Smokvina is claiming back the money his family donated for the defence of Croatia in 1991, alleging that it was not spent for that purpose but that Sarinic misused it.
Sarinic did not appear at today's hearing.
The lawsuit says that the late Gojko Susak, who served as deputy minister of defence in 1991, asked Croatian emigrants to donate funds for aid to Croatia and make their payments into a bank account opened in the Austrian town of Villach.
Despite assurances by Susak that all donors would be able to verify how their contributions were being used, Smokvina claims that he requested reports on the spending of the funds, but never received them.
The plaintiff says he later found out that the account in an Austrian bank was not owned by the Croatian government but by Sarinic and Susak.
Miroslav Separovic, the lawyer representing Sarinic, dismissed this charge, saying that the owner of the account was the Republic of Croatia rather than Sarinic, who he said was just one of the signatories.
Separovic called on the plaintiff to back up his charges of embezzlement with evidence.
The court ordered Smokvina to have all the documents translated into Croatian, and said that it would schedule the next hearing after that was done.