Georgia is currently facing arbitration disputes worth $1.7 billion, a significant amount for an economy with GDP of around $38 billion, Ketevan Kvartskhava, Managing Partner at law firm BLC, told BMGTV. She said the scale of the disputes represents a financial risk that should be taken into account when assessing the country’s economic and financial position.
Discussing the reasons behind investment disputes, Kvartskhava said the state should focus on making realistic commitments, negotiating balanced agreements with investors and properly fulfilling its contractual obligations. She noted that arbitration is costly and time-consuming for both governments and investors, and that some disputes could potentially be avoided through more careful contract negotiations and implementation.
According to Kvartskhava, the causes of individual disputes differ and cannot be generalized. She said a good contract is not one that is drafted solely to favor one side, but one that is balanced, realistic and enforceable. “Any one-sided contract is a bad contract because it is focused not on the outcome, but on a dispute,” she said.
Asked whether officials can be held accountable when state decisions result in major arbitration losses, Kvartskhava said Georgia’s legislation provides mechanisms for liability in cases involving intent or gross negligence. She referred to Article 1005 of the Civil Code, under which a public servant may be jointly liable with the state for damage caused intentionally or through gross negligence. She said the rule should be applied consistently, with each disputed decision examined to determine the circumstances behind it and whether appropriate action is warranted.
