Italy's UniCredit, the owner of Zagrebacka Banka (ZABA), has no grounds for arbitration over Croatia's law on the conversion of Swiss franc loans at the International Center for the Settlement of Investment Disputes (ICSID) because Italy withdrew from its investment protection agreement with Croatia, the Franak association, which brings together holders of those loans, said on Tuesday.
UniCredit announced last week that it would file a suit against Croatia at the ICSID in Washington because of the conversion of CHF loans.
Citing the UN website, Franak said in a press release that Italy had indeed cancelled its agreement with Croatia and that this meant that UniCredit had no grounds for launching arbitration proceedings at the ICSID.
Franak said it regretted that "we have incompetent people in ministries who seem to be willing to make certain concessions to ZABA in order to convince UniCredit, ZABA's parent bank, to give up the arbitration. However, it is evident that (UniCredit) has no grounds at all to launch arbitration proceedings whereby it threatens the sovereign Republic of Croatia."
Franak said that Italy's pulling out of the bilateral investment protection agreement proved Franak's claims that "Croatia too can and must withdraw" from bilateral agreements with Austria and all other European Union member states "and thus avoid the possibility of any arbitration in Washington."
The European Commission demands the cancellation of all bilateral investment protection agreements between member states as they are contrary to EU law and there is no reason for Croatia not to do so, Franak said, adding that it expected an urgent response from the government in order to prevent any damage to Croatia.