Georgia-Turkey Contracts — the Legal Foundation
Trade between Georgia and Turkey is one of the most active foreign economic directions, so the correct legal drafting of contracts concluded with Turkish companies is an everyday practical task. Georgia's private international law legislation precisely determines which legal order applies where the factual circumstances of a case are connected with the law of a foreign country, as well as the procedural norms applicable to the conduct of such a case. This page explains how this law resolves the three main questions connected with Georgian-Turkish transactions — the scope of the law, the forum agreement, and the choice of applicable law.
When concluding a contract with a Turkish partner, the Georgian side frequently faces the question of which country's court will hear a dispute and which country's law will govern the performance of the contract. The law answers both questions and gives the parties a significant degree of self-determination — which is precisely why knowledge of these norms is essential when preparing the contract draft.
The Scope of the Law
The first provision of the law defines its field of application: it determines which legal order applies where the factual circumstances of a case connected with the law of a foreign country exist, and also the norms of procedural law that apply to the conduct of such a case. A Georgian-Turkish contract is exactly such a relationship: it is connected with the law of a foreign country, and therefore the collision rules established by this law extend to it.
This means that when dealing with a Turkish company it is not enough merely to agree on commercial terms — what is decisive is which order applies to questions arising from the contract, from its interpretation to the consequences of breach. The law answers these questions with two instruments: by agreement of the parties and, absent an agreement, by the rule of the closest connection.
The Forum Agreement — Where the Dispute Will Be Heard
Under the law, the parties may agree on the international competence of a Georgian court even in a case where, under other norms of the law, it is not competent. Such an agreement must be concluded in writing, or orally with written confirmation; in international commercial relations — in a form corresponding to international trade usages known or reasonably knowable to the parties. In Georgian-Turkish contracts such a clause usually appears as a dedicated provision, and its correct wording determines the future of any dispute.
The rule on the defendant's conduct is equally important: Georgian courts have international competence if the defendant, without protesting the court's competence, agrees to participate in the proceedings — regardless of the defendant being represented by an advocate and of the judge having informed the defendant of the possibility of lodging a protest, where that notification is recorded in the minutes of the hearing. Therefore, if a Turkish company joins proceedings before a Georgian court and does not protest the jurisdiction, the dispute will be heard in Georgia.
The parties may also agree on the international competence of a foreign court — for example, a court of Turkey — if one of them has a place of residence, domicile or habitual residence in a foreign country. Note, however, that an agreement on competence established as exclusive under the law is void, and in such a case competence cannot arise through the party's conduct either.
Choosing the Applicable Law in the Contract
The determination of rights and obligations arising from contractual relations — in particular the interpretation, performance and termination of contracts, the consequences of invalidity, and breaches of obligations including pre-contractual and post-contractual obligations — is governed by the law of the country chosen by the parties. In a transaction with a Turkish partner this means that you may designate Georgian law as the substantive law of the entire relationship.
The law of the chosen country may by agreement be replaced by the law of another country even after the conclusion of the contract. A choice of law is, however, invalid if it disregards the imperative norms of the law of the country most closely connected with the contract — which is why the relevant norms must be checked before the choice is written in.
Applicable Law in the Absence of a Choice
If the parties have not chosen the law of any country, the contract is governed by the law of the country most closely connected with it. The law presumes 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 time of conclusion, a habitual residence or a seat of administration.
Special rules are laid down for particular contracts: for transactions concerning a land plot, the closest connection is presumed with the country where the plot is situated; for a contract of carriage of goods — with the country where the carrier has its principal place of administration, provided the principal place of loading, unloading or dispatch is in the same country; for an insurance contract — with the country where the principal part of the insured risk exists. In other cases the general presumption based on the place of performance of the characteristic obligation applies.
Frequently Asked Questions
Can Georgian courts and Georgian law be chosen with a Turkish partner?
Yes. The parties may agree on the international competence of Georgian courts and select Georgian law as the law of the contract. The forum agreement is concluded in writing or with written confirmation, and in commercial relations in a form corresponding to usages.
What happens if no choice of law is written into the contract?
The law of the country most closely connected with the contract applies — presumably the country where the performer of the characteristic obligation had its habitual residence or seat of administration.
Can the law be changed after the contract is concluded?
Yes, the law of the chosen country may be replaced by the law of another country by agreement after conclusion, provided the imperative norms of the closely connected country are not disregarded.
What if the Turkish side contests jurisdiction in a Georgian court?
The question of competence is resolved by the forum agreement: if the contract designates Georgian courts, the clause is binding; absent such a clause, the statutory competence rules and the parties' conduct become decisive.
How We Help on Legal.ge
The Legal.ge team helps you prepare contracts with Turkish companies: we draft forum and governing-law clauses so that they protect the Georgian side's interests, assess the risks of imperative norms, and evaluate which order is safest for your transaction. Should a dispute arise, we will represent your interests in court. Contact us on Legal.ge — we will become the legal backbone of your Georgian-Turkish business activity.