After eight years of trying, is the 250 million euro investment in eastern Hvar on the verge of collapse?
Tourist complex “Zaljev sv. Jurja” on the island of Hvar, an investment worth 250 million euros, is facing collapse after 8 years of preparations, reports Poslovni.hr on September 7, 2015. The Norwegian investor Prime Property Kroatia (PPK), the project leader, is forced to withdraw because of the recent decision by the Croatian judiciary. PPK has suddenly found itself in dispute with its former business partners, and the court is now trying to resolve whether promissory notes were issued more than five years ago in the amount of 5 million euros on behalf of the company which was buying land on the island. That company was later integrated into the Croatian branch of the Norwegian company – PPK Nekretnine, whose funds have therefore been temporary blocked by a court decision made in July, after the former partners activated the controversial promissory notes.
The Norwegians filed a complaint, but the Municipal Civil Court in Zagreb ruled against them. It has rejected their appeal and blocked the funds pending the resolution of the dispute. “This decision has forced a liquid company, which has been for years and without difficulties funding one of the largest projects in Croatia, to face the danger of pre-bankruptcy proceedings”, said Jan-Andrea Aasmoen from the PPK Nekretnine company. This seriously threatens the whole project, which means that “Croatia could lose one of the largest investors, but it also threatens the inhabitants of Sućuraj who would have to return the down payments which have been paid to them by the company for their properties”.
Norwegians claim that “the promissory notes cannot be found in the company books nor has the court received any evidence they ever existed”. However, the court has now confirmed the temporary measure and has blocked the funds until the end of the dispute. The fact that the dispute may last a very long time means that the project seems unrealistic now, since at least 9 million kuna will be blocked. The PPK shareholders could give up on the project because they believe “this has become theater of the absurd”.
The case is significant since it shows that the judiciary is deprived of any sense of time. In disputes which involve investors, it would be appropriate to introduce additional rules which would lead to more speedy proceedings, so that temporary measures would not turn into permanent ones. Otherwise, it will be too late not just for projects like this, but also for the image of the country which will be deemed unsafe for investments.