Cleary Gottlieb successfully represented the Republic of Slovenia, in an interpleader action brought by the Bank of New York in 2003 over disputed funds held in an account opened in 1991 by the Federal Directorate of Supply and Procurement (“FDSP”), an entity of the former Yugoslav state specialized in procuring and trading arms and armaments. The FDSP funds were blocked in 1992 pursuant to United States sanctions imposed on the former Socialist Federal Republic of Yugoslavia (“SFRY”) during the wars in the Balkans arising from the collapse of that state and were unblocked over a decade later after the fighting ended.
Slovenia (along with the Republic of Croatia) asserted a claim to the funds on the basis of the Agreement on Succession Issues Between the Five Successor States of the Former State of Yugoslavia (the “Succession Agreement”), which provides for distribution of assets of the SFRY and its “Federal Government Departments” and “Agencies” to the SFRY successor states, including Slovenia and Croatia, in specified percentages. Slovenia contended, over the objection of Yugoimport SDPR J.P., the successor of the FDSP, that the FDSP was an agency of the SFRY, and that the Republics should receive disbursement of the funds in the Bank of New York account in accordance with the Succession Agreement.
Slovenia demonstrated that the FDSP was an agency of the SFRY based upon SFRY law, the ordinary meaning of the term “agency,” language in the FDSP’s and Yugoimport’s own documents, and evidence that the United States and other international forces consistently viewed the FDSP as an agency or department of the former SFRY, including evidence that NATO forces actually targeted the FDSP for bombing during the Kosovo war. On April 29, 2011, Judge Hellerstein granted the summary judgment motion of Slovenia and Croatia, denied Yugoimport’s motion, and ordered that the funds be distributed to the five SFRY successor states in the percentages set forth in the Succession Agreement.
