"Sea Pioneer" lost 1,2 million euros

The Commercial Court has completely rejected the lawsuit filed by the company "Sea Pioneer Montenegro" against the state and its request to pay it more than 1,2 million euros in damages because the state's actions deprived the company of the right to port pilotage in the Bay of Kotor, which it received in a government tender in 2018.

Judge Radmila Peric On October 9, the Court of Appeals rejected as unfounded the request of "Sea Pioneer Montenegro" to pay it compensation of 205.824 euros for 2022 with default interest of 54.643,45 euros, the costs of engaging professional and administrative workers in the amount of 63.912,53 euros, material investments under the concession contract in the amount of 127.572.72 euros and lost profit in the amount of 761.655,15 euros.

The Herceg Novi company has the right to appeal this verdict to the Court of Appeal.

Revocation of pilotage

According to the official results of the 2018 tender, the Government of the Prime Minister Duško Marković (DPS) awarded the maritime pilotage concession in Boka Bay to the companies Luka Kotor from Kotor and “Sea Pioneer Montenegro” in the summer of 2020, and concession contracts were signed with them in August of that year for a period of five years. However, the third participant in the competition for the concession, the company “Boka Pilot&Tug Service” from Bijela, which did not pass the tender, initiated a dispute before the Administrative Court and won it twice, proving that its offer, which was ranked first in the 2018 tender, was not “incomplete” as it was characterized by state representatives in order to eliminate it from further proceedings.

In April 2022, the Administrative Court finally issued a ruling annulling the Government's decision from 2020 to grant the pilotage concession to the Port of Kotor and "Sea Pioneer Montenegro", and obliged the latter to conduct a new procedure for granting the concession. The Maritime Safety and Port Management Administration, which was supposed to do this on behalf of the state, has not done so to this day, but by decision of the 43rd Government of the Prime Minister Dritan Abazović (URA) granted the exclusive right to perform pilotage services for ships and large yachts entering the Bay of Kotor to the majority state-owned company Luka Kotor.

Believing that due to everything that has happened, including the ban on cruise tourism activities that they had in 2020-2021 due to the Government's measures to prevent the spread of coronavirus, they have suffered great damage, the company "Sea Pioneer Montenegro" led by Captain Miodrag Kršanac, sued the state, seeking compensation for the concession fee paid, the costs of workers, the purchase of materials and equipment for performing pilotage activities, as well as for lost profits.

At the trial before the Commercial Court, “Sea Pioneer Montenegro” claimed that the Government, through various legal complications in the period from 2020 to the end of 2023, practically prevented this company from engaging in the lucrative maritime pilotage business in Boka Bay, for which this company received the concession right under the 2018 tender, and that the Government, following the decision of the Administrative Court, unfoundedly granted the right to perform pilotage only to the company Luka Kotor, although it is not exclusively owned by the state, but private shareholders also have a significant stake in it. At the same time, the state has not yet implemented its own conclusion from April 2014 to prepare and announce a new tender for the award of a pilotage concession in Boka Bay, but has illegally left the monopoly on this to the Luka Kotor, although the Competition Protection Agency warned it in July 2023 that this was violating the rules and distorting market competition, i.e. putting some companies in a privileged position and others in an unequal position.

Co-owner and director of “Sea Pioneer Montenegro”, Captain Miodrag Kršanac, claimed in court that in 50 years of work in the global maritime industry and 33 years of command of merchant ships, he had never seen a similar example anywhere in the world and that his company had suffered great damage because, due to a combination of circumstances, namely subsequent decisions by the Government, it was put in a situation where, since 2020, when it received a five-year pilotage concession in Boka Bay, it could in practice only perform this activity for a little over a year. He pointed out that “Sea Pioneer Montenegro” was founded in 2015 and that since then it has had large investments in order to meet the required personnel and technical conditions to be able to engage in maritime pilotage, which it successfully performed until 2020.

Expert's findings

The financial expert pointed out that "Sea Pioneer Montenegro" did not pay the concession fees for 2023 and 2024, and therefore cannot claim them as compensation, while the Protector of Property and Legal Interests of Montenegro, who represented the state, emphasized that the Herceg Novi company's requests for compensation for material and employee costs are unfounded because it had already incurred them in 2015 when it first entered the pilotage business in Boka Bay, and that according to the laws, but also the tender rules that the bidders accepted, those interested in obtaining a concession knowingly run the risk of losing their potential material investments in that business if, for any reason, the conceding state terminates or does not conclude a concession agreement with them at all.

"This is exactly the situation that arose in this case - the decision to grant the concession from 2020 was annulled by the Administrative Court's judgment from 2022 following a third party lawsuit, after which the Government of Montenegro issued a conclusion on 13 April 2023, stated the legal consequence of the annulment and determined further steps towards acting in accordance with the court decision, which is the state's obligation," the protector argued, among other things, at the trial.

Judge Perić largely accepted this argument, and rejected the claim for damages by "Sea Pioneer Montenegro" as unfounded, believing that the company cannot claim a refund of the concession fee paid for 2022 because it was performing that activity at the time and making a profit from it, and that claims for employee salaries and material costs have no legal basis because, according to the Concession Agreement from 2022, "the concessionaire is not entitled to compensation for any loss or interruption of port activities resulting from activities within the jurisdiction of state authorities in accordance with applicable law."

The pre-trial court considers that “Sea Pioneer Montenegro” is not entitled to compensation for lost profits because “the defendant (the state) did not cause it any damage through illegal work, but rather the 2022 Administrative Court ruling annulled the Government’s 2020 decision on granting the concession”, and therefore the 2020 Concession Agreement between the state and “Sea Pioneer Montenegro” is no longer legally valid. For the same reason, the court considers that “Sea Pioneer Montenegro”’s allegations that the Government illegally and without conducting a tender subsequently granted the pilotage monopoly to the Port of Kotor “are of no relevance for a different decision in this legal matter”.

Accusations against former Prime Minister Abazović

Kršanac accused Abazović of making a decision at the end of December 2022 to annul the concession, which was a purely political matter, because the director of the Maritime Safety Administration was then a member of the URA, and the president of the Board of Directors of the Port of Kotor was the president of the OO URA Kotor, so in April 2023 he made a decision without any basis to grant the exclusivity of pilotage to the Port of Kotor without any tender, emphasizing that it was a state-owned company, which was not true at all, because the Port of Kotor is a joint-stock company.

He emphasized that "Sea Pioneer Montenegro" never received a decision from UPSUL to terminate the concession it acquired in the 2018 tender, and therefore could not appeal against it.