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NEWS

Zagreb County Court reaches another arbitrary decision on LB and NLB

Ljubljana, 18 January 2019 – The Zagreb County Court has dismissed as unfounded appeals by Ljubljanska Banka (LB) and Nova Ljubljanska Banka (NLB) in one of the proceedings on transferred foreign currency savings, thus rendering final the decision of the first instance court of 22 January 2016, to the detriment of LB and NLB. Once again, a Croatian court has dismissed a request to stay the proceedings in accordance with the Memorandum of Understanding signed in Mokrice by the Slovenian and Croatian governments in which the Croatian government undertook to stay all judicial proceedings initiated by Zagrebačka Banka (ZABA) and Privredna Banka Zagreb (PBZ) concerning the transferred foreign currency savings until the two countries have settled the issue on the basis of the Agreement on Succession Issues (Annex C).  

The decision imposes on NLB and LB joint and several payment to the plaintiff, i.e. PBZ, of 3,855,173.35 Swedish krona (approx. EUR 375,000), including interest on arrears, and legal costs amounting to HRK 679,926.08. This is the first final judgment delivered by the Croatian courts in these proceedings following the adoption of the Act Regulating Protection of the Value of the Financial Assets of the Republic of Slovenia in NLB. The Act stipulates that in the case of a compulsory execution of a judgment, the negative financial consequences suffered by NLB will be borne by Slovenia.

 

As a result of this final judgment, Slovenia today sent a note to the Croatian embassy in Ljubljana protesting against violations of international and EU law. The note expresses Slovenia’s expectation that Croatia will refrain from any future action contrary to the Agreement on Succession Issues and the Memorandum of Understanding. In particular, the Slovenian side expects that the assets of LB and NLB will not be seized, since such an action would be contrary to international and EU law, which Croatia is obliged to respect.

 

The Memorandum of Understanding signed by Slovenia and Croatia in Mokrice on 11 March 2013 is a treaty directly binding on their respective courts. It stipulates that Slovenia and Croatia will resolve the issue of the transferred foreign currency savings with LB in Croatia based on the Agreement on Succession Issues (Annex C). By signing the Memorandum, the Croatian government undertook to stay – pending the final settlement of this issue – all court proceedings initiated by ZABA and PBZ in relation to the transferred foreign currency savings, and – for the purposes of resolving this issue – to refrain from initiating new court or other proceedings concerning the transferred foreign currency savings.

 

By signing the Memorandum, the Slovenian government undertook to start the ratification of Croatia’s EU Accession Treaty in the National Assembly. Slovenia honoured its obligations under the Memorandum, but Croatia did not. The Memorandum provides a basis for a further settlement of the issue of the transferred foreign currency savings with a LB branch in Zagreb, but Croatia is seeking to circumvent its provisions by denying that the Memorandum has the status of a treaty. Croatia is striving to prevent the stay of judicial proceedings before a final settlement of the issue is reached in succession negotiations, which is unquestionably contrary to the agreements between the two countries.

 

Furthermore, Slovenia is concerned about the arbitrary and completely unfounded interpretation by the Croatian courts of the Slovenian Constitutional Act Amending the Constitutional Act Implementing the Basic Constitutional Charter on the Independence and Sovereignty of the Republic of Slovenia of 1994. This Constitutional Act only transferred LB’s specific obligations and rights to the newly established NLB. This means that NLB is being unjustly, and contrary to the Slovenian legal order and treaties, considered a second defendant in these proceedings.

 

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