CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ “JUNCTION AREA” ȃ A NEW LEGAL REGIME PCA … shall take all necessary steps to implement the award, including by revising national legislation, as necessary, within six months after adoption of the award.” These stipulations are binding and clear though the “six months” seems to be pretty short, since not only national legislation revisions but even constitutional adaptations might be required. Nevertheless, this is not the real problem. The real problem is that one of the parties, Croatia, persistently denies being bound by the Arbitral Tribunal’s award. Also after the Tribunal had on 29 June 2017 pronounced its Final Award Croatia, by statements of her competent state representatives and institutions, continues to deny being bound by the Tribunal’s award. The flow of events which led to Croatia’s unilateral withdrawal from the arbitration and corresponding reaction and activities of Tribunal have been already discussed above and are extensively dealt with also within the Final Award. 66 Since her verbal note of 30 July 2015, Croatia persists that because Slovenia has engaged in material breaches of the Arbitration Agreement, Croatia was entitled to terminate the agreement. Consequently, several measures were undertaken to assure the impartiality of the Arbitral Tribunal and are well described in the Final Award. The Tribunal on 30 June 2016 issued a Partial Award addressing the legal consequences of violations of the Arbitration Agreement by Slovenia’s national arbiter and Slovenia’s agent. The Tribunal concluded that provisions of the Arbitration Agreement were violated. The Arbitral Tribunal however observed that termination of a treaty under the Vienna Convention on the Law of Treaties, Article 60 par. 1 due to a breach, is warranted only if the breach defeats the object and purpose of the treaty. The Tribunal concluded that Croatia presented breaches of the Arbitration Agreement by Slovenia, and in view of the remedial action taken, did not defeat the object and purpose of the Arbitration Agreement. Thus, Croatia, according to international law, was not (and is also now not) entitled to terminate the Arbitration Agreement. Thus, the Tribunal concluded that the Arbitrational Agreement remains in force and continued its work. However, with no participation of Croatia. After the Final Award was issued, Slovenia made it clear that though the award is far away from her requests and expectations expressed in her submissions to the Arbitral Tribunal, she considers herself bound by the award, and expects the same from Croatia since it is clear that the award can be implemented only in cooperation of the parties. Croatia not only denies any obligations to act according to the Tribunal’s award, but ignores it, and proposes new bilateral negotiations ab initio , ignoring the Arbitration Agreement and the Tribunal’s Final Award. On the ground, Croatia continues, so to say, daily to violate inter alia in the Piran Bay the border line established by the Arbitral Award between Slovenia’s and Croatia’s internal waters. Thus, violating Slovenia’s territorial integrity in the bay, to which Slovenia for the time being reacts by diplomatic means only, to prevent a “hot” incident from occurring. Slovenia declared its readiness to comply fully with the award. Further developments will be no doubt be significant also for the rule of law within the EU and for respect of law in relation between the two EU and NATO members. The reaction of the EU, its main organs and its member States to non-compliance with the award of an Arbitral Tribunal established in fact under the auspices and sponsorship of the EU Commission will indicate the state of rule of law within the EU. The future fate of the legally binding Arbitral Award in this case will no doubt also be an example, for good or for bad, for the further resolutions of territorial disputes in particular in South-Eastern Europe. Finally,

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66 Final Award, par. 178-206.