Greek Debt Crises Reaches Federal Supreme Court

Coat_of_arms_of_Greece_svgGerman 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 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. According to the press release, further cases are pending before the Federal Supreme Court where German courts had held they had jurisdiction over the matter and ruled on the merits. So far, I was not aware of any such cases, and I will follow up on these. In any event, the Federal Supreme Court has announced that it will first decide on the issue of jurisdiction, and only thereafter will deal with the appeals in cases decided upon the merits.


OLG Schleswig, judgment dated December 4, 2014 file no. 5 U 89/14 (not available in free databases).

OLG Frankfurt am Main, judgment dated September 18, 2014, file no. 16 U 32/14.

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