Ex KAP Owner, CEAC, Seeks Compensation for all Damages and Losses Against Montenegro

Central European Aluminum Company (CEAC), a Cyprus-based major shareholder of Montenegro's biggest industrial enterprise Kombinat Aluminijuma Podgorica, A.D. (KAP) and one of its largest creditors, has launched proceedings against Montenegro for the latter's violation of the Agreement on the Reciprocal Promotion and Protection of Investments between the Republic of Cyprus, and Serbia and Montenegro.

The dispute stems from the Montenegrin government's unlawful interference with CEAC's investments in Montenegro's aluminium industry, including those in KAP, an aluminium plant located near Podgorica, the capital of Montenegro.

CEAC believes Montenegro's actions violate the Agreement and seeks compensation for all damages and losses CEAC has incurred, including compensation for the wrongful expropriation of CEAC's investments, and direct and consequential damages for Montenegro's unfair and inequitable treatment of CEAC's investments. CEAC expects the amount of the claim to exceed €600m.CEAC initiated dispute resolution proceedings against Montenegro in August 2013, based on the Agreement. However the government of Montenegro did not respond to CEAC's notice to negotiate a settlement during the six-month period required by the Agreement, and CEAC has therefore been left with no alternative but to initiate arbitral proceedings. 

The requested arbitration against Montenegro is pursuant to Article 36 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). 

In November 2013 CEAC also initiated ad hoc arbitral proceedings against Montenegro and other Montenegrin entities based on various breaches of agreements relating to KAP signed by CEAC and Montenegro in 2009-2010, followed by the insolvency of KAP. The total amount of CEAC's initial claim in these proceedings is €100m.
(CEAC Press Release)

(balkans.com, 11 March, 2014)