Franz Kafka, “The Trial”
The law envisages that Commercial Courts are competent to resolve disputes between investors-buyers and the Privatisation Agency. Privatisation contracts define under which conditions the Privatisation Agency has the right to unilaterally terminate the contract.
However, in the privatisation process, the Agency takes one step further and assumes for itself the right of the commercial courts to declare that buyers have acted in bad faith, and repossesses their shares and the payments they have made, without even addressing a commercial court. Even in cases where it is the buyer who takes the Privatisation Agency to court for acting in bad faith, but still wishes to execute the privatisation, the Privatisation Agency takes it upon itself to cancel the contract prior to the court’s ruling, repossess the shares and withhold the payments already made. This, along with the slowness of the judicial system, puts the private investor at a significant disadvantage.
In this way, the State sidelines the court system and demonstrates disregard of the equality of arms principle – the notion that all are equal before the law, and entitled without any discrimination to equal protection of the law. Investors are denied the basic right to protect their investment through an impartial court system. Equal right to legal protection of all types of property (public and private) is guaranteed by the Constitution of Serbia and the European Convention on Human Rights and Fundamental Freedoms, of which Serbia is a signatory.
Tomislav Đorđević currently has two lawsuits against the Privatisation Agency in commercial courts – one related to hotel Prag and another related to Ribarsko Gazdinstvo. Both proceedings were initiated before the Privatisation Agency unilaterally cancelled the privatisation contracts for these companies. In response to his complaints before the commercial courts, a criminal proceeding against him is staged.
Tomislav Đorđević privatised Ribarsko Gazdinstvo with the intention of merging it into DTD Ribarstvo, as was the case with other acquisitions in the agriculture and fisheries sector (liquidated assets of AIK Njegoš and Fidelinka Agrar).
The privatisation of Ribarsko Gazdinstvo could have been a good example of privatisation carried out by a strategic investor, had not the state not repossessed Ribarsko Gazdinstvo’s only production capacity – trout farm in Perućac shortly after the auction (in an incredibly expedited court proceeding).
Tomislav Đorđević sought to protect his interests before the courts.
More details on the commercial court case related to Ribarsko Gazdinstvo can be found here.
The privatisation of Hotel Prag could also have been a textbook example of a well-conducted privatisation. The buyer bought the hotel at the auction for a high price, met all investment obligations and turned the run-down hotel into an attractive destination. Instead of being satisfied with the outcome of the privatisation, the Privatisation Agency sent a letter to Tomislav Đorđević threatening cancellation of the contract due to a supposed lack of maintenance of business continuity.
The letter is sent after completion of full scale refurbishment of the hotel, and is an obvious attempt of confiscation of property. Tomislav Đorđević sues the Agency in order to protect his invested capital and to prove that the Agency is acting in bad faith.
Upon termination of the contract with Tomislav Đorđević, the Privatisation Agency is not satisfied by repossessing the shares sold to Tomislav Đorđević and retaining his funds. It then files a commercial lawsuit to annul a share issue of the hotel executed by the Belgrade Stock Exchange in accordance with all regulations.
More details on the commercial court cases related to Hotel Prag can be found here.
Companies in which Tomislav Đorđević is a shareholder acquired a minority share package of HTP Fontana on the stock market, in the hope that this company with great tourism potential would grow, and with the willingness to financially assist the recovery of the company.
Under the management of government agencies the company was run into the ground, so that on 25 September 2009 the Privatisation Agency entered it into restructuring in the process. The rights of minority shareholders were completely neglected.
More details on Fontana can be found here.
Next: Ribarsko gazdinstvo
©2020 Djordjevic family