Podgorica, (MINA-BUSINESS) - The Constitutional Court upheld a constitutional appeal filed by Budvanska Rivijera and annulled the Appellate Court’s decision recognizing legal costs in the dispute over Sveti Stefan, finding that it had arbitrarily concluded that domestic courts lacked jurisdiction and that the matter fell under international arbitration.

The Constitutional Court stated that the Commercial Court, in enforcement proceedings of an arbitration award issued by the London Court of International Arbitration, had recognized an obligation for the company Sveti Stefan Hoteli and the Ministry of Economic Development to pay Adriatic Properties £522,000 (around €620,000) in legal costs.

“The Appellate Court dismissed Budvanska Rivijera’s appeal as unfounded and upheld the position of the Commercial Court,” the Court stated in a press release.

The Constitutional Court found that the lower courts failed to examine the essential issue of whether the dispute falls under the exclusive jurisdiction of Montenegrin courts, given that it concerns the lease of real estate located in Montenegro.

“The Commercial and Appellate Courts stated in their decisions that this was a dispute with an international element, as one contractual party consisted of several companies headquartered abroad, noting that the 2007 lease agreement stipulated that any dispute not resolved amicably would be settled before the London Court of International Arbitration,” the Constitutional Court said.

It found, however, that the exclusive jurisdiction of Montenegrin courts had not been taken into consideration as a ground for refusing recognition of a foreign arbitral award, which courts must examine ex officio.