Justifications such as ‘we are still a young country’ and ‘the Croatian judiciary is still inexperienced’ can no longer pass because the country is not that young – in a few months it will turn 27 years old and has been ‘of age’ for some time now. It is no longer a matter of ‘inexperience’, but something entirely different, as evidenced by the recently rendered final decision of a Croatian court at the national level which rejected the lawsuit of a Croatian trading company against the subsidiary of a multinational corporation.
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According to that ruling, the multinational, which is among the world’s top performers in business success, does not have to pay for the product it received. The case is somewhat more complex, but in the event of a violation of legal norms, one would expect that the Croatian court, if not in the first instance, then at least in the second instance, would recognize the essence of the problem and clearly distinguish good from bad, positive from negative, unlawful from legal. Unfortunately, no matter how impossible it may sound, in this specific case, everything happened except what should have happened.
Change of Intermediary
A Croatian manufacturer (Ciglana Sinj) for some internal reasons has been marketing its product (which is valued and sought after) through another legal entity (which purchased from it and paid it) for years. This product was purchased by the subsidiary of a multinational corporation (Cemex). This went on for years.
According to the final ruling of the Croatian court, the subsidiary of a multinational does not have to pay for the received goods to the domestic manufacturer because it did not obtain consent to terminate the contract from the previous intermediary. In doing so, the court ignored that the fact that the contract was not assigned does not mean that an individual right from that contract was not assigned.
At one point, the relationship between the manufacturer and the intermediary became strained, and the manufacturer decided to terminate cooperation with the intermediary and informed the buyer about it. In writing, it stated that it was severing all ties with the previous intermediary and that it was now doing business through a third legal entity. The ‘subsidiary’ duly received a new shipment of goods through the new intermediary but did not pay for it. After some time, it began to pay (because otherwise it would not receive goods), but there remained a debt from the first delivery.
The new intermediary (who duly paid for the goods to the manufacturer) ultimately decided to file a lawsuit, but the court rejected it because the contract cannot be assigned-transferred without the consent of the other contracting party (in this case, the previous intermediary or seller).
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The court evidently failed to apply the elementary rule that the fact that the contract was not assigned does not mean and cannot mean that an individual right from that contract was not assigned (and the lesser is contained in the greater). For the assignment of an individual right, it is only necessary to notify the debtor, and this was not disputed in this case. The ‘subsidiary’ received the goods and did not pay for them, the manufacturer received the purchase price from the intermediary or seller, and the buyer persistently refuses to pay either the seller or the manufacturer, thus achieving an unjustified and undeserved profit (it is not theft, but it is not far from theft either).
To make matters worse (and this is probably what those interested are counting on), the manufacturer is in some ’empty space’ between bankruptcy and pre-bankruptcy proceedings, and the limitation periods concerning the manufacturer have expired, so the manufacturer has no prospects if it decides to file a lawsuit (but since it has received the money, it has nothing to sue for).
And ordinary honesty?
The real question is why such an incorrect, unjust, and unbusinesslike procedure of the multinational corporation goes ‘under the radar’ of those who deal with the business operations of business entities in our country. Just as good examples should be praised, bad ones should also be criticized.
We live in a time when purposive interpretation is widely accepted. Croatia is an EU member, business ethics and business codes are the law for business entities, Croatian judges are also European judges and should apply the law sovereignly and creatively. Instead, in the 21st century, we have a court decision that acts as if purposive interpretation does not exist at all; it is final and cannot be changed.
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We have a multinational corporation that formally tries to ‘sneak’ something that does not belong to it and does not think to return the delivery it has not paid for or to question why it paid for the next one and everything from then until today. As things stand now, the price has been paid by the one who is least guilty, or who is not guilty at all.
That is the intermediary who accepted to help the manufacturer not to go bankrupt and, through a series of incredible circumstances, jeopardized both its survival and its future, among other things, on the example of that manufacturer and that intermediary, the debate rages on the topic of which came first, the chicken or the egg – here whether the pre-bankruptcy or bankruptcy procedure is older – why has no one in authority ‘cut through’ this until now?
