Brussels, 11/06/2015 (Agence Europe) - When it restructured its debt in 2012, the Greek state did not act as a state authority and therefore the restructuring took place under civil and commercial law, but the European Court of Justice says that the restructuring did not appear to have caused damage, as alleged by German and other holders of Greek bonds.
In combined cases C-226/13, C-245/13, C-247/13 and C-578/13, the Court of Justice decided upon the type of dispute between Greece and holders of Greek bonds who bought them in Germany and are now calling for damages and interest payments because of violation of their ownership rights. The individuals in question say they suffered damages because Greece forced them in March 2012 to exchange their bonds for new state obligations of a much lower face value.
In the notification proceedings for these complaints to the Greek state, the question was raised of whether restructuring of the Greek debt can be qualified as a civil or commercial action under EU Regulation 1393/2007. If so, then notification forms could be directly served on the Greek state by a court in another member state. If not, in other words if it appears that the Greek state acted as a state authority, then the regulation in question does not apply.
The Court made a different decision from that recommended by Advocate General Yves Bot in December 2014 (see EUROPE 11214), who said that by acting unilaterally using legislation, conditions were attached to the bonds and Greece acted as a state authority and any appeals against the country cannot be based on civil law.
In its rulings, the European Court of Justice reached the opposite conclusion. It says the court cases against Greece in Germany do indeed fall within the scope of the EU regulation since they are manifestly not of a civil or commercial nature.
The Court notes that “the issue of bonds does not necessarily presuppose the exercise of powers falling outside the scope of the ordinary legal rules applicable to relationships between individuals.” The financial conditions for the bonds in question were not laid down unilaterally as part of the restructuring of the Greek debt by the Greek state but based on the market conditions that determine the sale and profitability of such financial instruments because Greece has always wanted to remain within the civil law regulatory framework.
Finally, “it is not obvious that the adoption of Law No 4050/2012 led directly and immediately to changes to the financial conditions of the securities in question and therefore caused the damage alleged by the applicants.” Summing up, the Court of Justice says that it seems incorrect to say that holders of Greek bonds suffered damage. (Jan Kordys)