The German Supreme Court (Bundesgerichtshof) rejected a claim brought by the city of Berlin, according to which the German government should refinance 50% of the credit guarantees which the city council had used over many years for social housing schemes in the German capital. The city council had already been unsuccessful with a test case brought before the Regional Court (Landgericht) of Berlin in October 2009, and the Higher Regional Court had dismissed an appeal against that decision. The Supreme Court has now denied Berlin’s request for leave to appeal (which would have been necessary to file an appeal before the Supreme Court).

Berlin’s alleged claim is based on federal government guarantees for social housing schemes. Local governments were only allowed to use such federal guarantees for economically viable projects. However, the city council of Berlin also promoted projects which met the criteria of economic efficiency only if Berlin had granted the usual aids for a minimum period of 30 years. The discontinuation of the local aid scheme (so-called “follow-up subsidies”) by the city resulted in numerous insolvencies. According to the city council, its alleged claims under the federal guarantees amount to a total of approximately €450 million.

A Linklaters litigation team from Frankfurt and Munich led by Alexandros Chatzinerantzis and Stephan Balthasar provided comprehensive advice to the German government throughout the litigation. The team also included Jan Suschinski and Uwe Hamelmann.