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July 28, 2022.

Yacht owners in Montenegro can finally breathe a sigh of relief

After many exhausting judicial and administrative procedures initiated by the ABACO&LOM Team, the illegal public sale of yacht was finally prevented. In the moment when our Team stepped into the proceedings on behalf of the yacht owner, the yacht was about to be unlawfully sold by the public enforcement officer, on the basis of a pro-forma invoice and without a proper enforcement title - a- final and binding court decision in place. As a result of a number of overwhelming judicial procedures, the Commercial Court of Montenegro finally adopted an official standing on what one would take as obvious and clear provision from the law: the court shall have exclusive jurisdiction over the public sale of vessels of 12m in length or more and 15 GT or more.

However, it remains unknown how many yachts were sold in public sales conducted by that public enforcement officer without enforceable title against the yacht owner, in complete contravention with the rule of national and international maritime law.

When the owner of one yacht moored in Montenegro found out from local newspapers that his yacht was subject to a public sale conducted by a public enforcement officer, there was a limited scope of  legal and factual remedies to prevent the unlawful alienation of his property.

Both owner and ABACO&LOM Team as his representatives were forbidden by the public enforcement officer to take part in the public sale. Our team had to act promptly and file provisional measures followed by number of lawsuits before the Commercial Court of Montenegro (the “Court”), followed by procedures before the port authorities, Ministry of Justice of Montenegro, diplomatic and other administrative bodies.

Based on application of the yacht's creditor, the public enforcement officer passed a writ of execution and commenced with enforcement procedure based on the credible document instrument, ordering a public auction to sale the yacht.

After two unsuccessful public auctions and in accordance with a writ of execution the yacht was to be acquired by the creditor in lue of payment. Initially, the Court refused to order rectification of irregularities in the enforcement procedure, interpreting that a 36 in terms of her registered length motor yacht is to be considered a boat and not a ship, hence the enforcement falls under the jurisdiction of the public enforcement officer and not the Court. However, on the basis of ABACO&LOM application for temporary injunction the Court granted the provisional measure suspending the public sale by which completely changed the course of all court proceedings.

In his attempt to sell the yacht in a public auction procedure, the public enforcement officer made a serious breach of both Montenegrin and international law. First, the public enforcement officers are not authorized to carry out the compulsory sale - public auction of ships. The compulsory sale of ships is within the exclusive jurisdiction of the Court under the Maritime and Inland Navigation Act (“MINA”), Enforcement and Securities Act (“ESA”) and Law on Courts (“LOC”). A 36.32 meters in terms of registered length and 395 GT motor yacht is a ship according to the definition of a ship pursuant to MINA. However, the public enforcement officer wrongfully treated the yacht as an open vessel-boat, which could be subject to public enforcer’s jurisdiction (vessels of less than 12 meters in length and less than 15 GT). Second, the public enforcement officer ordered a public sale of the yacht based on a pro-forma invoice, without any enforcement title in place, which contravenes to the national and international rules on compulsory sale of ships.

Finally, after many exhausting court proceedings, the Court adopted an official standing on what one would take as obvious and clear provision from the law: in determining the proper competence  in proceedings concerning yachts, the causal criteria shall be applied – the Court shall always have jurisdiction over the public sale of vessels of 12 meters in length or more and 15 GT or more. With this standing, it is hard to imagine that another compulsory sale of yacht can be done by the public enforcement officer, with a complete neglection of the owners' rights.

This case indeed disrupted the yachting sector and Montenegrin judiciary and made a precedent for all further cases. The yacht owners now can breathe a sigh of relief knowing that they will find their yachts safely moored in Montenegro as long as they have them in their ownership.

The future of Montenegro as emerging yacht destination will remain bright only if all the institutions and individuals fully understand and implement the rules of maritime law. Our Team is proud being able to prevent our jurisdiction from becoming internationally qualified as especially favorable one, at least in this particular case.