The government has reached an agreement with a German defense firm for the delivery of four submarines after resolving a dispute over the seaworthiness of one of them, Defense Minister Evangelos Venizelos said on Saturday.

«We have reached a solution which... protects the navy's interests, as it means it will finally receive modern, functional submarines,» Venizelos said. The dispute with defense manufacturer ThyssenKrupp broke out in 2006, when Greek authorities refused to take delivery of one of the submarines, dubbed the Papanikolis, complaining that it was defective. According to the new agreement, Greece will take delivery of all four submarines, including the Papanikolis which, sources say, it is receiving at a good price and intends to sell to a third party. In return, the sources say, the defense firm will drop a compensation claim for breach of contract. The purchase of the submarines forms part of a deal allowing shipbuilder Abu Dhabi MAR to buy a 75 percent stake in Hellenic Shipyards, acquired by ThyssenKrupp in 2005.