Croatia/Slovenia Arbitration

JurisdictionDerecho Internacional
CourtArbitration Tribunal (International)
JudgeMichel,Fife,Simma,Guillaume,Lowe
Date29 June 2017

Arbitration Tribunal2

Partial Award.

Final Award.

(Guillaume, President; Fife, Lowe, Michel and Simma, Members)

In the Matter of an Arbitration Under the Arbitration Agreement Between the Government of the Republic of Croatia and the Government of the Republic of Slovenia, Signed on 4 November 2009

(Republic of Croatia/Republic of Slovenia)1

Arbitration — Arbitration tribunal — Members of tribunal — Requirement of impartiality and independence — Whether ex parte communications between arbitrator and party agent violating arbitration agreement

Arbitration — Jurisdiction — Competence of arbitration tribunal to rule on objections to jurisdiction — Whether breach of arbitration agreement ground to terminate agreement — Definition of material breach — Vienna Convention on the Law of Treaties, 1969 — Whether attempt to terminate the treaty for material breach depriving arbitration tribunal of jurisdiction — Article 65 — Whether conduct in breach of arbitration agreement repudiating or frustrating object or purpose of arbitration agreement — Whether measures taken by arbitration tribunal ensuring procedural fairness

General principles of international law — Compétence de la compétence — Challenges to jurisdiction of arbitration tribunal — Whether tribunal having power to decide on challenges to its own jurisdiction — Jurisdiction of arbitration tribunal to rule on validity of termination of arbitration agreement

Sea — Law of the sea — Geneva Convention on the Territorial Sea and the Contiguous Zone, 1958 — Status of bay as internal waters — Definition of “closing line” of a juridical bay — Article 7 — No requirement to publish chart indicating closing line or to give publicity to baselines

Sea — Law of the sea — United Nations Convention on the Law of the Sea, 1982 — Delimitation of territorial sea — Article 15 — Equidistance line subject to special circumstances — Whether difference in lengths of coastal fronts or whether coastal configuration exacerbating “boxed-in condition” special circumstance requiring adjustment of equidistance line

Sea — Maritime boundaries — Delimitation — Dispute settlement — Arbitration agreement — Use of word “junction” — Ordinary meaning of word — Regime to ensure unimpeded access between Slovenia's territorial sea and the high seas or exclusive economic zones of other States in accordance with international law, equity and principle of good neighbourly relations — Freedom of movement within “junction area” not subject to requirements applicable to innocent passage or transit passage — No right of Slovenia to exploit living or non-living marine resources within junction area — Requirement that parties exercise rights and obligations within junction area in good faith and in accordance with duty of cooperation

State responsibility — Ex parte communication between arbitrator and party agent — Breach of arbitration agreement — Whether conduct of party agent attributable to State

State succession — Law of the sea — Whether internal waters of a single State retaining that status upon dissolution of that State

Territory — Determination of land boundary — Uti possidetis — Whether internal boundaries prior to independence constituting present-day land boundary between the parties — Presumption that aligned cadastral limits from pre-independence period constituting present-day land boundary — Whether other formal evidence of title establishing boundary if cadastral limits disputed or not aligned — Whether effectivités sufficient to override evidence of aligned cadastral limits or other formal evidence of title — Reliance on effectivités only in absence of other pre-independence evidence — Whether preferences of local population relevant to determination of land boundary

Territory — Internal waters — Delimitation of juridical bay — Application of uti possidetis principle — No formal division of bay prior to independence of the parties — Delimitation of bay subject to evidence of effectivités — Whether special regime for usage of bay required

Treaties — Vienna Convention on the Law of Treaties, 1969 — Notice of termination of a treaty — Articles 60 and 65 — Requirement of material breach — Whether breach constituting repudiation of a treaty or frustrating its object and purpose

Summary:3The facts:—The Republic of Croatia (“Croatia”) and the Republic of Slovenia (“Slovenia”) (together “the Parties”) were successor States to the Socialist Federal Republic of Yugoslavia (“the SFRY”). From 1992 until 2001, the Parties engaged in unsuccessful negotiations to resolve the dispute over their shared land and maritime boundaries.

In 2004, Slovenia acceded to the European Union. Negotiations regarding Croatia's accession to the European Union commenced in 2005. Slovenia raised certain reservations to the accession process on the basis that it might prejudice the course of the border. Following intervention by the European Commission, on 4 November 2009 the Parties signed an arbitration agreement (“the Arbitration Agreement”). In accordance with Article 3 of the Arbitration Agreement, the Arbitration Tribunal (“the Tribunal”) was to determine: (a) the course of the maritime and land boundary between the Parties; (b) Slovenia's “junction to the High Sea”; and (c) the regime for the use of the relevant maritime areas. Article 4 provided that the Tribunal was to apply the rules and principles of international law to determine the course of the maritime and land boundary. The other issues were to be decided on the basis of international law, equity, and the principle of good neighbourly relations in order to achieve a “fair and just result”. The Arbitration Agreement entered into force in 2010, after which Slovenia lifted its reservations to Croatia's accession to the European Union. Croatia acceded to the European Union in 2013.

In January 2012, the Tribunal was constituted pursuant to the Arbitration Agreement. It commenced its deliberations following the close of the hearing in The Hague on 13 June 2014.

On 30 April 2015, Croatia forwarded to the Tribunal a letter addressed to Slovenia in which Croatia asked Slovenia to explain two statements made by the Slovenian Minister of Foreign Affairs during interviews with Slovenian television. In one statement, the Minister referred to “unofficial information” that the Tribunal would determine that Slovenia “had contact with the high seas”. In the other statement, he indicated that he had “made it very clear” to the Tribunal that Slovenia would consider the absence of such a determination a failure to execute its mandate. Croatia called on Slovenia to “remove suspicion” that it had attempted to influence the work of the Tribunal. Slovenia responded that it did not possess information about the outcome of the arbitration and had not sought to influence the work of the Tribunal.

On 5 May 2015, the Tribunal expressed concern to the Parties with respect to the suggestion that a Party might have access to confidential information relating to its deliberations, and affirmed that representatives and arbitrators were to refrain from ex parte communications.

In a letter dated 28 June 2015, Croatia drew the Tribunal's attention to further media interviews by the Slovenian Minister and expressed concern that Slovenia had access to information on the Tribunal's deliberations, including that the award would be unfavourable to Croatia. On 1 July 2015, Slovenia suggested that the Minister's statements had been mistranslated and taken out of context.

In a letter dated 9 July 2015, the Tribunal announced, following consultations with the Parties, that it would render an award on 17 December 2015. It also called on the Parties to refrain from making public statements concerning the arbitration.

On 22 July 2015, newspapers in Serbia and Croatia published transcripts and audio files of two telephone conversations dating from 15 November 2014 and 11 January 2015, reportedly involving the arbitrator appointed by Slovenia, Dr Sekolec, and one of Slovenia's agents, Ms Drenik. The conversations concerned the internal deliberations of the Tribunal and covered a range of issues, including its tentative conclusions, possible opportunities to influence Tribunal members, and the provision of documents from Ms Drenik to Dr Sekolec.4

On 23 July 2015, the Tribunal notified the Parties that Dr Sekolec had resigned from the Tribunal. Croatia requested that the Tribunal suspend proceedings on the ground that Ms Drenik and Dr Sekolec had colluded to influence other members of the Tribunal by introducing new “facts” and “arguments”, with the aim of obtaining a more favourable outcome for

Slovenia.5 Croatia described the arbitration as “tainted” by this conduct. Slovenia opposed this request and on 28 July 2015 appointed Mr Abraham, President of the International Court of Justice, to replace Dr Sekolec.

On 30 July 2015, the Tribunal notified the Parties that Professor Vukas, the arbitrator appointed by Croatia, had resigned. On the same day, Croatia notified Slovenia that it considered Slovenia in material breach of the Arbitration Agreement, that Croatia was entitled to terminate the Arbitration Agreement in accordance with Article 60(1) of the Vienna Convention on the Law of Treaties, 1969 (“the Vienna Convention”), and that it was ceasing to apply the Arbitration Agreement.6 On 31 July 2015, Croatia informed the Tribunal that it considered the arbitration process to have been “totally and irreversibly compromised” and had notified Slovenia of its intention to terminate the agreement. Judge Abraham resigned from the Tribunal on the same day.

On 13 August 2015, Slovenia informed the Tribunal that it rejected Croatia's notification of its intent to terminate the Arbitration Agreement, and stated that the Tribunal had a duty to continue the proceedings. Slovenia further requested a replacement for Judge Abraham. On 25 September 2015, the Tribunal informed the Parties that the President had...

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