Choice of law (Governing Law) is one of the most critical and often overlooked issues in international contracts. When a Georgian company enters into a contract with a foreign partner, the question arises: laws of which country will interpret this agreement in case of a dispute? The answer can radically change the outcome, as legal systems of different countries (e.g., English Common Law vs. German Civil Law) approach issues like penalties, force majeure, damages, and limitation periods differently. An incorrectly chosen law may impose unexpected obligations on a party or strip them of protective mechanisms.
Choice of law is regulated by conflict of laws rules, which determine which country's law applies to a specific situation. In Georgia, this field is governed by the Law on Private International Law. Parties have the autonomy to choose the law themselves, but this freedom is not unlimited (for example, they cannot bypass mandatory rules such as labor rights or consumer protection). Specialists featured on Legal.ge will help you draft the optimal choice of law clause in your contract, analyze conflict of laws rules, and determine the content of foreign law.
What does the Choice of Law service cover?
- Drafting Choice of Law Clauses: Inserting a clear and enforceable clause in the contract that defines the substantive law (not procedural rules).
- Analysis of Conflict of Laws Rules: Determining which country's law will apply automatically if parties fail to make a choice (e.g., the principle of "closest connection").
- Foreign Law Research: Preparing a Legal Opinion on how a specific issue will be resolved under the chosen foreign law.
- Checking Mandatory Rules: Assessing risks to ensure the chosen law does not contradict Georgia's "Public Policy" or mandatory norms.
- Dépeçage: Analyzing the possibility of applying different laws to different parts of complex contracts.
- Proving Law in Court: Proving the existence and content of foreign legal norms before a Georgian court during a dispute.
Common scenarios requiring this service
A typical scenario is a Georgian company taking a loan from an international bank, where the bank requires the application of English law. The Georgian party must understand what this means in case of default. A second scenario is an international sale of goods where parties forgot to specify the law. During a dispute, the question arises: does the seller's law apply or the buyer's? A third case involves an employment contract with a foreign employer trying to restrict the employee's rights in Georgia using foreign law, which is impermissible under Georgian legislation.
Georgian Legal Framework
The main regulatory document is the Law of Georgia on Private International Law. The law recognizes the autonomy of parties to choose the law for contractual relations. However, the law also establishes special rules for non-contractual obligations (e.g., torts), family, and inheritance matters. Furthermore, the Civil Procedure Code of Georgia defines how foreign law must be established during court proceedings. In an international context, knowledge of Rome I and Rome II regulation principles is important, as these standards are often relevant when dealing with European partners.
Step-by-step service process
The process begins with analyzing the transaction. The lawyer assesses which law is more favorable for the client (e.g., English law is often preferred by sellers, while Civil law by buyers). Then, the appropriate clause is formulated. At the dispute stage, if no law was chosen, the lawyer analyzes conflict of laws rules to determine the "lex causae" (applicable law) and submits an expert opinion on the content of foreign norms to the court.
Why choose a specialist on Legal.ge?
The applicable law is the "invisible foundation" upon which the entire contract stands. A mistake at this stage could mean a lost dispute in the future. On Legal.ge, you will find experts in private international law who can navigate the labyrinth between different country jurisdictions and select the safest legal regime for you.
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