The European Court of Human Rights ruled in favor of the expropriated investors

On Tuesday, 14 September 2021, the European Court of Human Rights (“ECHR”) issued a judgment in the case of Pintar and Others v. Slovenia, ruling that expropriated investors did not have the possibility of an effective remedy in Slovenia in national bank’s extraordinary measures canceling shares and bonds in in 2013 and 2014,

The judgment refers to a total of seven applicants, one of whom was represented by our law firm, who filed legal remedies due to the lack of appropriate legal proceedings in which they would have the opportunity to challenge the extraordinary measures of the Bank of Slovenia, on the basis of which eligible liabilities of banks ceased in 2013 and 2014. For the applicants, the concrete measures meant the termination of their shares and subordinated bonds

The disputed decisions of the Bank of Slovenia were based on the provisions of Slovenian law, in particular the Banking Act. According to the ECHR, the latter are appropriate in terms of accessibility and predictability, but any interference with the peaceful enjoyment of assets must be accompanied by procedural guarantees that provide the affected individual with a reasonable opportunity to present his case to the responsible authorities in order to effectively challenge measures.

The ECHR ruled that the shares and bonds in the present case constituted assets within the meaning of Article 1 of Protocol No. 1. to the European Convention for the Protection of Human Rights and Fundamental Freedoms (“ECPHRFF“), which stipulates that every natural or legal person is entitled to the peaceful enjoyment of his assets and that no one shall be deprived of his assets unless in the public interest, in accordance with the conditions laid down by law and in compliance with the general principles of international law. Consequently, the termination of the specific shares and bonds constituted an interference with the applicants’ assets.

According to the ECHR, neither the claim for damages under the Banking Act nor other legal remedies used by some of the applicants provided a reasonable possibility to challenge the decisions of the Bank of Slovenia or claiming damages. At the same time, the interference with the applicants’ assets was not accompanied by an adequate procedural guarantee, so the interference was not lawful within the meaning of Article 1 of Protocol No. 1 to the ECPHRFF.

The ECHR emphasized in particular that, in accordance with the ECPHRFF and under the supervision of the Committee of Ministers, the country must take appropriate general and specific measures to guarantee the applicants the rights that have been violated. Measures must also be taken in respect of all others who are in the same situation as the applicants. All of them must therefore have access to legal proceedings which will enable them to challenge effectively the interference with their assets as soon as possible.

The ECHR did not award the applicants pecuniary damage, explaining that it could not speculate on the outcome of the proceedings if the applicants could effectively challenge these decisions in proceedings corresponding to the country’s procedural obligations under Article 1 of Protocol No. 1 to the ECHRFF. However, it awarded them non-pecuniary damage and the costs of the proceedings, explaining in relation to non-pecuniary damage that the fact that they could not claim damages and were in uncertainty as to the legal remedy that would enable them to do so caused distress to the applicants.

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