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May 27, 2024.

In recent months, the Montenegrin public had opportunity to hear about catamaran line Dubrovnik-Budva to be commercially operated by Kompas during the summer season. On the press organized by the Ministry of Traffic and Maritime Affairs and representatives of Kompas on Friday, the 24th May, it is officially announced that the line is expected to commence on June 29th, 2024, and operate until the end of September 2024.

This is, without a doubt, one of the most significant maritime projects in Montenegro in recent years. As such it gained institutional support of all relevant stakeholders, including the Ministry of Traffic and Maritime Affairs, Ministry of Spatial Planning, Urbanism and State Property, Ministry of Tourism, Ecology, Sustainable Development and Northern Region Development, Public Enterprise for Coastal Zone Management Montenegrin Government and other relevant governmental institutions.

Abaco has been assisting Kompas from the very beginning, starting from preparation of initial Letter of Intent addressed to the Montenegrin authorities. In our work we faced many interesting legal and practical challenges which were reflecting the reality and conditioning feasibility and future of this catamaran line. We also identified the emerging need for change or upgrade of existing legislation which directly or indirectly affects the international transport of passengers by sea.

First challenge was the classification of Port of Budva under the existing port legislation. It is noteworthy that despite its technical aspects and potential, the Port of Budva initially was not legally qualified for hosting the passenger transport. This is due to the fact that Montenegrin law on ports (Article 6) classifies Montenegrin ports according to the 3 criteria – (i) type of maritime traffic, (ii) purpose and (iii) importance of the port. Depending on their purpose, ports can be commercial, nautical tourism ports (marinas), shipyard ports, fishing ports, city ports and military ports.

The ports carrying out passenger transport belong to the classification of commercial ports, together with ports intended for cargo transport. However, the Regulation on the conditions that shall be met by ports classified according to the type of maritime traffic and purpose (the „2011 Regulation“) which was in effect until recently, did not differentiate the two types of transport in commercial ports in terms of the conditions to be met by the port. As a result, the ports intended for carrying out passenger transport were required to meet not only the requirements for such activities but also all the requirements for carrying out the cargo transport, even though they do not intend to perform cargo activities.

Our initiative supported by the Public Enterprise for Coastal Zone Management and the Ministry of Traffic and Maritime Affairs resulted in new Regulation which entered into force on 16th May 2024 (the “Regulation“) replacing the one from 2011. Pursuant to Article 4, paragraph 2 of the Regulation, if the port is intended for the passenger transport, in addition to the general conditions for the ports prescribed by the Regulation, such port shall comply only with conditions pertinent to the passengers’ transport.

Furthermore, according to Article 8 of the Regulation, if a part of the port that has already been classified according to its purpose, meets the conditions prescribed by the Regulation for some other purpose, such part of the port may be assigned a different purpose than the purpose that was determined for the remaining part of the port, whilst the purpose remaining part of the port does not change.

This provision enables that Port of Budva remains the port of nautical tourism, as initially designated by the previous resolution, and to partially be classified as the commercial port intended for passengers’ transport, which is a precondition for participation in the catamaran line Dubrovnik-Budva.

In addition, the realization of the project requires compliance with the comprehensive set of domestic and international regulations (ISPS Code) for enhancing the security of ships and port facilities, which has been a separate aspect of our legal assistance on this matter.

Furthermore, the determination of current legal status and management of the Port of Budva was quiet a challenge which hopefully has been overcome.

We represented Kompas before the Tax Administration and Ministry of Finance in relation of clarifying the tax status of Kompas as the operator of the international sea line and with help of swift response of the said authorities, this matter has also been resolved. Other regulatory aspects of operating the international line in Montenegro were subject of our attention as well and were successfully resolved with help of feedback of the Ministry of Tourism and other relevant authorities.

As mentioned already, catamaran line Dubrovnik-Budva is one among not many projects that have been recognized by all relevant decision-makers in such a short period of time as a project with great potential, around which an impressive level of agreement and support has been achieved.

Kompas is a respectable operator of passenger lines from Croatia, already well established at the regional market. It has been connecting Croatian peninsula Istria with Venice for more than 40 years.

Kompas will be the commercial operator of the catamaran “Antonija“, under the time charter party agreement, which will carry out the Dubrovnik-Budva line. The catamaran has capacity of 242 passengers. According to the presented timetable for 2024, the line will be active 6 days a week, with two departures from Budva and two from Dubrovnik per day.

The Dubrovnik-Budva line is expected to enhance the touristic offer of both Montenegro and Croatia, improve the connections between the two neighbouring states and positively affect local economies and sustainable tourism and traffic.

Apart from the above, the innovations brought by the new Regulation have potential to reshape the overall maritime activities in the country, due to their own development character. The Regulation gives opportunity to other ports of nautical tourism to invest in a special part of the port intended exclusively for passenger services, so that, in the end, these ports can legally accept and serve smaller passenger and cruise ships. This is an attractive development opportunity for such ports and not their obligation.

We indeed believe that this and similar projects in Montenegro will help recovering country's maritime reputation and enhance development of maritime economy and maritime law.