Since Republika Srpska is only an entity, not a state, it was Bosnia that lost the arbitration process in Washington.
In 2017, however, the Bosnian government and the government of Republika Srpska signed a special agreement specifying that the entity assumed all financial and legal responsibility for the dispute.
As a result, the State Attorney’s Office delegated the case to Republika Srpska institutions.
The Republika Srpska government appointed a separate legal team to represent the country in Washington, though it has never specified who was involved.
To this day, the Republika Srpska refuses to pay the damages, saying the state should do so on the grounds that, as an entity, the Republika Srpska cannot be sued in such cases.
In mid-April, the state-level government adopted a draft of a new state-level budget specifying that it would pay the arbitration award to Viaduct out of Central Bank profits.
The budget, however, looks unlikely to win the approval of Bosnia’s tripartite president or state parliament.
Pavlovic sees another possible solution: “One of the solutions is to simply reduce the sum from indirect taxes that is allocated to Republika Srpska,” he told BIRN.
Blagojevic, however, said the state should tread carefully.
“The Attorney General has the obligation to protect Bosnia and Herzegovina legally; I think that the next step here is that the office acts on its official duty and initiates a court case against Republika Srpska,” he said, citing the 2017 agreement between the state and the entity.
“They can file such a legal case on their own initiative, without any prior decision coming from the Council of Ministers [the government].”
“With such a case, the court would be able to issue a temporary measure freezing all bank accounts of Republika Srpska until the end of the procedure, after which the state of Bosnia and Herzegovina would be able to collect what Republika Srpska has a contractual duty to pay.”
Bosnia is currently embroiled in five other arbitration cases, four of which concern projects in Republika Srpska. If lost, the potential damages could reach an eye-watering 900 million euros.