Croatia is part of the European continental (civil) law system, and laws in Croatia are organised into systematic written codes. The courts primarily serve as implementers and not creators of the law, although the Supreme Court, as the highest court in Croatia, has the obligation to maintain consistent court practice on comparable legal issues.
Civil proceedings before courts follow the adversarial model. Therefore, the parties have the obligation to submit to the court all relevant procedural material –ie, facts on which the parties base their claims as well as evidence which support those facts. Also, the initiation of proceedings, as well as certain stages of the proceedings (eg, appeal procedure) depend entirely on the initiative of the parties.
Some remains of the older, inquisitorial model are still somewhat evident in the court’s authority to establish facts which the parties have not presented and hear evidence which the parties have not proposed. However, this authority of the court may be used only if it is needed to prevent actions of the parties which are contrary to peremptory norms and the rules of public morality. Also, the inquisitorial model is still evident in rules which provide for the court not being bound by the legal grounds for the lawsuit invoked by the plaintiff (the iura novit curia principle).
As a rule, the parties undertake procedural actions either in writing or orally during a hearing. Whether the procedural actions will be undertaken through written submissions or through oral argument will also depend on the stage of the proceedings. Generally, in its initial stages (before the main hearing) the process is conducted predominately through written submissions, while in the main hearing the process is mostly conducted through oral argument.
Croatia has a three-tier civil court system.
Municipal Courts are first-instance courts of general jurisdiction and County Courts are second-instance courts of general jurisdiction. Aside from courts of general jurisdiction, there are also specialised courts, which handle, among other matters, specific types of civil disputes. Commercial disputes are dealt with by a total of eight first-instance Commercial Courts. Furthermore, the Municipal Labour Court in Zagreb is established as a specialised first-instance court for labour disputes which arise in the territory of Zagreb.
County Courts primarily decide on appeals against decisions rendered by Municipal Courts, while the High Commercial Court decides on appeals against decisions rendered by Commercial Courts.
The Supreme Court is the highest court in the Republic of Croatia, responsible for ensuring uniform application of the law and the equality of all citizens. However, its role as a third-instance court in litigation proceedings is limited, since it can only decide on motions for revision which is an extraordinary legal remedy available only in cases where specific preconditions are met.
The Croatian legislative system, in accordance with the legal tradition of continental Europe, also recognises the institution of the Constitutional Court, which is separate from the judicial hierarchy and is not a regular instance for deciding individual civil disputes. However, since its scope of competence includes deciding on constitutional claims against individual decisions of public bodies (including courts) for alleged breaches of fundamental rights guaranteed by the Constitution, a civil dispute may end up being reviewed by the Constitutional Court as well.
Generally, civil proceedings are open to the public, especially during oral hearings. The public is excluded by virtue of law in some types of family disputes, in order to protect parties’ privacy as well as the rights and interests of children.
The court may decide to exclude the public during whole or any part of a particular oral hearing if this is required in the interest of morality, public order or state security; or to protect military, official or business secrets; or for the protection of the private life of the parties. Any exclusion of the public should apply only to the minimum extent necessary.
On the other hand, court filings (written submissions) are generally excluded from public disclosure. However, third parties, which can show a legitimate interest in examining and copying a particular case file, may be allowed to do so by the court. The decision to grant third parties access to a case file is issued by the judge handling the case (if the proceedings are pending) or the President of the Court (if the proceedings have ended).
Subject to limited exceptions, only an attorney-at-law may act as an appointed representative of a party in civil proceedings. Namely, parties may also be represented by their employees, their blood relatives or marriage partners.
If the amount in dispute exceeds a certain threshold in terms of value (approximately EUR6,750), legal entities may only be represented by persons who have passed the Croatian Bar Exam. Also, only persons admitted to the Bar may initiate revision (third-instance) proceedings before the Supreme Court.
A lawyer from another EU member state may act before Croatian courts with full powers of representation only upon fulfilling specific requirements, which include either passing the Croatian Bar Exam or having a record of successfully practicing law in Croatia for at least three years.
Third-party litigation funding is not regulated by Croatian law. Although it is not prohibited, it is still highly unusual and generally it is not used in civil law proceedings.
Please see 2.1 Third-Party Litigation Funding. In principle, since third-party litigation funding is not prohibited, it should be available for all types of lawsuits.
Please see 2.1 Third-Party Litigation Funding. In principle, since third-party litigation funding is not prohibited, it should be available to both the plaintiff and the respondent.
Please see 2.1 Third-Party Litigation Funding. There are no rules and practices regarding the minimum and maximum amount a third-party funder will fund.
Please see 2.1 Third-Party Litigation Funding. There is no developed practice which would suggest the type of costs that third-party funder would consider funding.
Contingency fees (pactum de quota litis), subject to certain conditions, are permitted in Croatia. Attorneys may conclude an agreement on contingency fees with their clients (fees that depend on the proportion of success of the proceedings), if those agreements are concluded in writing. The agreed percentage cannot exceed 30% of the total success achieved.
Please see 2.1 Third-Party Litigation Funding.
In most civil law cases, unless required by contract, the parties are not required to first try to settle the dispute amicably (by way of conciliation).
However, if one of the parties to the dispute is the Republic of Croatia, before initiating the proceedings before the court, the plaintiff is obliged to first try to settle the dispute amicably. The plaintiff must first address the competent State Attorney’s office with a formal request for amicable settlement of the dispute. The same applies for a competent State Attorney’s office when the Republic of Croatia is the plaintiff (provided that the respondent has residence in Croatia).
The request must contain all of the elements required for lawsuits. If the request is not accepted or no decision is made on it within three months of its filing, the plaintiff may file the lawsuit with the competent court.
Failure to file the respective request will result in dismissal of the lawsuit. The same applies if the lawsuit is filed before the period of three months, allotted for reaching an amicable solution, has elapsed.
The limitation periods for bringing claims in Croatia start on the first day following the day on which the creditor had the right to request the performance of an obligation (unless stipulated otherwise by law).
The general statute of limitation applicable to civil suits in Croatia is five years, but there are quite a few exceptions. For example, the statute of limitations for claims regarding payment of utilities is one year and mutual claims arising from a contract on transport of goods and services and claims for reimbursement of expenses in relation to such contracts become time-barred in three years.
Also, the statute of limitations for enforcing claims ascertained by a final court decision (including a court settlement), a decision of some other competent body of public authority, as well as claims ascertained by a notarial act, become time-barred after ten years (including those claims for which the law otherwise provides a shorter limitation period).
The expiration of the limitation period terminates the right to request performance of an obligation, although the obligation itself still exists. Therefore, it is important to note that courts will not take into consideration the expiration of the limitation period if the debtor does not explicitly raise such an objection during the proceedings.
Aside from statutes of limitation prescribed by material law, there are legally prescribed limited periods applicable to specific types of lawsuits; failure to bring a claim to the court within these periods may lead to dismissal.
In order for a respondent to be subject to suit in Croatia, it must, as a general rule, have its domicile or habitual residence (for a natural person), or registered seat (for legal entities) in Croatia.
It is also possible for a respondent to be subject to suit in Croatia in other cases provided in the Brussels 1 Regulation (eg, in matters relating to a contract, if the place of performance of the obligation in question is on Croatian territory).
Generally, the respondent’s capacity to be sued before Croatian courts in cross-border disputes will depend on rules set out in the Brussels 1 Regulation (if the respondent has its domicile/habitual residence or registered seat in the European Union) and other rules of private international law (if the respondent has its domicile/habitual residence or registered seat outside the European Union).
The initial complaint must contain:
If any submission, including the initial complaint, is either incomprehensible or does not contain all of the mandatory elements, the court shall request that the complaint be amended within a deadline of eight days. If the complaint is not amended pursuant to the court’s request, the complaint will be dismissed.
The initial complaint may be amended during the course of the proceedings. However, if the amendment entails a change of identity or an increase of the initial claim, or if the plaintiff includes an additional claim against the respondent, the respondent’s consent for that amendment is required if the respondent has already received the initial claim. However, even if the respondent objects, the court is authorised to allow the amendment if it decides that allowing the amendment would be beneficial for final resolution of relations between the parties.
In Croatia, service is generally the responsibility of the court. The court is obliged to, first, make a preliminary examination of the complaint it received. If the court finds that the complaint is incomprehensible or incomplete, it is authorised to request that the plaintiff remedy any defects, without delivering it to the respondent. At this stage, the court can also dismiss the lawsuit on procedural grounds.
If the court, after examination, finds that the complaint is suitable for proceeding to the next stage of litigation, it shall order for a copy of the complaint to be served on the respondent which can then provide a written response.
If a lawsuit must be served on respondents in other member states of the European Union, Regulation (EC) No 1393/2007 will apply. If the service of a lawsuit must be conducted outside of the European Union, the court shall apply the relevant bilateral or multilateral agreements between Croatia and the state in which the lawsuit is to be served. If there are no such agreements, service is done through diplomatic channels.
If the respondent does not respond to a lawsuit within the deadline set by the court (usually between 30 and 45 days), the court can render a default judgment in favour of the plaintiff, if the following prerequisites are met:
When serving the respondent with a lawsuit, the court is obliged to caution the respondent of the possible legal consequences of failure to respond within the provided deadline.
Croatian law does not permit class actions.
However, similar to other member states of the European Union, some Croatian associations, bodies, institutions and other organisations have the right to bring collective actions before the competent court, if they are aimed at the protection of collective interests and rights. This type of lawsuit can be brought against any natural or legal entity which, by performing a particular activity or generally by working or acting (including by omission), seriously harms or seriously threatens collective interests and rights protected by law.
The right to bring collective action must be expressly provided for and is subject to the conditions defined in relevant legislation. By way of example, the Croatian Consumer Protection Act states that this type of lawsuit can be brought by authorised bodies or persons having a legitimate interest in the collective protection of consumers (such as consumer protection associations and state bodies competent for consumer protection).
The purpose of the collective action is:
If the court renders a judgment that establishes a violation of collective interests or rights, natural persons and legal entities may, in their respective individual actions for compensation or payment, refer to legal determination adopted by the court in the judgment issued in the proceedings initiated through collective action, and the courts will be bound by such standpoints when deciding upon each individual claim.
As of October 2019, only one collective action has been brought before the Croatian courts. The collective action was filed by a consumer association in relation to Swiss franc (CHF) denominated loans which were granted to consumers by Croatian banks. Following these proceedings, thousands of individual proceedings are currently pending in Croatian courts where the plaintiffs are invoking legal determinations adopted by the court in the judgment. We are yet to see other examples of successful collective action in Croatia.
In Croatia, attorneys are not required to provide clients with a cost estimate of the potential litigation before the commencement of the proceedings. However, costs are generally discussed with clients before the proceedings start, especially since each of the parties must advance its own legal costs. However, the advanced costs are ultimately reimbursed if the party wins the case.
Costs of legal representation are generally known in advance, as they are usually set based on the Tariff for Attorney’s Fees and Cost Compensation, which provides detailed criteria for attorneys' representation fees and costs chargeable to the clients.
Croatian law recognises several types of interim applications, which are generally designed to provide some type of security for a plaintiff’s claims even before that plaintiff obtains a final and enforceable judgment. If the court grants these applications, the decision will allow full realisation of secured claims in the future, of course subject to ultimate success in the litigation.
For example, through a decision on a temporary injunction, a party may be granted with security for its monetary or non-monetary claim, even before the initiation of civil proceedings (although temporary injunctions may also be requested and issued during or after the completion of civil proceedings – up until enforcement is conducted). The primary purpose of a temporary injunction is to freeze certain of the debtor's assets until litigation is finally resolved, in order to prevent the adverse effects that the creditor may endure because of the inability to enforce his or her claim at the time when the judgment reached finality.
Besides temporary injunctions, the Croatian legislation provides for interim measures which can grant proprietary security to a party which succeeds in the first-instance procedure, in order to secure its claim up to the time when (and if) the first-instance judgment becomes final.
The Croatian Civil Procedure Act ensures also enables a party to seek that the court secure certain evidence even before (but also during) the court proceedings. This enables a party to secure evidence before the commencement of proceedings if there is a reasonable concern that some piece of evidence may cease to become available in the later stages of the proceedings, or that subsequent collection of that evidence may become more difficult.
There are several early judgment applications available to parties appearing before the Croatian civil courts.
If the respondent does not respond to a lawsuit within a time limit set by the court, the court can render a default judgment in favour of the plaintiff, if all statutory prerequisites for issuing such a judgment are met.
Other types of early judgments defined in the Croatian Civil Procedure Act include the following:
In certain situations the court is allowed to dismiss the claim before the substantive hearing of a claim (eg, if the claim is not justiciable, if the lawsuit was submitted untimely, if litigation concerning the claim is already pending (lis pendens), or if the claim has been adjudicated (res judicata)).
Please see 4.1 Interim Applications/Motions, and 4.2 Early Judgment Applications.
Non-parties that may have an interest in the outcome of a dispute can participate in the proceedings. There are four types of participation of third persons in the proceedings.
A person who has a legally recognised interest in the success of one of the parties in the litigation, may join that party. An intervener may enter the litigation during the entire course of the proceedings, including at the stage when extraordinary legal remedy is used. An intervener’s procedural actions produce legal effects for the party he or she has joined, if they are not in contravention of the party’s own actions. If the party conducted the proceedings correctly, the intervener will later not be able to dispute the factual and legal basis of the judgment rendered in the proceedings in which he or she participated as an intervener.
Intervener with a Position of a Co-litigant
If the legal effectiveness of the judgment also relates to the intervener, he or she has will have the position of a co-litigant during the proceedings. This means that the intervener and the party it has joined shall be treated as one (single) party to the proceedings. Therefore, the party will not be able to dispose of the claim without the approval of the intervenor.
Before the start of litigation on the merits of the case, a respondent may call a third person (the appointed predecessor) to appear in his or her place as a party to litigation. This can be done if the respondent is only holding certain property or using a certain right, which is the subject of the dispute, on behalf of a third person. The appointed predecessor can agree to replace the respondent in the proceedings, join the procedure as an intervener, or remain passive (in which case the proceedings will continue with the original parties).
Notice to Third Persons of Litigation
Parties will sometimes want to formally notify third persons about the beginning of proceedings, in order to create a specific civil law effect. For example, in cases of joint and several liability, the debtor will often notify other debtors about the proceedings with their creditor, in order to give them an opportunity to join the procedure (for example as an intervener), and to bind them with the factual and legal basis of the judgment. This is done to ensure the success of possible recourse action against other debtors.
The respondent can apply for an order that the plaintiff must pay a certain sum of money or other type of security for the respondent’s costs, but only in very limited circumstances. Granting of security for respondent’s costs can be ordered if the plaintiff is not a Croatian citizen and does not have domicile/registered seat in any of the member states of the EU or the EEA.
Also, the respondent will not be awarded with security for costs:
The principal rules regarding costs of procedure also apply to costs of interim applications, such as temporary injunctions. The decisions of the court regarding such applications, if they are connected to the court proceedings, will be deemed as part of the overall costs of proceedings, and therefore awarded together with other costs.
Please see 11.1 Responsibility for Paying the Costs of Litigation and 11.2 Factors Considered When Awarding Costs for more information regarding the costs of litigation.
Croatian law does not specify the timeframe for a court to deal with an application for issuance of a temporary injunction. However, the courts are obliged to act urgently in such cases. In enforcement and security proceedings, the courts are obliged to resolve cases in the order in which they were received, unless the nature of the claim, or other special circumstances, require otherwise.
Discovery, as known in common law jurisdictions, is not available in Croatian civil law. However, it is possible to request production of documents from the other party and/or third persons. Please see section 5.4 Alternatives to Discovery Mechanisms. On the possibility of a party to seek that the court secure certain evidence, even before court proceedings, please see 4.1 Interim Applications/Motions.
Since discovery is not available in Croatia, please see 5.4 Alternatives to Discovery Mechanisms.
Since discovery is not available in Croatia, please see 5.4 Alternatives to Discovery Mechanisms.
Discovery mechanisms are not available in Croatia, and each party in principle carries the burden of providing the evidence which support its clams.
However, if a certain piece of evidence is not available to a party which is invoking it, it can request that the court order either the other party or any third person to produce it.
For example, when one party invokes a document and claims that that the other party holds that document, the court will invite the other party to present the document, leaving it with a specified deadline. Generally, (subject to exceptions described in section 5.6 Rules Disallowing Disclosure of a Document) the other party may not refuse to file a document:
However, although binding, the court’s invitation for production of documents is not enforceable. The only consequence, which the party which fails to produce the required document will have to bear, is that the court will take that failure into consideration when deciding on the merits of the case.
Nevertheless, in some cases, a party can provoke an enforceable decision from the court, ordering the other party to produce a document it needs to specify a pecuniary claim. This can generally be requested only in disputes in which the plaintiff cannot make a specific pecuniary claim without the documents held by the respondent, but only if the respondent is obliged by law to hand over or show the requested documents to the plaintiff, or if the requested documents may be considered as belonging to both parties.
On the other hand, (subject to exceptions described in 5.6 Rules Disallowing Disclosure of a Document) third parties are generally obliged to testify or to produce documents, if so ordered by the court. In other words, the court’s decision ordering the production of documents from third parties is always enforceable.
Croatia recognises the concept of legal privilege. In civil cases, attorneys may refuse to testify about any factual circumstances they learned while representing their clients. This also applies to work-related products –ie, if an attorney is not obliged to testify against his or her clients, he or she can also refuse to comply with the court’s order to produce privileged documents.
This is in line with the general obligation on attorneys to preserve the confidentiality of all information they have obtained while representing their clients.
In-house counsel are not covered by statutory attorney-client privilege, since Croatian law does not recognise in-house counsel as attorneys-at-law. However, if an in-house counsel represents its employer in the proceedings, it will also be allowed to refuse to testify about anything its employer entrusted to them as their representative in the proceedings.
In some circumstances, a party is allowed not to disclose a document. Reasons for withholding a document correspond to the reasons which enable a witness to refuse to testify or to refuse to provide an answer to some questions during testimony.
Therefore, a party may choose not to disclose a document regarding/containing:
The party is also allowed to refuse to disclose a document if there are other important reasons to do so, and especially if by answering, the party would be exposed to grave shame, considerable property damage or prosecution of himself or herself or his or her relatives or spouse.
The above rules apply mutatis mutandis to the right of third persons not to disclose a document or to refuse to give testimony.
In Croatia, injunctive relief is a form of interim application available to parties before (or during) the proceedings. If statutory requirements are met, the court will render a decision freezing the other party’s assets such as real estate, movable assets or bank account funds.
Regarding types of injunctions, please see 4.1 Interim Applications/Motions. Injunctions to prevent parallel proceedings in other jurisdictions are not available.
Regarding urgency when dealing with an injunctive relief, please see 4.7 Application/Motion Timeframe. Arrangements for out of hour judges are not available in Croatia.
Injunctive relief can be obtained on an ex parte basis. An appeal against the decision on a motion for a temporary injunction can be lodged within eight days from the day the decision was serviced to the respective party.
The applicant can be held liable for damages suffered by the opponent, if it is later determined that the applicant’s motion was unfounded or if the motion was untimely.
The court may, at the proposal of the respondent and with a view of all the circumstances of the case, order the applicant to provide security to the opponent. Failure to provide this security will result in suspension of the injunction proceedings.
Croatian courts can generally issue injunctive relief regardless of the location of the opponent’s assets. However, whether the decisions of Croatian courts will be enforceable in other jurisdictions will depend on European Union regulations (particularly Brussels I Regulation) and other rules of private international law.
It is possible to obtain injunctive relief against third parties, when it is needed to secure an applicant’s claim. For example, the court can issue a preliminary measure ordering the debtor’s bank to withhold funds from the debtor's bank account.
The consequences of a respondent’s non-compliance with the terms of an injunction will vary, considering the type of injunction. Generally, injunctive relief is directly enforceable. In some instances, the court can also issue a fine against the non-compliant respondent. There is also a possibility that the respondent will be held liable for damages incurred by the plaintiff because of the respondent’s non-compliance.
Once a complaint is lodged, the court should conduct a preliminary examination of the complaint, serve the complaint on the respondent to provide a response, hold a preparatory hearing, close preliminary proceedings and schedule the main hearing.
If there are no grounds for dismissing the complaint, and after serving the complaint on the respondent and receiving the respondent’s response, the court will schedule a preparatory hearing.
The main purpose of the preparatory hearing is to discuss the facts of the case and the proposed evidence with the parties, in order to be able to decide which evidence will be heard (presented) in the main hearing stage.
At the end of the preparatory hearing, the court will close preliminary proceedings and schedule the main hearing. The court should, in general, schedule only one main hearing to hear all the evidence it has decided to hear, but in practice there are almost always several hearings.
When the court decides that the case has been sufficiently heard, it will conclude the main hearing and schedule a hearing at which the judgment will be announced.
Case management hearings are held during the preliminary proceedings stage, in which the court is obliged to make all necessary preparations for the main hearing.
Preliminary proceedings comprise of one (or, exceptionally, two) preparatory hearings. Preparatory hearings start with presentation of the lawsuit, followed by the presentation of the respondent’s answer to the lawsuit. The court should then rule on the evidence which it has decided to hear in the proceedings. The court will reject any proposed evidence which it considers inappropriate or irrelevant, but it is authorised to reverse this decision at a later stage of the proceedings.
After the preliminary issues are discussed, the court will conclude the preliminary proceedings and schedule the main hearing.
Jury trials are not available in civil cases in Croatia.
The parties bear the burden of presenting the facts on which they base their claims and providing evidence as to the existence of those facts.
However, the parties are not free to provide new evidence during the entire course of proceedings. The parties are obliged to present all facts on which they base their claims and admit all necessary evidence before the preliminary proceedings are concluded. During the main hearing, admission of new facts and evidence is rarely allowed (ie, it is possible only if the party, through no fault of its own, could not admit all the facts and evidence before the conclusion of the preliminary proceedings).
Types of evidence known in Croatian civil procedure are visual inspections, documents, witness testimony, expert witnesses and the hearing of the parties.
Expert testimony is allowed and commonly used in Croatian civil litigation. The court will allow expert witness testimony (upon request of a party) whenever certain expert knowledge is required to decide on the facts of the case.
Except in more complex cases, expert testimony is provided by only one expert witness. Expert witnesses are mostly selected from the ranks of licensed court experts for a particular field of expertise.
In practice, expert witnesses are usually required to submit their testimony in writing. However, they are also obliged to present their opinion orally at the hearing, enabling the parties to cross-examine them.
Although the court is not bound by the expert witness testimony and such testimony is, under law, treated as any other piece of evidence, expert witnesses have a very important role in Croatian civil law litigation, and courts tend to rely heavily on their conclusions when assessing the relevant facts.
Please see 1.3 Court Filings and Proceedings.
Although Croatia mostly follows the adversarial model, judges have an active role during the course of proceedings. For example, it is common that a judge will take on the main role during the examination of witnesses and expert witnesses, although the parties will also have the right to pose questions.
The courts are also allowed to establish facts which the parties have not presented and hear evidence which the parties have not proposed, but under limited circumstances – to prevent dispositions of the parties which are contrary to peremptory norms and the rules of public morality. This possibility is rarely used in practice.
After the court reaches a conclusion that the subject matter of the dispute is sufficiently heard, it may refuse to hear further evidence proposed by the parties.
The 2019 EU Justice Scoreboard ranked Croatia 21st (of 25 Member States for which the data was available) among the EU member states in the category “time needed to resolve litigious civil and commercial cases before the first-instance courts”.
According to the official statistics published by the Croatian Ministry of Justice, the typical duration of proceedings before first-instance courts in 2018 was 118 days (for Municipal Courts) and 64 days (for Commercial Courts). However, this data encompasses both disputed and undisputed matters (such as court registry procedures, etc), therefore it does not accurately reflect the time it normally takes to conduct proceedings of a disputed matter, which can usually take one to three years in the first instance.
According to the above mentioned statistics, the average duration of second-instance proceedings in 2018 was 160 days (for County Courts) and 336 days (for the High Commercial Court of the Republic of Croatia), while the duration of third-instance proceedings before the Supreme Court in 2018 was 483 days, on average.
The Croatian civil litigation system recognises two types of settlement – court and out-of-court settlement.
Court settlements are concluded before the court, by way of signing the minutes containing the settlement. The parties are free to conclude a settlement pertaining to the whole claim in dispute or pertaining only to a part of the claim. However, the court will disallow the settlement if it deems it to be contrary to peremptory norms and the rules of public morality.
Out-of-court settlement may be concluded without any kind of intervention of the court. However, these settlements will not have a direct effect on ongoing litigation, but rather, the parties will normally agree to formally withdraw from the litigation as a part of the out-of-court settlement.
The parties may stipulate confidentiality clauses in their settlements. However, even though court settlements are not published as judgments, there is no specific legal mechanism which could definitely exclude the possibility of making the settlement available to interested third parties, as it will be incorporated into the case file. Confidentiality is more efficiently achieved through out-of-court settlements.
Court settlements have the legal effects of final court judgments, and therefore can also be enforced in the same way as judgments.
On the other hand, out-of-court settlements are treated as regular contracts. Therefore, unless appropriate security instruments are obtained, any dispute related to an out-of-court settlement may turn into a new litigation.
Court settlements are final and binding from the moment they are signed by the parties. Therefore, they are not subject to appeal. Furthermore, unlike final and binding judgments, court settlements in principle cannot be challenged with extraordinary legal remedies.
Therefore, the most common path for setting aside a court settlement is through a separate litigation.
Regarding the content of legal protection given to a successful litigant, there are three main types of judgment:
The type of award will depend on the type of claim, meaning that the plaintiff decides which type of award it shall seek from the court. The court is bound by the content of the plaintiff’s claim –ie, it may provide only the type of protection actually sought by the plaintiff.
In Croatian tort law, damages include a loss of assets (pure economic loss), prevention of assets increase (loss of profit) and non-material damage.
The main aim of the rules regarding damages is to provide full compensation to the person sustaining the damage. A person liable for causing the damage is obliged to return the injured party’s financial position to the state in which it would have been had the wrongful act (or failure to act) not occurred. If restitution is not possible, or if it does not eliminate the damage fully, the responsible person shall pay an appropriate amount as compensation for damages to the injured party. In cases of non-material damage, an injured person may seek just pecuniary compensation or other appropriate remedies.
Punitive damages are not available in Croatia. Damages arising from a contract are regulated slightly differently than damages arising from tort, and contracting parties also have significant freedom to agree on specific provisions regarding liability arising from a breach of contract.
The right to collect interest arises immediately after maturity of the obligation, and the interest is accrued until the obligation is settled in full. Therefore, a party may collect interest for the entire period in which an obligation has not yet been settled, and a civil court will adjudicate such interest if sought by a creditor in a litigation.
Under the Civil Obligations Act, the statutory default interest is calculated based on an average interest rate on loans approved to non-financial companies with repayment periods longer than one year, increased by five percentage points (in commercial contracts and contracts between traders and public law entities), or three percentage points (in all other types of civil obligation).
In most cases, a judgment will become enforceable if it is final and if the period for voluntary fulfillment has expired. The means of enforcement will depend on the type of judgment rendered by the domestic court.
Enforcement proceedings are mostly conducted by courts. Debtor’s assets (money, real estate, movable property, securities), as well as certain non-proprietary rights of the defendant (eg, handover of movable property, vacating and handing over of real estate) may be subject to enforcement.
The procedure for enforcing a judgment from a foreign country is governed by the Croatian Private International Law Act and international treaties. The Croatian Private International Act prescribes application of EU regulations (based on the matters governed by each regulation) to all enforcement proceedings. For instance, in civil and commercial matters, Brussels I Regulation applies.
The Croatian litigation system provides for ordinary and extraordinary legal remedies. The most significant ordinary legal remedy is the appeal against the judgment of first instance. Submission of an appeal delays finality and enforcement of the contested judgment. The appeal is decided upon by the court of second instance.
There are two types of extraordinary legal remedies: revision and renewal of proceedings. Revision is a legal remedy against a final judgment of the second-instance court, and it does not suspend enforcement. Revision is decided upon by the Supreme Court of Croatia.
Renewal of proceedings is a legal remedy against a final decision which is brought before the first-instance court. It is generally reserved for the gravest violations of civil procedure, to set aside judgments which were based on criminal acts or for instances when new material facts and evidence, not previously known to the losing party, emerge.
A first-instance judgment can be contested through an appeal on the grounds of substantial violations of rules of procedure, misapplication of the substantive law and erroneous or incomplete determination of relevant facts.
There are two types of revision: revision with a prior approval and revision for which approval is not needed. Revision with a prior approval requires that the Supreme Court determines that a legal question, to be posed in the revision, is relevant for ensuring uniform application of the law, equality of all persons in its application, or development of law through case law.
Revision for which approval is not required can be filed only in specific types of disputes listed in the Civil Procedure Act.
A party can file for a renewal of proceedings only on the specific grounds which are explicitly enumerated in Civil Procedure Act. There are three groups of grounds for renewal: existence of very severe substantial violation of the rules of civil procedure, existence of some criminal acts that could have had an impact on a final decision, and discovery of new facts and evidence in cases where a more favourable decision could have been made for a party seeking renewal.
In most cases a party can lodge an appeal within fifteen days from the day of service of a copy of the judgment. An appeal is lodged before the first-instance court which can only examine whether an appeal is filed in time, and whether it is admissible and complete. If these prerequisites are met, the appeal is delivered to the opposing party which has eight days to file a response. The case file is then delivered to the second-instance court.
Parties can lodge a revision within 30 days from the day of service of a copy of the second-instance judgment. A revision is lodged before the first-instance court which can dismiss the revision (if the revision is untimely, inadmissible or incomplete). There is a difference in procedure based on the two different types of revision. If there is no need to seek the approval of the Supreme Court, the first-instance court serves the Supreme Court the revision and the file. However, if approval for revision is needed, a party must seek the approval of the Supreme Court before filing a revision. If the Supreme Court approves the submission of revision, a party needs to lodge it within 30 days of service of the Supreme Court’s decision.
A request to renew the proceedings needs to be filed before the first-instance court within a deadline of 30 days. The start of this deadline is determined for each of the renewal grounds specifically, but in most cases renewal of the proceedings becomes impossible after the expiry of five years from finality of the judgment.
The court of second instance examines the judgment in respect of the part of the judgment that has been contested by the appeal. However, second-instance courts will ex officio pay attention to the proper application of substantive law and to some of the gravest violations of civil procedure. In practice, second-instance hearings are rarely held. During the appellate procedure, it is not permitted to introduce new facts or new evidence regarding the merits of the dispute, but it is permitted to put forth new points with regard to procedural violations.
A party filing a revision needs to specify the grounds for revision and the Supreme Court is bound by those grounds. There are no violations that the Supreme Court ex officio needs to pay attention to. If a party is filing a revision for which an approval is needed, it must specify the substantive or procedural point of law based on which it seeks revision; it must also present reasons why it is important for the uniform application of the law, the equality of all persons in its application, or the development of law through case law. A party cannot present new points regarding the merits. A revision is decided upon without a hearing.
The grounds for renewal of the case are specifically enlisted in the Civil Procedure Act. Parties may present new facts and evidence in cases where a more favourable decision could have been made, had new points been presented earlier. Once the court reopens the proceedings, parties can present new facts and evidence without any restrictions. A hearing needs to be held before the court decides to reopen the case.
Neither first-instance nor second-instance courts can impose conditions on granting an appeal against the first-instance judgment. Parties must only satisfy statutory conditions. This also applies to the renewal of proceedings and revision without approval.
Regarding revision for which a prior approval is required, the Supreme Court decides whether the legal question posed by a party satisfies the criteria for it to be examined.
Upon deciding on an appeal, second-instance courts can:
Upon deciding upon a revision, the Supreme Court has analogous powers to those of the second-instance court. However, there is one major difference. If the Supreme Court remands for a retrial, the court to which the case has been remanded is bound by the legal opinion of the Supreme Court.
When a motion to reopen the case has been filed, the first-instance court can dismiss it as untimely, reject it or sustain it and reopen the proceedings. Once the first-instance court reaches a decision in the renewed proceedings, parties may appeal that decision.
Costs of litigation include all expenses incurred in the course of proceedings or due to proceedings. Each party advances its own expenses, but at the end of a dispute, the losing party is liable for the overall litigation costs. If a party succeeds only partially, the compensation of costs will be awarded proportionally.
Only costs which the court deems as necessary for the proceedings will be recoverable. The decision on procedural costs is also subject to appeal.
The most important factor in determining the costs is the success of the party. If a party only partially succeeds, the court should determine the percentage of success of each party. The court only considers costs which qualify as necessary. When determining the amount of costs, the court should consider the overall value of the dispute and the success ratio for each of the parties.
Statutory interest applies on awarded costs from the day on which the legally effective judgment was made.
For additional information on statutory interest rates, please see 9.3 Pre and Post-Judgment Interest.
Alternative dispute resolution (ADR) is still not very common in Croatia, but it is becoming increasingly popular. Forms of ADR in Croatia include arbitration, conciliation and family mediation.
ADR is possible in numerous matters, including commercial and civil matters, family matters and labour matters. Initiation of ADR interrupts the statute of limitation period, in the same way as a regular claim filed before the court does.
The Croatian legal system promotes ADR in a number of ways.
For example, arbitral awards are in most aspects equal to court judgments. They are also enforced the same way. What is more, grounds for setting aside an award are formulated very restrictively.
Regarding conciliation, the courts have a duty to promote this type of dispute resolution during the entire course of proceedings. Parties can use court conciliation as a means for dispute resolution. When the Republic of Croatia is a party to the dispute, conciliation is mandatory (please see 3.1 Rules on Pre-action Conduct).
Family mediation is also a possibility in family matters. Also, this type of mediation is mandatory when the well-being of a child is concerned.
The most relevant ADR institutions in Croatia are the Permanent Arbitration Court and the Conciliation Centre of the Croatian Chamber of Economy. These institutions have adopted standard rule books for arbitration and conciliation which provide a clear set of rules and guidelines for parties that choose alternative means for dispute resolution before the Chamber of Economy.
The conduct of arbitration in Croatia is governed by the Croatian Arbitration Act, which follows the regime envisaged by the UNCITRAL Model Law on International Commercial Arbitration, with slight alterations thereof.
The Arbitration Act governs the matters of domestic arbitration proceedings, recognition and enforcement of arbitral awards, as well as the jurisdiction and conduct of Croatian courts regarding domestic arbitration.
Disputes regarding all rights of which the parties may freely dispose may be referred to arbitration.
Additionally, domestic disputes without an international element (ie, where all of the parties are natural persons with their domicile or habitual residence in Croatia or legal entities established under the laws of Croatia) may only be referred to domestic arbitration, with its seat in Croatia.
On the other hand, in cross-border disputes (ie, if at least one of the parties is a natural person with its domicile or habitual residence in a foreign country or a legal entity established under foreign laws), the parties may refer their dispute to international arbitration (with its seat outside of the Croatian territory), but only if Croatian courts do not have exclusive jurisdiction over the matter in dispute.
Following the reasons provided by the UNCITRAL Model Law and the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958), the Croatian Arbitration Act prescribes the following reasons for challenging an arbitral award:
The award will also be set aside if the court finds that (i) the subject matter of the dispute is not arbitrable under Croatian law; or (ii) that the award is contrary to the public order of Croatia. The court will pay attention to these two reasons ex officio.
The parties may not waive their right to challenge the award, while the motion challenging the award must be submitted within three months from the day the award was served to the respective party.
Awards rendered in domestic arbitration proceedings shall be enforced unless the court finds that the subject matter of the dispute is not arbitrable under Croatian law or that the award is contrary to the public order of Croatia.
Foreign arbitral awards shall be recognised and enforced, unless the court determines:
The party seeking recognition and/or enforcement of a domestic arbitral award must submit to the competent court the original award together with its application, while a party applying for recognition and/or enforcement of a foreign arbitral award must also submit the original arbitration agreement, together with a certified translation of these documents (if the award or the arbitration agreement were not made in the Croatian language).