Arbitral Tribunal dismisses all claims brought against the Government of Montenegro by Addiko Bank AG

An arbitral tribunal constituted under the Rules of the International Centre for Settlement of Investment Disputes (part of the World Bank) has rejected Addiko Bank AG’s claim that the 2015 Law on the Conversion of CHF Denominated Loans into EUR Denominated Loans (as amended in August 2016) was a breach of Montenegro’s international law obligations under the Bilateral Investment Treaty between the Republic of Austria and the Former Republic of Yugoslavia (to which Montenegro is a successor).

Having confirmed that it had jurisdiction to determine the claims made by Addiko Bank AG, the Tribunal proceeded to comprehensively reject all claims made, and ordered the bank to reimburse Montenegro 70% of the costs incurred by the State to defend itself in the arbitration within 30 days.  

The 2015 Law on Conversion was enacted by Montenegro as a result of severe financial hardship experienced by Montenegrin citizens who were faced with sudden and unaffordable increases in repayments under Swiss francs denominated loans following the steep appreciation of the Swiss franc against the Euro in 2015. The ICSID Tribunal in particular found that the Law on Conversion was a reasonable and proportionate response by the Montenegrin State with the policy objective of alleviating the financial distress suffered by borrowers of Swiss franc-denominated loans.

Since the proceedings are classified as restricted until their formal conclusion, the Ministry of Finance and Social Welfare is not in the position to communicate more details at this stage.