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Germany: German courts dismiss Greek government bondholders’ claims against Greece on state immunity or jurisdiction grounds

German courts have dismissed damages claims by holders of Greek government bonds against Greece following the debt restructuring in 2012. The Federal Court of Justice (Bundesgerichtshof, BGH) held that such actions in tort were inadmissible due to state immunity. The bond exchange was based on sovereign acts – a statute and a Ministerial Council decision. The courts in Oldenburg and Cologne found that state immunity does not apply to contractual claims under the bonds, but still dismissed the actions for lack of jurisdiction. The court in Schleswig disagreed, finding that state immunity applies to all types of claims. The BGH will have to decide again as all three courts allowed an appeal on points of law.

Greek government bonds lost more than half their value

The claimants in all cases, German private investors, had bought Greek government bonds from their banks, which had bought the bonds from other banks participating in the giro system of the Bank of Greece. The Greek Bondholder Act in February 2012 (the Act)1 allowed the conditions of Greek government bonds to be amended by majority vote and Ministerial Council decision. In March 2012, the majority of bondholders agreed to trade in their bonds for new ones with less than half the nominal value and a longer term. The claimants did not consent but still had their bonds swapped. The Greek Government, based on the Act and the majority vote, issued a decision binding all other bondholders to the exchange. The claimants have sued the Hellenic Republic for their loss.

German courts cannot rule on foreign sovereign acts

German courts consider state immunity first before examining their jurisdiction. State immunity only applies to sovereign acts (unless the state has waived it), but not to a state's fiscal acts.

The crucial point in the Greek bondholder disputes is, therefore, whether the claims relate to sovereign or fiscal acts of Greece. In its March decision the BGH reiterated that this distinction depends on the nature of the state act in dispute: Did the state exercise its sovereign power or did it act like a private person? Core sovereign acts are exerting foreign or military power, legislation, police force and the administration of justice.

State immunity prevents bondholders' tort claims against Greece, but perhaps not contractual claims

In the BGH case the claimants had only asserted claims in tort, asserting that Greece had wrongly exchanged their bonds. The BGH stated that when a state raises capital by issuing government bonds this is not a sovereign act. However, the Greek Bondholder Act and the Ministerial Council decision, declaring the majority vote binding on all bondholders, were sovereign acts and hence Greece could rely on its state immunity.

Claimants in other cases have also asserted contractual claims under the bonds for performance (payment) or damages for non-performance. The BGH did not need to decide whether state immunity also applies to such claims. Three Higher Regional Courts later reached different views on this question. The courts in Oldenburg and Cologne held that Greece cannot rely on state immunity for contractual claims under the bonds. The Act and the Ministerial Council decision could not change the character of the legal relationship under the bonds; they could only make the obligations under the bonds lapse.

The Schleswig Higher Regional Court disagreed, stating that Greece's non-payment under the bonds is not relevant, but the Act and the Ministerial Council decision are. These sovereign acts had shaped the bond conditions and could not be separated from the state acting as a contracting party. The claim was based on the alleged unlawfulness of the Act and the Government decision, and a foreign court judging on this point was exactly what the principle of state immunity intended to prevent.

German courts have no jurisdiction anyway

The Cologne and Oldenburg courts still dismissed the actions for the lack of jurisdiction of German courts under the old Brussels Regulation.2 The court in Schleswig held the same view, although this was after finding that state immunity applied anyway.

All three courts discussed several arguments to deny jurisdiction. In summary: the claimants' home courts did not have jurisdiction under the rules for consumers3 as these rules require a contract concluded between the consumer and the defendant, whereas the claimants had acquired the bonds from their banks by assignment. Jurisdiction could also not be based on a place of performance in Germany,4 as Greece would have to fulfil the bond obligations in Athens, within the Bank of Greece's giro system.


We are seeing an increasing number of disputes on state immunity, since states have become more engaged in the financial sector, following the financial crisis. It looks very unlikely that German courts will decide on the substance of the bondholders' claims. Even if Greece is unable to rely on state immunity, the courts' views on lack of jurisdiction will probably hold. This would obviously be different if the bond conditions contained a German jurisdiction clause.

BGH, judgment dated 8 March 2016, file no. VI ZR 516/14; Oldenburg Higher Regional Court, judgment dated 18 April 2016, file no. 13 U 43/15; Cologne Higher Regional Court, judgment dated 12 May 2016, file no. 8 U 44/15; Schleswig Higher Regional Court, judgment dated 7 July 2016, file no. 5 U 84/1


1 Greek Act no. 4050/2012 of 23 February 2012. 

Regulation (EC) 44/2001. This applies as the actions were initiated before 10 January 2015.

3 Articles 15(1) (c), 16(1) of the Regulation. 

4 Article 5 no. 3 of the Regulation. 

Further information

This case summary is part of the Allen & Overy Legal & Regulatory Risk Note, a quarterly publication. For more information please contact Karen Birch, or tel +44 20 3088 3710. 

Legal and Regulatory Risk Note