Partial Decision of 2 April 1992

In February 1985, the claimant (plaintiff) and the respondent (defendant) signed a contract. The contract included Article XII, requiring the parties to arbitrate disputes before the Court of Arbitration for Foreign Trade of the Economic Chamber (the Court of Arbitration) of the Socialist Federal Republic of Yugoslavia (SFRY). In 1992, the dissolution of the SFRY caused conflict among the former member states of Yugoslavia, which interrupted communications between Ljubljana, the capital of Slovenia, and Belgrade, the capital of Serbia. As a precaution, the claimant terminated the contract. Instead of appearing before the Court of Arbitration of the SFRY, the claimant filed a lawsuit claiming damages for contractual breaches. The claimant argued the Court of Arbitration of the SFRY was not a competent tribunal for a Slovenian company. Furthermore, the claimant asserted it could not reasonably seek relief before an arbitral tribunal located in an indisputably hostile foreign state. The respondent countered that the claimant’s claims were inadmissible by virtue of the arbitration agreement. The respondent further asserted that, due to ongoing negotiations between the European Community and the government in Belgrade, the conflict in the former Yugoslavia was likely to end. The respondent argued that the cessation of these hostilities would enable the Court of Arbitration of the SFRY to resume operations. The lower court upheld the claimant’s action, and the respondent appealed to the Regional Court of Kassel.