Croatia and 6 Banks Reach Deal over CHF Loan-Related Arbitration Proceedings

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“I am glad to be able to confirm that an agreement has been reached with the six banks that have launched proceedings before the International Centre for Settlement of Investment Disputes (ICSID) in Washington and before domestic courts, as well as with those that at this point have not yet launched such proceedings,” Marić told a press conference.

He recalled that Zagrebačka Banka, Raiffeisen Bank, Erste Bank, OTP Bank, Addiko Bank and Société Générale had initiated legal proceedings against Croatia before the ICSID and the Commercial Court in Zagreb seeking compensation for the costs arising from the conversion of CHF-indexed loans.

Based on the agreement reached, the proceedings initiated by Zagrebačka Banka, Raiffeisen, Erste and OTP would be suspended with immediate effect. The agreement also applies to Privredna Banka Zagreb and Sberbank, although they did not take legal action against Croatia.

No agreement has been reached with Addiko and Société Générale, which is no longer present on the Croatian market, but dialogue will continue in efforts to reach a solution with them as well, Marić said.

Citing procedures before the ICSID, he said that there were certain steps that needed to be fulfilled within six months, after which the arbitration proceedings would be suspended for good.

Marić said that thanks to the agreement, the potential payment of at least HRK 2.5 billion from the state budget was avoided, adding that HRK 482 million related to the lawsuits before the Commercial Court in Zagreb and about HRK 2 billion to the lawsuits before the ICSID.

Marić said that Croatia had so far paid HRK 127 million for court costs, the costs of lawyers and expert witnesses, and similar costs for the cases before the ICSID. He noted that the agreement reached did not imply any further costs to the government.

Asked about the government’s commitments under the agreement, Marić said that the banks had recognised the government’s efforts to improve the business environment and further align national legislation with EU standards and directives, as well as the steps taken towards adopting the euro. He thanked the banks for the constructive dialogue and for acknowledging the government’s efforts.

In 2015, Croatia amended the Consumer Credit Act and the Credit Institutions Act allowing for the conversion of CHF loans into euro-indexed loans, which prompted legal action from the banks.

Currently, there are 13 cases against Croatia before the ICSID and four of them will now be dropped, which is certainly important for Croatia’s international reputation, Marić said.

Today the Constitutional Court is due to rule on the lawsuits brought by banks against the Supreme Court ruling that upheld the invalidity of the CHF currency clause for loan agreements concluded between 2004 and 2008, and this ruling is important for 125,000 families that concluded loan agreements with the CHF currency clause. Marić said that this case was not related to the subject matter of this press conference.

(€1 = HRK 7.56)


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