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NEWS

Another final decision to the detriment of LB and NLB in Croatia

Ljubljana, 24 April 2019 – The second-instance (county) court in Zagreb has delivered yet another final decision against Ljubljanska banka (LB) and Nova Ljubljanska banka (NLB) concerning transferred foreign currency savings in Croatia. Rejecting the appeal by LB and NLB, the court upheld the ruling of the first-instance court in favour of Privredna banka Zagreb (PBZ), which claimed USD 9,185,141.76 (approx. EUR 8,170,000) exclusive of interest, costs and fees.

Such decisions by Croatian courts are in contravention with Croatia's international obligations under the Agreement on Succession Issues and the Memorandum of Understanding signed at Mokrice. The Agreement on Succession Issues stipulates that guarantees by the SFRY or its National Bank of Yugoslavia of hard currency savings deposited in a commercial bank and any of its branches are an issue of succession. In accordance with Annex C to the Agreement, the successor States are obliged to negotiate such guarantees without delay under the auspices of the Bank for International Settlements. Although four negotiation rounds were held in 2001–2002, to date this provision has not been implemented. 

 

In addition, the Memorandum between Slovenia and Croatia signed at Mokrice on 11 March 2013 reaffirms that the issue of the transferred foreign currency savings of LB in Croatia is an issue of succession and that the two signatories have undertaken to settle it in accordance with Annex C to the Agreement on Succession Issues. The two countries have committed not only to negotiation, but also to finding a solution. Furthermore, the Memorandum stipulates that, pending the resolution of this issue, Croatia will ensure the stay of all judicial proceedings initiated by Zagrebačka Banka and Privredna Banka Zagreb related to the transferred foreign currency savings. 

 

In the Memorandum, Slovenia undertook to start – upon its signature – the ratification process for Croatia's EU Accession Treaty at the National Assembly. Slovenia honoured its obligations under the Memorandum, but Croatia did not. Croatia seeks to circumvent the Memorandum provisions with a view to precluding the stay of judicial proceedings until the final resolution of the issue as part of succession by refusing to acknowledge that the Memorandum has the status of a treaty. Such actions are contrary to agreements made between the two countries.

 

On this occasion, Slovenia is again concerned and dissatisfied with the violations of international obligations and provisions of the EU acquis on the part of Croatia and with the arbitrary and erroneous interpretation of the Slovenian Constitutional Act amending the Basic Constitutional Charter on the Sovereignty and Independence of the Republic of Slovenia by Croatian courts. The Constitutional Act only transferred LB’s specific obligations and rights to the newly established NLB, this not including the obligations regarding foreign currency in foreign currency accounts and deposits outside Slovenia and associated claims. This means that, unjustly and contrary to the Slovenian legal order and treaties, NLB is being considered a second defendant in these proceedings.

 

Pursuant to the Act Regulating Protection of the Value of the Financial Assets of the Republic of Slovenia in Nova Ljubljanska banka d.d., Ljubljana, the negative financial consequences suffered by NLB in the event of a compulsory execution of the court decision will be borne by the Succession Fund of the Republic of Slovenia. However, this protection mechanism does not imply that Slovenia assumes any obligations or liabilities for Croatia’s claims in respect of the transferred foreign currency deposits, but only protects the value of its financial assets.

 

Slovenia expects Croatia to fully implement its international obligations and ensure the stay of all legal proceedings before Croatian courts initiated by Zagrebačka Banka and Privredna Banka Zagreb until the issue of assuming the guarantee of the former SFRY for foreign currency savings deposited with commercial banks and their branches in the territory of the former SFRY has been finally resolved. 

 

Slovenia would like to stress once again that the principles of the rule of law and the peaceful settlement of disputes are cornerstones of the modern international and European communities. 
 

Media Relations Office