International Investment Contracts and Their Legal Foundation
International investment contracts in Georgia rest on the law on investment activity, which defines the rights and guarantees of investors, the inviolability of investments, compensation upon expropriation, guarantees against legislative changes and the resolution of disputes. The law governs the balance between investor and state on which an international transaction rests: the rights and guarantees of a foreign investor may not be less than those enjoyed by physical and legal persons of Georgia, save for cases established by legislation. In practice this means the terms of an investment contract must meet that standard, and the investor in Georgia is entitled to open current and other accounts in Georgian banks in any currency, to take loans from banking and financial institutions in Georgia or abroad, to acquire shares, bonds and other securities and property both in Georgia and abroad, and to transfer, at its own decision and in the manner prescribed by law, the rights to possess, use and dispose of the results of the investment to another legal or physical person.
Inviolability of Investments and Expropriation
An investment is fully and unconditionally protected by the legislation in force in Georgia. Deprivation of an investment is admissible only in cases directly established by law, by decision of a court or in a situation of urgent necessity established by organic law, and only with appropriate compensation. A decision on deprivation, as well as the terms of compensation, may be appealed in a Georgian court unless the parties' agreement or an international treaty of Georgia provides otherwise. The compensation given to the investor must correspond to the real market value of the expropriated investment at the very moment of expropriation; it must be paid without any delay and must include the loss the investor suffered from the moment of deprivation until payment of the compensatory amount. A foreign investor is entitled to convert the compensation in Georgian banks at the market rate and to transfer it freely abroad — a guarantee that must be anticipated when negotiating international agreements.