Concessions are a key tool for achieving public interest objectives – be it public services, infrastructure or utilities – while leveraging private investment and expertise. As such, they are rightly subject to strict regulation, ensuring transparency, efficiency and alignment with public objectives. However, regulation must not be mistaken for unilateral state control. A well-functioning concession framework must also safeguard the rights of concessionaires.
In this context, having the option to choose arbitration as a dispute resolution mechanism is often particularly important foreign investors. Arbitration provides a neutral, trusted forum beyond the possible influence of state interests in domestic judicial systems. This neutrality is not only essential for the protection of investors, but also for enhancing Slovenia’s credibility as a rule-of-law based, investment friendly jurisdiction.
The dispute resolution landscape in Slovenia, whether domestic or international, has traditionally been dominated by litigation and court-connected mediation. Many domestic parties place greater confidence in litigation or lack sufficient experience (or knowledge) with arbitration. However, with the influx of foreign investment and Slovenia’s growing involvement in international trade, arbitration is increasingly recognized as an effective alternative to litigation.
Despite this, the arbitrability of concession disputes in Slovenia has been subject of debate, particularly following the controversial adoption of an authentic interpretation of the Services of General Economic Interest Act (slo. Zakon o gospodarskih javnih službah).[1] This interpretation was specifically tailored to protect the individual interests of a single municipality, raising concerns about impartiality, legal certainty, and the broader implications for investment protection and contract enforcement.
The controversy surrounding concession disputes stems from an attempt by the Slovenian legislator to limit the arbitrability of concession disputes through an authentic interpretation of the law. This move created significant legal uncertainty for parties that had already agreed to arbitration clauses in their concession agreements – or were considering doing so. Several circumstances led the Slovenian legislator to settle on this interpretation, and we explored those in article Arbitrability of Concession Disputes in Slovenia.
Crucially, Slovenian law already regulates concessions, and arbitrators – like judges of the state courts – are bound to apply the applicable law in any dispute. There is no justification for treating concession disputes as non-arbitrable, particularly when comparable legal frameworks, such as those for public-private partnerships, explicitly allow for arbitration and even favour it in certain cases.[2] The attempt to limit of arbitration thus appeared legally unfounded and strategically short-sighted.
Moreover, the authentic interpretation was not motivated by a general legal principle but tailored to suit a specific political context on a municipal level, after one municipality lost an arbitration case against a concessionaire. Slovenia’s state courts consistently held that the authentic interpretation is not to be followed and that concession disputes are indeed arbitrable. A pivotal moment came with the ruling of the Constitutional Court of Slovenia affirming that courts are bound by the Constitution and laws – not by authentic interpretations.[3] This decision was a significant constitutional development, effectively restoring legal certainty. So, rest assured that even at the highest court instances, it has been clarified that the authentic interpretation is both misguided and inherently inappropriate.
At present, there is no legal barrier to the arbitrability of concession disputes in Slovenia. Courts have clarified that authentic interpretations are not binding, and arbitration remains a valid mechanism for resolving disputes – even in the realm of concessions.
Still the authentic interpretation has not been formally repealed, leaving behind an outdated legal relic. While obsolete regulations are nothing new in legal systems,[4] the continued existence of the authentic interpretation in the legal framework sends a conflicting message. It can have negative consequences on Slovenia’s image as an arbitration-friendly jurisdiction and may deter future investment. Its repeal is not just a matter of legal housekeeping – it is a necessary step to uphold legal certainty, protect investor confidence, and affirm the state’s commitment to impartial dispute resolution. For this reasons there have been calls to formally repeal the authentic interpretation.[5]
We explored reasons for the adoption of the authentic interpretation and its consequences in further details in magazine Strani pravni Život 68(4): Arbitrabilnost koncesionih sporova u Sloveniji
[1] Authentic interpretation of Article 40 of the Services of General Economic Interest Act (in Slovenian: Avtentična razlaga 40. člena Zakona o gospodarskih javnih službah; Official Gazette of the Republic of Slovenia, no. 57/2011); Services of General Economic Interest Act (in Slovenian: Zakon o gospodarskih javnih službah; Official Gazette of the Republic of Slovenia, no. 32/93 as amended, “ZGJS”).
[2] Proposal for Public-Private Partnership Act – first reading, available at: https://www.dz-rs.si/wps/portal/Home/zakonodaja/izbran/!ut/p/z1/jY_BCoJAFEW_xYVb31OxrJ0SGGMRapLNJjSmUVBHximhr09oVZT4dvdyzoUHFDKgbf6oeK4q0eb1mM90cSGr0CNhYGLgBC5Gx_AQk62Prr-E0xdgxQ5GG8vfJ2hjkphA5_j45zyc508AdHqeAOW1KN6vem1huxyoZDcmmTTucqxLpbp-raOOwzAYXAheM-MqGh1_KaXoFWSfJHRNmmbPHTt5mvYCc9LReA!!/dz/d5/L2dBISEvZ0FBIS9nQSEh/?uid=C12565D400354E68C12571C4004E835B&db=kon_zak&mandat=IV&tip=doc.
[3] Slovenian Constitutional Court case no. U-I-462/18-45 decision dated 3 June 2021.
[4] Služba Vlade Republike Slovenije za zakonodajo, Nomotehnične smernice, Ljubljana, 2018, pp. 123-124.
[5] Marko Djinović, Aleš Galič, Odprta pobuda, Ljubljana Arbitration Centre, available at: https://www.sloarbitration.eu/Portals/0/Prispevki/Pobuda-LAC.pdf.
