Brattle Experts Provide Valuation and Regulatory Analyses on Behalf of Société Générale in ICSID Arbitration Against Croatia
In a multi-year arbitration concerning losses allegedly incurred due to measures Croatia enacted in response to “francogeddon,” a Brattle team testified on behalf of French bank Société Générale, analyzing the reasonableness and financial impact of the retroactive conversion of Swiss franc-indexed loans into euros. In June 2025, an International Centre for Settlement of Investment Disputes (ICSID) tribunal issued its ruling in favor of Société Générale, determining that Croatia owes Société Générale more than €30 million. The tribunal’s award was based on Brattle’s analysis.
Foreign currency loans were commonplace in Croatia and other Eastern European countries due to distinct consumer advantages – particularly, lower interest rates and implicit loan repayment profiling. The dispute was related to loans indexed to the Swiss franc, which saw increased monthly loan payments due to significant franc appreciation in 2010 and 2015. Croatia responded to the 2010 and 2015 Swiss Franc appreciation by mandating in 2015 the retroactive conversion of franc-indexed loans into Euros. Along with several other European banks, Société Générale filed claims against Croatia, alleging that the retroactive loan conversion was a breach of relevant treaties. Société Générale filed its ICSID claim in 2020.
Société Générale retained Brattle to assess the financial impact of retroactive loan conversion, which involved extensive simulation of loan defaults and prepayments, and the construction of a discounted cash flow (DCF) valuation model for the loan portfolio. Principal Richard Caldwell and Senior Associate Berger testified concerning the financial impact of the retroactive conversion, and also supported Academic Advisor Johannes Stroebel, who provided separate testimony on financial regulatory issues.
Following a two-week hearing in Paris in 2024, the ICSID tribunal rendered its €30 award – comprising €17.5 million in damages plus interest, costs, and taxes – in June 2025, marking the first time Croatia has been held liable over the 2015 amendments. The tribunal’s damages award was based on Brattle’s assessment and valuation model. In 2021, Croatia settled disputes with six other banks over the measures.
