Enver Hasani*

The Evolution of the Succession Process in Former Yugoslavia

Introduction

This Article analyzes the nature of political developments in Serbia, following the October 2000 fall of the late, former President, Slobodan Milosevic.  Space limitations prevent a historical review of this matter.  Instead, this Article focuses on the consequences for all former Yugoslavs of the June 2001 signing of the Succession Agreement (SA)[1] between the five sovereign and independent States that emerged from the dissolution of former Yugoslavia.  This issue remains open in public discourse about Kosovo.[2]  This Article sheds light on the nature of the SA and its eventual consequences for the rights and duties of all Kosovars, vis-à-vis the succession of former Yugoslavia.

The conclusion of the SA closed, once and for all, the problem of State succession to the former Yugoslavia that had been unresolved since 1992.  The view of the Badinter Commission’s 1992 opinion, as discussed below, declared that the State known as the “Socialist Federal Republic of Yugoslavia” (SFRY) or former Yugoslavia had ceased to exist.  As a result, there was a need to discuss the issues surrounding the SFRY’s succession.

 The Yugoslav succession issue was officially discussed for the first time in the Working Group on Succession in 1992.  But the underlying issues were actively pursued within the Conference on the Former Yugoslavia, held in Geneva and London from 1992 to 1995.  Following the conclusion of the 1995 Dayton Peace Accords, the only remaining division from the Conference was the group charged with addressing the succession issues of former Yugoslavia.  The Dayton-established Peace Implementation Council transferred the authority to deal with the former Yugoslavia succession issues to the High Representative for Bosnia and Herzegovina.[3]

 As we shall see, the Serb position on the work of this new body poses a serious obstacle to progress and prevents any agreement on succession issues among the Yugoslav successors.  Against the rule of international law on State succession,[4] Serbs have continuously considered the Federal Republic of Yugoslavia (FRY)—renamed State Union of Serbia and Montenegro (SUSM) in 2001—as sole successor to the former Yugoslavia.  Until 2001, Serbs believed that by insisting on their claim to continuity with the former Yugoslavia they could decide (whimsically) the modalities used to divide the assets and property of the former Yugoslavia.[5] According to this official position of the Serbs, the former Yugoslavia did not dissolve in 1992.  Rather, the Serbs contend that in 1992 there was a succession of parts of former Yugoslavia, whereby the FRY/SUSM managed to preserve its State continuity with former Yugoslavia.  This was the supposed result of other Yugoslav republics seceding without consensus.  As such, these republics have no rights to equal succession to the assets, property, or other rights and duties of their predecessor State.

 This Article is divided into eight parts and tracks the structure of the SA.[6]  Part I covers the general issues regarding State succession.  Part II focuses on the legal framework of the SA.  Part III addresses the most contentious issue among Yugoslavs: State continuity of the former Yugoslavia.  These first three parts will enable the reader to follow the details of the Yugoslav succession, in comparison with other cases.  Part IV discusses an institutional framework for cooperation.  Part V addresses the concrete problems faced by the Yugoslav successor States regarding State property.  Part VI  is devoted to the succession of Yugoslav financial assets and liabilities spawned by the Yugoslav succession.  Part VII explains the division of Yugoslav archives.[7]  Finally, Part VIII discusses private property and acquired rights; it is also reserved for general observations on the subject. 

Kosovo has been effectively excluded from the process of succession to the former Yugoslavia due to its official disregard by the Badinter Commission in 1991.  Consequently, the SA did not deal with the right of Kosovo to succession either.  Kosovo is disregarded because it did not become an independent sovereign State—as occurred with the other former Yugoslav republics.  Therefore, this Article devotes less space to Kosovo and draws conclusions about it only at the end because none of the provisions of the SA or its earlier drafts discuss the possibility of Kosovo as a successor State to the former Yugoslavia.  The Article seeks to trigger scholarly and other related debate about the exclusion of Kosovo from the Yugoslav succession process and the political and legal possibilities for Kosovo reasserting itself as a successor to the former Yugoslavia (in this case only in regard to the Republic of Serbia), taking into account the ongoing talks on the future status of the country.

I.                   State Succession and Its Basic Principles

 Succession of States in international law consists of a set of express rules and related principles that define the legal consequences of changes in the territorial sovereignty of States.[8]  This regime governs the rights and duties of the predecessor State.  These rights and duties involve international treaties, citizenship, State property, foreign debt, archives, private property, and acquired rights under the laws of the predecessor State. As such, the succession of States represents a huge legal vacuum, largely because it has not been codified.[9]  The international arena’s minimal experience with State succession, prior to the process of decolonization, did not transform into clear legal rules.  The first and second Vienna Conventions (VC I and VC II) did nothing other than sanction the rules of succession of States within the prior colonial context.  Outside this context, the rules on State succession remained applicable only at the level of legal principles.  This state of affairs emerged from the “clean slate” doctrine.  This doctrine provides that of all dimensions of State succession, former colonies inherit only the rules and principles concerning border regimes and membership in certain international organizations created by their former masters.  Based on the “clean slate” doctrine, former colonies refused to accept most of the rights and duties of their predecessor States, especially when it came to foreign debt and the acquired rights of private persons (individuals and legal entities alike).  VC I and VC II, as well as States’ practices based on them, bluntly denied the doctrine of universal succession that had firmly been entrenched in traditional international law.  The opposite of the “clean slate” doctrine (universal succession) stresses that every change in territorial sovereignty should result in an activation of the historical rules and principles on State succession.

 Rules and principles on State succession address the legal consequences of the changes in territorial sovereignty of States.[10]  Changes in political regime effectuated through illegal means do not result in the activation of the rules and principles on State succession.[11]  Taking into account that the succession of States has to do with the legal consequences of changes in sovereignty, no matter the scope and extent of this change, it does not matter whether the predecessor State preserves its legal identity and continuity following a change in territorial sovereignty.

 Examples of what might happen in such cases are as follows: the State affected by such changes in territorial sovereignty may lose its membership in some international treaties; some of its citizens may become citizens of another State; the State’s rights and duties may pass onto others; and acquired rights under its old laws may fall under the scrutiny of the new sovereign.

 Such a State preserves its identity and subjectivity on the international plane because the issues of State identity and continuity are separate from the matter of the succession of States in international law.  Whether a State has lost its identity and continuity is a matter decided by the international community, no matter the scope or extent of the changes in territorial sovereignty.  Such a determination is a matter of convention and agreement among the members of the international community.  It is not dependent upon the size of the lost territory, or the form of transformation in the predecessor State.  A State could totally dissolve.  But for the purposes of international law, the predecessor State has preserved its identity and continuity despite its dissolution.[12]

 Such was the case with Austria.  It had been considered as an identical State with, and continuation of, the Austro-Hungarian Empire.  It is also the case with Turkey (in regard to the Ottoman Empire) and the Russian Federation (in regard to the former USSR).

 Neither VC I nor VC II represent reliable legislative solutions for other succession situations outside the colonial context.  Their provisions remain at the level of principles confirmed by previous State practice.  Among the principles enshrined in these two documents, the principle of “agreement” stands out as the most important.  Agreement, in this context, means all succession issues should be settled first through a consensus and agreement among interested parties; and only if that fails should the legal norms apply.  This was the case when the legal consequences of the dissolution of the former Communist federations were addressed (such as with Yugoslavia, the USSR, and Czechoslovakia).  This principle of agreement was confirmed by the decisions of the European Community (now the European Union) Pace Conference for Yugoslavia (1991-1992).  The decisions were applicable to all three of the former communist federations,[13] the opinions of the Badinter Commission,[14] the decisions of the International Conference for Former Yugoslavia (1992-1995),[15] and the decisions of the United Nations Security Council.[16]  The SA also reflects the principle of agreement—the principle finds an important place among its provisions.[17]

The principle of equity is another major principle applicable to the legal consequences of the changes in territorial sovereignty.  Its application represents a crucial factor during State succession.  It has been accepted by State practice.  In addition to the succession of States, its application relates to other fields of international law.[18]  Taking into account equity’s very contextual nature—rendering the term very difficult to define precisely and for all purposes—it essentially means “finding the truth.”[19]

 Practical exigencies, more than rigid legal norms requiring a disciplined application, have provided the solutions in cases of State succession—both in the distant past as well as with the former Communist federations of Yugoslavia, the USSR, and Czechoslovakia.  Before discussing these cases, one must acknowledge the possibility of equity’s liberal interpretation and a certain degree of insecurity and unreliability within the rules on State succession.  A detailed legal regulation of this field of positive international law would be very difficult.[20]

 The VC II principle of equity is found in the provisions of Articles 37 (1) and 40 (2), which require a balance between the division of assets and debts undertaken by successors.  This approach dictates a formula that in the opinions of the Badinter Commission appears as the requirement that “the overall succession be equitable.”[21]  The Badinter Commission has expanded upon this broad principle by providing more elaborate rules of procedure.  Nevertheless, the violent break-up of the former Yugoslavia prevented their implementation.[22]  Badinter’s rules of procedure and other guarantees for the implementation of the rule of equity in the Yugoslav context have had to wait for several years to be put into effect.  The delay was partially necessitated by the need to conclude the SA after the fall of Milosevic from power in October 2000.  Equity in the Yugoslav scenario means taking the following three factors into account: the economic sustainability of the successor States to former Yugoslavia; their population numbers; and the size of their territories.

 At the outset, application of these factors was not clear for the Badinter Commission itself.  The SA reflects these factors by discussing the division of State property and the division of the former Yugoslavia’s financial assets and its foreign debts.[23] The SA, like the VC II, does not contain provisions regarding the countermeasures other successors and creditors can use against States that eventually act in bad faith.  The SA, after many years of hardships and failed debates regarding Yugoslav succession, is actually based on the premise of parties acting in good faith.  This premise was real: Milosevic’s fall from power removed the main factor obstructing the Yugoslav succession process since 1992.  Throughout the time of Milosevic, acting in bad faith was a constant feature of the Serb delegation within the Working Group on Succession of Former Yugoslavia.[24]

Things were far different in the case of succession of two other former Communist federations—the USSR and Czechoslovakia.  That is because their dissolution was not chaotic, violent, and bloody.  In fact, for Czechoslovakia, the rule of equity meant the consensual application of the proportion “two to one” for all succession items.  In other words, the ratio of two for Czechs and one for Slovaks applied.[25]  For the USSR, the succession context equity rule consisted of total acceptance of its foreign debt by Russia, as well as all property, financial assets, and other succession features.[26]  In both cases, the insistence of the international community has meant the acceptance of an agreement freely reached among successor States and full respect for its provisions.  This was absent in the case of the former Yugoslavia until 2001 when the parties concluded the agreement on succession issues (the SA).

 The rule rebus sic stantibus is equally applicable in cases of State succession.  This principle means parties should pay full respect for norms unless factual circumstances change or alter their practical meaning and importance.  It thus serves as a useful instrument for applying the provisions of the VC I and VC II, as well as other provisions of traditional international law applicable in cases of State succession.[27]  The SA failed to include provisions incorporating this rule.  This omission occurred because the rights and duties of the successor States to the former Yugoslavia stemming from international agreements have not been contentious issues since 1992.

ii.  The Structure of the SA: The Main Part and Its Annexes

 The SA has two separate parts.  Together, they form a unified and single document.  The first basic text is entitled, “Agreement on Succession Issues.”  It forms the umbrella, or framework, of the SA.  In its basic text, the SA addresses key issues of the Yugoslav succession—the most contentious ones since 1992.  These include the legal status of the former Yugoslav republics vis-à-vis their predecessor State; the role of the VC I and VC II; the role of the principle of equity; the scope and extent of the mutual rights and obligations of the successor States; and finally, the issues of institutional cooperation among equal subjects of succession to the former Yugoslavia.

 The second part of the SA consists of seven annexes.  They cover the related segments of succession and the rights and duties as follows:

 1.      Annex “A” – Movable and Immovable Property;

2.      Annex “B” – Diplomatic and Consular Properties;

3.      Annex “C” – Financial Assets and Liabilities;

4.      Annex “D” – Archives;

5.      Annex “E” – Pensions;

6.      Annex “F” – Other Rights, Interests, and Liabilities; and

7.      Annex “G” – Private Property and Acquired Rights.

 As one can see, the SA does not regulate all dimensions or aspects of State succession.  By this is meant, first and foremost, the dimension and various aspects of succession to citizenship and membership in international organizations.  This is an approach also found in the VC I and VC II.  Since the SA does not deal with these dimensions and aspects, there have not been controversies among the Yugoslav successors as to their scope and content.  They are therefore not discussed in this Article.[28]

iii.  Final Refusal of the FRY/SUSM Claim to State Continuity With Former Yugoslavia

 The Badinter Commission’s first opinion was issued on November 29, 1991.[29]  It paved the way for a final solution of the legal status of the former Yugoslavia under international law applicable to the cases of State dissolution.[30]  In this opinion, Badinter stated, inter alia, that “the Socialist Federal Republic of Yugoslavia is in the process of dissolution.”[31]  Despite open negative Serb reactions to it, the opinion received the unreserved support of the international community.[32]  Support was provided by the UN Security Council, the UN General Assembly,[33] and other international bodies.[34] Furthermore, the national courts of various States, when faced with the issue of Yugoslav succession, supported the above opinions of the Badinter Commission and authoritative decisions of the UN Security Council and the UN General Assembly.[35]

 The practical results of these endorsements meant that the FRY would not be considered as sole successor to the former Yugoslavia and, consequently, would not inherit State continuity under international law.  The SA unambiguously sanctioned this position of the international community in its preamble, where it enumerates all five new successor States as equals on all issues of State succession to the former Yugoslavia.[36]

 The Serbian claim of the FRY to State continuity with former Yugoslavia existed from the first days of Yugoslavia’s creation in 1918.  Following its establishment, Serbs have insisted that the new State—the Serb-Croat-Slovene Kingdom (later renamed “the Kingdom of Yugoslavia” in 1929)—represents the same State as the pre-1918 Kingdom of Serbia.[37]  The activation of this Serbian claim to continuity with the former Yugoslavia after 1991 continues a long-term debate, despite the fact that during the Communist control of Yugoslavia the problem was frozen for various reasons.[38]  Among Serb scholars, it has been correctly noticed that this claim to continuity with the former Yugoslavia formed the very essence of the Greater Serbia Project, pursuant to questionable international legal norms.[39]

 While in power, President Milosevic pursued this State continuity claim, but without tangible success.  He first remained at the level of verbal statements, firmly insisting on it in an apparent hope this insistence would bring him more rights and privileges in the process of the Yugoslav State succession vis-à-vis other republics.[40] Only at a later stage did he undertake practical steps, advising his lawyers and diplomats not to seriously enter the negotiations on succession, leading practically to a deadlock until his downfall from power in October 2000.

 In this context, he concluded some agreements[41] and made joint statements[42] with other former Yugoslav republics, all of which followed the 1995 Dayton Peace Accords.  He obviously believed these documents would suffice to convince the international community to reverse its decision denying the Serbian continuity claim regarding the former Yugoslavia.  In all these documents there appears a clause recognizing State continuity between the former Yugoslavia (regarded as the FRY) and former para-statal political organizations existing in other republics before 1991 (Macedonia, Croatia, and Bosnia-Herzegovina).  It is understandable these attempts failed because no one from the international community recognized the State continuity of the FRY with former Yugoslavia.[43]

The question now is why Serbs under Milosevic have so fervently insisted on this claim to continuity with former Yugoslavia?  Scholars studying the succession of Yugoslavia have found that this continuity claim is explained by the nourished illusions regarding the division of property, assets, and foreign debts of the former Yugoslavia.  Milosevic obviously hoped that if he managed to receive the recognition of FRY’s continuity with former Yugoslavia, then by definition, other republics would be considered secessionists and thus have no rights to the property or assets of their predecessor.  This would further mean the foreign debt of former Yugoslavia could be divided at whim, according to the rules dictated by the FRY as a continuing State and the sole successor to former Yugoslavia.  These attempts proved futile because the resulting diplomatic effort, represented by the SA, conveniently purported to finalize this chapter on the supposed settlement of all succession issues of the former Yugoslavia.

iv.  Institutional Framework for Cooperation

 Work on the succession of the former Yugoslavia—under the auspices of the international mediator Sir Arthur Watts— abruptly halted on the eve of the Kosovo war.[44] It continued after the fall of Milosevic from power in October 2000.  Before the SA was concluded in June 2001, there were two meetings held between the successor States.  One was in Brussels (December 2000).[45]  The other was in Ljubljana (February 2001). Earlier than this (1992-1999), there had not been institutional contacts.  That is, only the SA established a proper institutional framework for cooperation among successors to the former Yugoslavia.

 The SA foresees not only permanent institutions for cooperation during the implementation phase, but also other mechanisms for the solution of controversies over the interpretation of the SA itself.  Among such institutions, the Standing Joint Committee (SJC) is the most important.  It is composed of the high representatives of each contracting party.[46]  The main task of the SJC is to oversee the effective implementation of the SA.  The SJC also serves as forum for the solution of any disagreement between the parties.[47]  Its decisions are not binding, which is a serious drawback of this body.[48]  In a sense, the SJC acts as a co-owner, taking into account only those rights and duties of the successor States that constitute, as the authors of the SA put it, a common good administered by themselves under the auspices of the SJC.[49]

 The SJC functions by overseeing the implementation of certain parts of the SA, especially those parts that are contentious between the successor States.  These committees often establish other mechanisms for dividing movable and immovable State property, the property of diplomatic and consular premises, and financial assets and obligations.  The main characteristic of the committees is that their work starts before the SA enters into force.  As a result, they are quite important in solving controversial aspects of the succession of the former Yugoslavia that commenced in 1991.[50]  Successor States have thereby established the Joint Committee on Succession to Movable and Immovable Property (JCSMIP). This mechanism manages “the proper implementation of the provisions of this Annex applicable to tangible movable and immovable property (other than military property) and the resolution of any problems which might arise in the course of their application.”[51]  The SA further allows for the formation of other joint committees that determine the value of various SA-related features, including financial assets and liabilities, disposition of diplomatic and consular premises, and dividing assets and liabilities, based on the proportions provided for by the SA.[52]

 The differences over the implementation and interpretation of the SA shall “be resolved in discussion among the States concerned.”[53]  Should such discussions not lead to a reasonable result, the parties may then lodge the issue before an independent person of their choosing, who makes a binding decision.[54]  Alternatively, the parties may send the issue before the SJC.  It has the right to make an advisory opinion, which is not binding upon the parties.  Based on an initiative by either party, disagreements over the interpretation of the SA can be submitted for a binding decision to an independent expert, “to be appointed by agreement between the parties in dispute or, in the absence of agreement, by the President of the Court of Conciliation and Arbitration within the OSCE [Organization for Security and Cooperation in Europe].”[55]

 This dispute resolution process prevents potential hindrances in the process of timely solving succession issues regarding the former Yugoslavia.  Due to its heavy involvement in the former Yugoslav crisis, the OSCE has been chosen by the successor States to the SA to play this role.  The five Yugoslav successors have apparently considered this regional organization as a neutral actor, able to deal with succession issues as well as its traditional political role.[56]  Compared with VC II, the SA does not expressly mention the possibility of resorting to the International Court of Justice. This does not mean, however, that the SA necessarily excludes that possibility, because “nothing in the preceding paragraph of this Article shall affect the rights or obligations of the Parties to the present Agreement under any provision in force binding them with regard to the settlement of disputes.”[57]

 The SA and the Yugoslav succession case represent a novel precedent that can be utilized in future succession cases.  Both offer very original paths (one binding and the other not) toward the solution of other State succession problems.

v.  Immovables, Movables, and the Property of Diplomatic and Consular Premises

 As for the division of immovables, the SA provides different solutions from those foreseen by the VC II.  These novel provisions of the SA deal with the definition of immovable State property, the determination of the date of succession to this property, eventual compensation for this property, and applicable law.

 The SA set the date on which successor States proclaimed their independence as the moment of succession.  The parties asked for this type of declaration, thus ignoring the provisions of the VC II.[58]  As a result, “[i]mmovable State property of the SFRY which was located within the territory of the SFRY shall pass to the successor State on whose territory that property is situated,”[59] while “its title to and rights in respect of that property shall be treated as having arisen on the date on which it proclaimed independence, and any other successor State’s title to and rights in respect of that property shall be treated as extinguished from that date.”[60]

 According to the VC II, immovable property belongs to the successor States in whose territory that property is located.  This rule foresees possible compensation in those cases where succession produces inequitable results for other successors.[61]  Such compensation, which is to be based on VC II principles, has been demanded by other Yugoslav republics—apart from the Serbs, who did not ask for it since they possessed the majority of the former Yugoslavia’s immovables.  This repeats the scenario played out in former Soviet Republics and the Czech and Slovak Republics,[62] but without success.

 While the Yugoslavian SA does not exclude the possibility for compensation, all five Yugoslav successor States must agree, based on a previous recommendation of the appropriate bodies functioning within the SA.[63]  In practice, it is difficult for such compensation to be obtained for the benefit of any of the successor States because it requires consent of all five Yugoslav successors.

 The parties inserted provisions that yield a different approach for the identification of the property of the former Yugoslavia.  This approach differs from the solutions proposed in the VC II, which defines State property as “property, rights and interests which, at the date of the succession of States were, according to the internal law of the predecessor State, owned by that State.”[64]  The SA, however, does the opposite.  It says the successor State, not its predecessor, in whose territory immovable and tangible movable property is situated, is to “determine, for the purposes of this Annex, whether that property was State property of the SFRY in accordance with international law.”[65]  Property of the former Yugoslavia is “the movable and immovable State property of the federation constituted as the SFRY.”[66]  This approach initially appears to have a logical inconsistency.  Upon closer observation, however, the opposite is true.  That is because the Government of Serbia under Milosevic from 1992 to 2001 opposed the results of the Badinter Commission, as well as the application of the VC II, regarding division of State property, while having in the meantime possession over the majority of former Yugoslav property.

 The division of the movable State property of the former Yugoslavia has also been accomplished in a different manner than provided by the VC II.[67]  There, the “functional principle” was pursued, which holds that movable State property belongs to those successor States with whose activity that property is connected.[68]  The SA accepts a territorial approach to the succession of movable State property because the Republic of Serbia notoriously held in its possession the major part of that property.  The Serbian government used it to pursue its war efforts.  For this reason, the SA itself excludes from the succession arrangement the military property of the former Yugoslav Army.[69]  It separates the issue of war damages from succession, as proposed by the Badinter Commission at an earlier stage.[70]

 According to Article 3(1) of Annex A of the SA, “tangible movable State property of the SFRY which was located within the territory of the SFRY shall pass to the successor State on whose territory that property was situated on the date on which it proclaimed independence.”  The following paragraph of the same Article excludes from this category property having cultural and historical importance for the peoples of the former Yugoslavia.  This provision was inserted because wars in the former Yugoslavia devastated so much of the cultural and historical property of the Yugoslav peoples.  This exclusion covers the movables located, on the day of the successor States’ independence, within the territory of the former Yugoslavia.  It also applies to the immovables that, based on Article 4(5) of Annex B, were held outside the country as part of the Yugoslav diplomatic and consular premises.  This provision is a novel one compared with the VC II, which offers such protection only to archived materials and not to the movables of the predecessor State.[71]

 The SA has in practice adopted the opinions of the Badinter Commission on the separation of war damages from the succession issues of former Yugoslavia.  The SA does not address war damages.  However, the formulation of Article 3(3) of Annex A addresses the possibility for return of the movable property removed without authorization.  Such property must have been located within the territory of a successor State on the day of independence.  If return is not feasible, the successor State in possession of such property should compensate the predecessor State for the value of the property, provided it does not fall within the category of military property.[72]  As a result, in cases of movable property (other than military property, which is excluded from this share) the return takes precedence over compensation.  This is only true when this kind of State property was removed without authorization from its original location.

 Diplomatic and consular property composes only one percent of the overall property of the former Yugoslavia.[73]  On the issue of its division, the successor States have more clearly respected the provisions of the VC II and customary international practice.[74]  To achieve an equitable solution, the SA provides three methods for its division.

 First, the SA foresees a division based on the selection of diplomatic and consular premises for allocation to each of the successor States (Article 1 of the Annex B).  This selection, however, is an interim and partial distribution of the SFRY’s diplomatic and consular properties.

 The second method of division is regulated by Article 3 of the SA.  This method requires the total and final distribution of diplomatic and consular properties (including those acquired in accordance with Article 1) reflect as closely as possible the proportions by value of each State: Bosnia and Herzegovina, 15 percent; Croatia, 23.5 percent; Macedonia, 8 percent; Slovenia, 14 percent; and the FRY, 39.5 percent.  These proportions, as it can be seen, are different from those applied by the International Monetary Fund (IMF); and they are more favorable for Bosnia, Herzegovina, and Macedonia.[75]  They also include the property of diplomatic and consular property from Article 1 of Annex B.  These are cases where the parties themselves have made their choice: Bosnia and Herzegovina (former Yugoslav Embassy in London); Croatia (former Yugoslav Embassy in Paris); Macedonia (former Yugoslav General Consulate in Paris); Slovenia (former Yugoslav Embassy in Washington); and the FRY/SUSM (former Yugoslav Residence in Paris).

The third method of division foreseen by the SA requires “[m]ovable State property of the SFRY that forms part of the contents of the diplomatic and consular properties [be passed] to whichever successor State acquires the diplomatic or consular properties in question,”[76] with the exception of movable State property that “is of great importance to the cultural heritage of one of the successor States.”[77]  This means other property shall be divided proportionally, to achieve the above percentages.  These proportions can be achieved through an agreement between the five successor States or special procedures for such a division.  Article 4(1) of the Annex B states that “each successor State shall, within the geographical region, be entitled to its proportionate share as set out in Article 3.” [78]

 The SA asked the parties to act in good faith and as good neighbors when it required successor States in possession of diplomatic and consular  property “to maintain and keep under repair any diplomatic or consular properties of the SFRY.”  The SA also asked the parties to:

 take the necessary steps to that end, bearing in mind in particular: (a) the principle that it must at all times take the necessary measures to prevent loss or damage to or destruction of such properties; and (b) the requirement to pay compensation for any loss, damage or destruction resulting from failure to take such action.[79]

vi.  Financial Assets and Liabilities

 Financial assets and liabilities are the most unregulated part of the VC II.  This is not surprising, given that State practice prior to 1991 related mainly to the colonial context.[80]  Both the VC II and its then contemporary State practice had very serious drawbacks regarding, first, the definition of State debt, and second, the principles according to which assets and liabilities of the predecessor State should be divided.  The VC II recognizes as State debt “any financial obligation of a predecessor State arising in conformity with international law towards another State, an international organization or any other subject of international law.”[81]  As for its division, the VC II states that “the State debt of the predecessor State shall pass to the successor States in equitable proportions, taking into account, in particular, the property rights and interests which pass to the successor States in relation to that State debt.”[82]

 The VC II takes into account only the interests of the successor State(s); that is, the interests of those entities taking over State debt (the debtor), but not the interests of those to whom the debt is owed (the creditor).[83]  The interests of the private creditors not “subject of international law” would be heavily affected if this practice had been pursued.  To evade its practical implementation, international governmental organizations,[84] creditor countries (the “Paris Club”), and private creditors (the “London Club”) have decisively intervened in the process of dividing assets and foreign debts of the former Communist federations—Yugoslavia, the USSR, and Czechoslovakia.[85]  This intervention has benefited these international actors.  It has further aided successor States, due to their paramount need to be integrated into capital markets and global trade, so they can foster their economic development.

 This situation was quite the opposite in the colonial period.  The actions of Slovenia and other Yugoslav successor States undertaken between 1993-1996 should be seen in a different light from colonial times.  Namely, they each entered into bilateral agreements with the countries of the “Paris Club” and the creditors of the “London Club” for the payment of their part of the foreign debt quotas assigned by the IMF.[86]  That left the rest of the unallocated debt and assets for retention by the FRY/SUSM.[87]  The SA recognizes the key assigned by international financial institutions (“IMF key”) as a criterion for the division of assets and foreign debt of the former Yugoslavia.  This tactic left untouched the individual agreements successor States bilaterally achieved with creditor countries, commercial banks, and other international financial organizations during 1993–1996.  Only in this manner could the equitable result be achieved in the former Yugoslav context, not through the implementation of the provisions of the VC II or the State practice of the colonial times.

 The intervention of international financial institutions has been decisive in the conclusion of the agreements between the successor States.  This was obvious in both the former USSR and Czechoslovakia.  It provided for the precise and clear criteria of an equitable division and a disciplined and ordered succession process.

 The SA recognizes the application of the IMF’s formula (or “key”) when dividing the assets and liabilities of the former Yugoslavia.  This application of the IMF formula did not mean parties were left without any choice to make some minor changes.  The IMF formula is based on several pillars, such as the contribution of the former Yugoslav republics into the gross domestic product and Yugoslav exports, as well as their economic power compared to each other.[88]

 The modifications of the IMF formula have been sanctioned in Annex C, Article 5 (2) of the SA.[89]  Now they appear as follows: Bosnia and Herzegovina, 15.5 percent; Croatia, 23 percent; Macedonia, 7.5 percent; Slovenia, 16 percent; and RFY/SUSM, 38 percent.  This division of assets and liabilities is applicable to the following assets in particular: 27 percent of the capital of the former Yugoslav Bank for International Economic Cooperation;[90] the net sum of the claims of the National Bank of Former Yugoslavia towards other countries;[91] foreign financial assets, such as money, gold, and other precious metals; deposits and direct guaranties held in the former Yugoslavia or the National Bank of Yugoslavia or held jointly with other foreign banks;[92] and finally, foreign financial assets currently unknown for the successor States.[93]

 The manner in which the former Yugoslav foreign debt has been divided is novel for many reasons.  First, parties to the SA accepted the IMF formula for the division of the Yugoslav State debts.[94]  Second, this division in the SA does not follow the instructions of the VC II, according to which there should be a balance between the property, rights, and interests that pass to the successor States in relation to their State debt.  The implementation of this formula was attempted in the context of the former USSR[95] and Czechoslovakia,[96] but without success.  Foreign creditors did not accept such an approach, insisting on a “joint and several liability” formula instead.  This “joint and several liability” clause was taken out only when foreign creditors realized successor States of these former Communist federations were being serious about  taking over their part of the unallocated federal debt.[97]  This approach proved to be both long and difficult. In standard State practice, this prior debt does not include either local debt (contracted by regional authorities, former Communist republics, and autonomous provinces) or localized debt (contracted by former Communist federations on behalf of the regional authorities, former Communist republics, and autonomous provinces).[98]  These two kinds of debt automatically pass onto the successor States, based on the “final beneficiary rule,” which is based on who benefitted in the past from the contracted debt.[99]

 This method of dividing the unallocated debt of the former Yugoslavia represents the permanent solution—according to the IMF formula and the completed bilateral activities with the IMF, World Bank (WB) and the countries of the “Paris Club” and the commercial banks of the “London Club.”  This solution was opted for to assure all international creditors, especially the country members of the “Paris Club” and the commercial banks of the “London Club,” that eventual disagreements between the parties would not impact the bilateral arrangements and activities so concluded with the above-mentioned actors.  The absence of such a clause would have triggered the return of the system of “joint and several liability” of the former Yugoslav republics.  In other words, these decision-makers wished to make sure the unallocated debt of the former Yugoslavia would be paid under all circumstances, regardless of any internal rifts between successor States to the former Yugoslavia.

vii.  Archives

 The provisions of the VC II regarding the division of archives have been generally respected.  This does not mean, however, that the SA did not include relevant solutions.[100]  The provisions of the SA apply mainly to the application of the territorial principle, functional (or organic) principle,[101] and the principle of integrity of the archives.[102]

 The key principle of the VC II is that documents necessary for the normal functioning of the administration of the successor country should be an object of State succession.[103]  This provision covers both administrative archives and those of cultural and historical importance for the successor State.  Political archives are not an object of succession.[104]  The VC II does not address what materials should make up the archives.[105]  This ambiguity was cleared up by the SA.  Article 1(a) of Annex D considers the following as State archives:

 all documents, of whatever date or kind and wherever located, which were produced or received by the SFRY (or by any previous constitutional structure of the Yugoslav State since 1 December 1918) in the exercise of its functions and which, on 30 June 1991, belonged to the SFRY in accordance with its internal law and were, pursuant to the federal law on the regulation of federal archives, preserved by it directly or under its control as archives for whatever purpose.

 In Annex D, Article 1(b), the SA discusses documents that compose archival material that should be the object of succession between the five successor States.  This does not mean it is possible to create a definitive list of all documents and the archival materials that are subject to succession.  The above formulation leaves enough room for brushing aside the responsibility regarding the archives succeeded to from June 1991 to July 1992 because there was no predecessor State in charge of them.  In fact, the predecessor State did not exist from June 1991 to July 1992.

 Concerning the organic principle, the VC II gives a formulation according to which

State archives of the predecessor State means all documents of whatever date and kind, produced or received by the predecessor State in the exercise of its functions which, at the date of succession of States, belonged to the predecessor State according to its internal law and were preserved by it directly or under its control as archives for whatever purpose.

 The VC II gives no criteria for interpreting, and no definition of, the meaning of “preserved by it directly or under its control” for the documents that qualify as State archives.  The SA is more specific, however.  In addition to the documents related directly to the territory of one or more of the successor States, the SA considers as State archives documents “produced or received in the territory of one or more of the States” in the past.[106]

 According to the principle of integrity of archives, successor States—on the occasion of their division—should ensure the data and other information contained therein is not damaged.  It must also be preserved in its entirety.  In the SA, this principle is expressed in the following words:

The agreement referred to in paragraph (a) shall take account of all relevant circumstances which include the observance as far as possible of the principle of respect for the integrity of groups of SFRY State archives . . . without prejudice to the question of where any particular group of archives should be preserved.[107]

 Article 6 of Annex D provides for the possibility of a “joint succession” to the State archives of the former Yugoslavia.[108]  The successor States should “identify, and circulate to each other, within 24 months of the date on which this Agreement enters into force, lists of archives to which Article 3 and 4 apply.”[109]  The same function of the preservation of the archival integrity, in addition to the “joint succession” archives, is anticipated by Article 5 of Annex D of the SA.  This Article allows for the parties to reach an agreement as to which of them shall keep the originals, so as to enable the others to make copies when “archives are to pass to more than one State.”[110]  It should be noted, however, that the principle of integrity of archives, or of the preservation of the collections of the archives, should not be detrimental to the need for implementation of the other principles of territoriality and functionality.[111]

viii.  Private Property and Acquired Rights

 Acquired rights are “any rights, corporeal or incorporeal, properly vested under municipal law in a natural or juristic person and of an assessable monetary value.”[112]  These rights were born in the context of protecting foreign concessions from nationalization by new territorial sovereigns.  They have been closely connected with the diplomatic protection of foreign nationals.  In fact, the first cases before national courts speak of this latter protection of the acquired rights.[113]

 The principle of acquired rights in international law limits the arbitrariness of State power involving territorial changes in sovereignty.  These principles are not limitations on sovereignty.  Instead, they protect private relationships of natural persons and legal entities in the aftermath of a change in territorial sovereignty.[114]  Their post-Cold War application has clearly established that acquired rights are an important part of customary international law.[115]  During the decolonization process, new territorial sovereignties, based on the “clean slate” doctrine, seriously questioned the validity of norms and principles on acquired rights.[116]  Before the decolonization, acquired rights found support in national[117] and international courts.[118]  They were also the object of multilateral[119] and bilateral legal regulations between sovereign States.[120]  Even when they were violated, the perpetrator State has offered “just and immediate” compensation to the damaged party.[121]

 During the dissolution of the former communist federations, these rights were respected to the greatest possible extent.  No hesitation or refusal to apply them ever surfaced, due to the lack of ideological conflict regarding forms of property and an overall liberal orientation in the former Communist world toward democracy, free trade, and respect for private property and free competition.  The application of acquired rights is connected to respect for universal human rights values, which had been incorporated in the national legislation of the former Communist countries.[122]  Provisions of the SA reflect this universal trend.  It contains concrete resolutions against discrimination and compensation in cases where the restoration of the acquired rights is not feasible for whatever reason.

In addition to so-called acquired rights of an administrative nature—such as pensions[123] and other rights—interests and liabilities are not covered by the SA.[124]  Annex  G of the SA speaks of  “private property and acquired rights.”  Articles 1 to 8, which are divided into material  rights (Article 2: “the rights to movable and immovable property”) and rights not having material nature (Article  3: “rights to intellectual property, including patents, trade marks, copyrights, and other allied rights [e.g., royalties]”).  The principle of non-discrimination appears in no uncertain terms in Article 2 (1) (a):

 the rights to movable and immovable property located in a successor State and to which citizens or other legal persons of the SFRY were entitled on 31 December 1990 shall be recognized, and protected and restored by that State in accordance with established standards and norms of international law and irrespective of the nationality, citizenship, residence or domicile of those persons.  This shall include persons who, after 31 December 1990, acquired the citizenship of or established domicile or residence in a State other than a successor State.

 Similar protection is also found in Article 6 of Annex G of the SA on the protection of “dwelling rights,” coupled with additional guarantees offered by the successor States regarding non-discrimination.[125]  As a result of these protections, every contract concluded under duress is considered null and void.[126]  Such provisions seek to prevent illegal acts against acquired rights, in much the same manner as was done with the Dayton Peace Accords of December 1995.[127]  The formulation of Article 7 of the same Annex aims at facilitating free and unhindered access to the national courts of successor States, by private persons and legal entities hoping to realize their acquired rights derived from the old Yugoslav laws.

 The rule on compensation in the SA, when acquired rights over movables and immovables cannot be realized in practice, ensures that private persons and legal entities “unable to realize such rights shall be entitled to compensation in accordance with civil and international legal norms.”[128]

 Finally, the provisions of the Annex G of the SA offer generalized solutions that should take the form of legal principles.  For this reason, Article 4 of the Annex G expressly foresees the duty of the parties to “take such action as may be required by general principles of law and otherwise appropriate to ensure the effective application of the principles set out in this Annex, such as concluding bilateral agreements and notifying their courts and other competent authorities.”[129]

In Lieu of a Conclusion

 This article has pursued the path set by the Badinter Commission.  The succession of States is a contextual issue, in which legal rules have a role to play only at the level of general principles.  The principle of cooperation in good faith among the succession parties and rebus sic stantibus are key topics for analysis of State succession issues. Despite the rational and scholarly critiques leveled against the Badinter Commission,[130] the unreserved acceptance of its opinions,[131] and accusations against it for conspiracy during the drafting process of its opinions,[132] the overall work of the Commission has been professional and has had a substantial impact on the framing of the solution to the Yugoslav crisis.

 The process of succession to the former Yugoslavia started in 1991.  It was closed between sovereign and independent States in 2001, with the successful conclusion of the SA.

 This does not mean the resolution in the former Yugoslavia did not yield any fruitful results.  In fact, it established some useful precedents for the future of any remaining Balkan succession issues.  The novelties can be summarized as follows: for the first time, it has been shown that universal succession, not the “clean slate” doctrine, should be a rule of customary international law on State succession.  In principle, States are successors to all kinds of rights and duties held by their predecessors, including private property and acquired rights.

 Yet another novelty involves the role of the international community, specifically the role of foreign creditors.  They played a crucial role in shaping the modalities of the succession of matters including property, financial assets, and liabilities of the predecessor State. This was unimaginable in the not too distant past.  The intervention by international financial institutions, especially the IMF, WB, creditor countries, and private commercial banks, all proved indispensable to the process of resolving the succession issue in former Communist countries.  Without them, the succession process would have failed.

 But this was a mixed blessing.  For example, Kosovo received nothing.  This was the unfortunate anomaly associated with Kosovo not being an independent sovereign State, a universal precondition for succession under international law.  Sovereigns routinely confer citizenship,[133] contract to undertake foreign debt, and enter into international treaties.  They manage the international border regime and enjoy the benefits of membership in the UN and other international organizations.[134]  Thus far, Kosovo has been Europe’s black hole, and unable to attract critical foreign investment because it lacks sovereignty and independence under auspices of what some have characterized as a new form of colonial control.

 The State property and assets of the former Yugoslavia would otherwise have been inherited by the FRY/SUSM with a just legal title, on behalf of Kosovo and its citizens.  Based on the criteria applied by the IMF, WB, and parties to the SA, Kosovo—as part of the former Yugoslav federation—has contributed to the size and value of the property and assets of former Yugoslavia. One may witness its contribution to the Yugoslav federal budget, gross domestic product, exports, and population (larger than the number of some former Yugoslav republics).  One must not discount Kosovo’s contribution to the economic impact of the former Yugoslavia, which is equal to, if not stronger than, some of the successor States.

 The same criteria should apply to the State archives.  Kosovo should be given back the archives taken from it after the 1999 Kosovo conflict ended.  This plea is rationally based on the principle of functionality, the organic and integral principle, as it was done with the other successor States.

 For this state of events to change, Kosovar institutions must demand the further negotiation of these simmering, if not boiling, issues in the political agenda for the final status talks for Kosovo (which started in November 2005).  Thus, there is a need for Kosovar academics and the political elite to abandon their naïve discourse on Kosovo, whereby they hope to justify their claims, based on the last Yugoslav Constitution of 1974.  The Constitution allegedly treated Kosovo as one of its eight constituent units of that State, alongside of Vojvodina and the five other successor States.  The former Yugoslavia is now dissolved and the story has effectively ended, in terms of the most important succession issues.  Serbia has essentially inherited Kosovo and its citizens.  The SA appears to be an irreversibly foregone conclusion.  The property of Kosovo has been taken over by Serbia.  It should be returned.

 International legal science can play an important role in the return of Kosovo’s right to succession.  It did so in the post-1991 period.  It offered new modalities for succession over certain rights and duties of the predecessor FRY/SUSM.  The border regimes around Kosovo (established after 1991) included changes made through the Border Agreement with Macedonia and the FRY/SUSM.[135]  These remain in place, and can be changed only via the civilized diplomatic and judicial methods accepted under international law.  Specifically, a new precedent—a sui generis succession—should be implemented, so new opportunities may open for Kosovo and its citizens for the application of the same principles as those applied and proclaimed by the Badinter Commission a decade earlier.[136]  Should this sui generis proposal not be implemented, Kosovo’s citizens will continue to feel the brunt of the Milosevic regime (1989 – 1999), long after his death.

 There are two impossible tasks the UN mission in Kosovo is currently facing: maintaining Kosovo within the FRY/SUSM, versus the presently unworkable Kosovar Albanian claim for an independent Kosovo.  There is a third solution.  It would include the following elements: less involvement of the international community in the administration of the country; more Euro-Atlantic integration; and the reconsideration of Kosovo’s being an immediate successor to those dimensions of State succession (vis-à-vis FRY/SUSM), but without affecting the rights and interests of third parties.  All steps should be undertaken in a way that rationally accommodates the rights of the Republic of Serbia—the entity that has spoken as the successor State for Kosovo from 1992 through the conclusion of the 2001 SA.