The correct option is C the deal is contested by Kosovo’s opposition parties, which say it cedes territory to Montenegro
The construct of the given sentence is incorrect.
Firstly, the phrase ‘saying it cedes territory to Montenegro’ applies to Kosovo’s opposition parties, and not the subject of the sentence, which is ‘the deal’.
Secondly, the modifier ‘a claim the government rejects’ relates to the claim, and not to the noun phrase ‘Kosovo’s opposition parties’ it is placed next to.
Option (C) corrects these errors, by placing the modifiers right next to the nouns they modify.