CEDH · CASELAW;JUDGMENTS;CHAMBER;ENG — 6 novembre 2006

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display:inline-block } .s97F15DD0 { width:177.63pt; display:inline-block } .sF2E32F9B { width:36.61pt; display:inline-block } .s5F32E900 { width:208.31pt; display:inline-block } .sF6A12959 { width:33%; height:1px; text-align:left } .s85226119 { margin-top:0pt; margin-bottom:0pt; text-align:justify; font-size:10pt } .s653E6C45 { font-family:Arial; font-size:6.67pt; vertical-align:super; color:#0069d6 }     THIRD SECTION [1]     CASE OF KOVAČIĆ AND OTHERS v. SLOVENIA     (Applications nos. 44574/98, 45133/98 and 48316/99)     JUDGMENT ( Striking out )     STRASBOURG   6 November 2006     THIS CASE WAS REFERRED TO THE GRAND CHAMBER WHICH DELIVERED JUDGMENT IN THE CASE ON 06/11/2008   This judgment may be subject to editorial revision. In the case of Kovačić and Others v. Slovenia, The European Court of Human Rights (Third Section [2] ), 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: PROCEDURE 1.     The cases originated in three applications (nos. 44574/98, 45133/98 and 48316/99) against the Republic of Slovenia lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) as well as with the European Court of Human Rights by three Croatian nationals, Mr Ivo Kovačić, Mr Marjan Mrkonjić and Mrs Dolores Golubović (“the applicants”), on 17 July 1998, 2   June   1997 and 24 December 1998 respectively. 2.     The Slovenian Government (“the Government”) were represented by their Agent, Mr L. Bembič, State Attorney-General, and by Messrs Cleary, Gottlieb, Steen and Hamilton, a law firm practising in Paris. 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. 4.     Mr Kovačić also complained that he had been discriminated against on the grounds of nationality, contrary to Article 14 of the Convention. He alleged that Slovenian account holders of the Zagreb branch had been allowed to withdraw their savings. 5.     The applications lodged by Mr Kovačić and Mr Mrkonjić were transmitted to the Court on 1 November 1998, when Protocol No. 11 to the Convention came into force (Article 5 § 2 of Protocol No. 11).] 6.     The applications were allocated to the Third Section of the Court (Rule   52 §   1 of the Rules of Court). Within that Section, the Chamber that would consider the case (Article 27 § 1 of the Convention) was constituted as provided in Rule 26 § 1. 7.     The Chamber decided to join the proceedings in the applications (Rule 42 § 1). 8.     By a decision of 9 October 2003, following a hearing on admissibility and the merits (Rule 54 § 3), the Court declared the applications admissible. 9.     The applicants and the respondent Government each filed further written observations (Rule 59 § 1). The parties replied in writing to each other’s observations. In addition, third-party comments were received from the Croatian Government, which had exercised its right to intervene (Article 36 § 1 of the Convention and Rule 44 § 1 (b)). The parties replied to those comments. 10.     On 1 November 2004 the Court changed the composition of its Sections (Rule 25 § 1), but this case remained with the Chamber constituted within former Section III. 11.     On 21 February 2005, the President of the Chamber requested further information from the applicants and the respondent and intervening Governments (Rule 59 § 1). The parties replied and filed comments on each other’s replies. 12.     On 25 July 2005 the respondent Government submitted additional information. The applicants and the intervening Government filed comments. THE FACTS 13.     The applicants are Croatian nationals. 14.     Mr Ivo Kovačić was born in 1922 and lived in Zagreb. He died on 17 July 2004, in the course of the proceedings. He was represented by Mr   Milivoje Žugić, a member of the Croatian Bar. His widow Mrs   Miroslava Kovačić, his daughter Mrs Marina Mušić and his son Mr   Zlatko Kovačić have elected to pursue the application before the Court. They continue to be represented by Mr Žugić. For reasons of convenience, Mr Kovačić will continue to be referred to as “the applicant” in this judgment. 15.     Mr Marjan Mrkonjić, who was born in 1941 and lives in Zurich, is represented by Mr Milivoje Žugić (see paragraphs 131-137 below). 16.     Mrs Dolores Golubović was born in 1922 and lived in Karlovac. She was represented by Mr Zvonko Nogolica, also a member of the Croatian Bar. She died on 15 October 2004. Her nephew, Mr Ivo Steinfl, has elected to pursue her application before the Court and is represented by Mr   Nogolica. Mrs Golubović will continue to be referred to as “the applicant” in this judgment. I.     THE CIRCUMSTANCES OF THE CASES 17.     Before the dissolution of the Socialist Federal Republic of Yugoslavia (“the SFRY”), the applicants or their relatives all deposited hard foreign currencies in savings accounts with the office of a Slovenian bank – the Ljubljana Bank ( Ljubljanska banka ) – in Zagreb (Croatia). Some of them also held term accounts which matured in the late 1980s or early 1990s. 18.     The facts of the case, as submitted by the parties, may be summarised as follows. A.     Background to the cases 1.     The Socialist Federal Republic of Yugoslavia (a)     The Ljubljana Bank and its Zagreb Office 19.     The bank now called the Ljubljana Bank (in Slovene: Ljubljanska banka ) in the present-day Republic of Slovenia, was founded in 1955 and subsequently underwent several changes of status and name. 20.     In 1969 its legal predecessor opened an office in Zagreb in the then Socialist Republic of Croatia. It was re-registered in 1974 and in 1977. 21.     From 1978 until 1 January 1990 the Ljubljana Bank Head Office ( Ljubljanska banka – združena banka ), a company existing under the laws of the then Socialist Republic of Slovenia, operated as an “associated bank”. It was made up of the Ljubljana Bank Basic Banks, carrying on business in accordance with the principles of the socialist self-management system. At the time, the Ljubljana Bank was one of the major and most reputable socially-owned commercial banks with offices in other Republics within the SFRY. 22.     Over much the same period, from 1977 until 1990, the Ljubljana Bank’s Zagreb office operated as a “basic bank”, being neither a branch nor a subsidiary of the Ljubljana Bank Head Office. The Ljubljana Bank Basic Bank Zagreb (in Croat: Ljubljanska banka - Osnovna Banka Zagreb ) had separate legal personality under the law of the Socialist Republic of Croatia and was financially and economically independent. It was, however, integrated into the organisational structure of the Ljubljana Bank. 23.     On 19 December 1989 the Ljubljana Bank Head Office was reregistered as a joint stock company with effect from 1 January 1990. 24.     On 29 December 1989 the Ljubljana Bank Basic Bank Zagreb was re-registered as the Zagreb Main Branch ( Glavna filijala Zagreb ) with effect from 1 January 1990. (b)     The system of redepositing foreign-currency savings 25.     Individuals were allowed to open foreign-currency savings accounts in the SFRY from 1965 onwards. From 25 December 1969 until the dates on which each successor State declared its independence, all foreign-currency deposits were covered by the Federation’s (“the SFRY’s”) statutory guarantee (see section 76 of the Banks and Other Financial Institutions Act, Official Gazette, no. 10/89, paragraph 151 below). Annual interest on savings accounts attained levels of 10% and more. 26.     In 1977 a system by which commercial banks re-deposited foreign-currency savings with the National Bank of Yugoslavia (“the NBY”) in Belgrade was introduced by the Foreign Exchange Operations and International Credit Relations Act (Official Gazette, no. 15/77). Pursuant to section 51(2) of that Act, the NBY was under an obligation to accept foreign-currency savings deposited with authorised banks and to grant interest-free loans in Yugoslav dinars (YUD) to the bank depositing the foreign currency. Although the SFRY banks were not required by law to transfer the foreign-currency deposits to the NBY, it is generally agreed that, in practice, they had no other option. 27.     From 1978 to 1988 further legislation regulating the re-deposit transactions was passed. One of the decisions adopted in 1978 introduced the so-called “pro-forma” or “accounting method” of re-depositing foreign exchange in order to save considerable sums that would otherwise have gone towards fees for neutral transactions. In the following years, only approximately 14% of foreign-currency deposits were actually transferred by the commercial banks to the NBY. 28.     From 1985 onwards re-depositing banks were required to pay interest on the previously interest-free loans in YUD granted in exchange for the foreign currency re-deposited with the NBY. 29.     On 15   October   1988 the system of re-deposits was brought to an end by amendments to the Foreign Exchange Transactions Act (Official Gazette no. 59/88). The amended section 14(4) provided that “[t]he conditions and procedure applicable to the obligations arising under the guarantee [should] be regulated by a separate federal law”. As no such law was enacted, the remedies employed by the SFRY were based on ad hoc decrees. Only banks, not individual depositors, were entitled to demand payment of foreign-currency deposits. A bank had to be insolvent or bankrupt before a payment could be made under the guarantee. 30.     In 1991 the foreign-currency claims of commercial banks against the NBY amounted to approximately USD   12 billion and remained frozen. (c)     The monetary crisis and the Marković reforms 31.     The problems resulting from the foreign and domestic debt of the SFRY caused a monetary crisis in the 1980s, with the SFRY economy suffering hyperinflation. The banking and monetary systems were on the verge of collapse and the SFRY had to resort to emergency measures. Among other developments, legislation imposing restrictions on the repayment of foreign currency deposits to individuals was introduced (see section 71 of the Foreign Exchange Transactions Act). 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). 33.     One of the linchpins of the transformation was a fundamental reform of the banking system, carried out in accordance with the Banks and Other Financial Institutions Act (Official Gazette no. 10/89). The banks were to be transformed from associated and basic banks into joint stock companies. 34.     In 1988, 1989 and 1990 the SFRY assumed liability for the foreign-currency related losses and payment of the foreign-currency deposits with the NBY by converting the Foreign Exchange-rate differences into public debt. Since in 1991 the servicing of public debt was not regulated, the NBY passed a resolution granting banks special liquidity loans in order to enable withdrawals of foreign-currency deposits. In addition, the amount of foreign-currency that could be withdrawn was further restricted. 35.     This general situation lasted until June 1991, when the process of disintegration of the SFRY started. The whole process took place over several months, as the various Republics proclaimed their independence. (d)     The Ljubljana Bank and the Zagreb Main Branch (i)     Background 36.     In 1988 the Ljubljana Bank froze all its foreign-currency accounts. 37.     On 19 December 1989 the Ljubljana Bank joint stock company ( d.d. - delniška družba ) was established in Ljubljana, in the then Socialist Republic of Slovenia. The change was entered into the Register of Companies on the same day and became effective on 1 January 1990. 38.     Article 60 of the Ljubljana Bank’s memorandum and articles of association of 19   December 1989 provided that the Ljubljana Bank would take over the rights, assets and obligations of the Ljubljana Bank Head Office and, inter alia , the Basic Bank of Zagreb as a legal successor on the day of its formation or registration on the Register of Companies. 39.     On 29 December 1989, the Ljubljana Bank Basic Bank Zagreb was reregistered in the Zagreb Commercial Court of First Instance as the Zagreb Main Branch ( Glavna filijala Zagreb ) with effect from 1 January 1990. (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 40.     The Slovenian Government maintained that the dissolution of the SFRY had prevented the full conversion of the Ljubljana Bank Basic Bank Zagreb into the Zagreb Main Branch. Thus, the status, operations, assets and liability for deposits of the Zagreb Main Branch had become a succession issue. During the two-year interim period under the Marković reforms, the so-called main branches which had operated previously as basic banks had had a sui generis status fundamentally different from that of a branch as known to Western European legal systems. (β)     Events as related by the Croatian Government 41.     As far as the status of the Zagreb office was concerned, the Croatian Government argued that at the material time the Zagreb Main Branch had existed as an organisational part of the Ljubljana Bank, that there had been an institutional relationship of dependency, and that the Ljubljana Bank’s liability for the Zagreb Main Branch’s obligations had encompassed its total assets and been unlimited. 2.     Republic of Slovenia 42.     On 25 June 1991 the National Assembly of the Republic of Slovenia enacted the Fundamental Constitutional Charter on the Sovereignty and Independence of the Republic of Slovenia and the Constitutional Law relating to its application (Official Gazette no.   1/91). Thus Slovenia became independent. (a) The Constitutional Law 43.     By virtue of section 19(3) of the Constitutional Law, the Republic of Slovenia became guarantor of all foreign-currency savings deposited with banks on Slovenian territory at that date. (b) Developments after independence 44.     In October 1991 a new Slovenian currency was introduced, the Slovenian tolar (SIT). 45.     On 4 February 1993 the Constitutional-Law guarantee was implemented by the Discharge of Liability for Unpaid Foreign-Currency Deposits Act (Official Gazette no.   7/93). Under section 2 of that Act, liabilities arising out of foreign-currency deposits became part of the Slovenian public debt. Further implementing legislation was passed in 1995. 46.     Thus, foreign currency deposited with banks on Slovenian territory became part of the public debt in the form of bonds totalling approximately 1,500,000,000 German marks (DEM) and the account holders, regardless of their nationality or of the location of the head office of their bank, were able to make withdrawals as and when they chose. 47.     On 11 March 1993 the Republic of Slovenia Succession-Fund Act (Official Gazette no.   10/93) came into force. Under that Act, a number of Slovenia’s claims and obligations vis-à-vis the SFRY, the NBY and other SFRY entities were assigned to the Succession Fund. 48.     On 28 June 1994 the Convention and Protocol No. 1 came into force with regard to Slovenia. (c)     The 1994 amendments to the 1991 Constitutional Law (i)     Background 49.     According to the Slovenian Government, in 1991 the Ljubljana Bank represented 42.4% of the Slovenian banking market. However, both before and after the dissolution of the SFRY, the Ljubljana Bank accumulated substantial negative capital. For this reason, the Government decided that rehabilitation measures were urgently required to prevent the collapse of the Slovenian financial system and such measures were taken in 1993. In that year, Slovenia became the Ljubljana Bank’s sole shareholder. 50.     The Ljubljana Bank’s financial position was further jeopardised by two kinds of succession risks in the absence of any agreement between the Successor States: firstly, a claim by foreign creditors for USD   4.2 billion under an agreement known as the New Finance Agreement (NFA); and, secondly, the continued exposure to the SFRY’s liability for re-deposited foreign exchange outside Slovenian territory. 51.     The authorities decided in 1994 to amend the 1991 Constitutional Law in order to protect the public interest, as is reflected in the preamble to the Act (see Relevant Domestic and International Law and Practice). (ii)     The legislation 52.     On 27 July 1994 the National Assembly amended the 1991 Constitutional Law (Official Gazette no.   45/94) so as to restructure the Ljubljana Bank by creating a new and separate legal entity (section   22(č)): the New Ljubljana Bank was formed as a joint stock company which took over the former bank’s entire assets and liabilities on Slovenian territory. The former bank, the Ljubljana Bank, retained its rights against and obligations towards the SFRY (section 22(b)) and its former constituent republics: in particular, full obligations in respect of the foreign-currency ordinary and deposit accounts that were not guaranteed under section 19 of the 1991 Constitutional Law, that is to say, those contracted outside Slovenian territory. The rationale behind this decision was that the funds for repayment were to become assets of the Ljubljana Bank as part of the succession arrangements. 53.     That law also laid down that the Ljubljana Bank would continue to deal with branches and subsidiaries whose head offices were situated in other republics of the territory of the SFRY and retain the rights to the corresponding portion of the debt owed by the NBY in respect of the foreign-currency savings accounts. (d)     The decision of the Slovenian Constitutional Court 54.     On 11 April 1996 the Constitutional Court ( Ustavno sodišče ) dismissed a constitutional initiative ( ustavna pobuda ) brought by a Croatian savings-account holder, Mr   Vukasinović, challenging the constitutionality of the 1994 Constitutional Law, holding that it had no jurisdiction to hear it (see the Relevant Domestic and International Law and Practice below). (e)     Developments subsequent to the decision of the Slovenian Constitutional Court 55.     On 5 July 1997 an amendment to the Republic of Slovenia Succession-Fund Act (Official Gazette no.   40/97) came into force. It provided for a stay on any proceedings directly or indirectly affecting legal relations with the SFRY pending resolution of the succession arrangements. The proceedings were to be reinstated ex officio once the succession arrangements had been resolved. By virtue of section   15(č) of the Act, the statutory provisions were binding on the Slovenian courts. 56.     On 29 June 2001 the Agreement on Succession Issues was signed in Vienna by Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia (later Serbia and Montenegro), the Former Yugoslav Republic of Macedonia and Slovenia. It entered into force on 2 June 2004 (see paragraphs 85-88 below). 57.     On 23 July 2004 the Slovenian Government informed the Court that new legislation in the form of the Transformation of the Succession Fund of the Republic of Slovenia and the Establishment of the Succession Agency of the Republic of Slovenia Act had been passed which repealed the Republic of Slovenia Succession-Fund Act. 58.     On 21 February 2005 the Court requested information from the Slovenian Government regarding implementation of the aforementioned Act (see also paragraphs 11, 91, 191, 197 and 198 below). 59.     The Slovenian Government replied that that Act was in the process of being implemented. In any event, further to the ratification of the Agreement on Succession Issues and in conformity with Article 7 of Annex G to that Agreement and with Article 8 of the Constitution (see Relevant Domestic and International Law and Practice”), the proceedings relating to succession issues had resumed in the Slovenian courts, since ratified and published international treaties took precedence over statutory provisions and, in particular, section 15 (č) of the Republic of Slovenia Succession-Fund Act. They produced a number of decisions by the Slovenian courts ordering the resumption of such proceedings. 60.     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 the proceedings that had been stayed under the Republic of Slovenia Succession-Fund Act. 61.     On 21 March 2006 further legislation – the Republic of Slovenia Succession-Fund and the Republic of Slovenia Senior Representative for Succession Act – was passed. Section 23 of that Act provided that any stay of proceedings in the Slovenian courts relating to foreign currency deposited in a commercial bank or a branch office of a commercial bank in any successor State of the SFRY was to remain in force. Proceedings that had since been resumed were to be stayed again until a solution was found to the question of the guarantees to be provided by the SFRY or the NBY under Article 7 of Annex C of the Agreement on Succession Issues (see paragraph 88 below). 3.     Republic of Croatia 62.     On 25 June 1991 the Parliament adopted a Declaration on the Sovereignty and Independence of Croatia and enacted a Constitutional Act on the Sovereignty and Independence of Croatia. On 8 October 1991 Croatia became independent. 63.     In December 1991 a Croatian currency was introduced, the Croatian dinar, which was replaced in 1994 by the Croatian kuna (HRK). (a)     Adoption of the SFRY’s finance regulations and assumption of the guarantee for savings in Croatia 64.     On 26 June 1991 the Act on the Applicability to Croatia of the SFRY’s Finance Regulations was passed. By virtue of that Act, which entered into force on 8 October 1991 (Official Gazette no.   71/91),   forty-two   federal statutes and five decisions of the Federal Executive Council concerning foreign-currency savings were incorporated into Croatian law. 65.     On 23 December 1991 the Government issued a Decree on the Conversion of Nationals’ Foreign-Currency Bank Deposits into the Croatian Public Debt (Official Gazette no.   71/91). Under the Decree, savings that were deposited before 27   April 1991 with banks whose head office was situated in Croatia (“Croatian banks”) or were transferred by Croatian nationals into Croatian banks from other banks within 30 days became, subject to compliance with Articles 15 and 16 of the Decree, part of the Croatian public debt. Only Croatian citizens were entitled to the conversion of their foreign-currency savings into public debt. 66.     The 1991 Decree provided for payment of the foreign-currency deposits in national currency in 20 half-yearly instalments starting on 30   June 1995 and bearing annual interest of 5%. Further legislation was subsequently passed on this subject. 67.     According to the Slovenian Government, about two thirds of the account-holders at the Zagreb Main Branch transferred their former savings accounts to Croatian banks, which in turn transferred their claims to Croatia. Thus, approximately DEM   450,000,000 became Croatian public debt. 140,000 Croatian depositors allegedly kept their accounts at the Zagreb Main Branch. The amount of their deposits came to approximately DEM   300,000,000. Of the remaining depositors, 96,000 have less than the equivalent of 30   Euros in foreign-currency savings standing to their credit. 68.     In 1991 a Decree was adopted which prohibited the disposal or encumbering of real property on Croatian territory owned by legal entities whose head office was outside Croatia. (b)     Other developments 69.     On 24 February 1996 the Croatian Payment Transaction Institute froze the Zagreb Main Branch’s company account. On 14 July 2000 the Croatian authorities closed the Zagreb Main Branch’s giro account. 4.     Financial documents and information 70.     On 25 October 2002 the Court invited Slovenia and Croatia to submit any documents that might serve as evidence of the existence or absence of an institutional and financial relationship of dependence between the Ljubljana Bank and the Zagreb Main Branch. 71.     On 5 December 2002 the Court additionally requested both Governments to provide further information on whether or not the funds on deposit with the Zagreb Main Branch had been effectively transferred to the Ljubljana Bank following the Marković reform, and if so, the amounts transferred in Yugoslav dinars and in hard currencies. (a)     The Ljubljana Bank’s Annual Reports 72.     The Slovenian Government submitted the Ljubljana Bank’s Annual Reports for the years 1989, 1990, 1991, 1992 and 1993. They claimed that no annual report for the Zagreb Main Branch existed. 73.     In the Ljubljana Bank’s 1990 Annual Report, the assets and liabilities of the Zagreb Main Branch were included for the first and only time. 74.     On page 23 of the Ljubljana Bank’s 1991 Annual Report, it is stated that the balance sheets of the Ljubljana Bank and the Zagreb Main Branch could not be consolidated because of the political situation in Croatia and in Bosnia and Herzegovina. The Ljubljana Bank had little or no control over the activities of its operations in those two countries and had little prospect of being able to transfer any funds to Slovenia in the foreseeable future. The same situation was noted in the 1992 and 1993 Annual Reports. (b)     The Zagreb Main Branch’s accounts 75.     The Slovenian Government submitted the Ljubljana Bank Basic Bank Zagreb’s balance sheet for 1989 and the Zagreb Main Branch’s balance sheets for 1990, 1991, 1994 and 2001. 76.     In 1991 the amount of foreign-currency redeposited with the NBY came to 13.6 billion Croatian dinars (USD 619 million), whereas foreign-currency deposits with the Zagreb office came to 10.7 billion Croatian dinars (USD 490 million), thereby confirming that 100% of the foreign-currency deposits with the Zagreb office were subsequently redeposited. 77.     The amount of foreign-currency deposited by the Zagreb office with the NBY exceeded its liabilities towards foreign-currency depositors. This was due to the fact that some foreign-currency deposits had been paid out in YUD or from the current inflow of foreign currency. No transfer of foreign-currency deposit funds from Zagreb to Ljubljana had ever occurred. 78.     According to the Slovenian Government’s submissions of 1   October   2004, the books and records of the Zagreb Main Branch as at 31   December 2003 showed that its assets, including real estate, amounted to EUR 370 million and its liabilities to EUR 168 million. 79.     The Croatian Government stated that further to the Marković reforms, the National Bank of Slovenia became the regulatory authority for the Ljubljana Bank and that the Zagreb Main Branch’s claims to foreign-currency deposits redeposited with the NBY were transferred on that date to the National Bank of Slovenia and the funds on deposit at the National Bank of Croatia transferred from Zagreb to new accounts in Ljubljana. 80.     However, the Croatian Government stressed that the correct answer to the question concerning the actual foreign-currency movements could be given only after comprehensive and independent financial examination by an expert of the Ljubljana Bank’s activities. 5.     The succession negotiations between the successor States of the SFRY 81.     After the dissolution of SFRY, the successor States were unable to negotiate a succession treaty owing to the ongoing violence in the region and the claims made by the then Federal Republic of Yugoslavia to be the sole successor to the SFRY. 82.     The succession talks were first conducted within the framework of the International Conference on Former Yugoslavia. 83.     As no tangible results were achieved through the International Conference on Former Yugoslavia, the succession issues were included in the functions of the High Representative in Bosnia and Herzegovina, who was appointed pursuant to the General Framework Agreement for Peace in Bosnia and Herzegovina signed on 14 December 1995. 84.     In March 1996 Sir Arthur Watts was appointed Special Negotiator to assist the Successor States in reaching an agreement. Numerous rounds of negotiations were held. 85.     On 29 June 2001 the Agreement on Succession Issues was signed by Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia, the Former Yugoslav Republic of Macedonia and Slovenia. Article 4 of the Agreement established a Standing Joint Committee to monitor the effective implementation of the agreement and to discuss issues arising in the course of its implementation. 86.     The agreement stipulated, inter alia , that the SFRY’s foreign financial assets should be distributed to the successor States in the following proportions: Bosnia and Herzegovina 15.5%, Croatia 23%, the Federal Republic of Yugoslavia (now Serbia and Montenegro) 38%, the Former Yugoslav Republic of Macedonia 7.5% and Slovenia 16%. 87.     By virtue of Article 2 § 3(a) of Annex C to the agreement, the SFRY’s financial liabilities included “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 independence”. 88.     Article 7 of Annex C provided: “[g]uarantees by the SFRY or its NBY ... 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 [‘the BIS’]”. 89.     In 2001 and in 2002, negotiations regarding hard-currency savings did take place under the auspices of the BIS, but no solution was found. 90.     All successor States have ratified the Agreement, Croatia being the last country to do so on 3 March 2004. It entered into force on 2 June 2004. 91.     On 21 February 2005 the Court requested both the Slovenian and Croatian Governments to inform it of any developments concerning the negotiations referred to in Article 7 of Annex C. In addition, the Slovenian Government were invited to inform the Court whether or not the Standing Joint Committee had met or been convened (see paragraphs 11 and 58 above and 191, 197 and 198 below). 92.     The Croatian Government in their reply dated 30 March 2005 stated that no discussion had taken place regarding the guarantee for hard currency savings which would be relevant to the applicants’ situation. 93.     The Slovenian Government in their reply dated 31 March 2005 stated that the first formal meeting of the Standing Joint Committee had not been convened by the Former Yugoslav Republic of Macedonia within two months of the entry into force of the Agreement as it should have been. They had repeatedly urged the convening of the meeting so that the issue of the frozen bank accounts could be discussed. 6.     Bilateral negotiations between Slovenia and Croatia 94.     The unpaid foreign-currency savings deposited with the Zagreb Main Branch have also been the subject of frequent bilateral negotiations between Slovenia and Croatia, but no solution has been found. 95.     The Croatian Government informed the Court that although negotiations on arbitration by the International Monetary Fund (“the IMF”) were held in 1998, no arbitration agreement was reached. According to the respondent Government, on 3   March 1999 both Prime Ministers had agreed that a list of succession issues should be submitted to the IMF for consultative arbitration. Slovenia had sent such a request in June 1999. 96.     A bilateral Agreement on the Regulation of Property Rights between Slovenia and Croatia entered into force on 23   February 2000. Article 1 of this Treaty provides that relations between Slovenia and Croatia concerning the Zagreb Main Branch shall be governed by agreements to be concluded between the two States. B.     The facts of the individual cases 1.     Application no. 44574/98, Mr Ivo Kovačić (a)     Deposit of savings and proceedings in Croatia 97.     Mr   Kovačić, who was retired, held a foreign-currency savings account with the Zagreb Main Branch. He was a client of the Zagreb office for over 30 years. 98.     On 24 October 1984 the applicant and his wife signed a three-year automatically renewable term-deposit agreement for DEM 66,771.12 earning 12.5% interest a year. The agreement stipulated, inter alia , that the SFRY would guarantee their savings. The last withdrawal from the account was made in August 1990. 99.     On 10 September 1990 Mr   Kovačić attempted to withdraw DEM   40,000 from his account. As the term had not yet expired, the bank manager turned down his request and suggested he should return after 24   October 1990, the date of maturity. On 25 October 1990 the bank manager offered monthly payments of DEM 4,000. However, no payments were made. 100.     Mr   Kovačić and his wife made repeated attempts to secure payment. They were informed by the bank on 17   April 1991 that it was unable to make any payments, as its relations with the NBY had not been determined and the Yugoslav Foreign Exchange market was not functioning. 101.     According to a bank statement of 14 October 1993, the amount standing to the credit of the account was then DEM 49,794.30. 102.     Following the bank’s refusal, the applicant brought a civil action against “the Ljubljana Bank, Zagreb Main Branch” in the Zagreb Court of First Instance ( Općinski sud ) claiming payment of his savings with interest. On 2   December 1997 the court found, inter alia , that Mr Kovačić had inherited the foreign-currency savings account in question from his wife, who had died in the meantime. It ordered “the Ljubljana Bank, Zagreb Main Branch” to pay the applicant within fifteen days the savings plus default interest; according to the applicant, the sum came to a total of DEM   61,000. 103.     The court also held that, as the bank’s head office was not on Croatian territory, the provisions of the Decree on the Conversion of Nationals’ Foreign-Currency Bank Deposits into Croatian Public Debt could not apply, as Mr   Kovačić had not transferred his deposits to a Croatian bank. On 22 April 1998 the ruling became final and enforceable. 104.     Mr   Kovačić then made an application for execution of that decision to the Zagreb Court of First Instance, which issued a warrant of execution in the applicant’s favour on 1 October   1998. The Zagreb Court of First Instance later stayed the execution proceedings. 105.     In 1998 Mr   Kovačić attempted to withdraw his funds, firstly, from the Zagreb Main Branch and, subsequently, from the Ljubljana Bank Head Office in Ljubljana. On 6 July and on 14 September 1998 he was informed by bank officials that the bank had no funds and the account was frozen. (b)     Proceedings in Slovenia 106.     On 7 December 1998 Mr   Kovačić made an application to the Ljubljana District Court ( Okrožno sodišče ) seeking a declaration regarding the extent to which the Croatian judgment of 2 December 1997 was enforceable. On 21   June   1999 the District Court authorised him to enforce the Croatian judgment. However, Mr Kovačić has not sought to enforce the judgment of 2 December 1997 in the Slovenian courts. (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. 109.     In 2003 42 individuals, including Mr Kovačić and Mr Mrkonjić, lodged requests for the seizure and sale of real estate owned by the Ljubljana Bank. 110.     On 17   July   2003 Mr   Kovačić obtained a warrant of execution for the amount of DEM 49,794.30 (EUR 25,459.42) plus the interest in arrears from 1 January 1992 until payment and the costs of the proceedings for obtaining the charging order in the amount of HRK 2,967.42 (EUR 406,49) and the costs of the subsequent enforcement proceedings. 111.     On 30 March 2004 the Zagreb Main Branch’s assets were liquidated for HRK 3,903,000 (EUR 534,657.53) in the enforcement proceedings started by a Croatian savings-account holder, Mr B. Various sets of proceedings were joined to those proceedings. A ruling was handed down on 9 April 2004. 112.     On 24 May 2004 the proceeds of sale were deposited with the Osijek Court of First Instance. On 15 July 2004 a hearing on the division of the proceeds of sale was held at the Osijek Court of First Instance. 113.     On 20 July 2004 the Osijek Court of First Instance rendered a decision dividing up the proceeds of sale. Mr Kovačić was awarded HRK 291,306.60 (EUR 39,905) (for the main debt and the costs) and Mr   Mrkonjić HRK 180,515.72 (EUR   24,728) (for the main debt and costs), both payable into Mr Žugić’s account. They were both also awarded costs for the enforcement proceedings. A number of the judgment creditors, including the two applicants, lodged an appeal against that decision in respect of the court fees (see paragraph 139 below). 114.     On 21   October 2004 the Osijek Court of Appeal quashed the decision and remitted the case. 115.     On 28 February 2005 a hearing was held. On 8 April 2005 the Osijek Court of First Instance gave a new decision concerning the di