The ‘Brussels Ia' Regulation (1215/2012) is not applicable for the determination of the jurisdiction of a national court for ruling on claims damages brought against Greece by an individual from another Member State who invested in Greek sovereign securities, the value of which has depreciated after their forced exchange in 2012 under exceptional circumstances related to the Eurozone rescue plan, confirmed the EU Court of Justice in a judgment delivered on Thursday 15 November (Case C-308/17).
Mr. Kuhn, an Austrian resident, purchased Greek bonds on the secondary market through an Austrian custodian bank. During the mandatory exchange carried out by Greece in March 2012 as part of the 2nd Greek rescue plan (see EUROPE 10571), they were required to replace these bonds with new ones under unfavourable terms.
Mr Kuhn claims compensation before the Austrian courts in order to obtain the execution of the initial borrowing conditions or compensation. He submits that the ‘Brussels Ia’ Regulation provides for a special jurisdiction according to which the court where the execution of the obligation - in this case Austria - which serves as the basis for the request, may have jurisdiction as Greece has always paid the interest due on the sovereign securities into his Austrian bank account.
When questioned by the Austrian Supreme Court, the Court upheld the reasoning of the Advocate General and ruled against Mr Kuhn (see EUROPE 12055).
According to the Court, the ‘Brussels Ia’ Regulation is not applicable to the dispute in question, which is not a dispute "in civil or commercial matters" according to the Regulation and which originates from a demonstration of public authority by the Greek State.
In an exceptional context of severe financial crisis threatening the stability of the Eurozone, Athens has resorted to an exceptional solution: Greek legislation retroactively imposed the use of a collective action clause to modify the initial borrowing conditions of Greek securities to all holders, including those who opposed the exchange.
This clause pursued the general interest of restructuring Greek public debt and avoiding non-payment by the Greek State, the European judge emphasised. It should be noted that all sovereign securities issued after January 2013 by Eurozone countries with a maturity of more than one year contain such clauses in order to ensure that they all have the same legal effect. (Original version in French by Mathieu Bion)