HRE ruling

A state court in Munich wants the European Court of Justice to rule on the German government's takeover of the troubled Hypo Real Estate bank (HRE).

Although the court took a decision on Thursday that the nationalization did not break German laws, it asked the European court to decide if the move broke EU directives.

The action in Munich was brought by six shareholders who sold stakes to the government. Their chances of claiming compensation from the government would be boosted by a decision from the court in Luxembourg that the process was not handled correctly.

"It is a massive success," said Bodan Kalwarowski, one of the complainants. Kalwarowski claims that he lost thousands of euros when he was forced to sell his shares at a knock-down price of 1.30 euros ($1.74).

Notice period was shortened

The European court will have to decide if the German government violated EU rules by not issuing shareholders with an invitation to an extraordinary general meeting 21 days of a general meeting. The notice period had been shortened to a day as the government moved to increase its stake in the bank, which was threatened with collapse.

At the meeting, the German state raised its holding in HRE from 47 to 90 percent.

"By this shortening of the notice period, the complainants had their cooperation and participation rights were violated," Judge Helmut Krenek said.

HRE was Germany's highest profile casualty of the financial crisis in the autumn of 2008. It needed more than 100 billion euros in guarantees to sustain it, most of which came from the Gerrman government.

rc/dpa/AP
Editor: Rob Turner