ASK: The agreement does not contain information on whether the Government has committed to providing land for long-term lease or for sale

The agreement between the governments of Montenegro and the United Arab Emirates on cooperation in the field of tourism and real estate development does not contain information on whether the Government has committed to providing land for long-term lease or for sale to the entities.

This is stated in the opinion of the Agency for the Prevention of Corruption (ASK) on the Draft Law on the ratification of the agreement between the governments of Montenegro and the UAE in the field of tourism and real estate development.

During the investigation, the Agency also noted that the particularly contentious point of the agreement related to the Government's obligations to provide the land necessary for the implementation of the project, excluding the application of public procurement, tenders or procedures prescribed by national legislation governing the area of ​​state property.

"It is also to be expected that the investor will request the adoption of the aforementioned planning documentation that will enable him to meet the formal conditions for obtaining construction permits and starting projects, and in this regard, the Agency specifically points out the formation and definition of urban plots on the land that the Government of Montenegro will be obliged to provide, in a way that pays attention to Article 171 of the Law on Property Relations, which stipulates that 'On an urban plot on which a residential building is built, the owners of separate parts have joint indivisible ownership.' Therefore, with the construction of the planned facilities, future buyers of apartments will acquire permanent joint indivisible ownership, which is why it is necessary to pay special attention when planning to the size of urban plots but also to the purpose of other cadastral plots within the project zone," the opinion signed by the acting director of ASK Dušan Drakić reads.

"In the following point b) the Government of Montenegro obliges to declare all projects with the Entities, among other things, as projects of strategic and public interest, which, if these are projects for the construction and sale of apartments, can hardly be correlated with the public interest, i.e. does not correspond to the previously stated definition of public interest. In point c) the Government of Montenegro obliges to develop public infrastructure for the needs of project implementation, which, taking into account the size and amounts of these costs and the impact on the Budget of Montenegro, and previous experiences with similar projects where this or a similar obligation of the state or local governments existed, it would be expected that in this regard, the possibility of certain credit arrangements or other forms of support from the UAE Government would be envisaged. The Agency also recalls the provisions of the Law on Spatial Planning relating to Article 68, which, among other things, stipulates that 'Communal equipping of construction land includes the construction of facilities and devices of communal infrastructure, namely: 1) access roads and streets in the settlement, public lighting, facilities and devices for public water supply and management of communal waste and atmospheric waters, up to the connection to plot, including connection etc...' Article 69 states that 'Basic and common communal equipment of construction land shall be provided by the local self-government unit', while Article 73 of the same law stipulates that 'Development of construction land within the meaning of Article 68 paragraph 1 item 1 of this law may also be carried out by the investor, or interested user of the space'", it is added.

ASK also writes that "taking into account the aforementioned articles, introducing the obligation of the Government of Montenegro to develop public infrastructure necessary for the implementation of the project, which actually represents an obligation to provide communal equipment for land, is in contradiction with Article 69 of the Law on Spatial Planning."

Also, as they said, from the materials submitted with the agreement, it is not possible to see the scope and size of the necessary investments in infrastructure, nor whether any analysis in this direction preceded the conclusion of the agreement, "which opens up space for numerous risks given the obligation assumed by this point by the state of Montenegro for the purpose of implementing the project."

"In point d) the Government of Montenegro undertakes that planning documents be prepared in cooperation with the Entity, which actually probably implies that planning documentation, land use, formation and purpose of urban plots will be carried out at the request of the Entity, which derogates from the procedure and procedure for adopting planning documents prescribed by the Law on Spatial Planning (Art. 31-56) and whose application is not excluded in point a) of this article. The aforementioned law, in the cited articles, elaborates in detail the procedure for adopting the documents in question, as well as the public debate procedure," writes ASK.

The Agency also reminds that all planning documents are general legal acts, and in this regard refers to the provision of Article 2 of the Law on Lobbying, which stipulates: "Lobbying is an activity undertaken with the aim of influencing legislative and executive authorities at the state or local level, state administration bodies, independent bodies, regulatory bodies, public institutions and other legal entities that exercise public powers, or activities of public interest or are state-owned in the process of adopting laws, other regulations and acts within the jurisdiction of those authorities, in order to achieve the interests of the person commissioning the lobbying, in accordance with the law."

If the intention was to adopt or amend planning documentation directly in accordance with the investor's request, in the Agency's opinion, this agreement does not exclude the application of the Spatial Planning Law and the Lobbying Law, "which should be taken into account in particular when applying the Agreement in practice."

"In point d) the Government of Montenegro undertakes to undertake all legislative measures for the implementation of the project, which indicates that it will enter into the procedure of amending existing or enacting laws if the needs of the Entity so require, so the Agency refers to the same comment as in the previous point in relation to the application of the Law on Lobbying," adds ASK.

Article 4 of the Agreement, they point out, defines that in order to ensure the success of the project, the contracting parties will establish a Joint Committee or subcommittees, which will work on topics covered by the agreement in order to support the implementation of this Agreement.

The Agency recalls that in a similar manner, the previously concluded Agreement between the Government and the UAE on Economic Cooperation also defined the establishment of a joint economic commission consisting of representatives of both sides, but without specifying the composition and tasks of that commission, the deadline for its establishment, and the obligation to prepare a report.

"This Agreement also does not define the composition of the Joint Committee or when the said Committee will be formed. Due to the fact that it is a document that refers to specific areas of economic cooperation between the two states, namely tourism and real estate, it is desirable to define who the representatives of the Committee are in front of specific state institutions, such as: 'The permanent members of the Committee in front of Montenegro are: a representative of the Prime Minister's Office, the Ministry of Finance, the Ministry of Tourism, the Ministry of Spatial Planning, Urbanism and State Property, the Ministry of Transport, the Ministry of Maritime Affairs, the Protector of Property and Legal Interests of Montenegro, as well as representatives of other institutions depending on specific needs.' Defining the permanent representatives of the most important state institutions for the implementation of the Agreement in question creates a formal legal framework for the permanence of the institutional framework of the said Committee. It is also desirable to specify the deadline for the formation of the Committee from the date of signing the Agreement, as well as the obligation to compile periodic or annual reports of the said Joint Committee, which would be considered and adopted by the Governments of the two contracting states," ASK points out.

Article 5 of the Agreement, as they said, in a similar manner to the previously signed Agreement between the Government and the UAE on Economic Cooperation, also defines that this Agreement does not affect the obligations from the Stabilization and Association Agreement between Montenegro and the European Communities, as well as the UAE and GCC agreements, as well as the rights and obligations from other concluded agreements in force that the contracting parties have concluded with third parties, "which clearly states that the provisions of the Agreement have no influence or supremacy over previously concluded agreements, whereby the contracting parties undertake that the said Agreement or certain of its provisions cannot be a formal obstacle in the process of Montenegro's accession to the European Union or an obstacle in fulfilling the accepted obligations from other agreements".

"Furthermore, Article 6 of the Agreement stipulates that any dispute arising between the Parties arising from the interpretation or implementation of this Agreement shall be resolved amicably through consultations or negotiations within the Committee, and if such consultations and negotiations do not resolve the dispute, it shall be resolved through diplomatic channels. However, this article of the Agreement does not clarify what will happen in the situation if the dispute is not resolved by the Commission or through diplomatic channels. In order to further protect the public interest, we believe that additional definition of this article of the Agreement is necessary, in order to normatively provide for some of the mechanisms for international dispute resolution, in the event of possible disputes that cannot be resolved by the Committee or through diplomatic channels, as well as to provide in this Agreement that possible disputes that may arise between the Government of Montenegro and the UAE Entities will also be resolved through international arbitration," writes ASK.

They said that, in terms of transparency, this Agreement does not contain an obligation for all other individual contracts, agreements or other arrangements between the Government of Montenegro and entities from the UAE to be available to the public.

They recall that the Constitution of Montenegro ("Official Gazette of Montenegro", No. 1/07 and 38/13 - Amendments I-XVI) in Article 9 stipulates: "Ratified and published international treaties and generally accepted rules of international law are an integral part of the internal legal order, have primacy over domestic legislation and are directly applicable when they regulate relations differently from domestic legislation." Additionally, they point out, Article 15 paragraph 1 of the Constitution stipulates that: "Montenegro, on the principles and rules of international law, shall cooperate and develop friendly relations with other states, regional and international organizations."

The United Nations Convention against Corruption (Law on the Ratification of the United Nations Convention against Corruption "Official Gazette of Serbia and Montenegro - International Treaties", No. 11/05), as an international instrument that is relevant to the field of corruption prevention, in Article 5, which defines the policy and practice of preventing corruption, stipulates: "Each State Party, in accordance with the fundamental principles of its legal system, shall prepare and implement or conduct an effective and coordinated policy against corruption that promotes the participation of society and reflects the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability."

Additionally, Article 8, which relates to the code of conduct for public officials, stipulates that: in order to combat corruption, each State Party shall have the obligation to promote, inter alia, the integrity, honesty and accountability of its public officials, in accordance with the fundamental principles of its legal system; and: each State Party shall in particular have the obligation to endeavour, within its institutional and legal system, to apply codes or standards of conduct for the correct, honest and proper performance of public functions.

The Agency also refers to Article 70 of the Law on Spatial Planning, which states that the investor does not pay a construction fee for basic communal equipment of construction land if it concerns facilities of general interest and five-star hotels, as well as facilities whose investor is a local government unit, and points out that projects from agreements that have been declared projects of public interest cannot be included under the definition of a facility of general interest.

"It also remains an open question what will happen if the state or local government are co-investors of the projects. In relation to the above issue, special attention should be paid to the condo model of the hotel and the provision of Article 70, paragraph 4 of the Law on Spatial Planning, which stipulates that 'If a hotel operates under a condo, or mixed business model, the investor is obliged to pay a construction fee for accommodation units that are the subject of individual sale, for the net area of ​​accommodation units with the associated parking space.' Bearing in mind that the construction fee is a significant budget revenue, the Agency also recalls the following provision from Article 70, paragraph 8 of the Law on Spatial Planning, which stipulates that 'For facilities in the coastal zone and national parks, the construction fee is increased by 20%'", states ASK.

Considering that this is a project that falls within the marine zone, the Agency also reminds of the consistent application of regulations related to a healthy environment, which is guaranteed by the Constitution of Montenegro, European environmental standards and the Aarhus Convention, and "in this sense, it is necessary to conduct an environmental impact assessment and assess the impact of the project on the ecosystems of Velika Plaza, because the application of these regulations is not excluded by the agreement in question."

"Norms that leave no room for subsequent interpretation will contribute to efficiency in the implementation of agreements"

Although the Agreement between the Government of Montenegro and the Government of the United Arab Emirates on cooperation in the field of tourism and real estate development represents an additional legal framework for the establishment and development of cooperation between the two countries, its implementation in practice may indicate the need for additional improvements to the normative text in terms of transparency, harmonization with national regulations related to spatial planning, and additional protection of public resources and interests of the state of Montenegro.

This is stated in the opinion of the Agency for the Prevention of Corruption (ASK) on the Draft Law on the ratification of the agreement between the governments of Montenegro and the UAE in the field of tourism and real estate development.

"Defining the composition of the joint committee or even the criteria for selecting representatives in the Committee, specifying deadlines, as well as resolving potential disputes, analyzing the necessary infrastructure investments, implementing the Law on Spatial Planning and the Law on Lobbying, can significantly contribute to a more efficient implementation of the Agreement, and reducing possible risks that may arise from the subsequent signing of additional contracts, protocols, agreements and other arrangements," reads the opinion signed by the acting director of ASK, Dušan Drakić.

It is also said that the implementation of further activities to eliminate the identified shortcomings and promote transparency in the implementation of the agreement in question should influence the creation of an investment environment that, in addition to attracting foreign investment, will also influence public trust and be directed towards the public interest.

"In this way, a relationship of trust will be created and built between the Government of Montenegro, local governments and local communities, as well as other competent authorities and the entire public, which should ultimately lead to the valorization and disposal of public resources in accordance with the full principle of public interest," it is emphasized.

It also states that the promotion of public interest, recognition of the importance of conducting prior analyses, establishing a system for monitoring project implementation, and protecting space and the environment when using public resources, while taking into account the needs of the local population and local governments, will be the best guarantee for responsible management of public resources and will also have a positive impact on the economy of Montenegro.

Also, clear and precise legal norms that leave no room for any subsequent interpretation will contribute to the efficiency of implementing the agreement and, ultimately, will lead to increased public trust in the work of state institutions, the opinion states.