In October 2016 the Constitutional Court of the Republic of Slovenia issued its decision No. U-I-295/13 on the constitutionality of provisions of the Banking Act (ZBan-1) which regulated the write-off of qualified financial instruments. The decision affected a large number of subordinated bond holders and shareholders of various Slovenian banks, whose financial instruments were written-off by the decisions of the Bank of Slovenia. The decisions were adopted during the rehabilitation of the Slovenian banking system after the financial crisis in December 2013.
The declared unconstitutionality of provisions for the protection of shareholders and creditors in the event of a decision on emergency measures shall be remedied on the basis of the new Act on Judicial Relief Granted to Holders of Qualified Bank Instruments (the "Act"). The Act aims to provide effective judicial relief to the injured parties in terms of accessibility to information, burden of proof, and joining of litigation procedures.
The subject of judicial relief under the new Act will be determined in a litigation proceeding; the beneficiaries of which will be the former holders of qualified financial instruments issued by the banks, who were adversely affected by the decision on extraordinary measures of the Bank of Slovenia.
The most important points of the newly proposed procedure are the following:
- limited circle of persons who are entitled to file an action against the Bank of Slovenia due to cancellation of qualified financial instruments issued by a bank;
- deadline to file an action is six months from the implementation of the Act;
- damages shall be paid by the Bank of Slovenia only if its liability is proven, otherwise the Republic of Slovenia shall cover the damages;
- specific formula for the calculation of damages is provided;
- possibility of joint processing of multiple lawsuits;
- the court may issue only one judgement for all parties injured from one particular decision of the Bank of Slovenia which will have effect also for those parties who did not file actions for damages;
- joint representative to be appointed to protect the rights of those injured persons who did not file actions for damages; and
- two-stage access to information.