According to the proposal of a group of legal experts, the dispossessed investors in the bank rehabilitation would file a lawsuit against the fund, which would be established by the state. A court whose jurisdiction would be proposed by the Supreme Court could join the cases.
A group of independent legal experts was engaged two years ago by the Bank of Slovenia to find a solution for the effective legal protection of holders of deleted shares and subordinated bonds in banks that were rehabilitated by the state in 2013 and 2014. The group has prepared a draft law, which will now be forwarded to the Ministry of Finance, which will then decide whether to summarize it in the preparation of the draft law.
A former judge at the General Court of the EU specializing in EU banking law, Miro Prek told a press conference on behalf of the group that they are proposing to the state to establish a fund. The founding assets for the operation of the fund are provided by the founder, i.e. the state, the supervisory board appoints the director of the fund.
How to get compensation?
Small investors could join the class action lawsuits. In any case, you would have to file a lawsuit, and then you could be passive. If the court ruled in favor of an individual deleted holder in the same case, this would apply to all holders of the same deleted qualified liabilities of the bank.
According to the proposal of the Bank of Slovenia, summaries of decisions and other important documents are published on the website for each bank to which an extraordinary measure has been imposed. The Ministry of Finance sets up a virtual data room. According to the proposal, every entry is recorded, the room is managed by the Securities Market Agency (ATVP).
According to the proposal, expropriates file judgments demanding payment of compensation against the fund. If they cannot prove the status, they sue the ATVP, so that the court can determine whether they are deleted holders or not. Lawsuits are filed seven months after the publication of the notice on the establishment of the virtual data room. The Fund must respond to them within six months.
After receiving the response to the lawsuits, the court merges all the lawsuits related to the same decision of the Bank of Slovenia. He issues a joint judgment on all consolidated litigations. After merging the disputes, the court has the option of implementing a model procedure. The court selects one or more lawsuits from former owners and combines them for consideration in a model procedure. The court may appoint a group of experts to prepare an opinion for it.
The court then issues a judgment regarding the merits of the claims, i.e. whether there is an obligation to compensate damages according to individual orders of qualified obligations. Then, the former owners must file a claim for the amount of damages within six months of the judgment becoming final. It is decided by the administrative unit with local jurisdiction, whereby the former holder is entitled to reimbursement of damages up to the value at which the individual qualified obligation of the bank was acquired with interest.
If it were established in the proceedings that Banka Slovenije or the persons it authorized to act on its behalf had seriously violated the duty of care, the fund could sue Banka Slovenije. In the event of a conviction, he should be reimbursed.
The Constitutional Court annulled the law
A group of legal experts published the proposal after the Constitutional Court annulled the law due to its unconstitutionality, with which the state wanted to order the Bank of Slovenia to pay compensation for the deletion of the property of natural persons in rehabilitated banks. In addition to Prek, the group also includes a full-time professor in the field of civil and commercial law at the Faculty of Law in Ljubljana Miha Juhartprofessor of financial and economic law at the University of Luxembourg and member of the European Banking Authority Andre Prüm and former President of the Constitutional and Supreme Courts Franc Testen.
As Jurij Žitko, director of the legal department of the Bank of Slovenia, said today, the verdict of the Constitutional Court published this week is important because it gives very useful instructions on how to prepare a constitutionally compliant law. According to Žitko, after two proceedings before the Constitutional Court and two before the EU Court, the decision is the last step to begin work on a comprehensive and coherent legal solution, and the Bank of Slovenia also wanted to contribute to this.
Žitko highlighted the points from the decision, that a solution for the former holders of the canceled qualified liabilities of the banks must be prepared as soon as possible, that any compensation must be paid from public funds and that a solution would also be admissible if the compensation represented a social correction that would mitigate the problems for low-income individuals. The constitutional judges also confirmed solutions regarding the disclosure of confidential information in connection with court proceedings contained in the repealed law.
“The key purpose of the proposal is that it will be available to competent authorities to use at their discretion in legislative and other procedures. In this way, the Bank of Slovenia tried to contribute its share to the regulation of long-standing unresolved problems that cause disturbances in the functioning of the financial system and for which the stakeholders have so far failed to use the means of effective legal protection,” Banka Slovenije stated.
The IMF proposes an out-of-court settlement
“We must make it clear that if we do not find a common language about an out-of-court settlement or settlement scheme, the law must be prepared by the Ministry of Justice and not by the Ministry of Finance with the help of the Bank of Slovenia, since the correction of an inadequate law for the correction of injustices cannot be prepared by the person who was an active actor in these events. If we joke, this is the same as giving a person convicted of a crime the opportunity to change or amend the penal code and his crime could become just a misdemeanor,” commented the proposal Rajko Stankovićpresident of the Association of Small Shareholders of Slovenia (MDS), who attended the presentation of the views of the Bank of Slovenia regarding solutions for deleted shareholders and bondholders of Slovenian banks.
However, the IMF believes that there are quite a few inconsistencies in the proposals of the Bank of Slovenia, among other things, that compensation at the maximum purchase price of the instrument violates the fundamental principle of repayment of the actual damage suffered and destroys the financial system, since no one will be willing to invest if, in the best case, got as much as he invested.
In their opinion, the solution for the Bank of Slovenia to determine which documents are necessary for the litigation (and thereby allowing inspection of them) is the same as the solution where the defendant would determine which parts of the apartment should be searched in pre-trial proceedings. The Bank of Slovenia cannot be “court assistant“, since it implemented the disputed measures and is potentially liable for damages, as the Court of Justice of the EU also found, they also stated.
The IMF praised two proposals, namely that the Bank of Slovenia recognizes the running of interest, which until now no law has provided for this, and for the first time also admits that it is possible that someone from the Bank of Slovenia made a mistake and a recourse claim against the Bank can be asserted Slovenia.
The IMF also sent an initiative to the Minister of Finance, the Minister of Justice and the Governor of the Bank of Slovenia to find a compromise out-of-court settlement scheme for all involved.
Source: Rtvslo
