European Commission Sues Croatia Due to Law on INA

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The lawsuit has been filed with the European Court of Justice.

The European Commission decided on Thursday to institute proceedings against Croatia before the European Court of Justice because it did not change the Law on Privatisation of INA, which gives the state the right to veto in the main areas of business operations, reports on 13 July 2017.

INA is the Croatian national oil company.

“The Commission considers that the state’s special powers provided for in the INA law unduly restrict the free movement of capital and freedom of establishment. It acknowledges that the objective of protecting the security of energy supply is a legitimate public interest shared by the EU and could justify certain restrictions. However, such restrictions must be proportionate. In the present case, the INA law empowers the Croatian state to oppose important company decisions without needing to justify their veto in terms of potential threats to the security of supply or other public policy, or in the public interest,” says the European Commission in its statement.

Under the Law on INA, the state has been given special powers in the company, including the right to veto the company’s decisions regarding the sale of shares or property above a certain threshold. Likewise, the state may oppose important decisions of INA’s management, such as a change to company activity, granting of concessions or authorizations, and change of address of its headquarters. “In the Commission’s view, these unconditional veto powers go beyond what is necessary to protect the security of energy supply and are therefore disproportionate,” says the European Commission.

The Commission states that before joining the EU, Croatia had assumed the obligation to align the so-called INA law with EU rules. In November 2014, the European Commission decided to take action against Croatia for failure to amend such law. After assessing the observations of the Croatian authorities in December 2016, the European Commission sent a reasoned opinion to Croatia to formally request the amendment of the INA law, on the ground that it violates the rules of the Treaty on the Functioning of the European Union (TFEU) on the freedom of establishment and the free movement of capital. To date, Croatia has not complied with the Commission’s reasoned opinion.

The statement ends with a note that, notwithstanding today’s decision, the Commission remains open to efforts by the Croatian authorities to find a solution to this case.


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