Constitutional Court rules Lex Agrokor is legal

Constitutional Court rules Lex Agrokor is legal

Constitutional Court rules Lex Agrokor is legal Izvor: Patrik Macek/PIXSELL

Croatia's Constitutional Court announced on Tuesday that the law on state-appointed emergency management, dubbed Lex Agrokor, is in line with the Constitution, dismissing proposals lodged by 12 different applicants who asked the court to examine specific provisions of the law.

To make its ruling, the court considered five opinions on the proposals filed submitted by the Croatian government, as well as opinions of experts. Although the majority of the 13 judges agreed with the decision, three judges formally filed dissenting opinions.

The Croatian Parliament had passed this law on April 6, 2017, allowing the government to intervene and appoint crisis managers at companies deemed large enough to be "systemically important" for the economy at large. According to the law, a company must have at least 5,000 employees and liabilities in excess of 7.5 billion kuna (€1 billion).

The law aims to secure an orderly restructuring of troubled companies, and defines the roles of the state-appointed crisis manager and several other bodies designed to help the company survive by offering tools to achieve a compromise among its creditors.

All companies meeting the said criteria and facing financial difficulties will be given the same legal framework for further action. The law, dubbed "Lex Agrokor" in the media, was passed after the debt crisis at the food and retail conglomerate Agrokor started early in 2017. The largest privately-owned company in the country which at the time employed some 60,000 across the region, found itself on the verge of bankruptcy over debts totalling some 58 billion kuna (7.8 billion).

Although the government repeatedly claimed that the law was in line with the Constitution, it was criticised by various groups and experts who interpreted it as a violation of the principles of free market and the equal treatment of all companies enshrined by the Constitution.

One of the proposals was also filed by Agrokor's founder and owner, Ivica Todoric, currently in London and awaiting extradition to Croatia, who said the law had violated his human rights guaranteed by the Constitution.

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