European Court of Human Rights

Information Note on the Court’s case-law No. 176

Ališić and Others v. Bosnia and Herzegovina, Croatia, Serbia, Slovenia and the former Yugoslav Republic of Macedonia [GC] - 60642/08

Judgment 16.7.2014 [GC] See: [2014] ECHR 786

Article 46

Pilot judgment

General measures

Slovenia and Serbia required to take measures to enable applicants and all others in their position to recover “old” foreign-currency savings

Article 1 of Protocol No. 1

Article 1 para. 1 of Protocol No. 1

Peaceful enjoyment of possessions

Inability to recover “old” foreign-currency savings following dissolution of former SFRY violation

Facts – The applicants are citizens of Bosnia and Herzegovina. Until 1989-90, the former Socialist Federal Republic of Yugoslavia (SFRY) made it attractive for its citizens to deposit foreign currency with its banks by high interest rates and a State guarantee in the event of bankruptcy or “manifest insolvency”. Depositors were also entitled to withdraw their savings with accrued interest at any time. The first and second applicants deposited foreign currency at what was then the Ljubljanska Banka Sarajevo and the third applicant at the Tuzla branch of Investbanka. Following reforms in 1989-90, Ljubljanska Banka Sarajevo became a branch of Ljubljanska Banka Ljubljana, which took over the former’s rights, assets and liabilities. Investbanka became an independent bank with headquarters in Serbia and branches, including the Tuzla branch, in Bosnia and Herzegovina. During this period, the convertibility of the dinar and very favourable exchange rates led to massive withdrawals of foreign currency from commercial banks which prompted the SFRY to take emergency measures to restrict such withdrawals. After the break-up of the SFRY in 1991-92, the “old” foreign-currency deposits remained frozen in the successor States, who however agreed to repay them to domestic banks. In Bosnia and Herzegovina, the Constitutional Court examined numerous individual complaints concerning failures to repay “old” foreign-currency savings at the domestic branches of Ljubljanska Banka Ljubljana and Investbanka. The Constitutional Court found no liability on the part of Bosnia and Herzegovina or its Entities and instead ordered the State to help the clients of those branches to recover their savings from Slovenia and Serbia respectively. In the framework of the negotiations for the Agreement on Succession Issues, negotiations regarding the distribution of the SFRY’s guarantees of “old” foreign-currency savings were held in 2001 and 2002. As the successor States could not reach an agreement, however, in 2002 the Bank for International Settlements informed them that it would have no further involvement in the matter. The applicants complained that they had been unable to withdraw their foreign-currency savings.

Law – Article 1 of Protocol No. 1: In its admissibility decision the Chamber found that the statutory guarantee of the SRFY in respect of the “old” foreign currency savings in Ljubljanska Banka Ljubljana and Investbanka had not been activated until the dissolution of the SFRY and that the relevant liability had therefore not shifted from those banks to the SFRY before its dissolution. The Grand Chamber endorsed the Chamber’s finding in this respect. Moreover, it stressed that the two banks had remained liable for the “old” foreign currency savings in their Bosnian-Herzegovinian branches since the dissolution of the SFRY. The Court went on to examine whether Slovenia and Serbia were responsible for the failure of those banks to repay their debts to the applicants.

The Slovenian Government had nationalised Ljubljanska Banka Ljubljana and transferred most of its assets to a new bank, while at the same time confirming that the old Ljubljanska Banka remained liable for “old” foreign-currency savings in its branches in the other successor States. Indeed Slovenia had become the sole shareholder of the old Ljubljanska Banka, which was administered by a Government agency. In addition, Slovenia was to a large extent responsible for the bank’s inability to service its debts (as it had transferred most of its assets to another bank) and there was evidence in the case-file that most of the funds of the Sarajevo branch of Ljubljanska Banka Ljubljana had ended up in Slovenia. It was therefore responsible for the debt of the Ljubljanska Banka Ljubljana to the first and second applicants.

As to Investbanka, it was State-owned by Serbia and controlled by a Serbian Government Agency. Moreover, at one point the bank had been required to write off its considerable claims against State-owned and socially-owned companies to its own and its stakeholders’ detriment. Serbia had thus disposed of Investbanka’s assets as it considered fit, which led the Court to conclude that there were sufficient grounds to deem Serbia responsible for Investbanka’s debt to the third applicant.

As to the applicants’ inability to freely dispose of their “old” foreign-currency savings since 1991-92, the explanation of the Serbian and Slovenian Governments for the delay essentially concerned their duty to negotiate that question in good faith with the other successor States, as required by international law. However, the duty to negotiate did not prevent the successor States from adopting measures to protect the savers’ interests. The Croatian Government had repaid a large part of its citizens’ “old” foreign-currency savings in Ljubljanska Banka Ljubljana’s Zagreb branch and the Macedonian Government had repaid the total amount of “old” foreign currency savings in the Skopje branch of that bank. At the same time, those two Governments had never abandoned their position that the Slovenian Government should eventually be held liable, and continued to claim compensation at the inter-State level in the context of the succession negotiations. Furthermore, the Slovenian and Serbian Governments insisted that during State succession negotiations the liability for debts of banks in Bosnia and Herzegovina was to be decided under the territoriality principle. The Court disagreed recalling the “equitable proportion” principle which was to be applied under international law on State succession.

Although certain delays in repayment of the above debts could be justified in exceptional circumstances, and despite a wide margin of appreciation left to the respondent States in this area, the applicants’ continued inability to freely dispose of their savings for over twenty years had been disproportionate and thus in breach of Article 1 of Protocol No. 1.

The Court emphasized that the above conclusions did not imply that no State would ever be able to rehabilitate a failed bank without incurring direct responsibility for that bank’s debt under Article 1 of Protocol No. 1. Given its context, the situation in the present case was unique and different from other cases concerning rehabilitation of an insolvent privately-owned bank.

Conclusions: violation by Slovenia with regard to the first and second applicants (unanimously); violation by Serbia with regard to the third applicant (unanimously); no violation as regards the other respondent States (fifteen votes to two).

The Court also found, unanimously, a violation of Article 13 of the Convention by Slovenia in respect of the first two applicants and by Serbia in respect of the third applicant.

Article 46: There were more than 1,850 similar applications, introduced on behalf of more than 8,000 applicants, already pending before the Court, and thousands of potential applicants. For that reason, it was appropriate to apply the pilot-judgment procedure to the applicants’ case. In view of the systemic problem identified, the Court considered that general measures at national level were undoubtedly called for in the execution of the present judgment. Notably, within one year and under the supervision of the Committee of Ministers, Slovenia and Serbia must make necessary arrangements, including legislative amendments, in order to allow the applicants and all other persons in their position to recover their “old” foreign-currency savings under the same conditions as their nationals who held such savings in the domestic branches of Slovenian and Serbian banks. While there was no need to indicate that all affected persons should be afforded redress for the damage incurred as a result of their inability to freely dispose of their savings for more than twenty years, the Court pointed out that it may reconsider this issue should either of the respondent States fail to apply the general measure indicated above. Finally, the Court decided to adjourn the examination of similar cases against Serbia and Slovenia for one year.

Article 41: EUR 4,000 each to the first, second and third applicants in respect of non-pecuniary damage.

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This summary by the Registry does not bind the Court.

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