In Case T‑868/16

1On 21October 2009, the Hellenic Republic notified the Statistical Office of the European Union (Eurostat) that its revised public deficit was 12.5% of gross domestic product (GDP), as compared with 3.7% of GDP as notified in spring 2009. That revision of the Hellenic Republic’s economic data raised doubts as to its solvency and, consequently, caused an increase in the rates of interest on Greek bonds during the first months of 2010.

2Having regard to the fact that the Greek public debt crisis threatened to affect other Member States in the euro area and endangered the stability of that area as a whole, the Heads of State or Government of the euro area agreed at the European Council summit of 25March 2010 to put into place, with the assistance of the International Monetary Fund (IMF), an intergovernmental mechanism to aid the Hellenic Republic, consisting of the granting of bilateral loans coordinated with non-concessionary interest rates.

3At the end of April 2010, a credit rating agency downgraded the rating of Greek bonds from BBB‑ to BB+, a rating regarded as indicating a high-risk debt. Accordingly, on 27April 2010, the credit rating agency Standard & Poor’s (S&P) warned the holders of Greek bonds that they had on average only a 30 to 50% chance of recovering their money in the event of a restructuring of Greek public debt or of a payment default on the part of the Greek State.

4On 23April 2010, the Hellenic Republic requested the activation of the intergovernmental aid mechanism referred to in paragraph2 above. On 2May 2010, under that aid mechanism, the euro area Member States agreed to supply the Hellenic Republic with EUR80 billion as part of a financial package of EUR110 billion allocated jointly with the IMF.

5On 9May 2010, in the context of the Ecofin Council, a decision was taken to adopt a package of measures, including the adoption of Council Regulation (EU) No407/2010 of 11May 2010 establishing a European financial stabilisation mechanism (OJ 2010 L118, p.1), on the basis of Article122(2) TFEU, and the creation of the European Financial Stability Facility (EFSF). On 7June 2010, the EFSF was created and the euro area Member States and the EFSF signed a framework agreement laying down the conditions under which the EFSF would provide stability support.

6By a press release of 10May 2010, the European Central Bank (ECB) announced the establishment of a programme for purchasing State bonds on the secondary bond market (‘the programme for purchasing bonds’).

7On 14May 2010, the ECB adopted Decision 2010/281/EU establishing a securities markets programme (ECB/2010/5) (OJ 2010 L124, p.8), on the basis of the first indent of Article127(2) TFEU and Article18(1) of Protocol (No4) on the Statute of the European System of Central Banks and of the European Central Bank (OJ 2010 C83, p.230; ‘the ESCB Statute’). Under Article1 of the ESCB Statute, the ECB and the national central banks are to constitute the European System of Central Banks (ESCB). The ECB and the national central banks of those Member States whose currency is the euro are to constitute the Eurosystem.

8Recitals2, 3 and 5 of Decision 2010/281 are worded, in particular, as follows:

‘(2)On 9May 2010 the Governing Council decided and publicly announced that, in view of the current exceptional circumstances in financial markets, characterised by severe tensions in certain market segments which are hampering the monetary policy transmission mechanism and thereby the effective conduct of monetary policy oriented towards price stability in the medium term, a temporary securities markets programme (hereinafter the “programme”) should be initiated. Under the programme, the euro area [national central banks], according to their percentage shares in the key for subscription of the ECB’s capital, and the ECB, in direct contact with counterparties, may conduct outright interventions in the euro area public and private debt securities markets.

(3)The programme forms part of the Eurosystem’s single monetary policy and will apply temporarily. The programme’s objective is to address the malfunctioning of securities markets and restore an appropriate monetary policy transmission mechanism.

…

(5)As part of the Eurosystem’s single monetary policy, the outright purchase of eligible marketable debt instruments by Eurosystem central banks under the programme should be implemented in accordance with the terms of this Decision.’

9According to Article1 of Decision 2010/281, ‘Eurosystem central banks may purchase… on the secondary market, eligible marketable debt instruments issued by the central governments or public entities of the Member States whose currency is the euro’. Article2 prescribes, as eligibility criteria for debt instruments, in particular, that such instruments are to be ‘denominated in euro’ and issued by such central governments or public entities.

10Within the framework of the programme for purchasing bonds instituted by Decision 2010/281, the ECB and the national central banks of the euro area acquired State bonds, including bonds from the Hellenic Republic, between May 2010 and March 2011 and between August 2011 and February 2012. It is apparent from Decisions No2/13203/0023A of 15February 2012 (FEK B’ 574), No2/14328/0023A of 20February 2012 (FEK B’ 705) and No2/14949/0023A of 21February 2012 (FEK B’ 413) of the Greek Ministry of Finance, that, at that stage, the ECB, the national central banks of the euro area and the European Investment Bank (EIB) held Greek bonds with a total face amount of EUR42732860000, EUR13519799177.59 and EUR315350000 respectively. The European Union, represented by the European Commission, also held Greek bonds with a total face amount of EUR106700000, a portion of which– namely bonds with a face amount of EUR55700000– were managed by the EIB on behalf of and in the name of the European Union. Thus, those institutional creditors held Greek bonds with a total face amount of EUR56674709177.59.

11In May 2011, the Hellenic Republic, the euro area Member States and a number of the creditors of the Greek State started discussions with a view to introducing a new financial aid programme, the overarching objective of which was to enable the Hellenic Republic to regain financial viability. One of the measures planned in those discussions was to restructure Greek public debt, under which the Hellenic Republic’s private creditors would contribute to reducing the burden of that debt, thereby avoiding a payment default. However, initially, those discussions related to, inter alia, a potential voluntary roll-over of maturities of Greek bonds held by private creditors.

12On 6June 2011, the German Finance Minister sent a letter to the ECB, the IMF and the other Finance Ministers of the euro area Member States, in which he recommended an exchange of bonds which would extend by seven years the maturities of the Greek bonds held by private creditors.

13On 20June 2011, following a meeting on the financial situation of the Hellenic Republic, the Eurogroup adopted a statement, according to which, in particular:

‘Given the difficult financing circumstances, [the Hellenic Republic] is unlikely to regain private market access by early 2012. Ministers agreed that the required additional funding will be financed through both official and private sources and welcome the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing [debt of the Hellenic Republic] at maturity for a substantial reduction of the required year-by-year funding within the programme, while avoiding a selective default for [the Hellenic Republic].’

14At its meeting of 23 and 24June 2011, the European Council considered the financial situation of the Hellenic Republic and in that regard concluded, in particular, that:

‘14.The European Council calls on the national authorities to continue implementing with resolve the necessary adjustment efforts to put the country on a sustainable path. A comprehensive reform package agreed upon with the Commission, in liaison with the ECB and the IMF, and adoption by the Greek Parliament of the key laws on the fiscal strategy and privatisation must be finalised as a matter of urgency in the coming days. Following the request by the Greek Government announced by the Greek Prime Minister, this will provide the basis for setting up the main parameters of a new programme jointly supported by its euro area partners and the IMF, in line with current practices, and at the same time for allowing disbursement in time to meet [the Hellenic Republic’s] financing needs in July [2011].

15.The euro area Heads of State or Government agree that required additional funding will be financed through both official and private sources. They endorse the approach decided by the Eurogroup on 20June [2011] as regards the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing Greek [public] debt at maturity for a substantial reduction of the required year-by-year funding within the programme while avoiding a selective default.’

15On 24June 2011, the Fédération bancaire française (French Banking Federation), an association representing banks engaged in commercial activities in France, wrote to the French Minister for the Economy, Finance and Industry to propose, in particular, that the maturities of outstanding Greek bonds held by private creditors be extended to 30 years, provided, inter alia, that the ECB was willing not to sell its Greek bonds during that period.

16In a press release of 1July 2011, the Institute of International Finance (IIF) stated, inter alia:

‘The Board of Directors of the [IIF] is committed to working with its membership and other financial sectors, the public sector, and the Greek authorities to deliver substantial cash-flow to [the Hellenic Republic], as well as to lay the basis for a more sustainable debt position.

The private financial community is ready to engage in a voluntary, cooperative, transparent and broad-based effort to support [the Hellenic Republic] given its unique and exceptional circumstances…

The involvement of private investors will complement parallel official financing and liquidity support and will be based on a small number of options…’

17On 21July 2011, the IIF submitted a proposal for a bond exchange and maturity extension programme. The programme was aimed at exchanging existing Greek bonds for four different instruments, together with a Greek public debt buy-back facility to be established by the official sector, that is, first, an exchange of bonds at par for a 30-year instrument; second, an offer of bonds at par involving the rolling-over of bonds at maturity into 30-year instruments; third, an exchange of bonds at a discount for a 30-year instrument; and, fourth, an exchange of bonds at a discount for a 15-year instrument.

18On 21July 2011, the Heads of State or Government of the euro area and the EU institutions met to consider measures to be taken in order to overcome the difficulties facing the euro area.

19Their joint statement of 21July 2011 includes, in particular, the following:

‘1.We welcome the measures undertaken by the Greek Government to stabilise public finances and [to] reform the economy as well as the new package of measures including privatisation recently adopted by the Greek Parliament. These are unprecedented, but necessary, efforts to bring the Greek economy back on a sustainable growth path. We are conscious of the efforts that the adjustment measures entail for the Greek citizens, and are convinced that these sacrifices are indispensable for economic recovery and will contribute to the future stability and welfare of the country.

2.We agree to support a new programme for [the Hellenic Republic] and, together with the IMF and the voluntary contribution of the private sector, to fully cover the financing gap. The total official financing will amount to an estimated [EUR] 109 billion… This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of [the Hellenic Republic]. We call on the IMF to continue to contribute to the financing of the new Greek programme. We intend to use the EFSF as the financing vehicle for the next disbursement. We will monitor very closely the strict implementation of the programme based on the regular assessment by the [European] Commission in liaison with the ECB and the IMF.

…

5.The financial sector has indicated its willingness to support [the Hellenic Republic] on a voluntary basis through a menu of options further strengthening overall sustainability. The net contribution of the private sector is estimated at [EUR] 37 billion… Credit enhancement will be provided to underpin the quality of collateral so as to allow its continued use for access to Eurosystem liquidity operations by Greek banks. We will provide adequate resources to recapitalise Greek banks if needed.’

20As regards private sector involvement, point6 of the joint statement of 21July 2011 indicates that:

‘As far as our general approach to private sector involvement in the euro area is concerned, we would like to make it clear that [the Hellenic Republic] requires an exceptional and unique solution.’

21On 21October 2011, the IMF published a Greek public debt sustainability analysis, which stated, in particular, as follows:

‘Deeper PSI [private sector involvement], which is now being contemplated, also has a vital role in establishing the sustainability of [the Hellenic Republic’s] debt… To assess the potential magnitude of improvements in the debt trajectory, and potential implications for official financing, illustrative scenarios can be considered using discount bonds with an assumed yield of 6[%] percent and no collateral. The results show that debt can be brought to just above 120[%] of GDP by end-2020 if 50[%] discounts are applied. Given still-delayed market access, large scale additional official financing requirements would remain, estimated at some [EUR] 114 billion (under the market access assumptions used). To get the debt down further would require a larger private sector contribution (for instance, to reduce debt below 110[%] of GDP by 2020 would require a face value reduction of at least 60[%] and/or more concessional official sector financing terms). Additional official financing requirements could be reduced to an estimated [EUR] 109 billion in this instance…’

22At their summit of 26October 2011, the Heads of State or Government of the euro area declared, in particular, as follows:

‘12.The Private Sector Involvement (PSI) has a vital role in establishing the sustainability of the… debt [of the Hellenic Republic]. Therefore we welcome the current discussion between [the Hellenic Republic] and its private investors to find a solution for deeper PSI. Together with an ambitious reform programme for the Greek economy, the PSI should secure the decline of the Greek debt to GDP ratio with an objective of reaching 120% by 2020. To this end, we invite [the Hellenic Republic], private investors and all parties concerned to develop a voluntary bond exchange with a nominal discount of 50% on notional Greek debt held by private investors. The euro [area] Member States would contribute to the PSI package up to [EUR] 30 [billion]. On that basis, the official sector stands ready to provide additional programme financing of up to [EUR] 100 [billion] until 2014, including the required recapitalisation of Greek banks. The new programme should be agreed by the end of 2011 and the exchange of bonds should be implemented at the beginning of 2012. We call on the IMF to continue to contribute to the financing of the new Greek programme.’

23According to a press release of the Greek Ministry of Finance of 17November 2011, that ministry had commenced consultations with holders of Greek bonds in preparation for a voluntary exchange of those bonds with a notional ‘haircut’ of 50% of the face amount of Greek debt held by private investors, as provided for in paragraph12 of the statement of the Heads of State or Government of the euro area of 26October 2011.

24On 2February 2012, the Hellenic Republic submitted to the ECB, pursuant to Article127(4) TFEU, read in conjunction with Article282(5) TFEU, a request for an opinion on draft Greek Law No4050/2012 introducing rules amending the terms applicable to marketable securities issued or guaranteed by the Greek State under agreements with their holders for the purpose of restructuring Greek public debt, based, in particular, on the application of collective action clauses (‘CACs’).

25On 15February 2012, the ECB and the national central banks of the euro area, of the one part, and the Hellenic Republic, of the other part, entered into an exchange agreement with the aim of exchanging Greek bonds held by the ECB and by the national central banks for new Greek bonds having the same face amounts, interest rates, interest payment and repayment dates as the bonds to be exchanged, but having different serial numbers (ISIN codes) and dates (‘the exchange agreement of 15February 2012’).

26On 17February 2012, the ECB issued Opinion CON/2012/12 on the terms of securities issued or guaranteed by the Greek State. It is apparent from that opinion, inter alia, that, first, ‘it is important that the Member States preserve their ability to honour at all times their commitments, also with a view to ensuring financial stability’; second, ‘the case of the Hellenic Republic is exceptional and unique’ (paragraph2.1); third, the aim of the draft law is to promote private sector involvement and in particular to introduce a procedure to facilitate, in accordance with CACs, negotiation with holders of Greek bonds and the securing of their agreement to an exchange offer by the Hellenic Republic for its bonds and, therefore, a possible restructuring of Greek public debt (paragraph2.2); fourth, ‘the ECB welcomes that the terms of such exchange [are] the result of negotiations held between the Hellenic Republic and the institutions representing its bondholders’ (paragraph2.3); fifth, ‘the use of CACs as a procedure to achieve an exchange of bonds is broadly aligned with general practice’ (paragraph2.4); and sixth, ‘it remains the sole responsibility of the Government of the Hellenic Republic to take the necessary action that will ultimately ensure its debt sustainability’ (paragraph2.6).

27In a press release of 21February 2012, following the conclusion of those negotiations, the Greek Ministry of Finance, first, disclosed the essential characteristics of the proposed Greek bond exchange transaction, called Private Sector Involvement (PSI), and, second, announced that a new law would be prepared and adopted for that purpose. That transaction was to include a consent solicitation and an invitation to private holders of certain Greek bonds to exchange those bonds for new bonds having a face amount equal to 31.5% of the face amount of the debt exchanged and for notes of the EFSF maturing within 24months having a face amount equal to 15% of the face amount of the debt exchanged, each to be delivered by the Hellenic Republic at settlement. In addition, each participating private investor would also receive detachable GDP-linked securities of the Hellenic Republic with a notional amount equal to the face amount of the new bonds.

28The Eurogroup statement of the same day states, inter alia, as follows:

‘The Eurogroup acknowledges the common understanding that has been reached between the Greek authorities and the private sector on the general terms of the PSI exchange offer, covering all private sector bondholders. This common understanding provides for a nominal haircut amounting to 53.5%. The Eurogroup considers that this agreement constitutes an appropriate basis for launching the invitation for the exchange to holders of Greek Government bonds (PSI). A successful PSI operation is a necessary condition for a successor programme. The Eurogroup looks forward to a high participation of private creditors in the debt exchange, which should deliver a significant positive contribution to [the Hellenic Republic’s] debt sustainability.

…

The Eurogroup takes note that the Eurosystem… holdings of Greek… bonds have been held for public policy purposes. The Eurogroup takes note that the income generated by the Eurosystem holdings of Greek… bonds will contribute to the profit of the ECB and of the [national central banks]. The ECB’s profits will be disbursed to the [national central banks], in line with the ECB’s statutory profit distribution rules. The [national central banks’] profits will be disbursed to euro area Member States in line with [those banks’] statutory profit distribution rules.

…

The respective contributions from the private and the official sector should ensure that [the Hellenic Republic’s] public debt ratio is brought on a downward path reaching 120.5% of GDP by 2020. On this basis, and provided policy conditionality under the programme is met on an ongoing basis, the Eurogroup confirms that euro area Member States stand ready to provide, through the EFSF and with the expectation that the IMF will make a significant contribution, additional official programme of up to [EUR] 130 [billion] until 2014.

It is understood that the disbursements for the PSI operation and the final decision to approve the guarantees for the [new] programme are subject to a successful PSI operation and confirmation, by the Eurogroup on the basis of an assessment by the Troika, of the legal implementation by [the Hellenic Republic] of the agreed prior actions. The official sector will decide on the precise amount of financial assistance to be provided in the context of the [new] Greek programme in early March, once the results of PSI are known and the prior actions have been implemented.

We reiterate our commitment to provide adequate support to [the Hellenic Republic] during the life of the programme and beyond until it has regained market access, provided that [the Hellenic Republic] fully complies with the requirements and objectives of the adjustment programme.’

29On 23February 2012, the Greek Parliament adopted nomos 4050/2012, Kanones tropopoiiseos titlon, ekdoseos i engyiseos tou Ellinikou Dimosiou me symfonia ton Omologiouchon (Law No4050/2012 on the amendment of bonds issued or guaranteed by the Greek State with the consent of their holders and introducing the CACs mechanism) (FEK A’ 36). Under the CACs mechanism, the proposed amendments would become legally binding on any holders of bonds governed by Greek law issued before 31December 2011, as identified in the act of the Greek Ministerial Council approving PSI invitations, if the proposed amendments were, collectively and without distinction by series, approved by a quorum of bondholders representing at least two thirds by face value of the bonds participating in the CACs mechanism. In addition, the preamble to that law states, inter alia, that ‘the [ECB] and the other members of the Eurosystem have concluded special agreements with [the Hellenic Republic] in order to ensure that their task and their institutional role, and the [ECB’s] role in drawing up monetary policy, as laid down in the Treaty, are not compromised’.

30In a press release of 24February 2012, the Greek Ministry of Finance specified the conditions governing the voluntary bond exchange transaction involving private investors with a face amount of approximately EUR206 billion, making a reference to Law No4050/2012.

31The voluntary bond exchange transaction offer was closed on 8March 2012.

32In a press release dated 9March 2012, the Greek Ministry of Finance stated that, in principle, the conditions laid down by Law No4050/2012 had been fulfilled, and announced the proportions in which private creditors had accepted the exchange offer.

33In that regard, the press release stated, inter alia, as follows:

‘Holders of approximately [EUR] 172 billion principal amount of bonds issued or guaranteed by the [Hellenic] Republic have tendered their bonds for exchange or consented to proposed amendments in response to the invitations and consent solicitations announced by the [Hellenic] Republic on 24February 2012.

Of the approximately [EUR] 177 billion of bonds issued by the [Hellenic] Republic and governed by Greek law and subject to the invitations, the [Hellenic] Republic has received tenders for exchange and consents from holders of approximately [EUR] 152 billion face amount of bonds, representing 85.8% of the outstanding face amount of these bonds. Holders of 5.3% of the outstanding face amount of these bonds participated in the consent solicitation and opposed the proposed amendments. The [Hellenic] Republic has advised its official sector creditors that, upon confirmation and certification by the [Central] Bank of Greece as process manager under… Law [No] 4050/2012…, it intends to accept the consents received and amend the terms of all of its Greek law governed bonds, including those not tendered for exchange pursuant to the invitations, in accordance with the terms of [Law No4050/2012]. Accordingly, the [Hellenic] Republic will not extend the invitation period for its bonds governed by Greek law.

… If the consents to the proposed amendments to the [Hellenic] Republic’s Greek law bonds are accepted, the sum of the face amount of those bonds that will be exchanged and of the other bonds [governed by law other than Greek law] subject to the invitations for which the [Hellenic] Republic has received tenders for exchange and consents to the proposed amendments will total approximately [EUR]197 billion, or 95.7% of the total face amount of the bonds subject to the invitations.’

34The applicants, QI and the other natural persons whose names are set out in the annex, as holders of Greek bonds, were involved in the restructuring of Greek public debt, under the PSI and the CACs implemented pursuant to Law No4050/2012, after having, they claim, rejected the offer to exchange their bonds.