The session was also attended by Croatian President Stjepan Mesic and Montenegrin President Filip Vujanovic. The memorandum was signed by Agriculture Ministers Petar Cobankovic of Croatia and Milutin Simovic of Montenegro.
The compensation refers to 650 cows that were taken from a farm in Gruda in the Konavle region. The memorandum is the first agreement whereby Montenegro pays Croatia compensation for war damage.
"By signing the memorandum Croatia and Montenegro are demonstrating willingness to cooperate," President Mesic said, adding that the two countries should discuss the establishment of cooperation and the opening of borders within the European community of states.
Speaking about war damage in other areas of Croatia, Mesic said Croatia had filed a lawsuit seeking compensation for war damage, which he said would be decided on by international bodies.
Montenegrin President Vujanovic said the memorandum was a good sign of mutual understanding and relations, adding that "the JNA waged the war in Croatia".
The session was also attended by the mayors of Zagreb and Podgorica, Milan Bandic and Miomir Mugos respectively, who discussed cooperation. The mayor of Podgorica said the Montenegrin capital would donate equipment for a kindergarten in Zagreb, and Bandic said the donation would be forwarded to Konavle.
Participants in the session also decided to establish the Valtazar Baldo Bogisic Award, which would be given every year for contribution to the building of good relations between Croatia and Montenegro.