Slovenia has filed a case against Croatia with the European Court of Human Rights (ECHR) related to the claims of the now-defunct Ljubljanska banka (LB) against Croatian companies for loans issued while the two countries were part of former Yugoslavia, the Slovenian government announced on September 15.
Both Slovenia and Croatia broke away from Yugoslavia in 1991. Before then, numerous people had bank accounts across Yugoslavia, and many have been waiting to get their deposits back from what are now foreign countries, causing additional tensions in the region. Slovenia has been ordered to repay depositors of LB bank in Bosnia & Herzegovina and Croatia, but claims that at the same time Zagreb has been blocking its efforts to recover loans from former corporate borrowers in Croatia.
Ljubljana contends that Croatia violated the European Convention on Human Rights and Fundamental Freedoms. The Slovenian side says that for the last 25 years, the Croatian judicial and executive authorities have “systematically incapacitated” LB from recovering its claims towards Croatian companies and thus "unlawfully denied" LB the right to its property. This allowed the debtors of LB in Croatia to avoid repaying their debts.
Following the “lengthy yet fruitless negotiations” with Croatia on the LB issue and considering the fact that Croatia has not honoured the previously agreed obligations, Slovenia estimated that the only possible solution to the dispute was to seek legal remedy at the international level, the government said. After exhausting all legal remedies in Croatia, Slovenia lodged an inter-state application before the ECHR that consists of 26 litigations regarding LB’s claims.
Slovenia is demanding at least €360mn in compensation for LB, Slovenian Minister of Justice Goran Klemencic told journalists after a government session on September 15.
“I expect at least two years to pass until the ECHR makes a decision,” he said, adding that he had informed Croatia’s Justice Minister Ante Sprlja about the lawsuit.
“Slovenia found itself in an unjust position, where on the one hand it needs to pay out to the savers of LB while on the other hand Croatia prevented the repayment of LB claims against Croatian companies,” the Slovenian government statement reads.
Slovenia expects to repay a total of €385mn to 230,000 people in Croatia and Bosnia, Slovenian Press Agency (STA) reported on March 5.
“The Croatian companies failed to repay their overdue liabilities, mainly from credit loans and guarantees approved after 1980, so between 1991 and 1996, LB and its branch office in Zagreb initiated the proceedings to recover their claims before the Croatian courts,” the Slovenian government stated on September 15.
“In the ensuing protracted court proceedings, LB was subjected to arbitrary decisions by Croatian judicial and administrative authorities, forced prevention of its operation in Croatia, systematically protracted litigations and even prevention of enforcement of final and enforceable judgements, including as a result of interference by the executive authorities.”
Slovenian Prime Minister Miro Cerar and Minister of Foreign Affairs Karl Erjavec said they did not expect the issue to significantly affect relations with Croatia.
“With the lawsuit, Slovenia only wanted to protect its interests,” Erjavec told Slovenian Press Agency (STA) on September 15.
Croatia and Slovenia are the only ex-Yugoslavian countries to be members of the European Union and Nato, but this is not their only conflict. A long-standing border dispute between the two countries has not yet been resolved.
Land and sea borders between Slovenia and Croatia been a contentious issue since 1991. The countries submitted their dispute to the International Court of Justice for arbitration in 2007 but the Croatian government announced in July 2015 that it was withdrawing from the arbitration after leaked transcripts revealed a Slovenian judge on the arbitration tribunal and a Slovenian foreign ministry official discussing how to influence the outcome of the arbitration. The Permanent Court of Arbitration (PCA) in The Hague held an oral hearing on March 17 but no representatives of the Croatian side were present.
Another dispute concerns the continuing sales of Teran wine by Croatia, even though it has been recognised by the European Commission as originating in Slovenia's Kras under protected designation of origin.