Greek Debt Crises Reaches Federal Supreme Court

von Peter Bert

German investors in Greek government bonds have sued the Hellenic Republic in German courts over losses suffered as a result of the restructuring of their bonds. The Greek debt restructuring which triggered this litigation took place in March 2012. Greek bonds were exchanged for new bonds with lower principal, lower interest rates and longer maturity, resulting in a haircut for investors. A large majority of investors accepted the swap, but some investors did not, and went to court.

So far, the German judgments that I had seen held that the German courts had no jurisdiction to hear these cases. Both the Frankfurt and the Schleswig Court of Appeals (Oberlandesgericht) held that the claims were inadmissible (unzulässig), since the Hellenic Republic did invoke the defence of state immunity, to which it was entitled. Germany recognizes, pursuant to Article 25 Basic Law (Grundgesetz), the general rule of sovereign immunity for all acts of a state acting in its sovereign capacity (acta juris imperii). The Greek legislation upon which the haircut was based did qualify as such an act.

Last month, the Federal Supreme Court (Bundesgerichtshof) issued a press release stating that a test case on the issue of jurisdiction will be heard on March 8, 2016 ...

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