After four years of closure, the Sveti Stefan City Hotel, a former highlight of Montenegrin tourism, may reopen this summer if the government and tenant “Adriatic Properties” finalize a crucial document endorsed by Greek businessman Petros Statis, who has reportedly given his approval.

Sources have confirmed to “Vijesti” that an agreement regarding the openings of Svec and Vila Miločer is forthcoming. The document has been submitted to the Government following the incorporation of its suggestions for initialing.

This document reportedly includes a provision to pause arbitration proceedings before the International Tribunal in London for six months, allowing for the reopening of the elite resort during this period.

According to multiple sources, the aim is for both parties to resolve their outstanding issues through negotiations and withdraw from arbitration amicably within these six months. A final agreement is expected to be reached by the end of the month, with a main hearing scheduled at the tribunal for mid-May.

One key aspect of this agreement is that the stunning Queen’s Beach will be accessible exclusively for hotel guests from 8 AM to 8 PM, after which it will be open to the public.

For the past four summers, Adriatic Properties has kept the Sveti Stefan and Villa Miločer hotels closed and has halted construction on the new Kraljičina plaža hotel due to the ongoing arbitration proceedings. Aman, the hotel operator, has refused to open the Sveti Stefan hotel as they cannot ensure guest safety and privacy without a resolution regarding Kraljičina plaža and the path connecting it to Miločer Park’s spa center.

The Djokovic Factor

In early February, the world’s most successful tennis player, Novak Đoković, sought to facilitate the reopening of the city-hotel Sveti Stefan, which has been closed since 2021. After engaging with Prime Minister Milojko Spajić, Djokovic expressed to “Vijesti” that his primary reason for being in Montenegro was to leverage his influence to resolve the situation.

The global ambassador for Aman explained that preliminary discussions have taken place, noting his efforts to advocate for the “greater good” of Montenegro, with hopes that a solution is nearing.

This year marks the 65th anniversary of the transformation of the medieval fishing village of Paštrov into a stylized summer resort by the then-communist regime.

Last season, local frustrations over the ongoing closure of Sveti Stefan peaked, prompting more radical actions, such as blocking access at the Zavala roundabout into Budva, though they opted against it after receiving governmental assurances about the potential reopening, which never materialized.

The closure of Svec stemmed from restrictions around Queen’s Beach, historically exclusive to hotel guests and elite politicians. The city-hotel shut down in 2021 after locals dismantled the barrier around Queen’s Beach, following a directive from the Public Company for Coastal Zone Management to restore access paths in Miločer Park.

Post-incident, Adriatic Properties sought assurances from the state to prevent similar occurrences, which were not provided. Consequently, the government initiated arbitration proceedings in London for breach of contract, leading Adriatic Properties to file a counterclaim for €100 million in damages.

This situation also resulted in Adriatic Properties withholding rent payments to the state company HTP “Miločer” for the Miločer Park complex, site of the old Kraljična plaza hotel, as they await arbitration conclusions. Here, they have commenced construction on a new hotel and market apartments, with quarterly rent payments of €87,000 halted.

Sources indicate a mutual agreement is in place for both parties to amicably resolve outstanding issues and exit arbitration proceedings.

Meanwhile, Adriatic Properties is not fulfilling quarterly rent payments of €380,000 to “Sveti Stefan Hotels,” the owners of the city-hotel and Villa Miločer, leading both entities into a challenging financial situation.

The Commercial Court has recognized the decisions made by the London Arbitration Court, ruling that “Sveti Stefan Hotels” and the Government must pay £522,000 (approximately €620,000) to Adriatic Properties for arbitration costs.

The Commercial Court’s decision states: “The proposal for recognition of a foreign arbitration award submitted by Adriatic Properties DOO Budva and Aidway Investments Limited from the British Virgin Islands is adopted, recognizing the Second Partial Arbitration Award of the London Court of International Arbitration dated September 25, 2023, and the Supplement dated October 12, 2023,” granting it equivalency with Montenegrin court rulings.

Bojana Cirovic, protector of Montenegro’s property and legal interests, has filed an appeal with the Court of Appeal against the Commercial Court’s decision.

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