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SLOVENIA: An Introduction to Dispute Resolution

Contributors:
Borut Leskovec
Iris Pensa
Mitja Podpecan
Jadek & Pensa Law Firm Logo
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Slovenia: Dispute Resolution

The year 2020 was marked by intervention measures due to the pandemic, which restricted court proceedings. For almost six months, the courts were only processing urgent matters and the courtrooms in commercial and civil proceedings stayed empty with little to no exceptions. The deadlines were suspended, which added to the length of the pending proceedings. As a result, the parties resorted more to interim injunctions and several disputes were resolved in an alternative way by negotiations. Some progress in digitalising court proceedings was also made. Post-pandemic recovery plans and infrastructure projects in Slovenia may indicate the areas where significant disputes are possible in the future.

In the previous year, plaintiffs have more frequently sought interim injunctions. This was common in matters dealing with issues important for the parties and where parties believed that their rights would not be properly protected in a timely manner. The result of such development was a higher proportion of ungrounded interim injunctions, as well as a higher proportion of attempted misuse of interim injunctions. If the court is misled into issuing an ungrounded or misused interim injunction, which becomes effective immediately, the opposing party is left with no other option but to challenge the interim injunction by an objection within a short deadline that cannot be extended.

Suspensions of non-urgent court matters and the expectation of additional delays in court proceedings forced parties to reassess their position and to take initiative for alternative resolution of their disputes. Among other forms of alternative dispute resolution, mediation remains at the forefront. Mostly it takes place in the form of a court-annexed mediation, which is affordable for the parties due to low and regulated fees that are not market-oriented. Such mediation does not allow the selection of a mediator. This raises the question of whether the assigned mediator will be adequately qualified to conduct the mediation process in a specific dispute. A court-annexed mediation is only possible in matters where a lawsuit has already been filed. Another form of mediation, which may be utilised prior to the filing of a lawsuit, is with private mediation centres. Despite a well-established network of possibilities to conduct mediation, dispute resolution in Slovenia typically takes place before the court or in the form of individual negotiations led by the attorneys. The success of such dispute resolution primarily depends on the wishes and proactivity of parties, but also on the experience and know-how of attorneys and their individual focus on finding solutions to the dispute. An alternative to court dispute resolution may also be arbitration. The latter, however, is less common than court proceedings and mediation. It seems that parties still have great confidence in the courts to resolve their disputes, fail to consider their options for potential disputes when entering contractual relationships, or are diverted by the high cost of arbitration and uncertainties related to the limitation of remedies.

During the period of suspension of non-urgent court cases, the mediation proceedings which had already started were conducted using teleconferencing technology. Such an approach has not proved desirable among mediation participants, nor has it always been successful in resolving disputes. Also, in court proceedings, teleconferencing made its way slowly. While technological conditions for conducting court hearings via teleconferencing were not yet sufficient in the first wave of the pandemic, particularly in commercial proceedings, the equipment of the largest courts in the country improved by the second wave. The courts started offering to conduct court hearings via teleconferencing by the end of 2020. Pursuant to procedural rules, each party has the right to reject a court hearing via teleconferencing, and this actually happened in most cases. Cases with teleconference hearings were therefore a rare exception. A slight improvement was also done in the digitisation of handling of applications as rules that would enable parties to file applications in a digital form, via internet, were adopted. To date, filing in digital form is not possible due to unfulfilled technical conditions on the part of the courts. However, the recent implementation of the court electronic auction system is considered a success.

It may be significant for future trends in the field of dispute resolution that Slovenia is currently in the middle of an intensive cycle of investment, particularly in infrastructure. Several government-financed projects are underway, including the construction of the second railway track to the Port of Koper and highways. In 2020, Slovenia invested heavily in health care and due to the pandemic, procurement procedures were not always conducted in a transparent way, which caused frustrations among suppliers and generated disputes. In the coming period, investments will further strengthen - also due to the EU measures to launch and revive the economy after the end of the pandemic, where special attention will be placed on green investments, digitisation, health care, education and tourism. It is thus expected to see increased investments also in the private sector. Tenderers who were unsuccessful in the public procurement procedures lodge legal remedies. It is expected that unsuccessful tenderers will not only resort to seeking legal protection within the framework of public procurement procedures but also before the courts. Since 1 January 2021, judicial remedy in the form of an administrative dispute is possible against the decisions of the National Review Commission but limited to a mere declaration of illegality. It is thus expected that unsuccessful tenderers will more often opt to enforce damage claims against contracting authorities in court.

An increased number of disputes arising from commercial contracts can be expected due to the consequences of the pandemic (e.g. inability of fulfilment, force majeure and changed circumstances). The legislator regulated the consequences of the pandemic on relationships governed by private law only partially, it did not regulate e.g. a moratorium on payment to private lessors or on repayment of loans. Furthermore, several interesting disputes are already underway regarding consumer loans in Swiss francs and regarding measures taken by the Bank of Slovenia during the period of bank rehabilitation, which resulted in the expropriation of investors in the banking sector. Despite large number of individual plaintiffs, no collective lawsuits were filed in these cases; collective lawsuits did not become widespread in Slovenia, as only three such proceedings have been initiated since 2017. The courts will also have to assess new circumstances after the UK’s exit from the European Union.

The disputing parties have adapted to the epidemiological barriers over the past year and have been resolving disputes pragmatically, taking into consideration the general situation. The pandemic, however, was also an opportunity for the judiciary to be digitised and moved online - procedural rules have adapted to the circumstances or can be adapted quickly. However, courts are facing a lack of technical conditions for the digital transition in this regard, and they need to educate and train their employees accordingly. The transition to digital is also opposed by some of the parties and even their attorneys who do not agree to the voluntary conduct of hearings via videoconferencing. It is our opinion that dispute resolution will face many challenges in the future with regards to the above-mentioned issues.