We’ve been following the story of the hedge funds who bought up distressed Greek debt at a discount and plan to make a killing on it. The only obstacle to this is the inconvenient fact that Greece made a deal to give haircuts on the debt. So the hedgies are blocking that deal, figuring they can get paid off at par if they just wait long enough, since nobody wants to risk a default event. And even if Greece defaults, they can collect credit default swaps and make money either way. In response, the Greek Prime Minister, Lucas Papademos, threatened to change Greek law to cut the creditor take. The hedge funds would lose their leverage and have to take a lower percentage than they expected, although they’d make up some with the CDS. But they’re not content with this, so in one of the more incredible examples of chutzpah, they plan to sue. In human rights court, of all places.

Hedge funds have been known to use hardball tactics to make money. Now they have come up with a new one: suing Greece in a human rights court to make good on its bond payments.

The novel approach would have the funds arguing in the European Court of Human Rights that Greece had violated bondholder rights, though that could be a multiyear project with no guarantee of a payoff. And it would not be likely to produce sympathy for these funds, which many blame for the lack of progress so far in the negotiations over restructuring Greece’s debts.

The tactic has emerged in conversations with lawyers and hedge funds as it became clear that Greece was considering passing legislation to force all private bondholders to take losses, while exempting the European Central Bank, which is the largest institutional holder of Greek bonds with 50 billion euros or so.

Legal experts suggest that the investors may have a case because if Greece changes the terms of its bonds so that investors receive less than they are owed, that could be viewed as a property rights violation — and in Europe, property rights are human rights.

I’ll leave the understanding of European property rights law to the experts. The understanding of the disgusting nature of this tactic I can handle. The hedge funds swooped in late, but the banks or other investors that made these loan deals did so knowing full well that they risked a default. That’s true of any loan. There are two sides to every deal. The hedge funds, in fact, took their deal knowing that Greece was on the precipice of default. They’ve just decided to be raging assholes, and threaten to blow up the world if they don’t get paid back. So the idea that hedge funds have an inalienable human right to make this profit is one of the most egregious things I’ve seen in a long time.

There’s no guarantee they would be successful, of course, and the process would take years, so the opportunity costs come into play, rather than just taking their haircut and moving on to the next deal. I think this little nugget buried in the story tells you how these hedge funds operate.

It is not just the legal cudgel that investors are threatening to use. Some hedge funds have discussed among themselves the possibility of demanding a side payment, as they describe it, as a price Europe and Greece must pay if the two want the funds to participate in the agreement.

How is that anything but protection money? As in, pay us off and we won’t blow up your currency union.