The interplay of human rights protection and arbitration law is not often mentioned or considered by many practitioners. However, apart from issues arising from the right to a fair trial (Article 6 of the European Convention on Human Rights), another avenue is through viewing an arbitral award as a possession within the meaning of Article 1 of Protocol 1 to the Convention on Protection of property .

( One of the key judgments of the ECtHR to establish this jurisprudence was rendered against Serbia in 2010 – Kin-Stib and Majkić v. Serbia  (hereinafter the Judgment). Although now 12 years old, it is worth revisiting this case as it bears important lessons for both arbitration practitioners in Serbia and beyond, and for the state(s) that ratified the Protocol.

The facts are relatively complex and span decades, but the most important points can be summarized as follows: the first applicant concluded in 1989 a joint venture contract with a socially-owned company, Genex; the contract envisioned the first Claimant operating a casino within the Intercontinental Hotel in Belgrade (paras 7-9 of the Judgment). The casino opened in October 1990, but had to close by 1993 due to various financial difficulties, leading to a plethora of disputes between the parties (para 10). Most importantly, in 1996, the first applicant obtained an arbitral award from the Foreign Trade Arbitration Court of the Yugoslav Chamber of Commerce, ordering Genex to pay nearly USD 2 million in compensation plus 6% interest, to allow them to retake possession of the casino, and to effectively manage its operation for five years after reopening (para 12).

A complicated enforcement struggle ensued. The monetary compensation part of the arbitral award seems to have been fulfilled by May 1998 (para 16). The repossession of the casino never took place. Enforcement of that obligation failed after the Commercial Court in Belgrade issued fines to debtors until statutory maximum was reached (paras 13-26), and in March 2008 any further enforcement was stayed as the debtors entered the privatisation process (para 27). The first applicant did initiate civil litigation before Serbian courts requesting compensation for the inability to operate the casino as ordered in the arbitral award, and managed to obtain compensation judgments in the amounts of USD 1,083,332 plus interest on 30 January 2002 (for the period between 1 April 1996 and 31 May 1998, paras 33-37) and USD 1,426,666 plus interest on 8 September 2005 (for the period between 1 June 1998 and 1 April 2001, paras 39-44). However, the first enforcement proceeding was terminated in February 2002 and the second was still pending at the time of the Judgment.

A 7-member ECtHR tribunal confirmed that ‘that a “claim” can constitute a “possession”, within the meaning of Article 1 of Protocol No. 1, if it is sufficiently established to be enforceable […] [that] it is the State’s responsibility to make use of all available legal means at its disposal in order to enforce a binding arbitration award providing it contains a sufficiently established claim amounting to a possession […] [and that] the State must make sure that the execution of such an award is carried out without undue delay and that the overall system is effective both in law and in practice.’ (para 83). In the present case, the claim established in the arbitration award undisputedly amounted to a possession under Protocol 1, and after 2006 Serbian authorities have unjustifiably failed to conduct the necessary measures to fully enforce the arbitration award (paras 84-85). The Court did recognize that ordering actual physical repossession of the casino ‘would either no longer be possible or would disproportionally interfere with the rights of third parties’ (para 96) and also that Serbian courts did award compensation for inability to operate which do not seem arbitrary (para 96). As Serbia was found responsible for honouring the debts of socially-owned companies (para 96), the Court decided that ‘the Government must, from their own funds, pay the applicants, jointly, the sums awarded in the final, compensation-related, judgments at issue […] less any and all payments received by them on those bases in the meantime’ (para 97). This was coupled with award of non-pecuniary damages in the amount of EUR 8,000 (para 95).

Viewing arbitral awards as possessions protected by the European Convention reminds us both of the avenues open to award creditors that go beyond the usual regime of the New York Convention, and raise interesting doctrinal questions on inter-regime interactions. Even if not the quickest tool in one’s arsenal, potential for recourse to human rights protection should always be on the radar of both states and enforcing parties.

Velimir Zivkovic