Montenegro Sued Over Aluminium Plant's Losses

CEAC filed on Tuesday a request to a Vienna court for arbitration proceedings with the Montenegrin government, seeking over 600 million euro in compensation for losses for the aluminum plant's bankruptcy.

The biggest creditors of the KAP aluminium plant are the Montenegrin government and Russian billionaire Oleg Deripaska, through CEAC.

Cyprus-based CEAC claims that the Montenegrin government interfered with the investment process, causing major damages to the company and subsequent loss of investment.

According to CEAC, Montenegro also breached an agreement on mutual encouragement and protection of investment signed between Cyprus and Montenegro.

Montenegro rejected the claims on Tuesday, describing the CEAC's demands against Montenegro as unfounded and criticising the company for its problems.

"Owing to poor corporate management, KAP's debt to its creditors exceeded 350 million," the government said.

CEAC initiated dispute settlement proceedings against Montenegro in August 2013.

The company said the Montenegrin government had not responded to the notice from CEAC on reaching a negotiated solution within six months, "so we had no other option but to initiate arbitration proceedings".

CEAC first filed for arbitration in early 2013 seeking 100 million euro in compensation. The company blamed the Montenegrin government for breach of an amicable agreement about KAP signed between CEAC and Montenegro in 2010.

KAP went bankrupt as a result.

Montenegro has provided 135 million euro in guarantees on the basis of which the KAP took out loans from banks in order to overcome the crisis that began in late 2008.

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