Text entitled “On the ruling of the Court of Appeal, dispelling the myth of the national justice”, dedicated to Strabag and Regional Water Supply System, was released in the December edition of the Legal anthology. The text lays out the decision and its repercussion for the Regional water supply system, Montenegrin coastline and the state, Montenegrin judicial system. Mr Časlav Pejović, the author of the text points out that Montenegrin judiciary had proven to be incompetent for settling international disputes.
The text has aroused the public interest and diverted the attention to the case that resulted in the many-month long blockage of the Regional Water Supply System.
DN: You wrote about this subject earlier and gave interviews, Can you tell us reasons for the engagement in the case as it is unusual for Montenegrin intellectuals.
Mr Pejović: There are reasons why I don’t do this as well as reasons why I devoted efforts to this. I heard comments that I’m dealing with this case because I’, being paid by the Regional Water Supply System. I will dismiss such claims straight away. That’s absolutely not true. I’m nobody’s lawyer. I know many people won’t believe me but that’s their problem. I know it’s hard to believe that somebody does something for free. And now, why I did it? As an arbiter in this dispute, I’m well familiar with the case and I know that the decision rendered by the Court of Appeals is wrong. There has been a serious omission that inflicted considerable damage to the state. I harshly criticize the decision, whoever rendered it.
DN: You also say that Court of Appeal covered up the mistakes made by Strabag. What is that all about? What mistakes did Strabag make?
Mr Pejović: Strabag made several mistakes. An arbitration agreement should state the name of the arbitrage, the place, or at least arbitration riles on the basis o which it can be established what the parties’ intention was. None of that was defined in the agreement between Strabag and Regional Water Supply System. In such case, the practice is that parties try to reach a deal later. If they fail to do so, there’s European Arbitration Convention, stipulating the mechanism available to the plaintiff. Strabag didn’t even try to reach an agreement with the Regional Water Supply System and it didn’t use the available mechanism. It just initiated the arbitration procedure in Paris. Therefore, Strabag made several mistakes.
DN: Given the fact that the arbitration hasn’t been agreed properly but it was actually a “blank clause” that is never valid, how is it possible that the court made such an omission? Is that lack of knowledge and resourcefulness?
Mr Pejović: In this case, it was a “blank clause”. The Court of Appeal was supposed to state a clear fact that it was a “blank clause” and there was no valid arbitration agreement. Surprisingly enough, Court of Appeals approved of the validity of such arbitration agreement. Commercial Court, on the other hand, carried out excellent analysis which contradicted the view of the Court of Appeal. However, court of the Court of Appeal had different opinion and made different decision. Why? That’s not the question for me.
DN: Court of Appeal mentioned the “useful effect” and liberal interpretation of arbitrary decisions. What is that about? Could that be a valid argument for defending decisions of the Court?
Mr Pejović: Principle of the “useful effect” means that ambiguous provision of the agreement should be interpreted in the context that attributes specific effect to it, not the other way around. According to the principle 3 of the “useful effect”, not every agreement clause should be interpreted as it had legal effect. If the provision is ambiguous or has several meanings, the advantage should be given to the meaning that has some effect. In the case in question, the clause envisaged that the arbitration should be carried out in accordance with the arbitration rules of the named institution, if it has any at all, or in accordance with the UNCITRAL arbitration rules. This clause isn’t even ambiguous, it’s senseless. It has nothing.
DN: Did this case deserve the attention of the institutions?
Mr Pejović: I think the Supreme Court should have reacted first. Contradictory views of the courts indicate that something is wrong with the Montenegrin judiciary system. It acts like a scattered orchestra. From the aspect of legal safety, this is unacceptable and the Supreme Court should take the legal stand on the legal disputes. I also think there’s problem in the assessment of the quality of judge work assessment, as it all boils down to form. A €12 million damage has been inflicted on Montenegro and nobody does anything. Why?
DN: What is the most serious consequence of such decision rendered by the Court of Appeal?
PEJOVIĆ: Consequences are multiple. Direct consequences will affect citizens of Montenegro. Regional Water Supply System will suffer next, and it has great strategic importance for overall Montenegrin economy.
The judiciary itself will feel the consequences. And what I find particularly worrying is the silence. That conveys a dangerous message that such court decisions are regarded as acceptable and open door to similar decisions to be rendered in the future.
