BATINOVIC AND POINT-TRADE, D.O.O. v. CROATIA
Inadmissible
Christos Rozakis
The first applicant, Mr Joko Batinović, is a Croatian national who was born in 1948 and lives in Ploče. The second applicant, Point-Trade, d.o.o., is a limited liability company with its seat in Imotski. The applicants were represented before the Court by Palić and Šurjak Law Offices, Zagreb. The Croatian Government (“the Government”) were represented by their Agent, Mrs Š. Stažnik. The facts of the case, as submitted by the parties, may be summarised as follows. The applicants were shareholders of the Croatia Bank, which is a joint stock company with its seat in Zagreb (“the Bank”). The Bank was entirely owned by private individuals and companies. On 23 February 1999 the Council of the Croatian National Bank (Savjet Hrvatske Narodne Banke, “the HNB”) adopted a decision to appoint a temporary manager for the Bank. According to the Banks Act, from the date of the service of such decision, all powers of the management board, the supervisory board and the shareholders’ assembly were transferred to the temporary manager. Subsequently, on 23 August 1999 the HNB prolonged the appointed temporary manager’s mandate for another two months. Meanwhile, on the basis of an expert opinion indicating the Bank’s financial losses, on 18 June 1999 the HNB proposed to the Government to commence the process of sanation and restructuring of the Bank in line with the domestic legislation. According to the above proposal, on 23 September 1999 the Government adopted the Decision on Sanation and Restructuring of the Croatia Bank (“the Decision”). From that date, all shares of the shareholders were withdrawn and annulled. Following the process of sanation, the Bank was to issue new shares, all to the name of the State Agency for Securing Deposits and Sanation of Banks (Državna agencija za osiguranja štednih uloga i sanaciju banaka). In late 1999 the applicants filed separate petitions for review of constitutionality and legality (prijedlog za ocjenu ustavnosti i zakonitosti) of the Decision. They complained that the Decision violated their property rights as shareholders of the Bank. They also claimed that the Bank had been in good standing and that the Decision had therefore been arbitrary and, in any event, unnecessary. On 30 January 2003 the Constitutional Court (Ustavni sud Republike Hrvatske) discontinued the proceedings because the law on which the Decision was based had meanwhile been abrogated. The Law on Sanation and Restructuring of Banks (Zakon o sanaciji i restrukturiranju banaka, Official Gazette no. 44/1994 of 3 June 1994, “the Sanation and Restructuring Act”), insofar as relevant, read as follows: “The procedure of sanation and restructuring shall take place when a bank shows potential losses ... of more than 50% of the amount of its share capital, if the HNB deems such procedure feasible and economically justifiable. The decision on sanation and restructuring of a bank shall be given by the Government of the Republic of Croatia on the basis of a proposal by the HNB.” The Sanation and Restructuring Act was abrogated on 23 May 2000 (Zakon o prestanku važenja zakona o sanaciji i restrukturiranju banaka, Official Gazette no. 52/2000 of 23 May 2000). The Decision on Sanation and Restructuring of the Croatia Bank (Odluka o sanaciji i restrukturiranju Croatia Banke d.d., Zagreb, Official Gazette nos. 98/1999 of 27 September 1999 and 53/2000 of 26 May 2000; “the Decision”), insofar as relevant, reads as follows: “It is established that on 31 May 1999 the Bank has (a) risky placements and potential obligations in the amount of 1,809 million kunas, including potential losses of 517 million kunas: (b) doubtful and disputed claims ... in the amount of 446 million kunas; (c) business losses incurred in 1998 and between 1 January and 31 May 1999 in the amount of 622.2 million kunas. On the day of the publication of this Decision all existing shares of the Bank shall be withdrawn and annulled. The Bank shall issue new shares in the amount of 217 million kunas, which shall be entirely owned by the Agency.” The Constitution of the Republic of Croatia (Ustav Republike Hrvatske, Official Gazette no. 11/2001 of 7 May 2001) provides as follows: “The right of ownership is guaranteed. 1. Property may be restricted or taken in accordance with the law and in the interest of the Republic of Croatia subject to payment of compensation equal to its market value. 2. The exercise...of property rights may, on an exceptional basis, be restricted by law for the protection of the interests and security of the Republic of Croatia, nature, the environment or public health. The Constitutional Court of the Republic of Croatia: - shall decide on the conformity of statutes with the Constitution; - shall decide on the conformity of subordinate legislation with the Constitution and statutes; - may decide on the constitutionality of statutes or subordinate legislation which are no longer in force, provided that from the moment of their abrogation until the submission of an application or a petition to institute the proceedings not more than one year has passed.” The Constitutional Act on the Constitutional Court (Ustavni zakon o Ustavnom sudu Republike Hrvatske, Official Gazette no. 49/2002 of 3 May 2002; “the Constitutional Court Act”), insofar as relevant, provides as follows: “Every individual or legal person has the right to request the institution of proceedings to review the constitutionality of statutes or subordinate legislation.... “The Constitutional Court shall commence proceedings within one year after the petition has been lodged.” The relevant part of section 19 (1) of the Courts Act (Zakon o sudovima, Official Gazette nos. 3/1994, 100/1996, 131/1997 and 129/2000) as in force at the material time reads as follows: Commercial courts... adjudicate disputes concerning establishment, functioning and dissolution of commercial companies as well as disputes concerning dispositions with membership and membership rights in such companies...” In its judgment Pž-6234/04-2 of 21 December 2004 the High Commercial Court (Visoki trgovački sud) adopted a judgment, which insofar relevant reads as follows: “It is declared that A.K. ... is a shareholder of Croatia Bank d.d. Zagreb and holder of rights in respect of 1,517 shares of nominal value of 200 HRK each..., and therefore entitled to both the property rights deriving from these shares and all the rights acquired through the investment of capital in Croatia banka d.d. from its foundation until the present day...”