The Court of Appeal has dismissed as unfounded the appeals filed by the Government of Montenegro, state companies and Budvanska Rivijera, upholding the decision of the Commercial Court that recognized the London Arbitration Tribunal’s ruling. The court ordered Sveti Stefan Hotels and the Government to pay Adriatic Properties—the lessee of the elite Sveti Stefan – Miločer resort—£522,000 (approximately €620,000) to cover legal costs from the international arbitration.
The ruling confirmed the validity of the partial arbitration awards issued by the London Court of International Arbitration in September and October 2023. Sveti Stefan Hotels, majority state-owned, was ordered to pay 50% of the incurred legal fees (£226,575), and both Sveti Stefan Hotels and the Government (formerly the Ministry of Economic Development) were jointly required to pay the remaining amount (£295,341), with interest applied if payments are delayed beyond 30 days.
The arbitration concerns lease agreements for the Sveti Stefan and Miločer hotels, as well as the Queen’s Beach hotel, signed in January 2007. The lessee, Adriatic Properties, controlled by Greek businessman Petros Statis, is seeking damages amounting to €100 million.
Since the arbitration process began, Adriatic Properties has kept the Sveti Stefan resort and Villa Miločer closed for four consecutive summers and halted construction of the new Queen’s Beach hotel. The closure followed disputes over access to Queen’s Beach—a private beach historically reserved for hotel guests and political elites—which was forcibly opened to the public in 2021, leading to a standoff between local authorities, the lessee, and hotel operator Aman. Aman has refused to reopen the resort without guaranteed security and privacy for guests.
Adriatic Properties also refuses to pay rent for the Miločer Park complex, where the old Queen’s Beach hotel stood and new developments are underway. Quarterly rent payments totaling €380,000 to both Sveti Stefan Hotels and HTP Miločer are in arrears, placing these state-owned companies in a severe financial crisis, with frozen accounts and unpaid staff salaries.
The Government and Sveti Stefan Hotels had requested the Court of Appeal to overturn the Commercial Court’s recognition of the arbitration decision, arguing exclusive jurisdiction of Montenegrin courts and requesting the case be returned for reconsideration. However, their appeals were rejected.
