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.