CASE OF KOVAČIĆ AND OTHERS v. SLOVENIA
(Applications nos. 44574/98, 45133/98 and 48316/99)
6 November 2006
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Kovačić and Others v. Slovenia,
The European Court of Human Rights (Third Section1), sitting as a Chamber composed of:
Mr G. Ress, President,
Mr I. Cabral Barreto,
Mr L. Caflisch,
Mr B.M. Zupančič,
Mr J. Hedigan,
Mrs M. Tsatsa-Nikolovska,
Mr K. Traja, judges,
and Mr V. Berger, Section Registrar,
Having deliberated in private on 16 October 2006,
Delivers the following judgment, which was adopted on that date:
3. The applicants complained under Article 1 of Protocol No. 1 of a violation of their right to the peaceful enjoyment of their “possessions” in that they had not been able to withdraw foreign currency which they had deposited before the dissolution of the SFRY from “the Ljubljana Bank – Zagreb Main Branch”. They claimed that the Ljubljana Bank or Slovenia, as a successor State which had assumed the SFRY’s guarantee obligations for foreign-currency savings on the break-up of Yugoslavia, should repay them the money deposited with accrued interest.
I. THE CIRCUMSTANCES OF THE CASES
A. Background to the cases
1. The Socialist Federal Republic of Yugoslavia
(a) The Ljubljana Bank and its Zagreb Office
(b) The system of redepositing foreign-currency savings
(c) The monetary crisis and the Marković reforms
32. 1989 was a year of reforms for the SFRY in which many legislative, institutional and structural adjustments were made in preparation for transforming the socialist planned economy into a market-oriented one (the so-called Marković reforms, named after the then Prime Minister).
(d) The Ljubljana Bank and the Zagreb Main Branch
(ii) Matters in dispute concerning the legal position and banking liabilities of the Zagreb office of the Ljubljana Bank at the material time
(α) Events as related by the Slovenian Government
(β) Events as related by the Croatian Government
2. Republic of Slovenia
(a) The Constitutional Law
(b) Developments after independence
(c) The 1994 amendments to the 1991 Constitutional Law
(ii) The legislation
(d) The decision of the Slovenian Constitutional Court
(e) Developments subsequent to the decision of the Slovenian Constitutional Court
3. Republic of Croatia
(a) Adoption of the SFRY’s finance regulations and assumption of the guarantee for savings in Croatia
(b) Other developments
4. Financial documents and information
(a) The Ljubljana Bank’s Annual Reports
(b) The Zagreb Main Branch’s accounts
5. The succession negotiations between the successor States of the SFRY
6. Bilateral negotiations between Slovenia and Croatia
B. The facts of the individual cases
1. Application no. 44574/98, Mr Ivo Kovačić
(a) Deposit of savings and proceedings in Croatia
(b) Proceedings in Slovenia
(c) Subsequent proceedings in Croatia
107. On 24 December 2001 Mr Kovačić sought the registration of a charge over land in Osijek (Croatia) belonging to the Zagreb Main Branch.
108. On 5 March 2003 the Osijek Court of First Instance granted his application. On appeal, on 5 June 2003 the Osijek Court of Appeal (Županijski sud) upheld that judgment. It also held that with the entry into force of the Agreement on the Regulation of Property Rights between Slovenia and Croatia (see paragraphs 96 above and 170 and 171 below) and a subsequent decision which was adopted on 27 April 2002, the ban on disposing of the real property belonging to the Ljubljana Bank was lifted.
“The Osijek Court of First Instance ... decided:
I. It is established that the real property recorded in the Osijek cadastral municipality land registry .... was sold ... for the amount of HRK 3,903,000 [EUR 534,657.53].
II. The costs of the enforcement proceedings shall be paid out of the amount obtained by the sale as follows:
18. Ivo Kovačić (I-Ovr-186/02 and I-Ovr-128/02), represented by the attorney Milivoje Žugić from Zagreb, the amount of HRK 15,742.62 [EUR 2,156.50] payable to the attorney Milivoje Žugić’s giro account ... with the Economic Bank (Privredna banka d.d. Zagreb).
In the aggregate, the compensation for the costs of the enforcement proceedings totals HRK 404,193.80. [EUR 55,369]. To this amount should be added ... the amount of HRK 23,180 [EUR 3,175] to the judgment creditors represented by the attorney Milivoje Žugić [for the appellate proceedings] ...
III. The following claims shall be settled from the proceeds of sale:
18. Ivo Kovačić from Zagreb – the claim referred to in the writs of execution nos. I-Ovr-186/02 and I-Ovr128/02 for the part relating to court fees in the amount of HRK 2,967.42 [EUR 406] payable to the attorney Milivoje Žugić from Zagreb’s giro account ... with the Economic Bank, and the main claim in the amount of HRK 288,339.18 [EUR 39,498.50], which together total HRK 291,306.60 [EUR 39,905].”
2. Application no. 45133/98, Mr Marjan Mrkonjić
(a) Deposit of savings and proceedings in Croatia
(b) Attempts by the applicant to withdraw his savings
(c) The “Agreement for the Assignment of a Claim”
(d) Enforcement proceedings in Croatia
“The Osijek Court of First Instance ... decided: ...
II. The costs of the enforcement proceedings shall be paid out of the amount obtained by the sale as follows:
9. Marjan Mrkonjić (I-Ovr-125/01), represented by the attorney Milivoje Žugić from Zagreb, the amount of HRK 25,374.22 [EUR 3,476] payable to the attorney Milivoje Žugić’s giro account ... with the Economic Bank (Privredna banka d.d. Zagreb); the remainder of the judgment creditor’s claim is disallowed.
III. The following claims shall be settled from the proceeds of sale:
9. Marjan Mrkonjić from Basel – the claim referred to in writ of execution no. I-Ovr-125/01 for the part relating to court fees in the amount of HRK 10,132.66 [EUR 1,388], payable to the attorney Milivoje Žugić from Zagreb’s giro account ... with the Economic Bank, and the main debt in the amount of HRK 170,383.06 [EUR 23,340], which together total HRK 180,515.72 [EUR 24,728].
143. On 20 July 2005 Mr Mrkonjić received payment in full of his foreign-currency deposits, including the costs awarded.
3. Application no. 48316/99, Mrs Dolores Golubović
(a) The applicant’s savings
(b) Other information submitted by the applicant
II. RELEVANT DOMESTIC AND INTERNATIONAL LAW AND PRACTICE
A. Legislation of the Socialist Federal Republic of Yugoslavia (SFRY)
1. Foreign Exchange Operations and International Credit Relations Act (Zakon o deviznom poslovanju i kreditnim odnosima – Official Gazette of the SFRY, no. 15/77)
“The National Bank of Yugoslavia shall be bound, at the request of an authorised bank, to accept citizens’ Foreign Exchange deposits held in accounts at such authorised bank, and at the same time to grant the authorised bank an interest-free credit in the amount of the dinar counter value of the foreign exchange deposited.”
2. Foreign Exchange Transactions Act (Zakon o deviznom poslovanju – Official Gazette of the SFRY, nos. 66/85, 59/88 and 82/90)
Section 14, as amended
“(1) Domestic natural persons may keep foreign currency in a foreign-currency ordinary or deposit account at an authorised bank and use it for making payments abroad, in accordance with the provisions of this Act.
(3) Foreign currency in foreign-currency ordinary or deposit accounts shall be guaranteed by the Federation.
(4) The conditions and procedure applicable to the obligations arising under the guarantee shall be regulated by a separate federal law.”
“(1) Nationals may sell convertible currencies to an authorised bank or other authorised exchange office or deposit such currencies in a foreign-currency ordinary or deposit account at an authorised bank.
(2) Foreign currency kept in foreign-currency ordinary or deposit accounts may be used by nationals to pay for imported goods or services for their own and close relatives’ needs, in accordance with the Foreign Trade Act.
(4) Foreign currency referred to in subsection 2 of this section may be used by nationals for the purchase of convertible bonds, to make testamentary gifts for scientific or humanitarian purposes in Yugoslavia or to pay for life insurance with an insurance company in Yugoslavia.
(5) The National Bank of Yugoslavia shall regulate the operation of the foreign-currency ordinary or deposit accounts of Yugoslav nationals and corporations and foreign nationals and corporations.”
3. Banks and Other Financial Institutions Act (Zakon o bankama i drugim financijskim organizacijama – Official Gazette of the SFRY nos. 10/89, 40/89, 87/89, 18/90 and 72/90)
“The National Bank of Yugoslavia, in accordance with federal law, shall guarantee dinar-savings deposits on citizens’ current accounts in the Post Office Savings Bank and other banks, and the Federation shall guarantee foreign-currency savings deposits and funds in foreign-currency accounts of domestic and foreign natural persons...”
B. Legislation and case-law of the Republic of Slovenia
1. The Constitution (Ustava Republike Slovenije, Official Gazette no. 33/91)
“Statutes and regulations must comply with generally accepted principles of international law and with treaties that are binding on Slovenia. Ratified and published treaties shall be applied directly.”
“Everyone shall be guaranteed equal protection of rights in any proceedings before a court and before any State or local authority or bearer of public authority which determines his or her rights, duties or legal interests.”
“The right to own and inherit private property shall be guaranteed.”
Article 153, § 2
“Statutes must conform to generally accepted principles of international law and international treaties currently in force and ratified by the National Assembly and regulations and other general provisions must also conform to other ratified international treaties.”
“The Constitutional Court shall have jurisdiction to decide the following matters:
(i) the conformity of statutes with the Constitution;
(ii) the conformity of statutes and other provisions with ratified international agreements and general principles of international law;
(vi) constitutional appeals alleging a violation of human rights and fundamental freedoms by specific acts;
Unless otherwise provided for by law, the Constitutional Court shall hear a constitutional appeal only if legal remedies have been exhausted. The Constitutional Court shall decide whether a constitutional appeal is admissible for adjudication on the basis of statutory criteria and procedures.”
2. The Constitutional Court Act (Zakon o ustavnem sodišču, Official Gazette no.15/94)
3. 1991 Constitutional Law relating to the Fundamental Constitutional Charter on the Sovereignty and Independence of the Republic of Slovenia (Ustavni zakon za izvedbo Temeljne ustavne listine o samostojnosti in neodvisnosti RS – Official Gazette no. 1/91)
“The Republic of Slovenia shall assume the obligations borne by the SFRY until the entry into force of this law to guarantee foreign-currency deposits in ordinary or deposit foreign-currency accounts in banks on the territory of the Republic of Slovenia in accordance with the statement of current liabilities.”
4. 1994 Constitutional Law amending the Constitutional Law relating to the Fundamental Constitutional Charter on the Sovereignty and Independence of the Republic of Slovenia (Ustavni zakon o dopolnitvah Ustavnega zakona za izvedbo Temeljne ustavne listine o samostojnosti in neodvisnosti RS – Official Gazette no. 45/94)
“Considering the reluctance of certain other States that have emerged on the territory of the former Socialist Federal Republic of Yugoslavia (hereinafter referred to as the ‘former SFRY’) and the banks based in those States;
Whereas practical and legal considerations arising from the war on part of the territory of the former SFRY, international sanctions imposed on the so-called FRY (Serbia and Montenegro) and the breakdown, as a result of efforts to finance the war of aggression on a part of the territory of the former SFRY, of the financial and economic systems in some States that have emerged on the territory of the former SFRY mean that it is currently impossible for the agreement on legal succession and on the assumption of the obligations and claims of the former SFRY and the legal entities on its territory to be put into effect and seriously jeopardize its immediate future;
And whereas the enforcement of the claims of foreign creditors and entities of the so-called FRY (Serbia and Montenegro) who have become creditors following the purchase of such claims in accordance with the New Financing Agreement (hereinafter referred to as the ‘NFA’), which makes banks based in the Republic of Slovenia jointly and severally liable for the repayment of the full debt, would seriously jeopardize the financial and economic system of the Republic of Slovenia;
And with the purpose of finding, through negotiations with foreign creditors, a fair solution to the assumption of an adequate share of the state debts of the former SFRY in cases in which the direct beneficiary may not be established...”
“ The Ljubljana Bank d.d., Ljubljana and the Maribor Credit Bank, d.d. Maribor shall transfer their respective businesses and assets to the new banks created hereunder.
Notwithstanding the provisions of the preceding paragraph, the Ljubljana Bank d.d., Ljubljana and the Maribor Credit Bank, d.d. Maribor shall retain:
(iii) full liability for foreign-currency ordinary and savings accounts not guaranteed by the Republic of Slovenia under section 19 hereof;
(iv) liabilities to the National Bank of Yugoslavia and foreign creditors that were guaranteed by the SFRY and the resources for which have been used by the ultimate beneficiaries from other republics within former Yugoslavia;
(v) the claims related thereto.
The Ljubljana Bank d.d., Ljubljana shall maintain its links with the existing branches and subsidiaries of Ljubljana Bank d.d. based in the other republics on the territory of the former SFRY, but shall retain the corresponding share of claims against the National Bank of Yugoslavia in respect of foreign-currency savings accounts.”
“The competent court shall of its own motion record:
(i) the Bank and Savings-Bank Rehabilitation Agency of the Republic of Slovenia as the owner and administrator of the Ljubljana Bank d.d., Ljubljana, Trg republike 3, and the Maribor Credit Bank d.d., Ljubljana, Trg republike 3;
(ii) the commercial activity as being the administration of the remaining assets.”
“Two banks shall be formed on the date this law enters into force:
Their trade names shall be:
(i) the New Ljubljana Bank d.d., Ljubljana, Trg republike 2; and
The managers of the new banks shall draw up a final statement of the assets and liabilities of the banks referred to in section 22(b) of this constitutional law as of the date on which it enters into force. The statement shall include liabilities to the National Bank of Yugoslavia and foreign creditors arising out of dealings with persons from the former SFRY, and the corresponding assets.
“The Republic of Slovenia and the new banks shall not recognise debt due to foreign creditors to whom United Nations sanctions apply in accordance with UN Security Council Resolutions Nos. 757/1992 and 820/1993 [i.e. those in the Federal Republic of Yugoslavia (Serbia and Montenegro) and certain areas in Bosnia and Herzegovina and Croatia].
Even if the UN sanctions referred to in the preceding paragraph are lifted, until a full or partial agreement on the legal succession to the former SFRY has been signed and ratified, or an arrangement made with foreign creditors, no claims or legal or other proceedings brought with a view to seizing bank property shall have any legal effect or be recognized by the courts of the Republic of Slovenia.”
5. Discharge of Liability for Unpaid Foreign-Currency Deposits Act (Zakon o poravnavanju obveznosti iz neplačanih deviznih vlog – Official Gazette no. 7/93)
“This Act governs the procedure for discharging liabilities arising out of unpaid foreign-currency deposits with banks on the territory of the Republic of Slovenia which the banks have deposited with the National Bank of Yugoslavia.”
“The banks’ liabilities arising out of foreign-currency deposits ... shall become debt of the Republic of Slovenia.
“The banks’ claims against the National Bank of Yugoslavia concerning the amount of unpaid foreign-currency deposits shall be transferred to the Republic of Slovenia.”
6. Republic of Slovenia Succession-Fund Act (Zakon o skladu RS za sukcesijo – Official Gazette no. 10/93)
“In order to realise the claims and discharge the liabilities of the Republic of Slovenia and natural and juristic persons on the territory of the Republic of Slovenia as part of the process of division of the rights, assets and liabilities of the SFRY, the Republic of Slovenia Succession Fund to Establish Rights and Obligations in the Succession Process (hereafter ‘the Fund’) is hereby created.”
“Natural and juristic persons who at the date this Act enters into force have unpaid claims against or liabilities to subjects of the former Federation may enter into an agreement with the Fund transferring their unpaid claims and liabilities to the Fund, or alternatively give the Fund authority to recover claims and to discharge liabilities in their name and on their behalf.”
7. Republic of Slovenia Succession-Fund (Amendment) Act (Zakon o skladu RS za sukcesijo – Official Gazette no. 40/97)
“If court proceedings or execution proceedings are pending against persons based or domiciled [on the territory] of the Republic of Slovenia and the claimant or the creditor is based or domiciled [on the territory] of the Republic of Slovenia, a former SFRY republic or a third country and the claim arises out of a legal transaction or enforceable judicial decision, the court shall stay the court proceedings or execution proceedings of its own motion.
Court proceedings commenced after this Act comes into force shall be stayed from the date of service of the claim on the defendant.
Execution commenced after this Act comes into force shall be stayed before a decision has been taken on the application for enforcement, with effect from the date of reception by the court of the notice referred to in section 15(g) of this Act.”
“The court shall also make an order ... in cases in which natural or juristic persons have not acted, or were not entitled to act, in accordance with section 15, and the claim relates, directly or indirectly, to legal relations with entities of the former Federation or to status liability of entities of the former SFRY.”
“Proceedings that have been stayed under section 15(č) of this Act shall be reinstated by the court of its own motion once [a new] Act ... has come into force.”
Section 15 (g)
“For the purpose of establishing whether the circumstances referred to in sections 15(č), 15(d) ... apply, the court shall obtain of its own motion the opinion of the Fund beforehand and base its decision on that opinion.
8. The Republic of Slovenia Succession Fund and the Republic of Slovenia Senior Representative for Succession Act (Zakon o Skladu Republike Slovenije za nasledstvo in visokem predstavniku Republike Slovenije za nasledstvo – Official Gazette no. 29/06)
“(1) Stays of proceedings in the courts in the Republic of Slovenia concerning hard currency deposited in a commercial bank or any of its branches in any successor State of the former SFRY that have been issued pursuant to the Republic of Slovenia Succession-Fund Act ... shall remain in force. Any proceedings referred to in the previous sentence that have already resumed shall be further stayed or suspended.
(2) Proceedings referred to in the previous paragraph shall be stayed or suspended until a solution has been found to the question of the assumption of the guarantee of the SFRY or the NBY for such deposits pursuant to Article 7 of Annex C to the Agreement on Succession Issues and shall, upon the fulfilment of that condition, resume automatically ...”
9. Case-law of the Slovenian Constitutional Court
167. On 17 March 2005 the Constitutional Court ruled that the Transformation of the Succession Fund of the Republic of Slovenia and the Establishment of the Succession Agency of the Republic of Slovenia Act was unconstitutional since it did not provide for the resumption of proceedings that had been stayed pursuant to Section 15(č) of the Republic of Slovenia Succession-Fund Act.
C. Legislation of the Republic of Croatia
1. Act on the Applicability to Croatia of the SFRY’s Finance Regulations (Zakon o preuzimanju saveznih zakona iz oblasti financija koji se u Republici Hrvatskoj primjenjuju kao republički zakoni - Official Gazette no.71/91)
“The following federal acts shall be adopted and applied as acts of the Republic:
(3) the Banks and Other Financial Institutions Act (Official Gazette of the SFRY, nos. 10/89, 40/89, 87/89,18/90 and 72/90);
(13) the Foreign Exchange Transactions Act (Official Gazette of the SFRY, nos. 66/85, 71/86, 3/88, 59/88 and 82/90).”
2. Decree on the Conversion of Nationals’ Foreign-Currency Bank Deposits into Croatian Public Debt (Uredba o pretvaranju deviznih depozita građana kod banaka u javni dug Republike Hrvatske – Official Gazette no. 71/91)
“This decree shall govern the procedural arrangements and conditions for the conversion of nationals’ foreign-currency deposits at banks established on the territory of the Republic of Croatia into public debt of the Republic of Croatia on 27 April 1991 and for access to such deposits.
For the purposes of this Decree ‘nationals’ foreign-currency deposits’ shall include:
(i) foreign-currency deposits of banks whose head office is situated on the territory of the Republic of Croatia that have been deposited with the National Bank of Yugoslavia as nationals’ foreign-currency savings; and
(ii) nationals’ deposits in foreign-currency accounts or savings accounts with banks in Croatia that have been transferred by a national from a bank that is not based on the territory of the Republic of Croatia, in accordance with Articles 15 and 16 of this Decree.”
“Foreign-currency deposits at banks in Croatia deposited with the National Bank of Yugoslavia as citizens’ foreign-currency savings and foreign-currency deposits transferred to banks in Croatia under the provisions of Articles 15 and 16 of this Decree together with accrued interest for the year 1991 calculated according to the structure of the currency deposited shall be converted into public debt of the Republic of Croatia.”
“The Republic of Croatia shall issue bonds to banks in Croatia in accordance with the provisions of this Decree for the public debt referred to in Article 2 above.”
“The bonds referred to in Article 4 of this Decree shall be amortised in 20 half-yearly instalments, the first of which shall be due on 30 June 1995.
The bonds shall be negotiable, payable to bearer in DEM, and paid in domestic currency at the exchange rate applicable on the date of payment.
They shall be made out in values of 100, 500 or 1,000 DEM.
Annual interest rates on bonds shall be 5%, to be calculated and paid on 30 June and 31 December every year in domestic currency at the exchange rate applicable on the payment date; interest will start to run on 1 January 1992.”
“Citizens who on 27 April 1991 had foreign-currency savings, that is, foreign-currency funds in a foreign-currency account with a bank based outside the territory of the Republic of Croatia but which carried on business in the territory of the Republic of Croatia may, within 30 days from the date this Decree enters into force, transfer the deposits to a bank in Croatia.
“Banks in Croatia shall be obliged to accept transfers of foreign-currency deposits made in accordance with Article 15 above and shall inform the bank concerned outside the territory of the Republic of Croatia that the transfers have been made.
D. International law
1. Agreement on the Regulation of Property Rights between the Republic of Slovenia and the Republic of Croatia (Pogodba med Republiko Slovenijo in Republiko Hrvaško o ureditvi premoženjskopravnih razmerij, Official Gazette of Slovenia no. 31/99; Ugovor između Republike Hrvatske i Republike Slovenije o uređenju imovinskopravnih odnosa, Official Gazette of Croatia – International agreements no. 15/99)
“This Agreement shall deal with the resolution of property relations established before and after the State Contracting Parties gained independence.
The resolution of relations relating to the Krško Nuclear Power Plants and the Ljubljana Bank, Zagreb Main Branch shall not be the subject of this Agreement, but shall be regulated by separate agreement.”
171. The Agreement entered into force on 23 February 2000.
2. Agreement on Succession Issues signed in Vienna on 29 June 2001
“(1) A Standing Joint Committee of senior representatives of each successor State, who may be assisted by experts, is hereby established.
(2) This Committee shall have as its principal task the monitoring of the effective implementation of this Agreement and serving as a forum in which issues arising in the course of its implementation may be discussed. The Committee may as necessary make appropriate recommendations to the Governments of the successor States.
(3) The first formal meeting of the Standing Joint Committee shall be convened, at the initiative of the Government of the Republic of Macedonia, within two months of the entry into force of this Agreement. The Committee may meet informally, and on a provisional basis, at any times convenient to the successor States after the signature of this Agreement.
(4) The Committee shall establish its own rules of procedure.”
Annex C, Article 2
(3) Other financial liabilities include:
(a) guarantees by the SFRY or its National Bank of Yugoslavia of hard currency savings deposited in a commercial bank and any of its branches in any successor State before the date on which it proclaimed independence; and
(b) guarantees by the SFRY of savings deposited before certain dates with the Post Office Savings Bank at its branches in any of the Republics of the SFRY.”
Annex C, Article 7
“Guarantees by the SFRY or its NBY of hard currency savings deposited in a commercial bank and any of its branches in any successor State before the date on which it proclaimed its independence shall be negotiated without delay taking into account in particular the necessity of protecting the hard currency savings of individuals. This negotiation shall take place under the auspices of the Bank for International Settlements.”
Annex G, Article 7
“All natural and legal persons from each successor State shall, on the basis of reciprocity, have the same right of access to the courts, administrative tribunals and agencies, of that State and of the other successor States for the purpose of realising the protection of their rights.”
173. The agreement entered into force on 2 June 2004.
E. Resolution 1410 (2004) of the Parliamentary Assembly of the Council of Europe (text adopted by the Standing Committee acting on behalf of the Assembly on 23 November 2004 (see Doc. 10135, report of the Committee on Legal Affairs and Human Rights, rapporteur: Mr Jurgens))
“Repayment of the deposits of foreign exchange made in the offices of the Ljubljanska Banka not on the territory of Slovenia, 1977-1991
1. The Parliamentary Assembly is seized of the question of the non-repayment by the Ljubljanska Banka (LB) in Ljubljana, Slovenia, of the foreign exchange deposited with the branches of the LB in Zagreb, Sarajevo and Skopje over a period of more than ten years, between 1977 and 1991, before the dissolution of the Socialist Federal Republic of Yugoslavia (SFRY).
2. The depositors from Bosnia and Herzegovina, Croatia and “the former Yugoslav Republic of Macedonia”, as successor states of Yugoslavia, claim that Slovenia is liable to repay these deposits because the head-office of LB is and was located in Slovenia. The smaller and larger claims by some hundreds of thousands of depositors total several hundred millions German Marks, including a very high percentage of accumulated interest.
3. The Assembly is of the opinion that it is not fair to keep the depositors waiting until the legal, economic and political questions have been solved between the successor states which have guaranteed these deposits.
4. The Assembly welcomes the fact that certain groups of savers have received at least partial compensation from their Governments: those who deposited their savings in LB offices in Slovenia or in “the former Yugoslav Republic of Macedonia” and those who accepted the Croatian Government’s limited offer to transform the savings into Croatian national debt. It considers that similar solutions should be offered to all those whose savings were lost in the collapse of the banking system in the SFRY.
5. The Assembly does not consider it to be its task to take sides in the legal dispute between Slovenia and some of the savers who deposited their savings in Ljubljanska Banka offices located in other former Yugoslav republics, a dispute which has been brought before the European Court of Human Rights by a group of depositors in Croatia.
6. The Assembly therefore considers that it is primarily for the Court, and not the Assembly, to decide on the application to the cases in point of the principle of protection against expropriation guaranteed by the European Convention on Human Rights, if the Court regards such claims to be admissible.
7. However, notwithstanding the decision of the Court to declare two individual applications from Croatian depositors admissible, the Assembly considers that the matter of compensation for so many thousands of individuals would best be solved politically, between the successor states, instead of an already overburdened Court. The Assembly therefore:
(i.) appeals to the successor countries of the SFRY to address without further delay the plight of the depositors of hard-currency savings in former Yugoslav banks, many of whom lost access to their modest life savings in the collapse of the banking system of the SFRY;
(ii.) proposes to the four countries concerned to set up a collective fund under the auspices of the Council of Europe in order to compensate the depositors for the capital of their original foreign currency savings, possibly with some compensation for inflation, in order to help the savers, who have been deprived of access to their life savings for more than ten years. The fund should be financed by all four governments concerned, in principle proportionately to foreign exchange deposits made on the territory of each of the countries. In negotiating the precise burden-sharing arrangement between the successor countries of the SFRY, due account should be taken of the following factors, to the extent that they can be properly established:
(a.) actual hard currency transfers made to the Ljubljana office of Ljubljanska Banka of savings deposited in offices located in other republics and use of such funds for the economic development of Slovenia;
(b.) the possibility offered, or not, to Ljubljanska Banka to pursue its banking activities in the other republics after the breakdown of the SFRY, thus making it possible for the LB to recover debts owed by clients for credits given;
(c.) the fact that compensation has already been given to depositors by some states and that the claims of these depositors have been taken over by those states;
(iii.) invites the European Union to examine the possibility of making a contribution to the collective fund;
(iv.) instructs its Committee on Economic Affairs and Development to study the modalities of setting up the above-mentioned collective fund.”
I. AS TO THE LOCUS STANDI OF MRS MIROSLAVA KOVAČIĆ, MRS MARINA MUŠIĆ AND MR ZLATKO KOVAČIĆ
II. AS TO THE LOCUS STANDI OF MR IVO STEINFL
III. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TAKEN ALONE AND IN CONJUNCTION WITH ARTICLE 14 OF THE CONVENTION
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
“The enjoyment of the rights and freedoms set forth in the Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. ”
A. The parties’ and third party’s submissions
(a) The applicants
183. On 20 August 2004, in view of the agreement whereby Mr Mrkonjić had assigned his outstanding claim against the Zagreb Main Branch to his representative Mr Žugić in return for the immediate payment of a portion of the claim (see paragraph 132 above), the Court asked Mr Žugić, who was representing also Mr Kovačić, whether he had concluded with the latter a similar agreement. On 8 September 2004 Mr Žugić replied that no such agreement had been signed with the Kovačić family.
187. Moreover, on 19 September 2005, in reply to the Court’s request of 30 August 2005, Mr Žugić confirmed on behalf of Mr Kovačić and Mr Mrkonjić that they had received full payment of their savings (see paragraphs 118 and 143 above). The applicants stressed that this had occurred as a result of the enforcement proceedings. It could not be claimed that either the Ljubljana Bank or the New Ljubljana Bank had voluntarily executed the judgments in their favour. They had been executed over property of the “old” Ljubljana Bank which happened to be located on Croatian territory.
191. Finally, Section 433 of the Slovenian Code of Obligations 2001 would make the New Ljubljana Bank, as the legal successor to the Ljubljana Bank, liable for its debts, including those of the Zagreb Main Branch, once the 1994 Constitutional Law was repealed. The problem of the “old savings” could not be solved as long as that Law had not been rescinded.
(b) The respondent Government
(c) The Croatian Government
204. In their additional submissions of 23 July 2004, the Croatian Government first referred to their previous submissions. The legislative measures taken in 1994 by the Slovenian authorities constituted an interference with the applicants’ rights to the peaceful enjoyment of their “possessions”, guaranteed by Article 1 of Protocol No. 1. Since the applicants’ valid claims against the Ljubljana Bank, based on the savings contracts, were concrete and specified, they constituted “possessions” or at least a “legitimate expectation” of their realisation. The Croatian Government argued that the cases concerned de facto expropriation of the applicants’ “possessions” and submitted that the rule contained in the first paragraph of Article 1 of Protocol No. 1, which forbids deprivation of “possessions” except under specific conditions, should be applied.
205. Prior to the enactment of the 1994 Constitutional Law, the applicants’ foreign-currency deposits in the Ljubljana Bank were not a part of the Slovenian public debt since they had not been deposited on Slovenian territory. They remained therefore the bank’s active debt to the applicants. The bank was not insolvent and remained in business. By the 1994 Constitutional Law, the Slovenian State had nationalised all the assets of the Ljubljana Bank and, although it had not rejected the applicants’ claims, it had effectively made them unenforceable. This constituted de facto expropriation.
206. Since the 1994 legislation did not only serve to protect the Slovenian financial and economic system from speculative claims under the NFA but also to protect a State-controlled bank from all claims from foreign creditors, especially individual savers, such an aim could not be considered to be legitimate. In any event, the measures were not proportionate since an excessive burden had been placed on the applicants who wanted nothing more than a secure bank in which to deposit their life savings. On the contrary, the Ljubljana Bank had been aware of the business risk in the political environment in which it was operating. In 1994, the Slovenian State had shifted the business risk entirely to the savers. In addition, the measures were not limited in time.
207. The entry into force of the Agreement on Succession Issues had not changed anything for the applicants. Their savings had remained irretrievable and they had acquired no enforceable rights under it. The private legal relationship between the bank and its savers was not the subject of succession. In principle, only Annex G could be applied to that relationship.
209. The fact that the money had been physically deposited in a certain territory made no difference given that free movement of capital had existed between that territory and the territory where the head office of the financial institution was located. In the SFRY, that possibility existed among its former component republics. As to the restructuring of the Ljubljana Bank in 1994, it was obvious that it had been undertaken with a view to depriving foreign savers of their claims.
210. In their response of 1 October 2004 to the Slovenian Government’s submissions, the Croatian Government stated that the Draft Resolution of the Parliamentary Assembly of the Council of Europe on the “Repayment of the deposits of foreign exchange made in the offices of the Ljubljana bank not on the territory of Slovenia” could not be used as evidence in the present proceedings since it had not been adopted at the material time (see paragraph 194 above). Moreover, the Parliamentary Assembly had not considered it to be its task to take sides in the legal dispute between Slovenia and the savers. The opinions expressed by the Rapporteur Mr Jurgens could only serve as a basis for adopting the Resolution which might contribute to a political solution to the problem.
211. As to the documents that had been submitted relating to the enforcement proceedings pending in the Croatian courts, they were relevant only to the question of the admissibility of the applications, in particular of the exhaustion of domestic remedies, on which the Court had already given a decision. They had no bearing on the merits.
212. On 21 February 2005 the Court asked the Croatian Government whether they could confirm the accuracy of the information provided by the Slovenian Government and Mr Mrkonjić regarding the position in the enforcement proceedings that had been issued by Mr Kovačić and Mr Mrkonjić (see paragraphs 11, 14, 58, 91,184 and 185 above).
B. The Court’s assessment
Article 37 § 1 of the Convention provides as follows:
“1. The Court may at any stage of the proceedings decide to strike an application out of its list of cases where the circumstances lead to the conclusion that
(a) the applicant does not intend to pursue his application; or
(b) the matter has been resolved; or
(c) for any other reason established by the Court, it is no longer justified to continue the examination of the application.
However, the Court shall continue the examination of the application if respect for human rights as defined in the Convention and the Protocols thereto so requires.
2. The Court may decide to restore an application to its list of cases if it considers that the circumstances justify such a course.”
226. The Court therefore finds that both these applicants failed to make their claims for just satisfaction within the time-limit. Consequently, it makes no award under this head.
IV. APPLICATION OF RULE 43 § 4 OF THE RULES OF COURT
231. Rule 43 § 4 of the Rules of Court provides:
“When an application has been struck out, the costs shall be at the discretion of the Court. ...”
233. Those principles should also be observed in the application of Rule 43 § 3, which leaves the costs at the discretion by the Court when it decides to strike an application out of its list, either by a judgment or by a decision (see Ertürk v. Turkey (dec.), no. 49683/99, 4 May 2006).
234. The Court notes that, despite having been invited to do so, the applicants made no submissions after the decision on admissibility as to the costs and expenses they had incurred before the domestic authorities or the Court. The Court further notes that it has granted them legal aid for the proceedings up to and including the hearing on 9 October 2003. In addition, Mr Kovačić and Mr Mrkonjić were awarded costs and expenses in the subsequent domestic enforcement proceedings (see paragraphs 116 and 142 above).
FOR THESE REASONS, THE COURT UNANIMOUSLY
Done in English, and notified in writing on 6 November 2006, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Vincent Berger Georg Ress
1 In its composition before 1 November 2004.