EU Greenlights Suits Over Greek Bond Plunge

     (CN) – Private holders of Greek government bonds can sue Greece for forcing them to accept new bonds worth cents on the euro after the Hellenic financial meltdown, the EU high court ruled Thursday.
     German citizens attempted to bring civil suits against Greece, claiming they lost millions when they refused to accept a restructuring of government bonds to help deal with the nation’s severe financial crisis in 2012.
     But EU law bars service of lawsuits in cases where a government’s liability stems from its exercise of state authority. This led two German courts hearing the cases to ask the European Court of Justice whether the lawsuits were civil or commercial matters – allowed to be served on the Greek government – or barred by the state-authority clause.
     In a ruling issued on Thursday, the EU high court held the lawsuits can be served on Greece since they do not fall outside the definition of civil or commercial matters under EU process-service law.
     Although the Luxembourg-based court acknowledged that Greece’s efforts to restructure its debt involved its authority to manage public finances, the law did not in and of itself affect the value of the securities held by the private bondholders. The valuation decisions were made by majority bondholders and forced upon everyone else, the court found.
     “Those changes were to give effect to a decision of a majority of the bondholders on the basis of the exchange clause incorporated by that law into the contract of issue, which, furthermore, confirms the intention of the Greek state to keep the management of the bonds within a regulatory framework of a civil nature,” the court wrote in its 6-page opinion.
     “Having regard to those considerations, it cannot be concluded that the cases in the main proceedings are manifestly not ‘civil or commercial matters’, within the meaning of the process-service regulation; that regulation is therefore applicable to those cases,” the court concluded.

%d bloggers like this: