Arbitrary decision of court of second instance in Zagreb regarding LB and NLB
The court of second instance (County Court) in Zagreb adjudged one of Zagrebačka banka’s lawsuits against Ljubljanska banka (LB) and Nova ljubljanska banka (NLB) to the detriment of LB and NLB and orderd them to pay EUR 492,430.53 plus interest from 1 January 1992 until repayment. The attorney of LB received the judgment on 14 November 2017.
Contrary to expectations and standard judicial practice, the court of second instance (County Court) in present case reversed the decision of the court of first instance (Zagreb Municipal Court). The court of first instance had rejected Zagrebačka banka’s demand in its entirety. The matter concerns one of the proceedings in connection with the transferred foreign currency deposits of LB in Zagreb, whose payment was assumed by Croatia as a public debt on the basis of its legislation,such that savers who hold Croatian citizenship could transfer foreign currency deposits to Croatian banks, two of which are currently suing LB and NLB pursuant to special authorisation from the Croatian Minister of Finance.
Slovenia has also expressed concern and dissatisfaction over Croatia’s violation of international obligations and the arbitrary and erroneous interpretation of the Slovenian Constitutional Law Amending the Constitutional Law for the Implementation of the Basic Constitutional Charter on the Independence and Sovereignty of the Republic of Slovenia by the Croatian courts.
The Memorandum of Understanding signed by Slovenia and Croatia in Mokrice on 11 March 2013 is an international agreement which is directly binding on the judiciaries in both countries. The Memorandum of Understanding provides that a solution for the transferred foreign currency deposits of LB in Croatia will be found based on the Agreement on Succession Issues (Annex C). Under the Memorandum, the Croatian government undertook to stay all court proceedings initiated by Zagrebačka banka and Privredna Banka Zagreb with regard to transferred foreign currency deposits until a final resolution of the issue, and, with the aim of resolving the issue, not to initiate new judicial or other proceedings in connection with transferred foreign currency deposits.
Under the Memorandum, the Slovenian government undertook upon signing it to begin the procedure to ratify the Treaty on the Accession of the Republic of Croatia to the EU in the Slovenian National Assembly. Slovenia has met its obligations while Croatia has not. Croatia wants to circumvent the provisions of the Memorandum, through which the countries regulated the future resolution of the issue of transferred foreign currency deposits of LB’s Zagreb branch, by not recognising the Memorandum’s status as an international treaty. Its objective is to preclude a stay of judicial proceedings until the resolution of the issue within the framework of succession, which is undoubtedly in contravention of the agreement between the two countries.
Slovenia also expressed concern over the arbitrary and entirely unfounded interpretation of the 1994 Slovenian Constitutional Law Amending the Constitutional Law for the Implementation of the Basic Constitutional Charter on the Independence and Sovereignty of the Republic of Slovenia by the Croatian courts. The Constitutional Law transferred a part of the obligations and rights of LB to the newly-established NLB, while a part of them was retained by LB. Article 22b of the Constitutional Law clearly sets out the assets and liabilities that were retained by LB. Pursuant to that Article, LB retained all liabilities for foreign currency on foreign currency accounts and foreign currency savings books outside the territory of Slovenia and the appurtenant claims arising therefrom. NLB is therefore unjustifiably and contrary to the Slovenian legal order and international agreements treated as a second defendant in these proceedings.
Slovenia expects Croatia to meet its international obligations in full and to enforce a stay on all judicial proceedings before Croatian courts initiated by Zagrebačka banka and Privredna Banka Zagreb until the final resolution of the issue of the assumption of SFRY or National Bank of Yugoslavia guarantees on foreign currency deposits at commercial banks in the SFRY. In 2016, in a similar case concerning the issues revolving around LB assets in Croatia, Slovenia lodged an inter-state action against Croatia before the European Court of Human Rights in Strasbourg. On this occasion Slovenia would once again like to emphasise that the principles of the rule of law and the amicable resolution of disputes are fundamental principles in contemporary international and European communities.