The Greek Debt Restructuring and Property Rights. A Greek Tragedy for Investors?

Abstract

This paper examines the position of investors holding Greek sovereign bonds after the restructuring (PSI) which took place in 2012. After briefly reviewing the main features of the PSI, the paper undertakes to verify whether investors could challenge the operation on the basis of their property rights, as protected by Article 1 of the First Protocol to the ECHR. On the basis of this review, the paper concludes that there does not seem to be any room for a single answer on the Greek restructuring case. Whether or not Greece fell short of the standard of protection afforded by Article 1 of the First Protocol, depends much on the particulars of the case and specifically on the nature of the bonds and the circumstances in which they were acquired by investors. Those investors who came in at a late stage on the Greek debt market will find it much more difficult to allege that the restructuring amounted to an unlawful repudiation. On the other hand, investors who bought the bonds when they were issued and held bonds with short maturity, will be able to make a more credible case that Article of the First Protocol was not respected.

Keywords: Greek debt; sovereign debt; PSI; Public Sector Involvement; ECB; Property Rights; investors; sovereign debt restructuring; Argentina; sovereign debt crisis; Article 1 Protocol I ECHR; European Convention Human Rights

JEL Classification: F34, H63, H81, K11, K33