The root of international arbitration disputes should be sought not in investors’ alleged bad faith, but in the state’s failure to fulfill its obligations, J&T Consulting partner Otari Machaidze told BMG. He said the trend places pressure on Georgia’s investment environment and state budget.
Commenting on the Namakhvani HPP project, Machaidze said the government had a dual responsibility: to ensure the investor could operate at the site and to communicate with local residents, explain the project and address their concerns. He argued that if such risks were known, the state should not have entered the project, while if they were not known, it should have ensured proper communication.
ENKA initially sought $350 million in arbitration, with the amount reaching about $383 million including interest by the end of the proceedings. Machaidze said the final amount is expected to exceed $400 million. He added that disputes with major international companies and unfavorable arbitration outcomes can negatively affect Georgia’s investment climate and put pressure on the state budget.
The US District Court for the District of Columbia has ordered Georgia to pay more than $400 million in compensation to ENKA, according to a September 11, 2026 ruling. The government says it will appeal the US court decision. The arbitration began in 2021 after the investment agreement was terminated over force majeure, while ENKA had already invested up to $100 million in preparatory work for the planned $800 million Namakhvani project.
