Croatia: A Dispute Resolution Overview

Legal System and Institutional Framework

The Croatian legal system is a civil law system, influenced by the Germanic, and to an extent Roman, legal traditions. Croatia is a parliamentary democracy, with the Parliament as the sole legislative authority. The country’s legislative framework is characterised by the hierarchical relationship of norms, with the Croatian Constitution holding the highest authority.

Croatia has been a member of NATO since 2009, of the European Union since 2013 and was fully integrated into the Eurozone and Schengen area in 2023. Croatia is currently a candidate and in the process of joining the OECD, with the aim to become a member this year (2026).

Litigation Trends and Judicial Reform

Dispute resolution in Croatia is characterised by a large share of litigation in comparison to alternative dispute resolution mechanisms, while the length of court proceedings is often cited as one of the main flaws of the judicial system. Accordingly, legislative efforts in this area are aimed at optimising litigation procedures, increased digitalisation, and facilitation of ADR methods.

The Civil Procedure Act is the subject of recurrent revisions, with the most recent substantial revision in 2022. The legislative interventions reflect two main systemic tendencies: to reduce the length of proceedings and to introduce a higher level of digitalisation. A relatively large number of cases is often referred to as one of the root causes of the comparatively lengthy proceedings, with different approaches being implemented and/or discussed to address this issue. Current discussions include an announced plan to increase court fees as well as efforts to increase the use of out-of-court settlement, arbitration in particular, especially with regard to state-owned companies.

Other trends include increased digitalisation, part of which has been successfully implemented in terms of digitalising written communication with the court through the e-communication system. However, other efforts, such as the introduction of audio recording and transcripts, despite having already been included in legislation in 2022 are still yet to be implemented due to technical constraints.

Rise of Alternative Dispute Resolution

In 2026, new legislation on mediation was enacted, aiming to complement other efforts to reduce litigation by further facilitating mediation. The new Mediation Act requires mandatory mediation for any disputes arising out of succession (probate) proceedings as well as for small-value claims (labour law and insurance disputes are excluded). Entering mediation in accordance with the Mediation Act cannot result in the loss of any rights due to statute of limitation or a peremptory time limit.

The National Mediation Centre, a state body, is given a central role in mediation proceedings. It is vested with authority to give and recall consent to mediation institutions and education programmes, performs professional training for mediators and keeps the register of mediators and mediation institutions. It also has exclusive competence to mediate in the aforementioned cases of mandatory mediation. A settlement reached in mediation proceedings is binding and may, under specified conditions, constitute an enforcement title.

While the actual effect of the new Mediation Act on the number of incoming court claims is yet to be evaluated, disputes outside the scope of the Act remain unaffected.

In July 2024, the Croatian Chamber of Economy, together with the Association of Consultants in Construction, as a licensed member of the International Federation of Consulting Engineers (FIDIC), published the Regulations on the appointment of dispute resolution adjudicators and the formation of the National List of Dispute Resolution Adjudicators under the FIDIC Conditions of Contract in the Official Gazette of the Republic of Croatia.

The FIDIC forms of construction contracts, especially the 1999 editions of the Red Book and the Yellow Book, are widespread in the field of construction in Croatia as well as across the wider region. One of the specialties of the FIDIC form of contracts is certainly the FIDIC multi-tiered dispute resolution clause containing three levels of dispute resolution:

• the engineer’s determination;
• the Dispute Adjudication Board and Dispute Avoidance/Adjudication Board (DAB and DAAB) decision; and
• finally, arbitration.

At the beginning of the use of the FIDIC forms of contracts in Croatia, parties considered the DAB/DAAB proceedings only a formality, as a step which had to be complied with but without aiming to effectively resolve a pending dispute. Today, almost every construction contract based on the FIDIC form of contracts, contains the DAB/DAAB as a necessary step in dispute resolution and parties engage with increasing effort to resolve their dispute before the DAB/DAAB, or at least to carefully assess their contractual position and prepare for arbitration or court proceedings.

It can be concluded that, after more than a year of application, the Regulation is effective. It provides a valid legal framework for appointing a sole member or the president of a DAB/DAAB when the parties cannot reach an agreement. It has also established a National List of Dispute Resolution Adjudicators under the FIDIC Conditions of Contract. This list gives parties a pool of qualified adjudicators from which they can choose and nominate candidates. In addition, it reinforces the role of the DAB/DAAB as a recognised method of alternative dispute resolution.

It is notable in this regard that construction disputes constitute the majority of arbitration proceedings and are based mostly upon the FIDIC 1999 Conditions of Contract. The translation of the new ICC Arbitration Rules into Croatian is expected by the end of the year, which should further facilitate the shift to alternative methods of dispute resolution in Croatia.

Recent Legislative Developments and Economic Policy

New developments last year were also noted in the area of construction and spatial planning. At the end of 2025, a package of legislative acts was adopted, including a new Spatial Planning Act, Construction Act and Energy Efficiency in Buildings Act. The package aims to set a strategic direction focused on safeguarding landscape, renewable energy, green jobs and increased digitalisation.

Novelties include, inter alia, the reintroduction of the legal instrument for land consolidation; new rules regarding campsites, which have seen rising investment in the coastal zones; and strict limitations on the establishment of condominium ownership in tourist zones.

The new Construction Act is expected to have a positive impact on economic investments in construction and other economic sectors, enabling faster issuance of building permits for buildings and strengthening the responsibility of administrative bodies, as well as cutting costs for less complex buildings and multi-apartment buildings.

Among other new and notable legislation is also the Foreign Investments Act which ensures the implementation of Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments in the Union. The Act contains a list of definitions where key terms such as “foreign investor” and “foreign investment” are defined broadly suggesting the intention of the legislature to cover all instances of qualified holding or controlling share by foreign capital. However, there remain uncertainties over implementation as the competent authorities have not, as of the day of finalising this article, clarified the scope of obliged entities, nor have they adopted all of the required lower-level regulation.

Amendments in 2025 to the Foreigners Act are aimed at addressing the growing needs of the labour market, which is under pressure from the decreasing labour force. The amendments seek to both enhance long-term possibilities for foreign workers in order to achieve continuity and stability as well as to protect the local labour market, inter alia, through a new system of strict quotas for the ratio of foreign and local workers, as well as stricter conditions for employers seeking to employ foreign workers. The strategic focus is on high skilled workers, especially in the IT sector. Given the demand for foreign workers, any amendments in relation to that part of the labour force are expected to have an impact on businesses.