The End of the Court Saga Over Spaladium Arena Is Not in Sight

Probably the largest arbitration proceeding by value, the largest dispute ever conducted in this area (excluding Zagreb) is the one concerning Spaladium Arena in Split, whose principal amount is worth more than five hundred million kuna, and when late interest is added, it is incomparably more. In terms of the idea, it is a beautiful project in which the City of Split offered interested investors in the market a public-private partnership to build several facilities.

In the so-called package, the primary focus was Spaladium Arena as a sports and multifunctional arena, then a large parking lot, a hotel, and a vast space for judicial and other institutions. Everything started idyllically, with great interest from investors. The first construction part (the Arena itself) was nearly completed, and the partners were paying what they were supposed to pay, referring to the Republic of Croatia and the City of Split.

How Problems Started

At one point, everything began to complicate – private partners fell into business troubles, and Pandora’s box was opened. Public financing ceased, banks that financed private partners (who went bankrupt) considered themselves harmed and initiated proceedings. And then something unprecedented occurred: arbitration was initiated (in 2015) in which a decision was made in favor of the banks to the detriment of the City of Split, but, outside all legal customs and norms that apply to both arbitration and courts, it happened that the annexes of the main contract in arbitration were not even read, and in the annexes of the contract, completely contra legem, the mayor of Split unilaterally deviated from the main contract, and that beyond the limits allowed by law without the consent of the City Council.

Of course, problems continued to pile up. The City of Split initiated criminal proceedings against both the arbitrators and responsible persons. Meanwhile, many strange data appeared: for example, the president of the arbitration during the arbitration proceedings was long not on the list of international arbitrators (and this is an international dispute), which was attempted to be remedied towards the end of the proceedings by merging the international and domestic lists. After that, both the City of Split and the separately authorized person for concluding that public contract on public-private partnership Dejan Kružić initiated separate litigation proceedings.

Reduced Value

So far, the City of Split has successfully obtained a final ruling, and Professor Kružić’s lawsuit was dismissed in the first instance because there was no legal interest in conducting the proceedings. Now that proceeding has also received a final ruling: thus, the High Commercial Court decided that Professor Kružić indeed has active legitimacy and the right to conduct the proceedings. As soon as this happened, along with many strange events such as delivery and similar, the banks, as if nothing had happened, sued the City of Split for payment. And then follows the strangest part, which calls into question the seriousness and credibility of those responsible: how is it possible to place a value of 10,001 kuna on a lawsuit that demands directly and indirectly half a billion kuna in principal?

This is playing with legal certainty; it is, in fact, playing with the state. Of course, at a recently held hearing, the City of Split opposed this, and the judge overseeing the proceedings reacted by not allowing it and determining a value of the subject of the dispute one hundred times greater – one million kuna. However, as a fact that will certainly be studied in law faculties, it stands that this happened. Just for clarity, the court fee is determined according to the value of the subject of the dispute.

Does anyone have the right to harass Croatian or any courts by determining a value that has no connection to reality, and is it not logical then to ask whether that lawsuit was written in such a way that its value was charged a thousand times less than it should have been?

It Could, But It Didn’t

In the latest lawsuit by the banks against the City of Split and Spaladium Arena in bankruptcy, filed just before the preparatory hearing, the banks submitted a huge amount of documents, aware that the defendants could not respond immediately. The City of Split requested a period of fifteen days, the court accepted this and set a hearing for November – would it not be logical to set the beginning for September and, for example, in October and render a judgment?

Also, could the value of the subject of the dispute (and thus the costs of the proceedings for the one who loses) not be determined in the full claimed amount, would it not be logical to have a substitute judge in case of a longer illness of the person conducting the proceedings (which is always possible), would it not be logical to ensure that proceedings regarding legal remedies last weeks, not years?

Finally, would it not be most logical for the DORH to announce why it dismissed the criminal complaint against the arbitrators (to which it, of course, had the right) and how the legally annulled arbitration decision did not affect any potential re-involvement in the proceedings and whether perhaps the neglect of Spaladium Arena in bankruptcy has elements of prohibited conduct in the latest proceedings?