates and Demosthenes were amongst the most prominent speech-writer advocates . Their services were not for free. According to Pliny the Elder, Isokrates charged up to 20 talents (520 kg of silver) for a case.44

Evidence

Aristoteles counts five means of evidence: laws, witnesses, contracts and other documents, testimony obtained by torture and testimony by oath.45

Testimony by torture (basanos) was the means of obtaining evidence from slaves. Slaves could not be questioned as witnesses. Because slaves were property , in a civil case a slave could be submitted to torture against the will of his master. If a litigant wanted to

obtain evidence from a slave of the other party, he had to challenge (proklesis eis basanon) the owner of the slave to present the slave for torture. Also the owner himself could challenge the opponent to accept evidence by torture of his slave. These challenges (prokleseis) would normally occur during the pre-trial phase.

If the challenge was accepted, the parties brought the slave to the Hephaiston to be examined under torture.46 The questions to be answered had to be agreed before the

41 See, e.g. Isokrates 17, 12. 42 Demosthenes 36, 1. 43 Platon, Gorgias, 520a, et seq. And what is one to say of those who, professing to govern the state and take every care that she be as good as possible, turn upon her and accuse her, any time it suits them, of being utterly wicked? Do you see any difference between these men and the others? Sophist and orator, my estimable friend, are the same thing, or very much of a piece, ( ); but you in your ignorance think the one thing, rhetoric, a very fine affair, and despise the other . 44 Pliny the Elder, Naturalis Historia, VII, 30. The sum appears to be on the high side if compared to the value in dispute reported in the cases. We can conclude from Demosthenes 27, 64 that a person with a (visible) property of between 2 and 6 talents would be taxable. 45 Aristoteles, Rhetorics, 1, 2, 2 (1356a 35 40) and 1,15, 1-2 (1375a 22 25). 46 Isokrates 17, 15.

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torture began.47 It appears that the party requesting the torture had to undertake to

compensate the owner for any injuries sustained by the slave.48 It is also disputed how serious the pain inflicted was. It appears that the means of torture had to be fixed beforehand as well.49

Isaios, another famous orator, argued that evidence under torture was the most conclusive test as a slave under torture would not be able to lie.50 Aristoteles, however, argued how parties could argue both ways: either that torture produced very credible or very questionable results.51

If a master refused to surrender his slave, this was often seen as proof of the fact which the opposing party sought to establish by torture. Litigants in that case asked the court to draw a negative inference. It has therefore been argued that the most effective proklesis eis basanon was one where the owner refused to surrender the slave.52

THE DISPUTE

We do not have an independent account of what happened between Sopaides and Pasion.

PONTIC HONEY

In accordance with Article 9 of the Agreement on the Promotion and Protection of Investments between Athens and The Bosporan Kingdom ( Treaty ), Sopaides submits a Request for Arbitration in an ad hoc arbitration under the 2010 UNCITRAL Rules against the City of Athens. He appoints Agesilaos II of Sparta as his party appointed arbitrator.

With his Request for Arbitration Sopaides submits a copy of the speech he held before the Athenian judges53 and states that he is maintaining and incorporating this speech as his

statement of fact :

[1] This trial, men of the jury, is an important one for me. For I have at stake, not only a large sum of money, but also my reputation for I risk being thought to covet what justly belongs to another; and that is what gives me the greatest concern. For sufficient property will be left to me even if I am defrauded of this sum; but if I should be thought to be laying claim to so large a sum of money without just cause, I should have an evil reputation as long as I live.

47 Macho, ibid., p. 81. 48 See Demosthenes, 59, 124. It is disputed whether the liability existed automatically, or whether the party requesting the application of torture could offer it to obtain the master s consent to surrender the slave. 49 See also Aristophanes, Frogs, 616 et sqq. for illustration purposes. 50 Isaios, 8, 12. 51 Aristoteles, Rhetorics, 1,15, 26 (1376b 31 -1377a 6). 52 Macho, ibid., p. 82. 53 Isokrates 17, see http://www.perseus.tufts.edu/hopper/text?doc=Perseus:text:1999.01.0144:speech=17.

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[2] The greatest difficulty of all, men of the jury, is that I have adversaries of the

character of the defendants here. For contracts with the managers of banks are entered into without witnesses, and any who are wronged by them are obliged to bring suit against men who have many friends, handle much money, and have a reputation for honesty because of their profession. In spite of these considerations I think I shall make it clear to all that I have been defrauded of my money by Pasion.

[3] I shall relate the facts to you from the beginning as well as I can. My father, men of the jury, is Sopaios; all who sail to the Pontus know that his relations with Satyros are so intimate that he is ruler of an extensive territory and has charge of that ruler's entire forces.

[4] Having heard reports both of this state and of the other lands where Greeks live, I desired to travel abroad. And so my father loaded two ships with grain, gave me money, and sent me off on a trading expedition and at the same time to see the

world. Pythodoros, the Phoenician, introduced Pasion to me and I opened an account at his bank.

[5] Later on, as a result of slander which reached Satyros to the effect that my father was plotting against the throne and that I was associating with the exiles, Satyros arrested my father and sent orders to citizens of Pontos in residence here in Athens to take possession of my money and to bid me to return and, if I refused to obey, to demand of you my extradition.

[6] When I found myself in difficulties so embarrassing, men of the jury, I related my troubles to Pasion; for I was on such intimate terms with him that I had the greatest confidence in him, not only in matters of money, but in everything else as well. I thought that, if I should yield control of all my money, I should run the risk, in case my father met with misfortune, after having been deprived of my money both here in Athens and at home, of becoming utterly destitute; and that, if I should acknowledge the existence of money here, yet fail to surrender it at Satyros's command, I should create the most serious grounds of complaint against myself and my father in the mind of Satyros.

[7] On deliberation we decided that it would be best to agree to comply with all of Satyros's demands and to surrender the money whose existence was known, but with respect to the funds on deposit with Pasion we should not only deny their existence but also make it appear that I had borrowed at interest both from Pasion

and from others, and to do everything which was likely to make them believe that I had no money.

[8] At that time, men of the jury, I thought that Pasion was giving me all this advice because of goodwill toward me; but when I had arranged matters with the representatives of Satyros, I perceived that he had designs on my property. For

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when I wished to recover my money and sail to Byzantion, Pasion thought a most

favorable opportunity had come his way; for the sum of money on deposit with him was large and of sufficient value to warrant a shameless act, and I, in the presence of many listeners, had denied that I possessed anything, and everybody had seen that money was being demanded of me and that I was acknowledging that I was indebted to others also.

[9] Besides this, men of the jury, he was of opinion that if I attempted to remain here, I should be handed over by Athens to Satyros, and if I should go anywhere else, he would be indifferent to my complaints, and if I should sail to the Pontus, I should be put to death along with my father; it was on the strength of these calculations that Pasion decided to defraud me of my money. And although to me he pretended that for the moment he was short of funds and would not be able to repay me, yet when I, wishing to ascertain exactly the truth, sent Philomelos and Menexenos to him to demand my property, he denied to them that he had anything belonging to me.

[10] Thus beset on every side by misfortunes so dire, what, think you, was my state of mind? If I kept silent I should be defrauded of my money by Pasion here; if I should make this complaint, I was none the more likely to recover it and I should bring myself and my father into the greatest disrepute with Satyros. The wisest course, therefore, as I thought, was to keep silent.

[11] After this, men of the jury, messengers arrived with the news that my father had been released and that Satyros was so repentant of all that had occurred that he had bestowed upon my father pledges of his confidence of the most sweeping kind, and had given him authority even greater than he formerly possessed and had chosen my sister as his son's wife. When Pasion learned this and understood that I would now bring action openly about my property, he spirited away his slave Kittos, who had knowledge of our financial transactions.

[12] And when I went to him and demanded the surrender of Kittos, because I believed that this slave could furnish the clearest proof of my claim, Pasion made the most outrageous charge, that I and Menexenos had bribed and corrupted Kittos as he sat at his banking-table and received six talents of silver from him. And that there might be neither examination nor testimony under torture on these matters, he asserted that it was we who had spirited away the slave and had brought a counter-charge against himself with a demand that this slave, whom we ourselves had spirited away, be produced. And while he was making this plea and protesting and weeping, he dragged me before the Polemarch with a demand for bondsmen, and he did not release me until I had furnished bondsmen in the sum of six talents.

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Please summon for me witnesses to these facts.

Witnesses

[13] You have heard the witnesses, men of the jury; and I, who had already lost part of my money and with regard to the rest was under the most infamous charges, left Athens for the Peloponnesos to investigate for myself. But Menexenos found the slave here in the city, and having seized him demanded that

he give testimony under torture about both the deposit and the charge brought by his master.

[14] Pasion, however, reached such a pitch of audacity that he secured the release of the slave on the ground that he was a freeman and, utterly devoid of shame and of fear, he claimed as a freeman and prevented the torture of a person who, as he alleged, had been stolen from him by us and had given us all that money. But the crowning impudence of all was this that when Menexenos compelled Pasion to give security for the slave before the Polemarch, he gave bond for him in the sum of seven talents.

Let witnesses to these facts take the stand.

Witnesses

[15] After he had acted in this way, men of the jury, Pasion, believing that his past conduct had clearly been in error and thinking he could rectify the situation by his subsequent acts, came to us and asserted that he was ready to surrender the slave for torture. We chose questioners and met in the temple of Hephaostos. And I demanded that they flog and rack the slave, who had been surrendered, until they were of opinion that he was telling the truth. But Pasion here asserted that they had not been chosen as torturers, and bade them make oral interrogation of the slave if they wished any information.

[16] Because of our disagreement the examiners refused to put the slave to torture themselves, but decreed that Pasion should surrender him to me. But Pasion was so anxious to avoid the employment of torture that he refused to obey them in respect to the surrender of the slave, but declared that he was ready to restore to me the money if they should pronounce judgement against him.

Please call for me witnesses to these facts.

Witnesses

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[17] When, as a result of these meetings, men of the jury, all declared that Pasion

was guilty of wrong-doing and of scandalous conduct since, in the first place, it was Pasion himself who had spirited away the slave who, so I had asserted, had knowledge of the money-dealings, although he accused us of having concealed him, and next, when the slave was arrested, had prevented him from giving testimony under torture on the ground that he was a freeman, and finally, after this, having surrendered him as a slave and having chosen questioners, he nominally gave orders that he be tortured but in point of fact forbade it , Pasion, I say, understanding that there was no possibility of escape for himself if he came before you, sent a messenger to beg me to meet him in a sanctuary.

[18] And when we had come to the Akropolis, he covered his head and wept, saying that he had been compelled to deny the debt because of lack of funds, but that he would try to repay me in a short time. He begged me to forgive him and to keep his misfortune secret, in order that he, as a receiver of deposits, might not be shown to have been culpable in such matters. In the belief that he repented of his past conduct I yielded, and bade him to devise a method, of any kind he wished, that his affairs might be in order and I receive back my money.

[19] Two days later we met again and solemnly pledged each other to keep the affair secret, a pledge which he failed to keep, as you yourselves will learn as my story proceeds, and he agreed to sail with me to the Pontus and there pay me back the gold, in order that he might settle our contract at as great a distance as possible from Athens, and that no one here might know the nature of our settlement, and also that on his return from the Pontus he might say anything he

pleased; but in the event that he should not fulfil these obligations, he proposed to entrust to Satyros an arbitration on stated terms which would permit Satyros to condemn Pasion to pay the original sum, and half as much in addition.

[20] When he had drawn up this agreement in writing we brought to the Akropolis Pyron, of Pherai, who frequently sailed to the Pontus, and placed the agreement in his custody, stipulating that if we should come to a satisfactory settlement with each other, he should burn the memorandum; otherwise, he was to deliver it to Satyros.

[21] The questions in dispute between ourselves, men of the jury, had been settled in this manner; but Menexenos was so enraged because of the charge which Pasion had brought against him also, that he brought an action for libel against him and demanded the surrender of Kittos, asking that Pasion, if guilty of falsification, should suffer the same penalty which he himself would have incurred for the same acts. And Pasion, men of the jury, begged me to appease Menexenos, saying it would be of no advantage to himself if, after having sailed to the Pontus, he should pay the money in accordance with the terms of the agreement, and then should all the same be made a laughing-stock in Athens;

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[22] for the slave, if put to the torture, would testify to the truth of everything. I for

my part, however, asked him to take any action he pleased as to Menexenos, but to carry out his agreements with me. At that time he was in a humble mood, for he did not know what to do in his plight. For not only was he in a state of fear in regard to the torture and the impending suit, but also with respect to the memorandum, lest Menexenos should obtain possession of it.

[23] And being embarrassed and finding no other means of relief, he bribed the slaves of the alien Pyron and falsified the memorandum which Satyros was to receive in case he did not come to an agreement with me. No sooner had he accomplished this than he became the most impudent of all men and declared that he would not sail with me to the Pontus and that no contract at all existed between us, and he demanded that the memorandum be opened in the presence of witnesses. Why need I say more to you, men of the jury? For it was discovered to have been written in the memorandum that Pasion was released of all claims on my part!

[24] Well, all the facts in the case I have told you as accurately as I could. But I think, men of the jury, that Pasion will base his defense on the falsified memorandum, and will especially rely on its contents. Do you, therefore, give your attention to me; for I think that from these very contents I shall reveal to you his rascality.

[25] Consider the matter first in this way. When we gave to the alien, Pyron, the agreement by which Pasion, as he claims, is released from my demands, but as I contend, I was to have received back the gold from him, we bade the alien, in case we arrived at an understanding with each other, to burn the memorandum; otherwise, to give it to Satyros, and that this was stated both of us agree.

[26] And yet, men of the jury, what possessed us to stipulate that the memorandum should be given to Satyros in case of our failure to come to terms, if Pasion had already been freed of my claims and our business had been concluded? On the contrary, it is clear that we had made this agreement because there yet remained matters which Pasion had to settle with me in accordance with the memorandum.

[27] In the next place, men of the jury, I can give you the reasons why he agreed to repay me the gold; for when we had been cleared of the false accusations lodged with Satyros, and Pasion had been unable to spirit away Kittos, who had knowledge of my deposit, he understood that

[28] if he should deliver his slave to torture, he would be convicted of an act of rascality, and, on the other hand, if he failed to do so, he would lose his case; he wished, therefore, to reach a settlement with me in person. Bid him show you what gain I had in view, or what danger I feared, that I dropped my charges against him.

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But if he can show you nothing of the kind, would you not with greater justice trust

me rather than him in the matter of the memorandum?

[29] Furthermore, men of the jury, this too is easy for all to see that whereas I, the plaintiff, if I distrusted the sufficiency of my proofs, could drop the prosecution even without entering into any agreement, yet Pasion, on account both of the examination of his slave under torture and the suits lodged with you, could not possibly free himself from his risks when he wished except by gaining the consent of me, the complainant. In consequence, I was not obliged to make an agreement about the dismissal of my charges, but it was necessary for him to do so about the repayment of my money.

[30] Besides, it would have been a preposterous state of affairs if, before the memorandum had been drawn up, I should have had so little confidence in my case as not only to drop the charges against Pasion, but also to make an agreement concerning these charges and, after I had drawn up such written proof

against myself, should then have desired to bring the case before you. And yet who would plan so foolishly in regard to his own interests?

[31] But here is the strongest proof of all that in the agreement Pasion was not absolved from his debt, but on the contrary had agreed to repay the gold: when Menexenos lodged his suit against him, which was before the memorandum had been tampered with, Pasion sent Agyrrhios, a friend of both of us, to beg that I either appease Menexenos or annul the agreement I had made with himself.

[32] And yet, men of the jury, do you think that he would desire the annulment of this agreement, which he could use to convict us of falsehood? At any rate, this was not what he was saying after they had altered the memorandum; on the contrary, in all details he appealed to the agreement and ordered the memorandum to be opened. In proof that Pasion at first was eager for the suppression of the agreement I will produce Agyrrhios himself as witness.

Please take the stand.

Testimony

[33] So then, the fact that we made the agreement, not as Pasion will try to explain,

but as I have related to you, I think has been sufficiently established. And it should not occasion surprise, men of the jury, that he falsified the memorandum, not only for the reason that there have been numerous frauds of such nature, but because some of Pasion's friends have been guilty of conduct far worse. For instance, is there anyone who is ignorant that Pythodoros, called the shop-keeper, whose words and acts are all in Pasion's interest, last year opened the voting-urns and removed the ballots naming the judges which had been cast by the Council?

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[34] And yet when a man who, for petty gain and at the peril of his life, has the

effrontery to open secretly the urns that had been stamped by the prytanes and sealed by the choregi, urns that were guarded by the treasurers and kept on the Akropolis, why should there be surprise that men, who hoped to make so great a profit, falsified an insignificant written agreement in the possession of a foreigner, gaining their ends either by the bribery of his slaves or by some other means in their power? On this point, however, I do not know what more I need say.

[35] Already Pasion has tried to persuade certain persons that I had no money at all here, asserting that I had borrowed three hundred staters from Stratokles. It is worth while, therefore, that you should hear me also on these matters, in order that you may understand how flimsy is the proof which encourages him to try to defraud me of my money. Now, men of the jury, when Stratokles was about to sail for Pontus, I, wishing to get as much of my money out of that country as possible, asked Stratokles to leave with me his own gold and on his arrival in Pontus to collect its equivalent from my father there,

[36] as I thought it would be highly advantageous not to jeopardize my money by the risks of a voyage, especially as the Lakedaimonians were then masters of the sea. For Pasion, then, I do not think that this is any indication that I had no money here; but for me my dealings with Stratokles will constitute the strongest proof that I had gold on deposit with Pasion.

[37] For when Stratokles inquired of me who would repay him in case my father failed to carry out my written instructions, and if, on his return, he should not find me here, I introduced Pasion to him, and Pasion himself agreed to repay him both the principal and the accrued interest. And yet if Pasion had not had on deposit some money belonging to me, do you think he would so readily have become my guarantor for so large a sum?

Witnesses, please take the stand.

Witnesses

[38] Perhaps, men of the jury, he will present witnesses to you who will testify that I also denied, in the presence of the agents of Satyros, that I possessed any money except that which I surrendered to them, and that he himself was laying claim to my money on my own confession that I owed him three hundred drachmas, and also that I had allowed Hippoladas, my guest and friend, to borrow from him.

[39] As for me, men of the jury, since I was involved in the difficulties which I have related to you, deprived of all I had at home and under compulsion to surrender what I had here to the envoys from Pontus, and finding myself without any means unless I could secretly retain in my possession the money on deposit with Pasion, I did, I admit, acknowledge a debt due him of three hundred drachmas and that in

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other respects I behaved and spoke in a manner which I thought would best

persuade them that I possessed nothing.

[40] And that these things were done by me, not because of lack of funds, but that the parties in Pontus might believe that to be the case, you will readily learn. I will present to you first those who knew that I had received much money from Pontus; next, those who saw me as a patron of Pasion's bank, and, besides, the persons from whom at that time I bought more than a thousand gold staters.

[41] In addition to this, when a special tax was imposed upon us and other men than I were appointed registrars, I contributed more than any other foreigner and when I was myself chosen registrar, I subscribed the largest contribution, but I pleaded with my fellow-registrars on behalf of Pasion, explaining that it was my money that he was using.

Witnesses, please take the stand.

Witnesses

[42] Pasion himself, moreover in effect, at least I will present as corroborating these statements. An information had been laid by a certain party against a trading-ship, upon which I had lent a large sum of money, as belonging to a man of

Delos. When I disputed this claim and demanded that the ship put to sea, those who make a business of blackmail so influenced the Council that at first I almost was put to death without a trial; finally, however, they were persuaded to accept bondsmen from me.

[43] And Philippos, who was my father's guest-friend, was summoned and appeared, but took to flight in alarm at the magnitude of the danger; Pasion, however, furnished for me Archestratos, the banker, as surety for seven talents. And yet if he stood to lose but a small sum and had known that I possessed no funds here, surely he would not have become my surety for so large an amount.

[44] But it is obvious that Pasion called in the three hundred drachmas as a favor to me, and that he became my surety for seven talents because he judged that the gold on deposit with him was a sufficient guarantee. That, therefore, I had a large sum of money here and that it was deposited in his bank I have not only proved to

you from Pasion's acts but you have also heard it from the others who know the facts.

[45] It seems to me, men of the jury, that you would best decide upon the questions at issue if you should call to mind that period and the situation in which our affairs stood when I sent Menexenos and Philomelos to claim the deposit and Pasion for the first time had the hardihood to deny its existence. You find, in fact, that my father had been arrested and deprived of all his property, and that I was unable,

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because of the embarrassment in which I found myself, either to remain here or to

sail to the Pontus.

[46] And yet, which is the more reasonable supposition that I, involved in misfortunes so great brought unjust charges against Pasion or that he, because of the magnitude of our misfortunes and the large sum of money involved, was tempted to defraud us? But what man ever went so far in chicanery as, with his own life in jeopardy, to plot against the possessions of others? With what hope or with what intent would I have unjustly proceeded against Pasion? Was it my thought that, in fear of my influence, he would forthwith give me money? But neither the one nor the other of us was in such a situation.

[47] Or was I of opinion that by bringing the matter to issue in court I should have greater influence with you than Pasion, even contrary to justice I, who was not even preparing to remain in Athens, since I feared that Satyros would demand of you my extradition? Or was I going to act so that, without accomplishing anything, I

should make a personal enemy of the man with whom, as it happened, of all the inhabitants of Athens, I was on terms of greatest intimacy? Who of you, I ask, would think it right to condemn me as being guilty of such folly and stupidity?

[48] It is also right, men of the jury, that you should note the absurdity and the incredibility of the arguments which Pasion on each occasion undertook to present. For when my situation was such that, even if he acknowledged that he was defrauding me of my money, I could not have exacted the penalty from him, it is then that he accuses me of trying to make unjust claims; but when I had been declared innocent of the slanderous charges lodged with Satyros and all thought that he would lose his suit, it is then that he says I renounced all claims against him. And yet how could anything be more illogical than this?

[49] But, you may say, perhaps it is on these matters only, and not on the others, that he obviously contradicts himself in both words and deeds. Yet he is the man who, though he alleged that the slave whom he himself had spirited away had been enslaved by us, yet listed this same person in his property-schedule as a slave along with his other servants, and then when Menexenos demanded that this slave give testimony under torture, Pasion brought about his release on the ground that he was a freeman!

[50] Furthermore, while he himself was defrauding me of my deposit, he had the impudence to accuse us of having six talents from his bank. And yet when a man

did not hesitate to lie in matters so obvious to everybody, how can he be believed about matters transacted between us two alone?

[51] Finally, men of the jury, although he had agreed to sail to the country of Satyros and to do whatever he decreed, he deceived me even in this; he refused to sail himself in spite of my frequent solicitations, but sent Kittos instead. On his

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arrival Kittos alleged that he was a freeman, a Milesian by birth, and that Pasion

had sent him to furnish information about the money.

[52] When Satyros had heard us both, he did not wish to render a decision concerning contracts made in Athens, especially since Pasion was absent and not likely to comply with his decision; but he believed so strongly that I was being wronged that he called together the ship owners and asked them to assist me and not suffer me to be wronged. And he wrote a letter to the city of Athens and gave it to Xenotimos, son of Karcinos, for delivery.

Please read the letter to the jury.

Letter

[53] Although, men of the jury, my claims to justice are so many, I think that the strongest proof that Pasion defrauded me of my money is this that he refused to surrender for torture the slave who knew about the deposit. And yet, in respect to contracts where banks are concerned, what stronger proof could there be than this? For witnesses certainly we do not use in contracts with banks.

[54] I see that in private and public causes you judge that nothing is more deserving of belief, or truer, than testimony given under torture, and that while you

think it possible to suborn witnesses even for acts which never occurred at all, yet that testimony under torture clearly shows which party is telling the truth. Pasion, being aware of this, wished that in this affair you should judge by conjecture rather than know the exact truth. For he certainly would not be able to say that he was likely to be at a disadvantage if torture should be used and that for this reason the surrender of his slave could not reasonably be expected of him.

[55] For you all know that if Kittos spoke against his master, he would likely suffer for the remainder of his life in the most cruel manner at the hands of his master, but that if he held firm in his denials, he would be free and have a share of my money which his master had taken. In spite of the fact that he was to have so great an advantage Pasion, conscious of his guilty deeds, submitted to stand suit and to rest under the other charges, all to prevent any testimony under torture being given in this case!

[56] I therefore ask of you that, keeping these facts in mind, you cast your votes against Pasion and not judge me guilty of a villainy so great, that I, who live in Pontus and possess so large an estate that I am able even to assist others, have come here maliciously to prosecute Pasion and to accuse him of dishonesty in the matter of a deposit made with his bank.

[57] It is right also that you keep in mind both Satyros and my father, who have always esteemed you above all the other Greeks and frequently in past times,

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when there was a scarcity of grain and they were sending away empty the ships of

other merchants, granted to you the right of export; also, in the private contracts in which they are arbiters, you come off not only on even terms but even at an advantage.

[58] You would not reasonably, therefore, consider their letters of little importance. I ask of you, then, both on their behalf and on my own, that you vote in accordance with justice and not count the false assertions of Pasion to be more worthy of belief than my own words. 54

Sopaides does not submit transcripts of the witnesses testimony given in court with his Request for Arbitration nor does he submit a copy of the letter by Satyros.55

For the arbitration, Sopaides has again retained the services of Isokrates, but also appoints international counsel to assist him.

THE COMPLAINTS

In his Request for Arbitration, Sopaides requests the following relief:

"The Claimant requests that the Arbitral Tribunal to be constituted in this case issue a final award:

Declaring that Athens breached its obligations under the Agreement on the Promotion and Protection of Investments between Athens and The Bosporan Kingdom, in particular

o Failed to treat the Claimant's investment fairly and equitably and to accord it full security and protection by

Failing to implement banking regulations which provide for effective protection of deposits, notably by failing to provide procedures ensuring that the persons who effectively direct the business of a credit institution are of sufficiently good repute and have sufficient experience to perform such duties;

Denying the Claimant an effective remedy to compel the testimony of Kittos, or in the alternative by the failure of its court

54 http://www.perseus.tufts.edu/hopper/text?doc=Perseus:text:1999.01.0144:speech=17; References have been omitted for convenience. Participants will find the references useful as background information. The translation by George Norlin, Ph.D., LL.D. Cambridge, MA on Perseus uses Latinized spelling of individual names. In this case-study we have changed the spelling to Greek. 55 Witness statements and expert evidence will be submitted and discussed at the merits stage of the arbitration. As the merits stage will take place on the day after the final of the moot, participants will not have the benefit of these documents for the hearings.

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to draw a negative inference from the refusal of Pasion to

produce Kittos for torture; and

Allowing its court to be constituted by non-professional judges without any legal knowledge or training and to render judgment without any reasons, and in the absence of an appeal's procedure;

o Failed to grant the Claimant national treatment by submitting him to a procedure before the Polemarchos and requiring to give security ensuring his attendance in subsequent legal proceedings (see para. 12 ).

o Failed to treat the Claimant fairly and equitably and to accord him full security and protection as required by Article 3 of the Treaty by failing to provide effective protection against expulsion to the Bosporan Kingdom, and by failing to provide such protection violated its obligations under the observance of obligations clause of Article 11 of the Treaty read in conjunction with Articles 3 and 13 of the European Convention of Human Rights and the Geneva Convention and Protocol relating to the Status of Refugees.

Ordering Athens to pay damages wiping out the damages and to pay pre- and

post-award interest on any sums awarded;

Ordering Athens to reimburse the Claimant for the costs of the arbitration, including his legal fees and expenses and the fees and expenses of the Tribunal."

ATHENIAN ELOQUENCE

The six Thesmothetai decide that this kind of proceedings cannot be run by themselves, but that professional counsel should be retained. After some toeing and froing, and against the vociferous protests of some more conservative citizens (Lysias himself was not a citizen), they decide to ask Lysias to represent Athens.

30 days after the receipt of the Request for Arbitration, Lysias submits a document entitled Paragraphé , which states that it serves as response to the Request for Arbitration.

In this document, Athens objects to the jurisdiction of a tribunal (which still needs to be constituted) and to the admissibility of all claims.

In particular, Lysias argues the following:

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This is a bogus claim. As is apparent from the facts that Sopaides relates himself is that

he had no investment. In fact he tried to defraud his own king, his own country. He is a scoundrel descended from scoundrels

his father was even suspected of high treason!

And the king himself, Satyros, would not intervene on his behalf, but entrusted the case to Athenian justice, which is known for his even-handedness and wisdom. The Gods themselves submit to the jurisdiction of the Athenian courts.56 This dispute is a dispute between two private parties that are not even Athenian citizens. That this dispute took place in Athens is purely accidental. The Claimant's attempt to dress up a commercial dispute as an investment dispute is obviously contrived. The case should therefore be dismissed without further ado as it was brought abusively. The Claimant did not have any deposits with Pasion. This has been finally decided by the court. Moreover, as the Claimant himself admits, he declared in front of numerous witnesses that he had no deposits but only debt with Pasion.

We object to this arbitration on the following grounds:

1. As regards the claims relating to the alleged investment: even if Claimant had had any deposits with Pasion, these would not have constituted an investment under the Treaty for the following reasons:

1.1 Portfolio investments such as bank deposits are not protected by the Treaty; Bank deposits moreover are no protected investments as they do not meet the Salini criteria;

1.2 The alleged investments were illegal and therefore exempted from protection as they violated internationally accepted anti-money laundering standards which now have the status of customary international law.

1.3 The alleged investments were illegal as they were being hidden from the Claimant's home state in order to avoid their repatriation. The rights granted to investors under the Treaty are derived from and depended on the rights of the home state. There can be no enforcement against the will or the interests of the home state.

2. The claims are inadmissible under the Oil Platforms Test as

2.1 The Treaty does not require Athens to regulate its banking business in a certain

way. The right to regulate - or not to regulate - is an emanation on the State's sovereignty. Moreover, the liberal and inclusive approach with its commitment to diversity has in fact made Athens the center of excellence of international banking in Europe and contributed significantly to the prospering Athenian economy.

56 Lysias is evidently referring to the founding myth of the Areopag, see Aischylos, Eumenides, 680 et seq. and Demosthenes 23, 66.

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2.2 There can obviously be no denial of justice if the method of taking evidence

requested by the Claimant is in fundamental breach of international ius cogens.

2.3 There is no requirement that courts must give reasons for their decisions. In fact many jurisdictions recognize trial by jury and judgments without reasons. There is no right to an appeal under international law.

3. As regards the personal claims:

3.1 The claims regarding the necessity to provide security are inadmissible under Oil Platforms principles, as there is discrimination: all non-citizens (including Athenian metoikoi) have to provide security as is shown the example of Pasion which the Claimant himself reports (para. 14).

3.2 The claims regarding the alleged failure to provide protection against the alleged expulsion threat are clearly inadmissible as the Claimant is basically claiming that Athens failed to protect him against his own home-state and sovereign. A bilateral treaty, such as the Agreement on the Promotion and Protection of Investments between Athens and The Bosporan Kingdom cannot be used for claims directed against the conduct of the Claimant's home state.

3.3 These claims are also inadmissible under Oil Platforms principles as Article 11 of

the Treaty does not extend to obligations existing under other bilateral or multilateral treaties. This is even more true for treaties providing for their own dispute resolution mechanism. Trying to incorporate those treaties through a so-called umbrella clause also violates the principle of speciality.

We therefore request that the Tribunal to be constituted reject the claims for lack of jurisdiction and admissibility and order the Claimant to pay the costs of this arbitration including the costs and fees for Athens s defense."

In its Paragraphé, Athens appoints Gorgias of Leontinoi as its party-appointed arbitrator.

THE CONSTITUTION OF THE TRIBUNAL

The two party appointed arbitrators agree on Marcus Furius Camillus of Rome as president

of the tribunal. The Tribunal orders the Claimant to submit a Reply to the Paragraphé.

ISOKRATES'S REPLY

In his reply, Isokrates states as follows:

"Sopaides clearly had deposits with Pasion's bank as the Claimant will prove in due course of this arbitration. This question, however, is a question of the merits and can only be

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decided after an evidentiary hearing. For the purposes of jurisdiction and admissibility, the

Tribunal must accept the facts as stated by the Claimant.

1. In response to the objections relating to Claimant's investments:

1.1 The notion of "portfolio investments" appears nowhere in the Treaty. It is completely irrelevant for the current dispute. Bank deposits meet the definition of "investment" in the Treaty. Moreover, even if one were to accept the existence of "portfolio investments" it must not be forgotten that the deposits were intended to be used for commercial and financing purposes. It was not just "idle capital". Similarly, there is no reference in the Treaty to any "Salini criteria". The concept is a fabrication of respondents such as Athens. Even looking at the ICSID Convention, which is not applicable here, and its travaux, it is apparent that there is no basis for such a test. In any event, the Claimant's investment would meet the "Salini criteria".

1.2 Sopaides made his investments in accordance with Athenian laws and regulations

(

). There is therefore no question of illegality, either

under national or international law. In addition, Athens would not be able to rely on an alleged contradiction between its own law and international law. Thirdly, in any event, there is no international law which would prohibit investments of the kind made by Sopaides. Such rules do not exist and would not rise to the standard of customary international law.

1.3 Rights under investment treaties are subjective rights of the individual investor. They are independent of the home state once such a treaty has entered into force. Whether or not at the time they were - as Athens alleges - "being hidden from the Claimant's home State" is irrelevant. Otherwise, an investment would oscillate between being protected and not being protected depending on the political situation in the home State. This is clearly irreconcilable with the notion of treaty rights.

2. In response to the objections regarding the admissibility of the claims:

2.1 As evidenced by the case of Pasion, Athens's obvious failure to regulate the banking sector has resulted in a breach of its due diligence obligation.

2.2 Athenian law provides for basanos as means of taking evidence. This is a fact

which must be accepted by the Tribunal. If such means is provided for by national law, an investor must have effective access to it. The Respondent cannot now argue that it allegedly violates some external standard. Even if there was such a standard, it would not apply to the Athenian legal order.

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2.3 It is a well established international law standard that courts and arbitral tribunals

must deliver reasoned judgments. The absence of a right to appeal also violates Article 5 of the Treaty.

3. In response to the objections relating to the personal claims:

3.1 As the Respondent admits, Athenian citizens are exempt from the duty to provide security. The Respondent cannot exculpate itself arguing that it discriminates against classes of its own residents. It is not sufficient that the Respondent treats a Bosporan investor in the same way as a second-class Athenian.

3.2 Athens's objection as regards the failure to provide protection against expulsion is misconceived. The Treaty guarantees individual rights of investors. They are independent of the home State and provide for a standard of protection owed by the host State. The fact that the threatened extradition would have been to the home State is therefore irrelevant.

3.3 Article 11 of the Treaty does extend to obligations existing under other bilateral or multilateral treaties. This is irrespective of whether or not such a treaty provides for a dispute resolution mechanism. This is what an umbrella clause is for.

PROCEDURAL ORDER

After receipt of the Reply, the Tribunal has a (rather philosophic) discussion on the schedule for the oral hearing. Its President is not happy about the lengthy briefs the Parties exchanged ("scripturae autem erant inanes et vacuae" - "vain and vacuous writings"). Gorgias is only slightly more constructive: "everything is difficult and explaining

things clearly impossible" ("cunctae res difficiles non potest eas homo explicare sermone"). Agesilaos in his laconic way puts an end to the controversy: "It is the Parties' arbitration. They plead, we decide."

The Tribunal then issues the following order:

FIAT

Whereas the Parties have submitted their arguments on jurisdiction and admissibility, the Tribunal decides to bifurcate the proceedings and to hold a hearing on jurisdiction and admissibility from ante diem quartum idus Martii MMXII (12 März 2012) ad ante diem septimum decimum kalendas Aprilis MMXII (16 March 2012).

The Tribunal asks the Parties to submit skeleton arguments by ante diem tertium decimum kalendas Martii MMXII (17 February 2012).

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For the purposes of that hearing, the Parties will argue on the basis of the facts alleged by

the Claimant. In this context, the Tribunal further requests the parties to reserve ante diem sextum decimum kalendas Aprilis MMXII (17 March) for an evidentiary hearing, should the need arise.

The Tribunal intends to focus the oral hearing on the nine issues, set out in the Paragraphé at paras. 1 3 (pp. 20/21) and the Reply at paras. 1 3 (pp. 22/23). It expects the Parties to address these in their skeleton arguments in preparation for the hearing.

For the purposes of the moot the participants will assume that both Athens and The Bosporan Kingdom are member states of the European Convention on Human Rights (ECHR) and the 1951 Geneva Convention relating to the Status of Refugees and its 1967 Protocol.