SLOVENIA: An Introduction to Dispute Resolution

Dispute resolution in Slovenia is undergoing transformation, driven by a surge in collective actions and significant amendments to key legislation. It is also facing challenges in product liability and conformity litigation, public procurement litigation, and bankruptcy proceedings amidst evolving judicial practices and more frequent resorting to alternative dispute resolution mechanisms.

Collective Actions 

The legal landscape continues to be stirred by the surge in collective actions. As of the close of 2023, a notable tally of 23 collective actions had been set in motion, initiated since 2021 by three consumer protection organisations. Of the latter, one is responsible for instigating 14 collective actions, a remarkable feat considering its inception just prior to its inaugural collective action filing.

While the aggregate count of collective actions may appear modest, it merits attention that this figure equates to 1.15 actions per 100,000 inhabitants. Presently, these collective actions remain in their nascent stages, with only two of them having traversed through the first-instance proceedings. Notably, one of these was recently appealed, promising to potentially shape jurisprudence in 2024 on the pivotal criteria concerning the requirement of representativeness of non-profit entities that may instigate collective actions.

Although the Collective Actions Act (CAA) is still a relatively new law, it was amended in 2023. The amendment, which came into force on 26 January 2024, represents a significant step forwards in aligning the country’s legal framework with Directive (EU) 2020/1828 on representative actions for protecting the collective interests of consumers. This comprehensive revision introduces pivotal changes aimed at bolstering consumer rights enforcement, enhancing legal recourse mechanisms and fostering a more unified European market. The following are key alterations of the CAA, some among which could attract consumer protection organisations from abroad for filing collective actions in Slovenia: 

Broadening the scope of collective actions to encompass all consumer rights violations

This amendment of the CAA is a fundamental enhancement in consumer protection, ensuring that consumers have effective means to address claims arising from various infringements. 

Extending procedural eligibility for initiating collective actions

This includes the State Attorney of the Republic of Slovenia and domestic and EU-wide non-profit entities which are linked to the violated rights.

Facilitation of cross-border collective actions

The amended CAA promotes the harmonisation of legal standards and aims to foster a cohesive European market. By streamlining procedures for cross-border litigation, the amendment facilitates co-operation among member states and strengthens consumer protection across borders.

Enhanced criteria for determining the representativeness of eligible entities

This amendment seeks to mitigate the risk of frivolous or abusive collective actions. By ensuring that only bona fide representatives can initiate collective actions, the amended CAA seeks to safeguard the integrity of legal proceedings and to prevent abuse aimed at putting defendants under unjust pressure.

Strengthening transparency 

Non-profit entities are required to maintain transparency by disclosing pertinent details such as funding sources, organisational structure and activities on publicly accessible platforms. With these requirements, the CAA underscores the importance of accountability and transparency in collective litigation.

Detailed rules on financing of collective actions

The amended CAA puts particular emphasis on transparency and fairness. Notably, third-party funders, which can anticipate receiving a remuneration of up to 15% of the awarded amount for their services, are subject to stringent oversight to prevent undue influence on procedural decisions, thereby upholding the integrity and impartiality of the proceedings.

Sector-Specific Issues and Litigation 

Slovenia is also witnessing a surge in product liability and conformity litigation often addressing legally complex and highly technical issues. The emergence of industry-specific issues spanning multiple jurisdictions exacerbates this intricacy. These cases not only challenge the courts but also involve the need for support from knowledgeable court-appointed experts. Amidst this, insurance litigation becomes pivotal and linked to the intricate web of liability and indemnity. A continued rise in such cases is anticipated. Successfully resolving these disputes demands industry-specific dispute resolution expertise and substantial manpower to navigate intricate details effectively.

The landscape is experiencing significant developments in the infrastructure sector, which also influence the law. In November 2023, Slovenia enacted substantial amendments to its Employment Relationships Act (ERA) impacting on the construction industry. The amendments to the ERA entail that, should a subcontractor fail to remunerate its employees for work conducted in construction services, the contractor becomes subsidiarily liable for fulfilling this obligation. This alteration is poised to spark new disputes in the ensuing years.

In public procurement litigation, Slovenia saw a possible shift in jurisprudence. The courts have traditionally limited compensation to negative contractual interest, primarily covering costs incurred from participating in public tenders. Recent jurisprudential trends indicate an evolution towards recognising lost profits in cases of unlawful tender awards. This potential shift prompts enquiries into causality, burden of proof and procedural prerequisites. If this evolution were to endure, an increase in damage lawsuits from unsuccessful bidders against contracting authorities could be expected.

In 2023, Slovenia also witnessed a notable decline in bankruptcy litigation owing to fewer initiated bankruptcy proceedings, marking the lowest figures since 2012, with a 7% decrease compared to the preceding year. Despite this trend, there was a significant rise in simplified compulsory settlements before their abolition in November 2023. The latter could be a sign that Slovenia is shifting towards trends from countries such as Germany and Austria (key export markets for Slovenia), where the number of insolvent companies is on the rise. Understanding these dynamics is imperative for businesses operating within the Slovenian market, as an uptick in insolvency proceedings may be expected in the foreseeable future.

Amidst the recent judicial strike, Slovenia faces a crisis in its judiciary system, exacerbating the persisting issue of court case backlogs. This has also catalysed a paradigm shift towards alternative dispute resolution (ADR). Notably, mediation has emerged as the method for resolving disputes. The Mediation Centre at the Academy of the Slovenian Bar Association stands as a beacon of hope for resolving protracted disputes, such as the enduring conflict between FIDES (Union of Doctors and Dentists) and the Republic of Slovenia over salary discrepancies. Disputants are increasingly opting for this method, recognising its potential to circumvent the delays and uncertainties plaguing traditional court proceedings.

Outlook 

Looking ahead, companies and lawyers must be prepared to navigate the evolving legal terrain, including the increased scope and facilitation of cross-border collective actions. Moreover, the anticipated rise in product liability and conformity cases, coupled with developments in public procurement litigation and potential shifts in bankruptcy proceedings, demonstrates the need for specialised expertise and sufficient legal manpower in dispute resolution.

Amidst challenges in the judiciary system and court backlogs, ADR mechanisms such as mediation are gaining prominence. Lawyers need to be proactive in exploring options to effectively resolve disputes and mitigate delays. In the future, the legal profession in Slovenia will continue to evolve in response to legislative changes, judicial trends and the growing demand for efficient dispute resolution.