Russian billionaire Oleg Deripaska‘s Central European Aluminium Company, CEAC, is suing Montenegro for “hundreds of millions of euros” over the failure of its plant in the capital Podgorica, the firm said in a statement on Monday.
The statement said the case will be heard in Cyprus, where the Russian company has its headquarters.
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The company claimed that Montenegro violated a 2010 settlement agreement, leading to the plant going bankrupt.
It did not specify exactly how much compensation it is seeking, saying only that it wanted “hundreds of millions of euros”.
The CEAC’s director for corporate affairs, Andrei Petrushinin, said that the company has repeatedly urged Montenegro to find a fair solution to the dispute.
“Given the problem that burdens the court system of Montenegro and the lack of a clear division of authorities, a fair trial is not guaranteed in Montenegro, which is why we were forced to take our demands before courts in Cyprus, ” he said.
In a respond to the CEAC’s claims, the government in Podgorica said that the company has already lost a case against Montenegro before the Arbitration Tribunal in Paris in July this year.
“This is confirmation of the fact that the government did everything in accordance with the agreement on the settlement, local legislation and best international practice in this area, ” the government said in a statement.
In 2014, the CEAC filed a request to a Paris court, and another in Vienna, for arbitration proceedings with the Montenegrin government, seeking over 600 million euros in compensation for losses incurred through the aluminium plant’s bankruptcy.
The biggest creditors of the KAP plant are the Montenegrin government and Russian billionaire Oleg Deripaska, via the CEAC.
The CEAC claimed that the Montenegrin government interfered with the investment process, causing major damage to the company and a subsequent loss of investment.
According to the CEAC, Montenegro also breached an agreement on mutual encouragement and protection of investment signed between Cyprus and Montenegro.
Montenegro rejected the claims, describing the CEAC’s demands as unfounded and blaming the company for its own problems.
The CEAC first filed for arbitration in early 2013, seeking 100 million euros in compensation. The company blamed the Montenegrin government for breachng an amicable agreement on KAP signed between the CEAC and Montenegro in 2010.
KAP went bankrupt as a result but it was sold in June 2014 for 28 million euros to a local company which has promised to bring in outside investment.
Montenegro provided 135 million euros in guarantees, on the basis of which the KAP took out loans from banks in order to overcome the financial crisis that began in late 2008.
This article was first published at Balkan Insight, by Dusica Tomovic
