Grappling with a Grexit: what should lawyers be advising businesses now?

It has been a febrile few days in Greece with the prospect of a Greek exit from the euro looming.

Jean-Claude Juncker the President of the European Commission has spoken of being 'betrayed':

As for the Greek Prime Minister, Alexis Tsipras, he talks of 'blackmail' on the part of the Eurogroup:

So what are businesses which trade with Greece supposed to make of all this? How are they supposed to read between the lines of all this political posturing?

We set out below some tips on what businesses and their legal advisers should be thinking about.

Clearly, a Greek departure from the Euro zone is likely to present an existential crisis for the single currency. That said, it doesn't necessarily need to be the end of the world for businesses which trade with the country. While they are likely to be badly affected, there are steps that can be taken to minimise the challenges which are looming over the Hellenic Republic.

Steps to consider now

  • Identify the risks that may be faced, evaluating each risk and considering possible measures to reduce, avoid or transfer such risks
  • Set out, if necessary, a priority list of matters that would need to be dealt with on an exit and during each phase of an exit
  • Determine the key staff who will deal with the issues arising out of an exit
  • Update the exit plan regularly and in light of any new developments or likely developments

Initial steps if there is a euro exit

  • If a exit is likely or occurs, gather together the key staff and determine who is responsible for what
  • Locate any key documents (contracts etc)
  • Identify where the business may be exposed and what arrangements are affected
  • Instruct in-house counsel or external lawyers where necessary
  • Take local law advice where necessary

Legal issues on a euro exit

On exit, the typical scenario will be that the exiting state would enact a new currency law redenominating its currency from the euro to a new national currency.

Bear in mind that such legislation might prevail over the contractual, common law and conflict of laws analysis that would otherwise apply.

Exchange controls are also likely to be imposed.

    • Consider any new legislation in this respect, both EU and local
    • Consider any advice or guidance from any trade associations and other bodies (eg UK Trade & Investment (UKTI), UK Export Finance, the Bank of England, GOV.UK and/or Where necessary, speak to your bank and relevant financial institutions
    • Check all relevant contracts to determine what currency is the payment be in. Typically, creditors would insist on being paid in euros and debtors would wish to pay in the new currency
      • consider the contract generally including the payment provisions
      • determine which courts have jurisdiction
      • determine the governing law
      • consider whether there are any conflict of laws issues
      • consider whether there are any issues of enforceability
      • consider the interplay of all of the matters above. Read any currency clauses carefully. Is the term 'euro' defined? Is the euro the 'money of account' or 'money of payment' or both? Does the euro remain the 'money of account' or 'money of payment' or both even if membership of the Eurozone changes after the contract is entered into? Does the contract set out when a redenomination of the currency from the euro to the new currency is acceptable? Is there a mechanism under which any euro obligations are converted into a different currency such as US dollars?

Potential remedies

  • Consider terminating contracts if there is a right to do so. Make sure that any notice periods and processes are adhered to
  • Consider whether there is the likelihood of any counter claims
  • Check any force majeure, material breach, material adverse change and events of default provisions
  • Consider whether any contracts have been frustrated
  • Consider whether litigation is appropriate. Do any judgments need to be sought?


  • If the other party is insolvent or there is a risk of insolvency, consider what steps should be taken. What sorts of claims are available? Are they worth pursuing (ie there is no point 'throwing good money after bad')? Is it possible to reserve any rights or remedies while the business analyses its options? Where necessary, take legal advice (including local legal advice)

So what do you think? Have you already started to prepare for a Grexit? Or do you think this is all overblown? Do let us have you thoughts below.

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