International investment contracts are legal instruments that regulate the injection of significant foreign capital into a country's economy. In Georgia, which actively seeks to attract Foreign Direct Investment (FDI), the role of such contracts is decisive. An investment agreement is often concluded between the state and an investor (Investment Agreements) or between private entities within the framework of large projects. The purpose of the contract is to create a stable environment for the investor, insure risks, and provide legal backing for investment protection guarantees. Professionally prepared investment documentation includes complex mechanisms regarding tax stabilization, repatriation of profits, and international arbitration for dispute resolution.
What Do International Investment Contracts Cover?
Legal support for investment activities requires a complex approach to protect long-term capital investments:
- Stabilization Clauses: Guarantees that legislative changes will not negatively impact the project's economic profitability.
- Protection from Expropriation: Drafting mechanisms that protect the investor from asset seizure and establish rules for fair compensation.
- Repatriation of Profits: Guarantees that the investor can freely transfer earned profits out of the country in foreign currency.
- International Arbitration (ISDS): Agreeing on dispute resolution mechanisms with institutions such as ICSID, ICC, or LCIA.
- Transfer of Intellectual Property and Technology: Terms for protecting know-how and patents associated with the investment.
- Social and Environmental Obligations: Defining the investor's responsibility toward the local community and ecology.
Common Scenarios Requiring an Investment Contract
1) Implementation of energy projects (HPPs, wind farms) with foreign capital; 2) Establishing large enterprises in Free Industrial Zones (FIZ); 3) Development of tourism infrastructure (hotel chains) with the participation of international operators; 4) Privatization of state property under the condition of investment obligations; 5) Construction and management of large infrastructure projects like ports or airports.
Georgian Legal Framework
The primary regulator of investment activity in Georgia is the Law of Georgia on Promotion and Guarantees of Investment Activity, which sets out fundamental principles for investor protection. Additionally, Georgia is a member of over 70 Bilateral Investment Treaties (BITs) with various countries, offering additional protection to foreign investors. For resolving disputes at the international level, the Washington Convention (ICSID), of which Georgia is a member, is significant. Regarding tax benefits, the Tax Code of Georgia and special agreements on Free Industrial Zones are applicable.
Step-by-Step Process
The service begins with a legal and financial Due Diligence of the project. In the second stage, negotiations take place with the state or partner on the package of investment conditions. The third stage is dedicated to drafting the contract itself, where special attention is paid to protection guarantees and dispute resolution mechanisms. In the fourth stage, the agreement is ratified or registered with the relevant authorities (if necessary). In the final stage, the lawyer performs constant monitoring of contract performance and provides legal support throughout the project's lifecycle.
Why Use Legal.ge to Find a Specialist?
International investment contracts require the highest level of qualification in international law and arbitration. On Legal.ge, you will find experts with experience working with states and multinational corporations. The specialists on our platform will help you maximize the protection of your capital, insure risks, and secure favorable investment conditions. Find your investment lawyer on Legal.ge and make a secure investment in Georgia.
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