The state cannot pay Montenegro Airlines' debt from an invalid law: The Basic Court dismissed the Airport's lawsuit

The Basic Court in Podgorica has issued a first-instance verdict dismissing as unfounded the lawsuit filed by the state-owned company Aerodromi Crne Gore against the state of Montenegro, which requested 7,14 million euros from the state budget for unpaid claims from the bankrupt "Montenegro Airlines".

The verdict also stated that Aerodori should pay the costs of the court proceedings of 34.450 euros, as well as that they have the right to appeal to the Higher Court.

The Airports claimed 5,75 million euros from the former airline for services provided but not paid for, including handling, passenger services, and lease of land and business premises. They based their lawsuit against the state on their interpretation of the Law on Investment in the Consolidation and Development of the Air Passenger Transport Company "Montenegro Airlines" from 2019, which stipulated that the Government would pay money to "Montenegro Airlines" as a form of state aid, including to pay the debt to the Airports, which was not done. The lawsuit was filed in November 2021.

The state was represented in the dispute by the Deputy Protector of Property and Legal Interests of Montenegro. Vanja Stankovic, stated, among other things, that the disputed Law cannot constitute an enforceable and authentic document, that the Competition Protection Agency stated in September 2020 that the state aid envisaged for MA was unlawful, that the disputed Law on Aid was contrary to the Agreement on the Accession of Montenegro to the EU as an international treaty, that it provided that the state would receive new shares for the money invested in airlines, and that in December 2021 the Law on the Termination of the Disputed Law on Investment in the Consolidation and Development of "Montenegro Airlines" entered into force.

In the explanation of the verdict, the Basic Court states, among other things, that bankruptcy was declared against "Montenegro Elajns" on April 28, 2021, and that the aforementioned Law on Investment in Consolidation and Development did not provide for the fulfillment of obligations in the event that bankruptcy was opened against this company.

They point out that the Competition Protection Agency, by its decision of 6 May 2021, determined that the state aid provided for in the Law on Investment in the Consolidation and Development of “Montenegro Airlines” was not in accordance with the Law on State Aid Control, and that the law itself ceased to be valid on 31 December 2021. It was also stated that Article 2 of the Law on the Termination of the Law on Investment in the Development of “Montenegro Airlines” expressly provides that proceedings initiated under the Law on Investment in the Consolidation and Development of “Montenegro Airlines” shall be suspended on the date of its entry into force, which means that “in this specific case, the legal basis on which the plaintiff seeks the aforementioned compensation has ceased to exist, which is why the court rejected the plaintiff's request as unfounded”.

The court also noted that Airports of Montenegro had filed the same claim with the bankruptcy administration of the former airline.

In March last year, the Commercial Court of Montenegro similarly rejected a lawsuit filed by the bankrupt company "Montenegro Airlines" seeking payment of 100.241.505 euros from the state, citing that the state had not paid the company the amount of aid stipulated in the Law on Investment in the Consolidation and Development of "Montenegro Airlines" from 2019.

The ruling stated that such a request was unfounded, and that Montenegro Airlines, in bankruptcy, was obliged to compensate the state for the civil proceedings in the amount of 20.250 euros.

The disputed 2019 law provided for the state to forgive MA's debt of 34 million euros, or to receive new shares in the company for it, then to pay the company money: 32 million euros to pay the debt to Airports, 6,5 million to pay the debt to Air Traffic Control, 6,8 million for the debt to Hipotekarna Banka, six million euros for debts to creditors, then 11 million for aircraft leasing, 8,8 million for engine restoration, and 50 million for the purchase of new aircraft by 2024.