At The Hague on 30 October 2003, thirty donor countries (including the US) agreed to allocate 15.7 million euro to set up a new court. Its role will be to try Bosnian war criminals indicted by the ICTY for crimes committed during the 1992-5 war that caused the death of 220,000 people. The court will be based in Sarajevo, at the Bosnia-Herzegovina State Court. The funds will kick-start the court for its first two years, but it will need some 38 million euro to complete an operating budget over five years. Initially, the court will be made up of mostly international judges and prosecutors, but will be seconded to local teams at a later date. The judges should be appointed by the end of March 2004.

The creation of the new court is part of the ICTY's strategy to prepare for its closure in 2008. It plans to reduce its workload by gradually transferring certain cases to Bosnian courts, in order to focus on the trials of the top-ranking leaders, including former commander in chief of the Bosnian Serb armies, General Ratko Mladic, and expolitical leader of Bosnian Serbs Radovan Karadzic, who are both still on the run. The project was initiated by former ICTY president Claude Jorda (today an ICC judge), Carla del Ponte, chief prosecutor of the ICTY and Paddy Ashdown, High Representative of the international community in Bosnia. The UN Security Council gave its seal of approval in August 2002.