Slovenia Successful Before the Grand Chamber of the European Court of Human Rights

October 7, 2008

Cleary Gottlieb represented Slovenia in proceedings brought by three Croatian individuals before the European Court of Human Rights. The dispute arose out of Yugoslavia’s collapse. It concerns the distribution among the successor States of Yugoslavia’s liability for foreign-currency deposits with commercial banks. On November 6, 2006, after it had declared the applications admissible in October 2003, the Court decided to strike the applications out of its list of cases. Upon the request of the applicants, supported by the Republic of Croatia, the case was referred to the Grand Chamber consisting of seventeen judges of the Court in May 2007.

The applicants deposited foreign-currency with Ljubljanska Banka Zagreb prior to Yugoslavia’s dissolution. Payment of the deposits was guaranteed by Yugoslavia. As a result of the collapse of the Yugoslav banking system, the Yugoslav banks could not pay their foreign-currency depositors. The applicants claimed that Slovenia as a successor State is liable for their deposits and Slovenia’s failure to reimburse them would violate their right to property. Slovenia accepted liability for deposits made on Slovenian territory, but not for deposits in other successor States.

The Grand Chamber confirmed the Chamber’s decision to strike the cases on the grounds that two of the applicants had received payment from assets located in Croatia. As regards to the third applicant, who received no payment, the Court held that in cases in which liability for a former State’s debt is disputed by the successor States, a debtor should seek redress where other debtors have been successful, in this case the Croatian courts.

The Grand Chamber also noted that several thousands of foreign-currency depositors, also located outside Slovenia, had lodged complaints against Slovenia and other successor States and confirmed the matter must be solved by agreement between the successor States. The Grand Chamber called on the successor States to proceed with the distribution of Yugoslavia’s guarantee for foreign-currency deposits as a matter of urgency with a view to reaching an early resolution of the problem.