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 (available here) 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 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. The press release can be accessed here.
1 September 2015 Minister Vesna Pusić met in Brussels with European Commission’s First Vice-President Frans Timmermans to inform him about Croatia’s decisions and all the relevant facts leading up to Croatia's cessation of application of the Arbitration Agreement between Croatia and Slovenia. Although it is not in its immediate competence, the European Commission has all the information regarding the arbitration procedure with Slovenia and facilitated the process of its establishment. Timmermans expressed hope that Croatia and Slovenia would find a joint solution to determine the border between the two countries. The press release that the Ministry of Foreign and European Affairs issued on that occasion can be found here.
25 September 2015 President of the Arbitral Tribunal Gilbert Guillaume appointed Rolf Einar Fife (Norwegian ambassador to France) and Nicolas Michel (Swiss professor of international law) as new members of the Arbitral Tribunal, in replacement of Jernej Sekolec and Ronny Abraham, as well as Budislav Vukas, who have resigned from their posts. The Arbitral Tribunal’s press release on that occasion can be found here.

Minister Pusić commented on these appointments and said that they “changed nothing for Croatia because the arbitration process was too contaminated to continue”. At the same time, she expressed Croatia’s readiness to discuss alternative ways to resolve the border dispute. Minister Pusić’s statement is available here.
30 September 2015 President and Vice-President of the European Commission, Jean-Claude Juncker and Frans Timmermans, sent a joint letter to Croatian Prime Minister Zoran Milanović and Slovenian Prime Minister Miro Cerar, confirming that setting of borders between Member States does not fall within the competences of the Union, but that open border disputes should be resolved promptly as they “can have an impact on the application of EU law”. At the end of the letter, support was given to the continuation of the work of the Arbitral Tribunal, with the expectation that both states will respect its decisions.
1 October 2015 Croatian Prime Minister Zoran Milanović responded to President of the European Commission Jean-Claude Juncker’s letter, stating that the European Commission had no legal basis for involvement in this case, and thus should not be involved in this, nor in any of the other numerous border disputes between Member States. Croatian Prime Minister reiterated that Croatia withdrew from the Arbitration Agreement because Slovenia corrupted the entire process by its “deliberate, illegal, immoral and unethical actions”, which is why Croatia shall not comment the possible intentions of the Arbitral Tribunal, shall not participate in its work, nor shall it consider itself obliged to receive and act upon any decisions the Arbitral Tribunal may reach. It is Croatia’s expectation that the Tribunal dissolves itself. At the end, Prime Minister Milanović stated that Croatia’s offer to Slovenia to identify an alternative way to resolve the territorial dispute, though rejected by Slovenia, remains valid. The integral text of the letter is available here, and Croatian Government’s press release issued on that occasion can be accessed here (in Croatian).
2 December 2015 The Arbitral Tribunal published a press release in which it invites Croatia and Slovenia “to make further submissions ‘concerning the legal implications of the matters set out in Croatia’s letters of 24 July 2015 and 31 July 2015’” and informs the two states of its intention to hold a hearing on the matter in March 2016. The press release can be accessed here.
14 March 2016 Minister of Foreign and European Affairs Miro Kovač said that “Croatia has withdrawn from the arbitration process and will not attend the hearing” and “will seek a solution through bilateral negotiations with Slovenia in accordance with international law”. The press release that the Ministry of Foreign and European Affairs issued on that occasion can be found here.
16 March 2016 The Ministry of Foreign and European Affairs of Croatia sent a note verbale communicating its position on the compromised and corrupt arbitration process to UN Member States. Croatia stated that it expects the Arbitral Tribunal to terminate its work without delay because of the process being irreparably compromised and corrupt. For such a decision the Arbitral Tribunal possesses enough information which Croatia readily provided immediately after Slovenia’s illegal and unethical acts were revealed. Croatia also reiterated its readiness to resolve the dispute in bilateral negotiations, in the spirit of good neighbourly relations and in accordance with international law. The full text of the note verbale is available here and the press release that the Ministry of Foreign and European Affairs issued on that occasion can be found here.
17 March 2016 The Arbitral Tribunal published a press release following the conclusion of oral hearings on 16 March 2016, in which it restates the two states’ positions and declares that it “will now begin its deliberations concerning the legal implications of the matters set out in Croatia’s letters of 24 July 2015 and 31 July 2015”. In conclusion, the Arbitral Tribunal states that “any consideration by the Tribunal regarding the merits of the underlying territorial and maritime dispute remains suspended.” The press release can be accessed here.

In reaction, the Ministry of Foreign and European Affairs of Croatia issues a press release (available here) in which it repeated its previous views on the arbitration process, its expectation that the Arbitral Tribunal terminates its work without delay and Croatia’s readiness to resolve the dispute in bilateral negotiations, in the spirit of good neighbourly relations and in accordance with international law.
30 June 2016 In its Partial Award, with respect to events that caused Croatia’s withdrawal from the arbitration process, the Arbitral Tribunal ruled that Slovenia has violated the provisions of the Arbitration Agreement. It concluded, at the same time, that the Arbitration Agreement remains in force. The contents of the Partial Award clearly shows that having ignored Croatia’s objections, the Arbitral Tribunal falsely claims that no doubts have been expressed as to independence and impartiality of arbitrators who are now part of the Arbitral Tribunal. Accordingly, the Arbitral Tribunal decided to continue the arbitral proceedings and return to examining the merits of the dispute between the two states, with the aim of delivering a final award on the course of the boundary on land and at sea. The Arbitral Tribunal’s Partial Award is available here and their press release here.

In its reaction to the Arbitral Tribunal’s award, the Ministry of Foreign and European Affairs issued a press release stating that it “considers the Arbitral Tribunal’s Partial Award as a missed opportunity for the Arbitral Tribunal to restore confidence in independence and impartiality of its own work, as well as confidence in international arbitration as such”. The Ministry added that Croatia is no longer a party to the arbitration process and that it shall not comment on the intentions or decisions of the Arbitral Tribunal, nor shall it consider itself bound by them. The press release can be accessed here.

In his reaction to the decision of the Arbitral Tribunal, Minister Kovač said that “the arbitration procedure is no longer relevant for Croatia” and repeated that Croatia is no longer a party in the procedure and does not comment on the intentions of the Arbitral Tribunal. Croatian News Agency’s press release can be accessed here.
25 November 2016 During his official visit to Slovenia, Minister of Foreign and European Affairs Davor Ivo Stier said that “the Arbitration Agreement [was] undoubtedly a thing of the past [that] should not be returned to”, thus confirming that – despite the change of governments – Croatia has not changed its views of the arbitration process. Minister Stier also reiterated Croatia’s stance that the border issue is a bilateral issue, and called upon Slovenia to launch bilateral talks about resolving it as soon as possible. The press releases that the Ministry of Foreign and European Affairs issued on that can be found here and here.
7 March 2017 The European Commission clarified its position towards the arbitration process by saying that "[t]he European Commission continues to follow closely the arbitration process on this bilateral issue". The statement sent to the Croatian News Agency also states that "[i]n general, the European Commission backs processes of arbitration which are in the interest of legal certainty for both sides", as well as that the European Commission was also open to supporting any viable, bilateral solution, if agreed between the two parties. At the end of its statement, the European Commission called on both parties "to pursue the bilateral dialogue on this important issue which should lead to legal certainty with regards to the definitive settlement of the border dispute." The Croatian News Agency press release can be accessed here (in Croatian).
26 April 2017 In its press release (available here), the Arbitral Tribunal said that it declared the hearings in this case closed and that it planned to render its award in the coming months. In his reaction to this announcement, Croatian Prime Minister Andrej Plenković said that Croatia will not be bound by the arbitral award and that "we are yet to find a solution to the boundary issue with Slovenia on land and at sea". The Prime Minister's statement can be accessed here.
19 June 2017  The Arbitral Tribunal published a press release (available here), in which it announced that it would render its award in the border dispute on 29 June 2017.
21 June 2017 In his reaction to this announcement, Croatian Prime Minister Andrej Plenković stated that "following the decision of the Croatian Parliament, the arbitral decision was unacceptable". He reiterated Croatia's dedication to resolving outstanding boundary issues with Slovenia, but not within a process, which Slovenia irreversibly contaminated and compromised. Prime Minister Plenković's statement can be accessed here (in Croatian).
22 June 2017 During his participation at the European Council, Prime Minister Plenković repeated that Croatia entered arbitration in good faith but that "it failed" and that the arbitration was, in Croatia's view, irreversibly contaminated. His statement is available here.
25 June 2017  Croatian President, Kolinda Grabar Kitarović, in her speech on the occasion of Statehood Day, said that Croatia was committed to developing dialogue with Slovenia, not only to advance cooperation, but also to resolve the boundary issue. She stressed that this arbitration was irreversibly compromised and that Croatia is no longer part of it. She also said that, no matter the contents of the decision, Croatia will not allow for it to be implemented. President Grabar Kitarović also added that Croatia was ready to start negotiations immediately and extended Croatia's invitation to Slovenia to do so. "I believe we must show that we are mature and ready to resolve this issue bilaterally", President Grabar Kitarović said in a speech available here (in Croatian).
 
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