Relationship between international and domestic law represents an extremely complex theoretical question which has great practical consequences. There is an ever-increasing number of areas which are simultaneously regulated both by international and domestic law norms, international legal rules in the field of human rights and liberties are being directly applied and the state cannot be exempted from liability for failing to fulfill international obligations referring to its internal regulations. Courts and other state authorities must interpret norms of national law so as to be in accordance with the international law. The provisions of the Law on Judge according to which the Republic of Serbia, in case of conviction by the competent international body to compensate the damage due to violation of basic human rights and freedoms in a court proceeding, is entitled to a regress from the judge who made the damage either intentionally or by gross negligence, make this question even more current. This paper discusses fundamental theoretical suppositions of dualism and monism, the provisions of the Constitution of Serbia of 2006 which regulate this complex question, the relevant case law of the Supreme Court of Serbia, as well as Constitutional Court of Serbia and of the former Federal Constitutional Court and also the question of the direct application of the rules of international law.