Embassy of the RS Zagreb /Newsroom /

Due to the continued court proceedings in Croatia, Slovenia asks the European Commission to act as a mediator in the case of the transferred foreign currency deposits

The letter of request was signed by the Prime Minster, Miro Cerar, and the Minister of Finance, Mateja Vraničar Erman, and was addressed to the President of the European Commission, Jean Claude Juncker, the First Vice-President of the Commission, Frans Timmermans, who is, among other things, responsible for the rule of law, the Vice-President of the Commission, Valdis Dombrovskis, whose responsibilities also include the euro and the social dialogue, and the European Competition Commissioner, Margarethe Vestager.

In its letter, Slovenia recalled that the proceedings in the case of the transferred foreign currency deposits which are conducted against LB and NLB before the Croatian courts represent a violation of Croatia's international legal obligations, of the Slovenian constitutional order and of the EU law. Annex C to the Agreement of Succession Issues, which was signed on 29 June 2001 in Vienna, provides that the guarantees given by the Federal Socialist Republic of Yugoslavia for foreign currency deposits are a succession issue. In 2013, Slovenia and Croatia signed a Memorandum of Understanding undertaking once again to find a solution to the transferred foreign currency deposits in Croatia within the framework of succession negotiations.

By signing the Memorandum of Understanding, Croatia also undertook to stay all proceedings initiated against LB and NLB before the Croatian courts until final resolution of this issue and Slovenia undertook to start the procedure of ratification of Croatia's Accession Treaty following the signing of the Memorandum of Understanding.

Slovenia has fulfilled its obligations, whereas Croatia has failed to honour its international obligations since the court proceedings against LB and NLB before its courts are continuing. Four court proceedings so far are final, of which three to the detriment of LB and NLB. The two companies have consequently suffered damage, which is also the case for Slovenia, because of a diminishing government investment in NLB, which turned out to affect in NLB's privatisation process. Court proceedings conducted against LB and NLB in Croatia violate the freedoms and the rules of the EU treaties as well as the fundamental values such as the rule of law, the respect for international law, the duty of loyal cooperation between the EU Member States and the fundamental rights.

Before the conclusion of the Memorandum of Understanding, Slovenia repeatedly called on Croatia to stay the court proceedings, including by sending written requests of the minister of foreign affairs and of the minister of finance. After the conclusion of the Memorandum, Slovenia invited Croatia again to proceed to succession negotiations in November 2015 and February 2018 when the Croatian courts resumed the issuance of unlawful court decisions. Croatia did not respond to any aforementioned initiatives. Croatia did also not respond to the note of protest of 28 March 2018 by which Slovenia called on Croatia to stop violating the accepted international legal obligations and to pay the related damages.

Since Croatia continuously fails to respond to Slovenia's calls to resolve the aforementioned issue within the framework of succession negotiations and since the European Commission has already played an active role in the conclusion of the Memorandum of Understanding, Slovenia has today asked the European Commission to accept an active role of mediator in the resolution of this issue.

Mediation in international relations is an established diplomatic method for resolving disputes in which an appropriate solution is sought with the assistance of a third party. Mediation is a highly flexible and informal procedure which is based on intervention by a third party which puts forward a proposal for solution. The duration of mediation procedure cannot be predicted with accuracy since it depends on negotiation dynamics. Mediation could last several months.

The European Commission has expressed its willingness to mediate in the resolution of the dispute between Slovenia and Croatia involving the transferred foreign currency deposits on several occasions in the past. Croatia's failure to comply with its obligations under the Mokrice Memorandum has also caused difficulties and the delay in the process of selling NLB. Slovenia believes that the European Commission has the appropriate political and professional authority of a third party which is necessary for a successful mediation procedure. Slovenia is willing to constructively cooperate in finding a suitable solution through mediation.

Further details on the issue of the transferred foreign currency deposits are available on the website: http://www.vlada.si/en/projects/the_issue_of_the_transferred_foreign_currency_deposits_savers_in_croatia/