Ministarstvo vanjskih i europskih poslova RH

Termination of the Arbitration Process between Croatia and Slovenia: Causes and Consequences

 
This part of the website of the Ministry of Foreign and European Affairs of the Republic of Croatia hosts information about the relevant facts and events surrounding the decisions of the Croatian Parliament and the Croatian Government to cease – with immediate effect – to apply the Arbitration Agreement between the Government of the Republic of Croatia and the Government of the Republic of Slovenia, signed on 4 November 2009, and to initiate the procedure of its termination.
To ensure that those interested have access to complete and accurate information, as well as to  the most recent developments with regard to the border arbitration case with Slovenia, the Ministry of Foreign and European Affairs provides below a timeline of events, together with transcripts of conversations between the Member of the Arbitral Tribunal appointed by Slovenia and the Agent of Slovenia before the Arbitral Tribunal, the relevant correspondence and details about formal legal actions and acts that Croatia undertook and adopted. This section will be constantly updated, as new events unfold.
The documents provided as an integral part of the text below fully expose the width and depth of Slovenia’s breach of the Arbitration Agreement. They also point to the great effort that Croatia invested into resolving this issue, both previously and currently. Croatia first acted completely within the framework of the Arbitration Agreement and in front of the Arbitral Tribunal. Then, as it became obvious that Slovenia consciously and mala fide breached the Arbitration Agreement to the extent that its object and purpose can no longer be accomplished, Croatia adopted decisions in accordance with the available instruments of international law to initiate the procedure of termination of the Arbitration Agreement, and simultaneously ceased to apply it.
Croatia accepted the Arbitration Agreement (link) in good faith, ready to resolve its border dispute with Slovenia at an ad hoc arbitral tribunal in the manner and under the conditions set forth in the Arbitration Agreement itself. The fact that it secured that territorial issues, i.e. the question of the border of Croatia and Slovenia, on land and at sea, shall be determined in accordance with international law, and in accordance with international law exclusively [see Articles 3(1)(a) and 4(a)], has been of the greatest importance for Croatia. In its Article 6(2), the Arbitration Agreement also stipulates that the proceedings shall be conducted according to the Permanent Court of Arbitration Optional Rules for Arbitrating Disputes between Two States (available here), which explicitly point to impartiality and independence of arbitrators as the main traits of those who decide on matters under arbitration. Finally, Article 10 of the Arbitration Agreement clearly mandates Parties to refrain from any action or statement which might, among others, jeopardize the work of the Arbitral Tribunal.
In this new situation, Croatia is convinced that the continuation of arbitration proceedings is impossible and unsustainable. Croatia also believes that, for procedural and ethical reasons, the Arbitral Tribunal should independently and on its own initiative decide to bring its work to an end. Having become part of a compromised arbitration, the remaining members of the Arbitral Tribunal should remove themselves from such a process. By doing so, they would stand to protect the credibility and integrity of international judicial institutions that have taken a long time to build. Such a step would strengthen the confidence of states that their disputes shall be decided upon competently, independently and in adherence with the highest ethical and moral standards.
TIMELINE OF RECENT EVENTS AND DOCUMENTS
30 April 2015
                                   
Motivated by statements of the Slovenian Foreign Minister, which suggested the possibility that Slovenia had information concerning the future outcome of the arbitration and that the Slovenian side had a separate channel of communication with the Arbitral Tribunal, First Deputy Prime Minister and Minister of Foreign and European Affairs Vesna Pusić sent a letter to the Arbitral Tribunal asking for an explanation. The letter is available here and the press release issued by the Ministry of Foreign and European Affairs on that occasion here. In her letter, Minister Pusić reminded the Arbitral Tribunal that Slovenia had previously also sought to bring political pressure on their work, namely through the Conclusion of the Slovenian Parliament of 4 February 2013. In it, the Slovenian Parliament said that Slovenia will consider any decision of the Arbitral Tribunal that would not ensure Slovenia’s territorial contact with the High Seas as a decision reached in violation of the mandate of the Arbitral Tribunal. The Conclusion of the National Assembly of Slovenia is available here (in Slovenian) and here (in unofficial translation into English).
5 May 2015 In its letter of response to Croatia, the Arbitral Tribunal stated that safeguarding the confidentiality of the arbitration proceedings is a matter of highest priority. The Tribunal took note of Slovenia’s assurance that it had not received any information whatsoever as to any aspect of the outcome of the arbitration, and examined its own mechanisms for the protection of confidential information, to conclude that it had not detected any omissions because of which confidential information about the likely outcome of the arbitration could have been disclosed. The Arbitral Tribunal’s letter is available in its entirety here.
7 May 2015 Minister Vesna Pusić sent a letter to the First Vice-President of the European Commission Frans Timmermans, to bring to his attention the circumstances created by inappropriate statements of the Slovenian Foreign Minister. A copy of her letter was also sent to Jean-Claude Juncker, the President of the European Commission. The letter can be accessed here.
22 July 2015 First, the Serbian, and then also the Croatian media publish audio recordings and excerpts of conversations between a Member of the Arbitral Tribunal, appointed by Slovenia, Jernej Sekolec, and the Agent of Slovenia before the Arbitral Tribunal, Simona Drenik. In their conversations, the two devise strategies to influence other members of the Tribunal and to manipulate with the file of the case. Transcripts of parts of their conversations, translated into English, are available here. Audio recordings can be accessed at Newsweek’s and Večernji list’s websites.
23 July 2015 Member of the Arbitral Tribunal Jernej Sekolec resigns from his post. The Arbitral Tribunal’s press release issued on that occasion can be found here. Simona Drenik, the Agent of Slovenia before the Arbitral Tribunal, also resigns from her post.
24 July 2015 Minister Vesna Pusić sent a letter to the Arbitral Tribunal saying that Croatia was deeply alarmed by the publicly disclosed scandalous behaviour which was without a known precedent in the practice of international judicial institutions and which calls into serious doubt the integrity and fairness of the entire arbitration proceedings. In her letter, Minister Pusić also requested that the Arbitral Tribunal suspends the proceedings with immediate effect. The letter is available here.
24 July 2015 Minister Vesna Pusić sent a letter to the First Vice-President of the European Commission Frans Timmermans to inform him of the publicly disclosed scandalous behaviour of a Member of the Arbitral Tribunal and the Agent of Slovenia, as well as of Croatia’s reaction towards the Arbitral Tribunal. A copy of the letter was also sent to Jean-Claude Juncker, the President of the European Commission. The letter can be accessed here.
25 July 2015 The Ministry of Foreign and European Affairs of Croatia issued a press release (link) concerning the events in relation to the arbitration process.
27 July 2015 Slovenian Prime Minister Miro Cerar sent a letter to the Croatian Prime Minister Zoran Milanović. The Slovenian Government reported on the details of the letter in a press release, available here.
28 July 2015 Croatian Prime Minister Zoran Milanović responded to Prime Minister Cerar’s letter, stating that, inter alia, “the credibility and integrity of the arbitration process as a whole have been to such an extent compromised that, unfortunately, Croatia is not of the opinion that the arbitration process can continue in this or a similar form”. At the same time, Prime Minister Milanović emphasised Croatia’s commitment to seeking a solution “in accordance with international law”, as well as that this incident should not have negative effects on the two states’ good neighbourly relations. The letter is available here (translated into English), and the Croatian Government’s press release can be accessed here (in Croatian).
29 July 2015 The Croatian Parliament, in its extraordinary session, unanimously adopted a decision to put the Croatian Government under an obligation to begin the procedure of termination of the Arbitration Agreement between the Government of the Republic of Croatia and the Government of the Republic of Slovenia for reasons of material breach of its provisions by Slovenia. The text of the Croatian Parliament’s Ruling can be accessed here (translated into English).
30 July 2015 The Croatian Government, in accordance with the Ruling of the Croatian Parliament, initiated the procedure of termination of the Arbitration Agreement between the Government of the Republic of Croatia and the Government of the Republic of Slovenia because of its material breach by Slovenia, instructing also the Ministry of Foreign and European Affairs to inform Slovenia that, as of the date of Croatia’s notification to Slovenia thereof, Croatia ceases to apply the Arbitration Agreement. The text of the Croatian Government’s Decision can be accessed here (translated into English).
30 July 2015 The Ministry of Foreign and European Affairs of Croatia sent a note verbale to Slovenia notifying it that, because of the gravity of Slovenia’s material breach of the provisions of the Arbitration Agreement, requirements have been met for its termination. Slovenia was also notified that from the date of the note Croatia ceases to apply the Arbitration Agreement. The full text of the note verbale is available here and the press release issued by the Ministry of Foreign and European Affairs on that occasion can be accessed here.
30 July 2015 Minister Vesna Pusić sent a letter to the First Vice-President of the European Commission Frans Timmermans informing him of Croatia’s decisions. A copy of the letter was also sent to Jean-Claude Juncker, the President of the European Commission. The letter can be accessed here.
30 July 2015 Budislav Vukas, Member of the Arbitral Tribunal appointed by Croatia, resigns from his post. His resignation letter can be read here and the Arbitral Tribunal’s press release on that occasion can be accessed here.
31 July 2015 Minister Vesna Pusić sent a letter to the Arbitral Tribunal informing it about the decisions of the Croatian Parliament and the Croatian Government, the notification sent to Slovenia, as well as the reasons behind them. Minister Pusić said that the procedure to be followed next would be governed by Article 65 of the Vienna Convention on the Law of Treaties and that the Arbitral Tribunal itself was “without competence to express any views as to the requirements for the termination of the Arbitration Agreement”. The letter, in its entirety, is available here, and the press release that the Ministry of Foreign and European Affairs issued on that occasion can be found here.
31 July 2015 Croatian Prime Minister Zoran Milanović sent a letter to the Slovenian Prime Minister Miro Cerar to inform him of the recent decisions of the Croatian Parliament and the Croatian Government. Prime Minister Milanović also invited Prime Minister Cerar for a meeting, either in Croatia or in Slovenia, to discuss presenting the bilateral dispute to an appropriate international forum. The letter is available here, and the Croatian Government’s press release here (in Croatian).
31 July 2015 Slovenian Prime Minister Miro Cerar replied to Croatian Prime Minister Milanović’s letter declining the latter’s invitation for a meeting on the issue of finding an appropriate international forum. The Office of the Prime Minister of Slovenia’s press release can be accessed here (in Slovenian).
3 August 2015 Ronny Abraham, the President of the International Court of Justice, who was appointed by Slovenia as Member of the Arbitral Tribunal on 28 July 2015 to replace Jernej Sekolec, resigns from his post. The Arbitral Tribunal’s press release, referring to Minister Pusić’s letter of 31 July, informing the Tribunal of Croatia’s intention to terminate the Arbitration Agreement, and referring to Ronny Abraham’s subsequent resignation, stating that in the current situation, it was “no longer appropriate” for him to serve as arbitrator in the present proceedings, can be accessed here.
19 August 2015 The Arbitral Tribunal published a press release in which it states that it now falls to the President of the Tribunal to appoint the remaining two members of the Tribunal to replace the two that have resigned. Once that happens, the Tribunal intends to consider the Parties’ positions and actions carefully.