Greek Debt Restructuring Case

Abstract

Two complainants brought a constitutional complaint before the German Constitutional Court. The complaint was directed against a judgement of the Federal Court of Justice (Bundesgerichtshof) that dismissed their action because the Hellenic Republic enjoyed state immunity before the German courts. in February 2012, Greece restructured its debts through a bond exchange in response to its major debt crisis. In this exchange, Greece offered its bondholders new bonds with a 53.5% percent reduction in the nominal value compared to the old bonds. The bond exchange was conditional on bondholders representing 2/3 of the aggregate principal voting in favour of the exchange, and subject to a quorum of 50% of bondholders. The complainants brought claims against the Hellenic Republic before the Regional Court of Osnabruck for the repayment of the funds that they originally paid to acquire the bonds, or alternatively, for the loss in value suffered due to deliberate immoral damage, unlawful expropriation, or unlawful interference equivalent to expropriation. In their constitutional complaints, the complainants invoked breaches of their right to a lawful judge based on Article 101(1) 1 Sentence 2, Article 100(2) and Article 25, first Sentence 1 of the German Basic Law. They also argued that the Federal Court of Justice unlawfully ruled on the scope of state immunity and failed to consult the Federal Constitution Court through the norm verification procedure. The German Constitutional Court did not accept the constitutional complaint for decision.