The Ministry of Finance of Montenegro is pleased to announce that the Award in favour of Montenegro from Addiko Bank AG v. Montenegro has been published by the International Centre for Settlement of Investment Disputes (ICSID). The Award, which has been redacted to preserve the confidential information of the Claimant, is available here.

Addiko Bank AG commenced arbitration proceedings against Montenegro in 2017 under the Bilateral Investment Treaty between the Republic of Austria and the Former Republic of Yugoslavia (to which Montenegro is a successor), alleging 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. 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. However, Addiko Bank AG complained that the Government and loan-holders ought to have taken on part of financial risk arising from the currency fluctuations and that the Law had wrongly been rushed through Parliament without due consideration.

Proceedings began in September 2017 and comprised of two rounds of written submissions and a hearing in Paris in December 2019, following which the Tribunal issued its Award in November 2021, dismissing all claims against the State and ordering Addiko Bank AG to pay the majority of Montenegro’s costs.

The Tribunal 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. The Award is a complete vindication of Parliament’s and the Government of Montenegro’s handling of the Swiss Franc Loan crisis.

The Swiss Franc Loan crisis has prompted legal action in domestic and international courts and tribunals across the Southern and Eastern European region, including ICSID arbitrations against Montenegro, Croatia and Slovenia. The case against Montenegro is the first ICSID arbitration to reach conclusion and decide on the degree of deference accorded to States as a matter of international law when responding to situations of financial crisis. Montenegro was represented by members of the Ministry of Finance, the Central Bank, the Ministry of Justice and an international legal team under Cherie Blair CBE KC and Catriona Paterson of Omnia Strategy LLP. The Ministry of Finance would like to thank all of those involved for their dedication in representing Montenegro in this important case.