15.05.2024.

The first completed ICSID case against BIH

The first meeting with potential clients, the director of the concession company HES Vrbas, Nemanja Petković, took place back in April 2015. After that, a meeting with representatives of the company Viaduct, Boris Goljevšček and Vladimir Zevnik, followed. Getting acquainted with the case was not easy at all; we were given a pile of documentation. After the initial analysis of the case, we determined that it had certain potential. We agreed on the terms of cooperation, and by May 2015, we began preparing the case.

In October 2015, on behalf of the concession company HES Vrbas, we sent a warning letter to the Government of the Republic of Srpska prior to initiating arbitration proceedings, claiming an amount of 46 million BAM. Negotiations followed but did not lead to an agreement, which paved the way for initiating arbitration proceedings.

The very high costs of the arbitration process seemed to present an insurmountable obstacle. From the very beginning, it was no secret that the clients lacked the financial means to initiate arbitration proceedings. The company's accounts were blocked, and this fact was known to the opposing party as well. At that point, we learned about the existence of so-called Third Party Funding, or funds that finance the costs of arbitration proceedings, and we began searching for a fund that would be interested in the Viaduct case.

 

The search for a fund presented a unique challenge. There were not many ICSID arbitration cases where Bosnia and Herzegovina was the respondent; at that time, only one case was active, and no fund had ever approved financing for an arbitration case against Bosnia and Herzegovina. By chance, we met American lawyer Timothy Scrantom, one of the pioneers of the idea of third-party funding for arbitration. From the beginning, lawyer Timothy showed great interest in the case. At the time of filing the lawsuit and initiating the arbitration process against Bosnia and Herzegovina, the financing issue had not yet been resolved. However, through lawyer Timothy's mediation, Vanin Capital agreed to finance the arbitration process and initially approved 2.5 million USD for the costs of the proceedings.

By finding the fund and securing the necessary resources to complete the initiated arbitration process, we felt that we had accomplished our task; the case would not be left in a drawer, and the clients would have a chance to protect their rights, which they believed were being infringed upon.

With the fund secured, a legal team was formed. Initially, we collaborated with the MSK law office from Washington, whose role was later taken over by the 3VB law office from London.

The arbitration tribunal in Washington conducted the proceedings and issued an arbitral award on April 18, 2022, obligating Bosnia and Herzegovina to pay a total amount of approximately 46 million EUR (the decision was made unanimously).

After the issuance of the arbitral award, Bosnia and Herzegovina filed a request to annul the award. Filing the annulment request also meant a suspension of the enforcement proceedings until a final decision on the annulment request was made.

On May 1, 2024, a three-member ad hoc committee appointed by ICSID issued a decision rejecting the request to annul the arbitral award of April 18, 2022, in its entirety as unfounded, thereby lifting the suspension of the enforcement proceedings. This brought the case to its final conclusion (the decision was also made unanimously).

Hundreds of work hours, exhaustive nine years of work on a colorful case, continuous uncertainty, and countless events have been summarized in one page.

The Viaduct case is the first successfully concluded ICSID arbitration proceeding against Bosnia and Herzegovina, the first case where Bosnia and Herzegovina initiated an annulment proceeding of an arbitral award, and the first case where a fund approved financing for a proceeding in which BIH was the respondent.

Unfortunately, the final resolution of the case was not witnessed by those to whom we owe great gratitude: lawyer Timothy Scrantom, who passed away in 2021, and Marjan Ristić, the tragically deceased Consul of the Republic of Slovenia in 2022, who, as a representative of the Embassy of the Republic of Slovenia, continuously followed the case and all its developments.