Vol 3 (2006) - Issue 4

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In the Matter of AY Bank Limited (in Liquidation) and in the Matter of the Insolvency Act 1986 between AY Bank Limited and (1) Bosnia and Herzegovina (2) the Republic of Croatia, (3) the Republic of Macedonia, (4) the Republic of Slovenia, (5) the Federal

On an application for directions by the Joint Liquidators,one of the respondent creditors contended that the issues raised by the application were non-justiciable on the basis of the principles exemplified in the decisions of the House of Lords in Buttes Gas v Hammer [1982] AC 888 and JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418.
AY Bank Limited (‘the Bank’) had been incorporated in England in 1980 for the purpose of encouraging trade, finance and engaging in associated banking activities
with the Socialist Federal Republic of Yugoslavia (‘SFRY’). On 26 September 2003, the members of the Bank resolved that the Bank be wound up voluntarily on the ground that it could not by reason of its liabilities continue in business, and joint liquidators were appointed. On 5 January 2006, the Joint Liquidators issued an originating application seeking directions as to the identity of the persons to whom to pay dividends in respect of three categories of account held at the Bank and in what proportions. The accounts involved were held in the name of the National Bank of Yugoslavia, the Yugoslavian Embassy and as a suspense account to which had been credited a number of sums in the name of the National Bank of Serbia.
The background Each of the six republics comprising SFRY, except Serbia and Montenegro, declared its independence from SFRY between 25 June 1991 and 5 April 1992. On 27 April 1992, the republics of Serbia and Montenegro formed the Federal Republic of Yugoslavia (‘FRY’). SFRY’s central bank was the National Bank of Yugoslavia (‘NBY’). Following its formation, FRY set up its own central bank, initially also called the National Bank of Yugoslavia, but subsequently called the National Bank of Serbia (‘NBS’).
The process undergone by SFRY was known as dismembratio or dismemberment, the consequence of which was that all six former republics were jointly the successors to its property. An Agreement on Succession Issues (‘ASI’) was concluded on 29 June 2001 between the five successor states (the five first-named defendants to this application). The ASI was registered with the UN on 2 June 2004 and came into force on that date.