The Bank of N.Y. v. Yugoimport Sdpr J.P.

• Decision Date: 29 April 2011
• Docket Number: No. 03 Civ. 9055(AKH).,03 Civ. 9055(AKH).
• Citation: 780 F.Supp.2d 344
• Parties: THE BANK OF NEW YORK, Interpleader Plaintiff,v.YUGOIMPORT SDPR J.P., Republic of Croatia, and Republic of Slovenia, Interpleader Defendants.
• Court: U.S. District Court — Southern District of New York

780 F.Supp.2d 344

THE BANK OF NEW YORK, Interpleader Plaintiff,

v.YUGOIMPORT SDPR J.P., Republic of Croatia, and Republic of Slovenia, Interpleader Defendants.

No. 03 Civ. 9055(AKH).

United States District Court, S.D. New York.

April 29, 2011.

Daniel Zachary Mollin, Leo T. Crowley, Pillsbury Winthrop Shaw Pittman, LLP, New York, NY, for Interpleader Plaintiff.Sean Shields, Orrick, Herrington & Sutcliffe LLP, Steven Skulnik, Squire, Sanders & Dempsey, L.L.P., Jonathan I. Blackman, Cleary Gottlieb Steen & Hamilton, LLP, New York, NY, for Interpleader Defendants.

ORDER AND OPINION GRANTING SUMMARY JUDGMENT TO THE REPUBLICS OF CROATIA AND SLOVENIA AND DENYING YUGOIMPORT'S MOTIONS FOR SUMMARY JUDGMENT AND FURTHER DISCOVERY

ALVIN K. HELLERSTEIN, District Judge:

This lawsuit, pending since 2003, requires the Court to declare ownership of funds in its registry amounting to $2,526,233.76 and interest. The Bank of New York, as Interpleader Plaintiff, instituted the present action, deposited the funds in the Court's registry, and obtained a discharge from the lawsuit. The Interpleader Defendants are the disputing claimants to the funds: they are Yugoimport SDPR J.P. (“Yugoimport”), the successor to the original depositor of the funds in the Bank of New York, the Federal Directorate of Supply and Procurement, or “FDSP”; and the Republics of Croatia and Slovenia (“Republics”), representing the interests of the various states that succeeded the former Socialist Federal Republic of Yugoslavia (“SFRY”). The dispute calls for interpretation of a multilateral treaty entered into by the successor states, the Succession Agreement. The Succession Agreement followed a series of treaty instruments known as the Dayton Accords, which brought a measure of peace to the former nations of the SFRY after years of violence.

The Succession Agreement contains a dispute resolution mechanism, but the Interpleader Defendants have been unable to employ it. In the circumstances, this Court is required to adjudicate the case and controversy before it. I hold, interpreting the clear and unambiguous terms of the Succession Agreement, that the funds in the Court's registry should be distributed to the successor states of the SFRY and not to Yugoimport, for Yugoimport's predecessor-in-interest was an “agency” of the SFRY and the Succession Agreement provides that funds held by agencies of the SFRY should be distributed to the successor states.

I. Factsa. The Historical Context of this Litigation

The instant dispute arises in the context of a long history of ethnic and racial tensions in the Balkans, a portion of Southern Europe extending from the Adriatic Sea in the West to the Carpathian Mountains in the East, and from the Alps in the North to the Aegean Sea in the South. This area has long been populated by Slavs, Croats, Bulgars, Romas, Serbs, Turks, and other nationalities. They have been Roman Catholic, Greek Orthodox, Eastern Orthodox, Muslim, Jewish, and members of other religions. In the centuries leading up to World War I, this diverse land was controlled by the Austro–Hungarian Empire in the north, and the Ottoman Empire in the south. These empires long feuded, and used their territorial holdings to press upon each other. Much of the struggle centered on Bosnia, an Ottoman outpost against neighboring Austro–Hungarian territory.

It was in Bosnia that World War I began, with the assassination in 1914 of the Archduke Francis Ferdinand of Austria by Gavril Princep, a Bosnian Serb nationalist. After World War I, pursuant to the Treaty of Versailles of 1919, Yugoslavia was created as the “Kingdom of Serbs, Croats, and Slovenes.” In 1929, the nation was formally renamed “Yugoslavia,” and existed that way until World War II, from which it emerged as a socialist state, headed by Joseph Bronz Tito. From 1946 to 1963, the country was known as the Federal People's Republic of Yugoslavia, or “FPRY.” In 1963, the name was changed to the Soviet Federal Republic of Yugoslavia, or “SFRY.” Its constituent states, generally speaking, were Croatia, Slovenia, Macedonia, Bosnia–Herzegovina, Serbia, and Montenegro. Serbia, perhaps the largest and most powerful of the constituent members of the SFRY, also held authority over Kosovo, a small semi-autonomous region in its southwestern region.

The SFRY enjoyed a period of relative stability from the end of World War II to the end of the 1980s. Beginning in 1989, following the fall of the U.S.S.R., long-simmering tensions boiled over, and the constituent states of the SFRY began to break away and seek independence. Croatia and Bosnia–Herzegovina were the first to attempt to secede from the SFRY. As a result, wars broke out between Croats and Serbs, and Serbs and Muslims. The fighting and the accompanying human tragedy are well known, with Bosnia again the centerpiece of the struggle. Thousands died and hundreds of thousands were displaced from their homes, victims of ethnic cleansing campaigns.

In November 1995, American efforts, led principally by Secretary of State Warren Christopher and Assistant Secretary of State Richard A. Holbrooke, brought an end to the fighting and brought a measure of peace to the region. In a series of agreements known as the Dayton Accords, Croatia and Bosnia–Herzegovina were recognized as independent republics, while Serbia and Montenegro reconstituted themselves as the Federal Republic of Yugoslavia (“FRY”). See General Framework Agreement for Peace in Bosnia and Herzegovina (“Dayton Accords”), Bosn. & Herz.–Croatia–Fed. Repub. Yugo., Dec. 21, 1995, 35 I.L.M. 75 (1996). The Dayton Accords recognized the Bosnia–Herzegovina Constitution, and provided terms for dispute resolutions, elections, protections of human rights, and reductions of military forces between those countries and the FRY. The Dayton Accords were signed by representatives of Bosnia–Herzegovina, Croatia, and the FRY, and the signatures were witnessed by the European Union Special Negotiator and by representatives of France, Germany, Russia, the United Kingdom, and the United States. To maintain peace in Bosnia, the North Atlantic Treaty Organization (“NATO”) committed 60,000 ground troops to the region, 20,000 of them American.¹

In the month following ratification of the Dayton Accords, December 1995, a Peace Implementation Council was organized for the purpose of assisting in the creation of agreements for peaceful, cooperative relations, by assisting the signatory states in forming mutual agreements to address the various topics enumerated in the Dayton Accords. A High Commissioner also was appointed, and the Peace Implementation Council provided a mandate to the High Representative to oversee implementation of the Dayton Accords and to assist the parties in reaching agreements for peaceful cooperation.

The Dayton Accords did not end the violence in the region. Prior to their enactment, in 1989, Kosovo, a mini-state within Serbia that borders Macedonia, Albania and Bosnia–Herzegovina, rebelled from Serbian authority, seeking to establish its independence. The newly elected President of the FRY, Slobodan Milosevic, responded by stripping Kosovo of its autonomy and the Kosovars, in turn, voted formally to secede from the FRY. Protracted and intense fighting followed. The FRY army was drawn in, the Kosovar Liberation Army was overcome, and the fighting degenerated into mass killings and incessant shelling of the civilian population of ethnic Albanians. Hundreds of thousands of Kosovar Albanians were displaced from their homes into internment camps.

In the late 1990s, NATO intervened in an effort to stop the violence in Kosovo. A peace resolution, the Rambouillet Agreement, was proposed to resolve the issues between Kosovo and the FRY. See Interim Agreement for Peace and Self–Government in Kosovo, http:// www. state. gov/ www/ regions/ eur/ ksvo_ rambouillet_ text. html (last accessed Feb. 24, 2011). Pursuant to the Rambouillet Agreement, the independent state of Kosovo was to be recognized, organized under a constitutional government, with full protection of civil rights, free elections, humanitarian assistance, and economic development.

The Kosovar delegation accepted the Rambouillet Agreement, but the FRY rejected it and atrocities against Kosovars resumed. Again, other nations intervened. In April 1999, at a summit held in Washington, D.C., NATO Secretary–General Javier Solana, backed by the leaders of NATO, ordered air strikes against Belgrade, the capital of the FRY, and the massing of ground forces in the region. The United States contributed 40 percent of NATO's air power, as well as 25,000–30,000 ground troops, and the leadership of United States Army General Wesley Clark. Finally, in mid–1999, the shelling of the civilian population by Serbian forces and the killing and ethnic cleansing of ethnic Albanian Kosovars stopped, and the FRY relented.

In 2001, the five nation-states that comprised the former SFRY—Croatia, Slovenia, Bosnia–Herzegovina, Macedonia and the FRY—negotiated an end to hostilities and a permanent peace. Under the supervision of the Peace Implementation Council's High Representative, the office established by the Dayton Accords, the party-states executed an agreement recognizing the five states as the “successor states” to the SFRY, providing for the demise of the SFRY, and distributing the assets of the SFRY amongst themselves, the peoples and states of the former Yugoslavia.² See Agreement on Succession Issues Between the Five Successor States of the Former State of Yugoslavia (“Succession Agreement”), Bosn. & Herz.-Croat.-Maced.-Slovn.-F.R.Y., June 29, 2001, 41 I.L.M. 3 (2002). The successor states recognized themselves as “being in sovereign equality the five successor States” to the SFRY, leaving behind any conflicts that could arise out of their new alignment. Id., preamble. The principal purpose of the Succession Agreement was “to resolve questions of State succession...