The state is not obliged to pay the Bistrica Clean Energy consortium 27,5 million in damages - lost profits because the Concession Agreement for the construction of a small hydroelectric power plant (SHP) on the Bistrica River was terminated, the Commercial Court has ruled.
According to the verdict of Judge Filip Vujošević, the state should pay a little more than 760.000 euros to the consortium, whose majority owner is businessman Žarko Burić's company "BP Hydropower" - 602.818 euros in ordinary damages and 157.879 euros in interest.
"The claim seeking to oblige the defendant to pay the plaintiff, as compensation for damages - lost profits, the amount of 27.505.749,00 euros, with statutory default interest, is rejected as unfounded," the verdict, which "Vijesti" has access to, states.
The Office of the Protector of Property and Legal Interests, which represents the state in the dispute, told the editorial staff that it will appeal the verdict.
The Commercial Court had previously issued a similar ruling. After appeals from both the state and the concessionaire, the Court of Appeals overturned that ruling in February last year and returned the case to the Commercial Court for a retrial.
The Bistrica Clean Energy consortium received the concession for the construction of a small hydropower plant in early 2017. At the end of 2019, the government of Duško Marković adopted information on the need to terminate the contract and initiate an agreement on amicable termination, which did not occur even though the concessionaire requested it. The government of Zdravko Krivokapić unilaterally terminated the contract in December 2020, citing the fact that the concessionaire did not submit a new bank guarantee within the legal deadline.
(Un)Realistic expectation
The latest ruling of the Commercial Court states that Burić's consortium believes that the state is responsible for the damage they suffered, as well as lost profits.
"The plaintiff bases his claim on the standard of legitimate expectation, which is reflected in a certain certainty of achieving the goal, which is based on the state of the legal, economic and social framework of the country in which the investment is being implemented at the time of the investment, i.e. at the time when the plaintiff was granted a concession for the construction and exploitation of the small hydropower plant. The certainty with which the plaintiff realistically counted is embodied in the profit from the production of electricity from the specific small hydropower plant, which he would have realized if the concession had lasted until the end of the concession period. The plaintiff had a realistic expectation that he would have a guaranteed income from the small hydropower plant for the entire duration of the concession, which is normatively confirmed as such by the Law on Energy and related by-laws...", the consortium's position is quoted in the judgment.
In its response to the lawsuit, the state disputed the claim, stating that the intention was for the agreements covered by the Government's 2019 information to be terminated by mutual consent.
The state representative states that in June 2020, the consortium was submitted a draft annex to the contract, which aimed to regulate the date of commencement of negotiations on the termination of the contract, mutual rights, obligations and deadlines during the negotiations, "in order to suspend the obligations of the contracting parties during the negotiations and avoid the possibility of unilateral termination by any of the contracting parties."
"Specifically, the proposed annex provided that the date of commencement of negotiations on the termination of the concession agreement, for the purposes of this annex, would be considered the date of conclusion of the annex. The proposed annex was never accepted by the plaintiff, nor signed between the contracting parties. By refusing to conclude the proposed annex, the concessionaire assumed the business risk that the grantor would terminate the Concession Agreement due to the concessionaire's breach of the same...", the judgment states.
The director's salary and the investment were damaged
The verdict states that the findings and opinion of economic and financial expert Dragan Đukić from April 2022 determined that the damage based on the plaintiff's investment as a concessionaire was determined in the total amount of 760.697,28 euros, of which 602.818,23 refers to the principal costs, and 157.879,05 to default interest.
"According to the expert's findings, the stated amounts include the cost of salaries for one person - the executive director, with the calculation of default interest on the total gross amount, which the expert arrived at by checking the collected payrolls for the period from the establishment of the company, up to and including March 31, 3. The total costs of the calculated paid salaries for one person, the executive director, for the period from September 2022 up to and including the March 2017 salary, amount to 2022 euros, which with the calculated default interest of 51.464,47 gives a total sum of 9.574,33," states Judge Vujošević's final verdict.
In addition to salary expenses, the expert assessment also included other documentation - contracts, invoices, analytical cards, statements from the concessionaire's account, which refers to the costs of the consortium and its founder in connection with the Concession Agreement for the small hydroelectric power plant "Bistrica B".
"The expert finds that the expenses of the plaintiff ('Bistrica Clean Enew' doo Podgorica), as well as the plaintiff's founder ('BP Hydropower' doo Podgorica), related to the concession for the small hydropower plant "Bistrica B", as of the date of the preparation of the findings, amount to 551.353,76 euros, which amount represents the principal of the costs on which default interest has been calculated from the date of individual payments until the date of the preparation of the findings," it was specified.
The agreement on earnings calmed some locals
The court, as the verdict points out, based on the testimony of former Minister of Economy Dragica Sekulić, majority owner of the Burić consortium, and representative of the "Bistrica" Local Community Sakib Čindrak, came to the conclusion that in this specific case, the position of the Ministry of Economy to initiate amicable termination of the contract, which they justified by the dissatisfaction of the local population with the construction of mini-hydroelectric power plants, was not justified.
"Namely, from the testimonies of the witnesses Žarko Burić and Sakib Čindrak, it was indisputably established that an agreement was reached in principle between the prosecutor and the representatives of the Local Community 'Bistrica' regarding the share in the ownership structure of the mini-hydroelectric power plant, in which way the prosecutor wanted to resolve any concerns of the local population regarding the project in question. The representative of the Local Community Bistrica Sakib Čindrak clearly answered the court's question that there was a very small number of residents who were against the construction, while the majority of the population accepted Žarko Burić's offer that the Local Community Bistrica become the owner of his 10 percent ownership share in the mini-hydroelectric power plant, which would enable the Local Community to realize its economic interest," the document states.
The Court therefore considers that it has been “clearly established that in this specific case there was no opposition from the local population that caused the aforementioned decision of the Government of Montenegro to initiate amicable termination of the contract”.
“…When determining the amount of damage, the court assessed the expert's findings and opinion in this part and accepted it as accurate, objective, prepared in accordance with the rules of the profession and science, and as not contradicting other presented evidence. In the above, the defendant's objections to the expert's findings and opinion in this part are unfounded… During the preparation of the findings, the expert focused only on the official costs contained in the plaintiff's business books,” the court concludes.
In the part relating to the compensation claim in the amount of more than 27,5 million, the court considers that there was no "certainty" that the consortium would make a profit, and that the state prevented it from doing so.
Judge Vujošević explains this by the fact that the consortium was "only in the first phase of preparing technical documentation, which ends with the issuance of a building permit."
"The certainty of making a profit could possibly be discussed if the implementation of the plaintiff's contractual obligations was in the final phase, if the plaintiff had built the small hydropower plant facility and obtained a usage permit for it," Vujošević explained in the verdict.
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