BOSNIA: CONSTITUTIONAL COURT RULING AFFIRMS

C O N F I D E N T I A L SARAJEVO 000945

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E.O. 12958: DECL: 04/21/2016
TAGS: EFIN ECON PREL PGOV ECIN BK
SUBJECT: BOSNIA: CONSTITUTIONAL COURT RULING AFFIRMS
REVENUE ALLOCATION LAW

REF: A. A) STATE 55442


B. B) SARAJEVO 375

Classified By: Ambassador Dougles L. McElhaney for Reason 1.4(B).


1. (C) Summary: On April 19, the Vital National Interest
(VNI) panel of the Federation Constitutional Court issued a
formal decision upholding the USG-backed Law on Revenue
Allocation (Ref B). With a resounding majority, the panel
dismissed HDZ claims that objective and transparent revenue
allocation violates Croat interests by a vote of 6-1. The
Court also reportedly resolved procedural uncertainties
caused by amendments to the Federation Constitution imposed
by OHR in 2002 that could have given each of Bosnia's
constituent peoples an ethnic veto overall all legislation,
with disastrous implications for future reform (Ref A).
Specifically, the Court has determined that a finding of VNI
requires a two-thirds majority of the judges on the panel,
although this has not yet been tested. That is good news for
draft public broadcasting (PBS) legislation, an explicit
requirement for an EU Stabilization and Association Agreement
(SAA) and subject of another HDZ VNI claim. Companion
legislation at the state level was also subject to a VNI
challenge, which was overcome only because the state-level
Constitutional Court decides such matters by majority vote.
The Court's handling of this case, despite OHR's refusal to
interpret its own confusing and contradictory amendments, is
a strong sign of the growing domestic constituency for
reform, especially when tied to EU accession. End Summary.

One Good Decision...
--------------


2. (SBU) In a much anticipated decision, the Federation
Constitutional Court released its formal opinion on an HDZ
VNI challenge to the USG-backed law on revenue allocation on
April 19. The Court voted six to one (with the majority
including one of the two Croat judges on the panel) to reject
the HDZ's assertion that objective and transparent revenue
allocation harms Croat interests. Helpfully, the Court also
pre-emptively ruled that the law is constitutional, depriving
the HDZ of its last available legal challenge to the
legislation. The law now goes into force, with the
Federation government required to retroactively adjust
revenue allocation to comply with the law as of February 14,
the date parliament approved it.

Deserves Another
--------------


3. (C) Although the overwhelming majority negated the need,
the Court also reportedly removed a key uncertainty caused by
OHR-imposed amendments to the Federation constitution in
2002: Exactly how many judges from the seven judge panel
(which is composed of two Bosniaks, two Croats, two Serbs and
one "other") are required for a VNI finding? The provisions
in question first call for a 2/3 majority of judges to
decide, within one month of a case held to be admissible, to
uphold a VNI claim. However, the next article contains a
reference to the need for "at least two judges" for a finding
of VNI. The resulting confusion opened space for a possible
interpretation that only two judges were needed to uphold a
VNI claim, in effect giving each of Bosnia's main constituent
peoples an ethnic veto over all legislation. Not
surprisingly, the HDZ strongly favored such an
interpretation.


4. (C) Unable to understand the VNI procedures as written
and mindful of the broader issues at stake, the Court
initially asked for clarification from parliament's
Constitutional Committee. The Committee could not deduce the
intent of the amendments either so both turned to OHR for
assistance. In a March 31 letter to High Representative
Christian Schwarz-Schilling, Court President Nedjo Milicevic
wrote that, "According to acceptable legal standards, the
only competent institution that can interpret a provision is
the institution that passed the provision."


5. (C) Despite OHR's leading role in drafting the
amendments in question, the High Rep decided that this was an
issue of "local ownership." The High Rep did, under
considerable prodding from the U.S. and others, point the
Federation Court toward the its counterpart in the RS. The
RS Constitutional Court operates under the exact same
language and has already ruled on a number of VNI cases. It
requires a two-thirds majority for a finding of VNI. In the
end, RS practice was decisive in convincing the Federation

Constitutional Court to adopt similar procedures, although
this decision has yet to be put into practice.

Next Up, PBS
--------------


6. (C) The Court will now turn to its second VNI challenge,
draft public broadcasting (PBS) legislation that is a
requirement for an EU Stabilization and Association Agreement
(SAA). This case will sorely test the Court's new procedures
in the face of strong political pressure. The HDZ is
adamantly opposed to the law, insisting that anything less
than a separate public television channel broadcasting in the
Croatian language damages Bosnian Croats. Unlike the revenue
allocation law, the HDZ has a plausible legal basis for its
PBS challenge -- the OHR-imposed amendments to the Federation
constitution define "public information systems" as an
explicit vital national interest. The HDZ filed a similar
VNI case against companion state-level PBS legislation. This
challenge was only overcome because the state-level
Constitutional Court decides such matters by majority vote.


Comment
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7. (C) The recent ruling clears the last legal obstacle to
the revenue allocation law, which will radically alter BiH's
political and economic playing field (Ref B). Resolution of
the broader VNI procedural issue is an even bigger victory --
granting BiH's constituent peoples an ethnic veto in the
Federation risked snarling all reform efforts in petty
politics. The Court's professionalism under enormous
pressure is a reflection of the growing domestic constituency
for reform, especially when linked to EU accession. End
Comment.



MCELHANEY