Category: Montenegro

  • Komnenic Law Office Opens Doors in Podgorica

    Komnenic Law Office Opens Doors in Podgorica

    The Komnenic Law Office has opened its doors in Podgorica, Montenegro. 

    Led by Milos Komnenic, who was a Senior Associate in the Jovovic Mugosa & Vukovic law firm before hanging out his shingle, KLO employs three legal practitioners, though Komnenic says he intends to expand the team soon. Komnenic explains this his new firm “provides full service, with a particular focus on Real Estate, Financing, M&A, Tax, and private investments. Our clients come from different areas of business, such as energy, construction, gambling, etc. Among the clients that we would mention is the utility and energy company A2A from Italy, which in the largest ever privatization in Montenegro partially privatized the country’s only public energy supplier.”

    “I am very excited and satisfied with the new start,” Komnenic added, “which as any fresh start gives you motivation and different view. The target which I hope I and my associates will be able to reach is to establish KLO as a local player enable to provide immediate and efficient assistance to the clients, without too many formalities before. After almost nine beautiful years in JMV, I have to thank also to my previous office and confidence of the partners to be a lead team member in charge of various M&A, Finance, Tax and general commercial matters.   

  • The Buzz in Montenegro: Interview with Dragan Prelevic of the Prelevic Law Firm

    The Buzz in Montenegro: Interview with Dragan Prelevic of the Prelevic Law Firm

    “You know, Montenegro is a very small economy, and easily affected by international developments,” says Dragan Prelevic, the Managing Partner of the Prelevic Law Firm in Montenegro.

    The country’s main sectors are Real Estate, Tourism, and Energy, with a significant number of real estate customers and tourists traditionally coming from Russia, Ukraine, the Middle East. As a result, according to Prelevic, “the economic downturn in Russia and Ukraine and the sanctions in Russia have had a significant effect on the Montenegrin market,” and “the turmoil in Turkey has affected investment from that side as well.”

    “The overall economy is struggling as well,” he says, citing “a decrease in FDI and the rise of debt on the national level.” In addition, he says, “interest rates remain pretty high, keeping in mind that we are not part of the EU.”

    However, the country’s accession to the EU — it’s currently on the top of the list of candidate states — and NATO (where membership is expected this year) is expected to be significant factors in the country’s growth. Prelevic describes the country’s movement towards both institutions as “the main political process from the country’s independence in 2006.” He notes, though, that the country’s candidacy to both “has also raised significant internal opposition, including boycotts of parliament and an attempted coup and interference by pro-Russian parties.” He emphasizes that this opposition is generally “low-key,” with “no violence,” but that nonetheless “it leads to hesitation from big EU and American investors.”

    Turning to the subject of new legislation, Prelevic reports that the government is promising to produce several significant new laws in the next couple of months, including “the introduction of economic citizenship, as recently happened in Malta.” Prelevic says that this law — which would provide citizenship to those who invest beyond a specified minimum in Montenegrin real estate — is expected “to boost investments and the sale of real estate in Montenegro, and the whole chain of the construction industry, which is very important for Montenegro.” Prelevic says “the whole economy should benefit.” The law has been expected for a long time, he reports, but he says “previous attempts to enact it have been stopped by the EU out of concerns about money-laundering and a general lack of transparency.” The new version of the law, he says, should satisfy those concerns, and it is expected to pass muster.

    In addition, he says, the country’s construction and planning laws, as well as PPI , public procurements and expropriation are expected to be liberalized, reducing the amount of red tape in each and support interest of business.

    Ultimately, however, Prelevic is confident about the direction Montenegro is moving in. He notes that the country “has a very attractive tax system” with “single digit tax (except for VAT),” which makes it “very attractive to foreign investors.” Also, infrastructure development and privatization remain on the top of national agenda attracting investors attention. 

    He also notes that serious investors are awaiting the “stability stamp” of this year’s expected accession to NATO. He says of the country’s prospects: “It’s exciting, it’s vibrant. So many things are pending. And there’s such huge potential, in commodities, agriculture, etc.” He concludes with enthusiasm: “I’m really very optimistic about Montenegro.”

  • When Arbitration Meets Insolvency in Montenegro – Can They Coexist?

    Even at first blush, it is apparent that arbitration and insolvency make strange bedfellows.

    The reason they make such an odd couple is the different underlying the policies, objectives, and purposes they stand for. The heart of arbitration lies at the privity of contract and the existence of party autonomy independent from the state. In contrast, insolvency reflects a centralized and to a certain extent state-managed procedure that holds all creditors equal, within a set system of ranking – a transparent and accountable process governed by mandatory substantive and procedural law provisions.

    However, with insolvency on the rise, parties to arbitration agreements may find themselves increasingly often considering a claim against a counterparty who is insolvent or becomes insolvent during the dispute. This is no different in Montenegro.

    When arbitration meets insolvency or insolvency meets arbitration in Montenegro, can they coexist? Does insolvency affect the arbitrability of claims in Montenegro? Is there exclusive jurisdiction of Montenegrin courts for all disputes against or with an insolvent party? 

    Montenegrin statutory law does not provide a clear answer.

    It is undisputed that once initiated, an insolvency proceeding is carried out ex officio by the Montenegrin court competent within the territory where the insolvency debtor is seated or has its residence. It is equally unquestionable that creditors can settle their claims against an insolvent debtor exclusively within these insolvency proceedings. Montenegrin insolvency law also provides that disputes arising within or in relation to insolvency proceedings in Montenegro fall within the exclusive territorial jurisdiction of the court seated in the territory of the insolvency court. This rule intends to attract all insolvency-related litigations under the auspices of one court – the one conducting insolvency.

    There are no further provisions explicitly conferring jurisdiction on Montenegrin courts in relation to insolvency.

    Still, how broadly are these jurisdictional rules interpreted in practice? 

    Do they inevitably affect the validity of the arbitration agreement? Can they be stretched so far as to justify a court’s refusal to (i) enforce a previous arbitration agreement relating to an insolvent debtor, or (ii) recognize and enforce an arbitral award against an insolvency debtor?

    It seems that Montenegrin court practice is yet to be settled in this respect. 

    However, some recent court decisions indicate that Montenegrin courts may be quick to interpret exclusive territorial jurisdiction very broadly. Thus, one can find decisions where the court construed this rule of territorial jurisdiction to imply exclusive jurisdiction of Montenegrin courts. There are also instances in which courts have read the subject matter scope of this territorial jurisdiction rule expansively. With no attempt to explain, in those cases courts understood the wording “disputes arising within or in relation to insolvency proceedings administered in Montenegro” to encompass, in principle, all disputes commenced by or against an insolvency debtor after the initiation of the insolvency proceeding in Montenegro. Some courts have recognized a far-reaching jurisdiction of the Montenegrin insolvency court, even if only from such court’s exclusive jurisdiction for insolvency. 

    Obviously, this reasoning would impede the use of an arbitration agreement against the insolvency debtor, i.e,. an insolvency administrator. It could equally affect the enforcement of an arbitration award rendered against a Montenegrin insolvency debtor after initiation of the insolvency proceeding. 

    Jurisprudence, on the other hand, appears to offer a more elaborated and analytical approach. It has been underlined that the law itself provides no justification for converting the exclusive territorial jurisdiction into exclusive jurisdiction of Montenegrin courts. For that reason, insolvency should not be an absolute bar to arbitration with or against an insolvency debtor. In terms of monetary claims, it is unquestionable that any such claim needs to be registered and settled within the insolvency procedure. This is mandatory even where arbitration is pending for such claims. If the registered claim remains undisputed in insolvency, there is no need for arbitration. But if the insolvency administrator disputes the existence and/or amount of the claim, many argue that these issues should be decided in arbitration if the insolvency debtor had previously so agreed.

    The above evidently shows that the meeting of arbitration and insolvency in Montenegro is rather a difficult matter. In that clash, projections for arbitration are currently still uncertain. Given the severity of possible implications, the parties are strongly advised to take this issue into account and monitor further developments of court practice and legal doctrine in this respect.   

    By Jelena Bezarevic Pajic, Partner, and Vanja Tica, Associate, Moravcevic Vojnovic and Partners in cooperation with Schoenherr

    This article was originally published in Issue 3.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Temporary Employment of Seasonal Workers

    It is no secret that Montenegro is a country heavily oriented towards tourism, and its macro-economic activity is primarily based on services related to hotels, restaurants, and other similar tourist facilities. Generally speaking, one of the main characteristics of the tourism industry is expressed in its seasonal nature.

    This aspect is particularly relevant for Montenegro, a country that – despite owning a couple of winter/skiing resorts as well – has a much stronger emphasis on its seaside and summer season which, due to its higher level of development, also has greater labor force needs. Being currently in the middle of that season, this seems like a good moment to provide a short overview and analysis of seasonal employment trends in Montenegro.

    Up until now, various employers have reported 20,015 jobs available for 2016, out of which 18,316 positions are for a certain time-limited period. Unsurprisingly, more than a half of these positions are stationed around the country’s coastal cities.

    Although the tourism industry is a popular source of employment, it has become clear that people are less interested in working in other spheres, such as agriculture. Conditions are difficult due to high temperatures and the open air, and so the majority of citizens prefer to work on the coast. Around 6000 citizens found seasonal work this year, a figure that – when taking into account the size of the Montenegrin economy – is no small feat.

    The seasonal jobs are interesting both to domestic and foreign summer workers. Domestic companies in particular try to convince young people in Montenegro to get seasonal jobs and work during the summer. To that extent, a few of the major companies such as Porto Montenegro organized a mini summer job fair that offered all of the applicants the opportunity to talk with the company’s representatives regarding positions across different departments, such as construction, marina work, and housekeeping.

    During 2015, the Montenegrin Parliament adopted the new Law of Foreigners which – at least from the perspective of employers – brought along certain problems and uncertainties. Employers were mostly worried about a new provision which stated that regardless of the annual quota, foreign nationals may only be taken on if domestic workers with appropriate qualifications are unavailable. Although this trend is well known abroad and is tightly connected with the concern of domestic workers being undercut, employers – together with a few commercial chambers in Montenegro – decided to fight this new Montenegrin regulation and came out as winners.

    They have every reason to be very satisfied with the results, as according to the Law on Amendments to the Law on Foreigners – which entered into force in mid-March 2016 – the employment of foreigners is no longer conditioned on proving that there are no unemployed persons registered who meet the requirements for the position or who rejected an offer to fill it. The employers’ overarching opinion has been that this amendment significantly improved and liberalized the Montenegrin labor market shortly before the beginning of the tourist season, which was essential for conducting successful summer business.

    The Ministry of Internal Affairs has issued 7465 work permits to foreign citizens, with most of them being working in the hospitality industry. The most popular jobs are those that require higher levels of qualification, such as cooks, bakers, and butchers. In addition, a lot of applicants showed interest in working in reception, administration, etc.

    Experience shows that a significant number of workers stay to work even after the season ends, and some of them get contracts. The number of employers grows each year as well, with the opening of new hotels and restaurants and the overall development of tourism in Montenegro – bringing more job opportunities along the way. This is also possible due to the fact that, even though the tourist season usually lasts from six to eight months, some locations make it possible for employers to conduct their work all year. 

    It will be interesting to see how Montenegrin tourism will develop in the years to come. Hopefully, attention will be focused on facilitating the employers’ position regarding seasonal employment, allowing for more freedom in negotiating work conditions but without losing an equivalent focus on the workers’ interests as well, and finding an adequate balance between the two – often unnecessarily conflicting – sides.

    By Milena Roncevic, Head of Montenegro Office, Karanovic & Nikolic

    This Article was originally published in Issue 3.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • BDK and Harrison Solicitors Advise on Eni-Novatek Joint Concession Agreement

    BDK and Harrison Solicitors Advise on Eni-Novatek Joint Concession Agreement

    On September 14, 2016, a consortium of Eni (Italy) and Novatek (Russia) signed a Concession Contract for the Production of Hydrocarbons with the Montenegrin Government. BDK Advokati advised Eni and Harrison Solicitors advised Novatek on the deal.

    According to BDK, “under the contract, the consortium receives a concession for exploration and production of oil and gas in four blocks offshore of Montenegro.”

    BDK’s team was led by Senior Partner Dragoljub Cibulic, supported by Managing Senior Associate Luka Popovic.

    The Harrison Solicitors team was led by Lana Vukmirovic-Misic, the head of the firm’s Podgorica Office.

  • Marjanovic Law Advises on Porto Montenegro Acquisition

    Marjanovic Law Advises on Porto Montenegro Acquisition

    Marjanovic Law has advised the Investment Corporation of Dubai (ICD) on its purchase of the Porto Montenegro marina. Marjanovic Law acted as a local counsel to Hogan Lovells Dubai for all corporate and anti-trust matters.

    The transaction was structured as a share deal whereby the ICD took over the company Adriatic Marinas (with its affiliates) through the purchase of shares from the Maltese company Montport Capital SE. Adriatic Marinas and its affiliates form Porto Montenegro, which Marjanovic Law describe as one of the biggest and most developed marinas, not only in Montenegro, but in the Adriatic area as well.

    As the principal investment arm of the Government of Dubai, the ICD has a rich portfolio of assets, both Dubai-based and international, across a broad spectrum of the sectors, that form the blueprint of Dubai’s dynamic economy. Through the acquisition of Porto Montenegro ICD intends to expand and implement its investment strategy, which Marjanovic Law describes as “disciplined, sustainable, and provid[ing] synergy with its existing portfolio, thus enabling the utilization of the full potential of the Porto Montenegro project.” 

    The Marjanovic Law team led by Partner Mladjan Marjanovic and including Senior Attorneys Marina Lazovic, Andrea Klimovic, Dusan Matijasevic, and Aleksandar Jokic worked on the transaction in cooperation with a Hogan Lovells Dubai team led by Partner Charles Fuller.

    Commenting on the deal, Mladjan Marjanovic said: “This project was certainly one of the biggest transactions in Montenegro in recent years and of significant importance for the economic development of Montenegro, especially in the tourism and maritime sectors. Working on this project was a valuable experience for our team and we especially thank Hogan Lovells Dubai and its Partner Charles Fuller for the excellent cooperation and successful finalization of the transaction. It was a great pleasure working with him and the entire Hogan Lovells team.” 

  • Investments In Montenegrin Road Infrastructure

    Investments In Montenegrin Road Infrastructure

    The Montenegrin Ministry of Transport has recently been in the news as it provided an overview of investments that it has made over the past ten years in the country’s road infrastructure – investments that have totalled at EUR 300 million through renovation, modernisation, and construction processes throughout the country.

    The Ministry’s statement further outlined that the latest projects included 35 kilometres of roads that were built during the past six months, at the same time pointing out that the two key projects are still awaiting completion – the Obzovica-Brajici section and the Budva-Becici connecting boulevard. Both of these projects have been deemed as especially significant for the ways in which they can facilitate the mobility of tourists in the high season. However, the Montenegrin Ministry emphasised the fact that even though the two projects have not yet been finalised, the works involved with them are still ahead of schedule, meaning that the completion is expected soon.

    Furthermore, the Ministry made it clear in their statement that their biggest focus is on implementing the kinds of projects that can simultaneously benefit everyone, including their own citizens, the incoming tourists, as well as the growing numbers of seasonal workers, many of whom use Montenegrin roads as the premier option of transport. A significant part of finalising these projects on time, according to related reports, has been the way in which the already short and limited spring construction season is utilised – something which was dealt with successfully thus far this year.

    The Ministry’s statement concluded with their encouragement of Montenegrin citizens to continue providing feedback on how best to improve the current infrastructure, and as a consequence, scale down what’s most detrimental for normal functioning of transport – traffic jams and road congestions – to a bare minimum. In doing so, the report concludes, everyone involved can only experience wide-reaching benefits

    By Dejan Nikolic, Senior Partner, and Milena Roncevic, Senior Associate, Karanovic & Nikolic

  • CEAC Files for Arbitration Against Government of Montenegro

    The Russian Legal Information Agency (RLIA) has reported that the Central European Aluminum Company (CEAC) has filed a request for arbitration proceedings with the government of Montenegro seeking over EUR 600 million in compensation for losses.

    CEAC, a subsidiary of Russian billionaire Oleg Deripaska’s En+, is one of the largest shareholders and creditors of the Kombinat Aluminijuma Podgorica (KAP) aluminum plant. According to the RLIA, CEAC claims that Montenegro’s government interfered with the investment process, causing major damages to the company and the subsequent loss of investment. CEAC also claims that Montenegro breached the agreement on mutual encouragement and protection of investment signed between Cyprus and the State Union of Serbia and Montenegro (which was dissolved in 2006).