Nicosia, Cyprus, 11 March 2015 - Central European Aluminum Company (CEAC), a Cyprus-based major shareholder and one of the largest creditors of Montenegro's Kombinat Aluminijuma Podgorica (KAP), is greatly encouraged by the robust resolution adopted by the European Parliament on the European Commission's Progress Report on Montenegro.
The resolution was adopted by an overwhelming majority in a plenary vote of the European Parliament this afternoon.
The European Parliament's resolution explicitly calls on the government of Montenegro to "resolve commercial disputes with foreign investors that are critical to the economy of Montenegro"; expresses its grave concern over "the delay in the resolution of the bankruptcy procedure of Montenegro's biggest industrial manufacturer, the aluminum plant KAP"; and calls for a sustainable solution to the dispute "based on transparency and the rule of law". Indeed, the Parliament resolution singles out Montenegro's cavalier disregard for the rule of law, particularly regretting that "Montenegro has ignored the injunction of the Cypriot court regarding the KAP sale". In robust language that seriously calls into question Montenegro's willingness to abide by EU rules and rulings, the European Parliament calls on Montenegro to "fully recognize relevant decisions by the judicial authorities of EU Member States".
Commenting on the resolution CEAC's external counsel, Dr Matthias Menke, said:
"The European Parliament's resolution is a damning indictment of the Montenegrin government's sclerotic pace of reform, clear recalcitrance and irresponsibility. The Parliament is rightly worried to see how little progress Montenegro has made in addressing fundamental issues around the protection of foreign investments in the country. It is the government's downright disregard for the rule of law within Montenegro which has led to the numerous international arbitration cases against the state which risk imperilling the country's fundamental financial stability. Now, as the European Parliament has clearly recognised, we need to add to this the Montenegrin government's contempt not just for EU rules, but also for the rulings of EU Member State courts. The European Parliament's resolution raises serious questions about Montenegro's suitability – indeed, its ability – to become an eventual EU member under its current leadership."
In calling for the resolution of commercial disputes with foreign investors the European Parliament's resolution echoes the European Commission's own conclusions on the 2014 Progress Report, which spoke of the "risks of a new round of contingent liabilities for the public finances" as a result of ongoing international arbitration cases against the State of Montenegro. CEAC has repeatedly called for a negotiated settlement of the KAP dispute and is just one of a number of foreign investors forced to take their claims to international courts as a result of non-application of the rule of law within Montenegro. Ongoing foreign investor international arbitration cases against Montenegro total close to €1bn, almost one third of the country's GDP.