The Essence of Conflict of Laws and the Structure of the Statute
In any international transaction the question always arises of which country's law governs the contract and the disputes flowing from it. In Georgia this question is regulated by the Law on Private International Law: the law determines which legal order applies where the factual circumstances of a case are connected with the law of a foreign country, and also the norms of procedural law applicable in the conduct of such a case (Article 1). For the practitioner the statute's own structure reads like a manual: ascertainment of the content of foreign law (Article 3), renvoi (Article 4), public policy (Article 5), mandatory norms (Article 6), the parties' choice (Article 35), the law applicable absent a choice (Article 36) and the mandatory norms of social protection (Article 38).
Ascertainment of Foreign Law and Renvoi
When applying the law of a foreign country, a Georgian court takes the measures necessary to establish the substance of its norms — taking into account their official interpretation, practice of application and doctrine in the relevant country (Article 3). If this proves fruitless or requires unjustifiable expense, and neither party to the proceedings can establish the substance of the norms and substantiate their application, the court applies Georgian law. The renvoi rule also matters: a reference to the law of another country (a third country included) implies the application of that country's private international law as well, unless this contradicts the sense of the reference; upon remission to Georgian law, the norms of Georgian law connected with the concrete case are applied (Article 4).
Public Policy and Mandatory Norms
The freedom of the parties' choice is bounded by two limits. The first is public policy: the norms of a foreign country's law are not applied in Georgia if this contradicts the fundamental legal principles of Georgia (Article 5). The second is mandatory norms: the provisions of the law do not extend to the operation of the mandatory norms of Georgian law, regardless of which country's law applies to the regulation of the relations (Article 6). The mandatory norms of social protection form a separate rule: a choice of law is deemed void if it disregards the mandatory norms adopted to protect consumers and workers; this rule applies to contracts for the supply of movables, financing, labor or services where they were agreed or concluded in the country where the protected party resides (Article 38).
The Parties' Choice and Its Limits
The determination of rights and obligations arising from contractual relations — including the interpretation, performance and termination of contracts, the consequences of invalidity and the breach of obligations — is governed by the law of the country chosen by the parties (Article 35). The chosen law may by the parties' agreement be changed even after the conclusion of the contract. But the choice of law is deemed void if it disregards the mandatory norms of the country most closely connected with the contract.
Absent a Choice — the Law of the Closest Connection
Where the parties have not chosen a law, the contract is governed by the law of the country most closely connected with it (Article 36). It is presumed that the contract is most closely connected with the country in which the party who was to perform the characteristic contractual obligation had, at the conclusion of the contract, habitual residence or the seat of administration. The law lays down separate rules: for a right in or use of a plot of land — the country where the plot is; for a contract of carriage of goods — the country of the carrier's principal place of administration, if the principal place of loading, unloading or dispatch is in the same country; and for an insurance contract — the country where the principal part of the insured risk exists.
Frequently Asked Questions
May the parties choose any country's law?
In contractual relations — yes, but the choice is void if it disregards the mandatory norms of the closely connected country; moreover, Georgian mandatory norms and public policy still operate.
What happens if no choice was made?
The law of the country most closely connected with the contract applies; presumptions are laid down for the performer of the characteristic obligation, plots of land, carriage of goods and insurance.
How is the content of foreign law established?
The court examines interpretations, practice and doctrine; if ascertainment proves fruitless and the parties cannot substantiate it — Georgian law applies.
How does renvoi work?
Upon remission to Georgian law, the norms of Georgian law connected with the concrete case are applied.
How We Help on Legal.ge
A correctly drafted governing-law clause averts disputes for years: a single clause determines which court applies which law. On the Legal.ge platform you can find an experienced private international law lawyer who will help you prepare the choice-of-law clause, assess the risks of mandatory norms and substantiate the applicable law in a dispute. Choose a specialist and carry out your international transaction on a reliable legal basis.