The Buzz in Croatia: Interview with Vjekoslav Ivancic of Ostermann & Partners

The Buzz in Croatia: Interview with Vjekoslav Ivancic of Ostermann & Partners

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“Agrokor is still in the center of everyone’s interest,” reports Vjekoslav Ivancic, Partner at Croatia's Ostermann & Partners. “Not as much as it was previously, of course. But now the settlement of Agrokor is being implemented.” Ivancic says that “it’s definitely going to be a challenge. But all sides are keen to settle this, as was the purpose of the Lex Agrokor in the first place.”

When asked about the effect of the process on the legal marketplace, he says “It is definitely creating work for lawyers. At the end it appears most of the sides 'went in;' they made a deal and settled. But there was definitely a lot of work for lawyers of all sides.”

He rolls his eyes when the subject turns to the awkwardly-named "Law on Nullity of Loan Agreements with International Characteristics Concluded with Unauthorized Creditors in the Republic of Croatia,” which he describes as a “very strange law, to put it mildly.” According to him, “the purpose of the law was to protect consumers from foreign banks who gave loans without first obtaining the license of the Croatian National Bank,” but he reports “the law itself was of poor quality and rendered very quickly without much consideration for constitutional principles, due to the complex political situation and the instability of the political system at the time.“ According to him, there is “lots of controversy about the law, and there’s a case pending before the European Court of Justice as to whether the law is compliant with EU rules.” The ECJ’s Advocate General has issued an opinion that the law isn't compliant, in fact, and Ivancic says, "so that’s bringing a lot of comfort to creditors.” Ostermann & Partners “works for the financial institutions” he admits, but he insists that, “you don't have to be a constitutional or an EU law expert to see at first glance that the respective law is very controversial from that perspective, so the opinion of the Advocate General did not come as a surprise to the legal community in Croatia.”

Otherwise, Ivancic says, the Croatian economy is going well, and business is strong. He points in particular to the “continuing strong NPL market,” and he reports that “it's not a sign of the economy rising, of course, but still, things are moving.” He notes that “different funds are buying NPL portfolios from banks — and that’s not the end of it, because they sell them on, and the circle continues.” In addition, he say, “here the emphasis is not only on the NPL market — so loans and mortgages — but also real estate assets and their legal and zoning status. So some of the work is more in the nature of real estate transactions than NPL transactions.”

And, he notes, “there’s definitely more stability in the political system than there was a year and a half ago.” He says, “the big issue in Croatia at this moment is the expected restructuring of the Uljanik shipyard in Istria.” Though not technically state-owned, the shipyard is of interest of the state, which issued guarantees to commercial banks for Uljanik's loans. Thus, although “there is a budgetary surplus — which I don’t remember ever in Croatia — the downside is that that surplus will probably be spent on guarantees issued by the state for the benefit of Uljanik’s creditors.”