The Court of Appeal of Montenegro has reversed the decision made by the Commercial Court in early November 2019, partially accepting the Municipality of Pljevlja’s lawsuit against the Coal Mine for not meeting the terms of the Contract on Compensation for Development of Construction Land, which was signed in mid-August 2004.

This ruling was made during a retrial, following the Supreme Court’s approval in November of the previous year for the Coal Mine’s request to reevaluate the Court of Appeal’s decision. The prior order had required the largest company in Pljevlja to compensate the Municipality with 2.37 million euros for breaching the contract related to the financial obligations concerning the development of city land made twenty years ago.

The prolonged dispute between the Municipality and the Coal Mine has lasted nearly 12 years. After the verdict became final, the Mine paid the full debt owed to the local authorities on July 1st of last year, despite having initially requested to fulfill its obligation via installments.

After the Supreme Court approved the revision of the previous ruling by the Court of Appeal and sent the case back for reassessment, the Municipality of Pljevlja reimbursed the Coal Mine.

The contract, signed by the leaders of the Municipality of Pljevlja and RUP in mid-August 2004, specified compensation for the costs associated with the development of construction land. This obligation was tied to the execution of a multi-million euro project involving the relocation of the Ćehotina River and the opening of the Cementary mine. The contract required the mine to cover the expenses for a portion of the planning and project documentation in exchange for compensation for the land development and to contribute to construction work on some of the buildings.

When the Coal Mine failed to meet its obligations within the agreed timeframe, the Municipality proceeded with legal action. Throughout the 12 years of litigation, several verdicts were handed down, some favoring the state-owned company.

In the retrial, the Court of Appeal mandated that the Coal Mine, in fulfilling its obligations as stated in the Contract on Compensation for Development of Construction Land, finance investment efforts pertaining to the regulation of the Breznica River bed over a stretch of 600 meters and the deepening of the Ćehotina River bed over an unregulated section of 3.5 km, to be completed within two years of receiving the judgment under the threat of enforcement.

All other claims from the Municipality were dismissed by the court.

The Municipality sought for the Coal Mine to fund the project documentation related to the development of the Main Design for the wastewater treatment plant in Židovići, following the completed conceptual design, and the Main Design for treating water from the Otilovići reservoir as part of the facility on Pliješa, in order to meet the obligations outlined in the Contract on Compensation for Development of Construction Land.

The request for the Mine to finance investment efforts for the necessary works on the remaining portion of the fecal collector to the planned site of the wastewater plant in Židovići, the main drinking water supply for both high and low zones, the construction of facilities for the new plant on Pliješa, and the purification of water from the Otilovići reservoir as part of the facility on Pliješa— which may involve replacing equipment, automating, and updating all installations at the current plant, as well as constructing new filter fields and enhancing reservoir capacity by building new reservoirs for both high and low zones— was also rejected. Additionally, the request for work on the secondary collector from Podgoričke Street along the Breznica River’s right bank to the main collector over a distance of 325 meters, and for implementing the fecal sewage project in the Ševari local community, was denied.

The Court of Appeal explained that it found the claim well-founded only in relation to the defendant’s obligation to finance investment works linked to the regulation of the Breznica River bed and the deepening of the Ć. riverbed, as the Mine failed to provide proof of having fulfilled its contractual obligations pertaining to these uncompleted works.

“As for the other works, the plaintiff acknowledged during the second-instance proceedings, corroborated by an expert examination by construction expert OM (supplement to the findings and opinion dated 17.11.2023), which was not contested by the defendant, that some of the project documentation and investment works that were the defendant’s contractual obligation under the contract in question had been carried out in the meantime, financed by the plaintiff or other entities… Since these works had undeniably been completed and paid for, the plaintiff’s claim demanding the defendant be required to fund these works pursuant to the Contract on Compensation for Development of Construction Land is deemed unfounded. It is irrelevant that the plaintiff insisted these works occurred after the lawsuit was filed, during the court proceedings, as the court bases its decision on the situation at the time the main hearing concluded,” stated the explanatory note of the verdict.

The court also maintained that the Municipality of Pljevlja could not claim 2.372 million euros from Rudnik for the work executed in this case.

“Given the legal stance articulated in the Supreme Court of Montenegro’s decision Rev.Ip.br.18/24 dated 14.10.2024, the sum of money (2.372.844,73€) disbursed by the plaintiff for the work executed, which was the subject of the claim and contractual obligation of the defendant, cannot be claimed in these proceedings, since the initial proceedings dictated the claim and established the performance of the act. The plaintiff might seek to recover the amount paid for work that was the defendant’s contractual obligation through separate legal proceedings,” the judgment of the Court of Appeal further asserts.

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