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Strasbourg Leaves Croat Savers Out of Pocket

10 11 2006  Ruling deals blow to 130,000 Croats who lost sight of savings in the 1980s then worth more than 170 million euro.

By Sergej Abramov in Zagreb (Balkan Insight, 10 Nov 06)

The European Court of Human Rights has disappointed thousands of savers in Croatia who hoped it would help them retrieve millions of euro they invested in the largest bank in the former Yugoslavia.

The depositors lost access to their savings in the Ljubljanska Banka in the late 1980s, after the country's central bank fended off an economic crisis by restricting access to such deposits.

Slovenian savers were later able to retrieve their money from the bank, based in the Slovene capital Ljubljana. But those from Croatia, Bosnia and Herzegovina and Macedonia were not so fortunate.

Croatia holds Slovenia responsible for repaying the money from the original bank or its successor, the Nova Ljubljanska Banka.

But the Slovenes want the matter dealt with as part of Yugoslav succession agreements between the independent states that emerged from the former federation in the 1990s.

The test case considered this week on behalf of Marjan Mrkonjic, Ivo Kovacic and Dolores Golubovic was an attempt to break the deadlock.
But the Strasbourg court on November 6 threw it out.

As a result, the painful dispute between Croatia and Slovenia remains unresolved. In the meantime, another lawyer is going down a different route in the Italian courts.

The earlier legal strategy of the claimants' lawyer, Milivoje Zugic, has attracted strong criticism. This relates to the fact that since the cases were brought in 1998, two of the three claimants have in fact already been compensated.

This was the result of a Croatian court order, which liquidated the assets of the bank's main branch in Zagreb. Strasbourg then concluded that the right of the claimants to property had not been breached, nor had they been discriminated against on the basis of nationality. In the case of the third claimant, Strasbourg ruled that he had not exhausted all domestic remedies, which is a requirement.

The ruling threatens to leave hundreds of thousands out of pocket, for, while two of the Strasbourg claimants have been compensated, sales of the former bank's assets in Croatia are nowhere near enough to repay all the lost savings of some 130,000 depositors from Croatia, claiming more than 170 million euro. The figure does not include the interest incurred over almost 20 years.

Many of these people now criticise Zugic for initiating the legal battle to have the bank's property in Croatia sold off. They fear it may block them from raising further claims against Slovenia at Strasbourg.

While Zugic insists he will appeal the decision, which he calls procedural and says sets no precedent, the Slovenian government believes its position has been vindicated, which is that the onus for reparation belongs to the states in which bank branches were registered.

The problem over the savings became more complex in 1994, when independent Slovenia passed a law founding a successor bank to the old bank. The Nova Ljubljanska Banka assumed the old bank's assets and claims but not its debts. The law also prohibited foreign savers from recovering their deposits in the old bank through the Slovenian courts.

Savers outside Slovenia hotly dispute the law. They maintain that the successor bank is responsible for repaying them. The issue is one of several outstanding disputes between the two neighbouring states, mainly involving land and sea borders.

After attempts failed to reach a political agreement on paying back the Croatian savers, Croatia acted to prevent the entry of the Nova Ljubljanska Banka into the Croatian banking market, a significant loss of opportunity.

"The Slovenian government is reluctant [to compensate savers] because it is a large amount of money, which could soar even further to more than 500 million euro once the interest is factored in," said Damir Novotny, a former member of the board of the Croatian National Bank. "At this point in time a political solution appears unlikely and legal action is the only alternative."

Novotny is convinced it was a mistake to take the matter to Strasbourg, especially when some claimants had already reclaimed their savings in Croatia.

He believes the more recent alternative route, involving suing the Nova Ljubljanska Banka branch in Trieste in Italy offers a better chance. Savers may get a better hearing from the Italian courts, he believes.

While the case that Zugic took to Strasbourg sought to tackle the heart of the problem, lawyer Bozidar Vukasovic has sought a more tangible solution, after locating a Nova Ljubljanska Banka branch in Trieste. He has advised
715 depositors to claim their savings there.

"Zugic made a mistake when he tried to win compensation for his clients through the bank's property in Croatia before taking the matter to Strasbourg," said Vukosavic.  "That was exactly the Slovenian objection that the court sustained."

Zugic disagrees and has asked the Strasbourg court to reconsider its ruling, which he says is legally untenable. He hopes the Grand Chamber of the Strasbourg court may overrule the decision.

Vukasovic is also keeping an eye on the European court. Even if the approach in Trieste is successful, he still intends to ask the Strasbourg court for compensation for the discrimination that he says his clients have suffered and for the violation of their right to claim property.

In the meantime, Italy's constitutional court has declared that the courts in Trieste are authorised to rule in the matter of the Trieste branch.
Importantly, it has also said relevant verdicts in other countries must be executed automatically in Italy.

Sergej Abramov is a journalist with Novi List.
Balkan Insight is BIRN's online publication