A highly unusual legal battle between Greece and Wilmington Trust Limited is unfolding in a London courtroom this week, offering a rare test of crisis-era financial instruments created during Europe’s sovereign debt turmoil.
The case, heard before Justice Bright, centers on GDP-linked warrants issued by Greece in 2012 as part of its sweeping debt restructuring. Designed to align investor returns with the country’s economic recovery, the securities promised payouts beginning in 2027 if Greece’s economy surpassed specific thresholds, including a gross domestic product above €267 billion and annual growth exceeding 2%.
At issue now is Athens’ decision to buy back those warrants early, exercising a call option in May 2025 in a move that officials say saved the state hundreds of millions of euros. Wilmington Trust, which served as trustee for the instruments, is challenging the legality of that buyback and seeking compensation on behalf of investors.
The dispute traces back to last year, when the law firm White & Case raised concerns on behalf of hedge funds and asset managers including VR Capital, Wellington Management and Pharo Management. The investors argued that Greece’s move undermined the terms under which the securities were issued, effectively depriving them of potential future gains tied to the country’s recovery.
The proceedings took an unexpected turn last autumn when lawyers for both the investors and Wilmington Trust withdrew, with neither side willing to shoulder the mounting legal costs. Faced with the prospect of an incomplete hearing, High Court judge Robin Knowles proposed an extraordinary workaround: attorneys representing Greece, from Cleary Gottlieb Steen & Hamilton LLP, would temporarily present the opposing arguments to ensure the court could fully examine the case.
That arrangement has now played out in court, with Greece’s own legal team outlining not only the government’s defense but also the claims of the funds challenging the transaction—an approach virtually without precedent in modern commercial litigation.
Greek officials have not objected to the unconventional process, signaling a preference for a definitive ruling even if it entails some financial cost. Still, people familiar with the matter say a significant compensation payout is not viewed as the most likely outcome.
