The United Nations Commission on International Trade Law (UNCITRAL) arbitration tribunal dismissed all claims of CEAC Holding, owned by Russian businessman Oleg Deripaska, against Montenegro over KAP’s bankruptcy, the Montenegrin government said on January 13. 

CEAC and its owner, En+ Group, have filed several claims against Montenegro, claiming their assets were illegally expropriated. In December, their owner also decided to sue the country directly, seeking a redress of hundreds of millions of euros.

En+ Group acquired majority stakes in KAP and another Montenegrin company, Rudnici Boksita, back in 2005. However, in 2013 the government initiated bankruptcy proceedings due to unpaid debts. Eventually, both KAP and Rudnici Boksita were acquired by Montenegrin private firm Uniprom owned by local businessman Veselin Pejovic. CEAC Holding and En+ Group have objected to the sale of KAP to Uniprom as well.

“This decision [of UNCITRAL] finally confirms that Montenegro has not breached the settlement agreement, but on the contrary, it is precisely the CEAC that has violated its obligations under the contract,” Montenegro’s government said in the January 13 statement.

According to the ruling, CEAC will have to pay the country €250,000 for breaching investment obligations and another €29,000 for breaching the obligation to submit an annual investment report.

Following the government’s announcement, CEAC said in a press release that it was disappointed with the decision of UNCITRAL.

“While we are disappointed with the tribunal’s neutral ruling overall, we feel vindicated by two key elements: firstly, that the tribunal found that Montenegro failed to pay €8.72m in electricity subsidies owed to KAP; and secondly, that the tribunal did not dismiss major aspects of our claims regarding Montenegro’s breaches of its duties and bankruptcy law, but said that these claims fell outside of its jurisdiction,” CEAC’s director of corporate affairs Andrey Petrushinin said in the statement.

In July 2016, CEAC lost another case against Montenegro as the International Centre for Settlement of Investment Disputes (ICSID) ruled that CEAC did not have headquarters on the territory of Cyprus, therefore it was not a foreign investor according to the terms of the applicable international agreement for protection of foreign investments. CEAC has appealed against the ruling.

In 2014, CEAC had filed a claim for €600mn against Montenegro with ICSID, saying that the decision of the country to declare KAP bankrupt in 2013 violated the trade treaty protecting Cypriot investments in Montenegro. CEAC had a 65.43% stake in KAP before the bankruptcy.

In June 2016, Montenegro won another case concerning KAP’s bankruptcy. The London Court of International Arbitration (LCIA) dismissed arbitration on the claim filed by Russia’s VTB Bank against the bankruptcy of KAP. Following this ruling, Montenegro’s commercial court was allowed to complete the bankruptcy proceedings of KAP.