Budva City Council adopts settlement agreements with companies from the German WTE group

The Budva Municipal Assembly adopted the Settlement Agreement on mutual rights and obligations between the Municipality and the Budva Waterworks and Sewage Works on the one hand and WTE Wassertechnik GMBH, Budva Wastewater DOO, WTE Sea Water Desalination DOO and Beteiligung 52 asset solutions GMBH on the other hand, which obliges it to pay 3,5 million euros to companies from the German WTE group from Essen and thus close disputes before international and domestic courts.

18 councilors voted for the agreement, three voted against, and there were no abstentions.

Supporters of the Democrats and "For the Future of Budva" left the hall early.

The President of the Municipality of Budva, Nikola Jovanović, said that by closing the chapter between the WTE group and the local government, complete financial stability and the end of financial uncertainty in the Municipality of Budva are achieved.

"This further opens up the possibility of full investments in municipal development projects, stabilization of public finances. This means that without any burden, you can plan budgets for the next few years, implement the planned and promised development projects and dedicate yourself to absolute development in the coming years," said Jovanović at the session of the Budva Municipal Assembly (MA).

The councilors of the Budva Municipal Council, at a session scheduled under urgent procedure, considered the proposal for a Decision on the adoption of the draft Settlement Agreement on mutual rights and obligations between the Municipality of Budva, DOO "Vodovod i kanalizacija" Budva and WTE Wassertechnik GMBH, Otpadvede Budva DOO, WTE desalinizacija sea water DOO and Beteiligung 52 asset solutions GMBH.

The Budva municipality wants to pay 3,5 million euros to companies from the German WTE group from Essen and thereby close disputes before international and domestic courts, claiming that they are threatening to devastate the city's coffers in the name of building a wastewater treatment plant in Bečići, as well as a desalination plant on Cape Zavala.

This is stated in the draft Settlement Agreement on mutual rights and obligations between the Municipality of Budva and the Budva Water and Sewerage Company on the one hand and WTE Wassertechnik GMBH, Wastewater Budva DOO, WTE Desalination of Sea Water DOO and Beteiligung 52 asset solutions GMBH on the other hand, which is before the councilors of the Municipal Assembly today.

"The settlement agreement stipulates that the Municipality of Budva will make a payment in the total amount of 3.500.000 euros, in four equal installments of 875.000 euros each, the first by November 30, 2025, the second by December 30, 2025, the third by February 15, 2026, and the fourth by March 15, 2026," the decision, which was reviewed by "Vijesti", states.

Councilor Dragana Kažanagera Stanišić (Democratic Montenegro) requested a postponement of the session, because the councilors were not provided with enough documentation for them to review so that they could express their opinion on the proposed decision.

"The people who are supposed to vote today definitely do not have enough knowledge or are familiar with enough facts to be able to express their opinion on such an agreement," said Kazanagera Stanišić.

The Assembly adopted the proposed agenda and therefore the proposal of the Democratic councilor was not accepted.

Municipal Assembly President Petar Odžić said that a team of lawyers was present at the session to clarify any doubts.

Jovanović said that anyone who wanted to learn about the information could do so through councilor questions, stating that there had been no questions about these procedures so far.

The assembly decision states that by settling, the Municipality of Budva manages to protect itself from millions in claims from the German company.

"Based on the calculations presented in the Agreement, the Municipality of Budva and the related legal entity Vodovod i kanalizacija are exposed to total liabilities towards the WTE group and its subsidiaries which, depending on the legal basis that would be recognized, on September 23, 2025 amount to between 49.513.382,47 euros (the lowest limit, according to the expert's findings) and 53.013.382,47 euros (the highest limit, according to the final arbitration awards in arbitration proceedings)," the decision states.

As explained, the settlement permanently closes the obligations based on two final arbitration awards before the International Court of Justice in Frankfurt and Geneva.

"The entire claim from the domestic litigation against Vodovod i kanalizacije is extinguished and all procedural and enforcement risks in the country and abroad are eliminated, including the potential costs of the proceedings before the Federal Court of Germany (BGH), whose cost risk amounts to at least 876.000 euros," the decision emphasizes.

Jovanović said at the meeting that if a settlement agreement is concluded, the savings for the municipality and citizens will amount to between 46 and 49.5 million euros.

"By paying 3,5 million, we are putting an end to any financial doubts and damages that may arise under already final judgments, and I mentioned how much the arbitration in Frankfurt could damage us, say in the amount of an annual budget," said Jovanović.

The legal representative of the Municipality, Miroje Jovanović, said that a trial has been scheduled for October 22nd in Frankfurt and if they do not inform the court that they have reached an agreement, a verdict will follow.

He pointed out that the agreement's greatest success was "what they feared most."

"These costs that the mayor stated, the best and worst case scenario, and what we obtained a separate, independent opinion for is what and whether there is a possibility of subsequent proceedings after Geneva. The first fear was what to do in Frankfurt. We won the dispute, hypothetically, that we owe the bank nothing, and the bank still has a mortgage. We won the main dispute over the contractual relationship, and we are challenging the arbitration award where someone determined that we should pay something under the guarantee," said Jovanović.

He explained that it was 37 million to the defendant, with "crazy interest," plus legal costs.

"We challenged it before the court in Frankfurt, managed to get the court to postpone it several times... and came to an ideal position where, either in three or four months, the Commercial Court of Montenegro, and after that the Court of Appeal of Montenegro, would enforce the arbitration decision there. Even if we exposed ourselves to the cost risk of over 800.000, to go to the Supreme Federal Court of Germany, that is being waited for, and here it is being enforced," said Jovanović.

He said that the adopted agreement extinguishes and ends all existing disputes, preventing new known and unknown ones.

He pointed out that this has been a long time in the works and that due to deadlines, he wants the councilors to make a decision today.

Kažanegra Stanišić said that she guarantees that everyone in the room finds everything mentioned absolutely incomprehensible and that "they wouldn't be able to repeat three sentences."

"If the government changes, anyone who would like to reconsider this scandalous deal will be prevented by this agreement, or will additionally burden the state. According to this agreement, only WTE has the right to terminate the agreement, why?"

She asked why they did not receive written expert opinions:

"We are councilors. A councilor can be a watchmaker, a hairdresser, anyone, and you are serious lawyer tigers who know very well how to formulate a legal opinion and to substantiate and give us full arguments so that we can support this today, on behalf of our citizens," said Kažanegra Stanišić.

She pointed out that the preamble to the agreement states the state guarantee paid by the Government of Montenegro in December 2019 in the amount of 29,25 million euros:

"Why does the Municipality now, with Nikola Jovanović at the helm, want to 'legalize' the state guarantee, introducing it into the text of the agreement and waiving the right to be examined before the competent authorities, even though Jovanović himself previously claimed that it was illegal and corrupt?".

She asked why the responsibility of the German side, which has been repeatedly linked to criminal activities in this business, is being shifted exclusively to the Municipality of Budva and why the Municipality is waiving future claims. Attorney Jovanović replied that the fact itself regarding the state guarantee is not in dispute, but the manner in which it was issued.

"It is not disputed that the state paid a certain amount, what is disputed is how the state guarantee was issued. The dispute with the state arises the moment the state said that they paid according to the act, and what we submitted to them is not of interest. Therefore, the fact that the state paid is not questionable," said Jovanović.

He pointed out that money needs to be allocated, and that it is a figure, but when choosing between three and 40 million, the smaller one is chosen.

"Look at the end of the provision and what it says at the very end. We received half of the documentation through procedures, so this is a success," said Jovanović.

City Movement councilor Đorđe Zenović said that the Agreement was uncertain and that the expertise of the legal team was needed.

"At first glance, the decision seems quite logical, however, the text contains terms like 'very possible', which indicates a 50/50 chance, that you are not sure that we will succeed either. Whoever is against this agreement, let them propose a better solution, but we are not all lawyers here nor do we have experience in arbitration disputes. You are paid to do this job, not us," said Zenović.

Councilor "For the Future of Budva", Ilija Gigović, asked if they had any invoice or written obligation to which the Municipality of Budva was obligated to pay, even this amount of 3,5 million euros.

"You will agree that if someone lends you money, and at some point tells you to pay it back in a much smaller amount, that would be a sign of distrust at the start," Gigović said.

Jovanović responded that there is no invoice, but rather a decision by an arbitration court based in Frankfurt from two years ago, with accrued interest.

"It is final and enforceable from the moment of its adoption, it is only recognized and enforced in the state of recognition, i.e. Montenegro. What we are talking about is our attempt to challenge it. There is already a document on which WTE can seek enforcement," said Jovanović.