The Legal Regime of Contracts with United States Companies
Contracts with United States companies are assessed in Georgia under the law on private international law, which determines which legal order applies where the facts of a case are connected with foreign law, and which procedural norms govern its conduct. The American market is a priority for Georgian exporters and service providers, and it is precisely there that the legal contrast is most visible: American legal institutions often allocate liability and procedure differently from Georgian ones. Within that contrast two instruments of Georgian law become decisive: the parties' ability to choose the applicable law and the competent court, and the state's power not to apply foreign law where it contradicts the fundamental legal principles of Georgia. A properly balanced contract accounts for both.
The Public Policy Safeguard
Norms of foreign law are not applied in Georgia if this contradicts the fundamental legal principles of Georgia. This is the classic public policy institution, and it becomes especially practical in relation to American contracts: the parties may choose foreign law, but before a Georgian court that choice is immediately examined for soundness. If a norm of an American state's law conflicts with Georgia's fundamental principles, its application will be excluded in a dispute subject to the Georgian court. Resort to public policy is an exception rather than the rule, yet it is precisely what gives the Georgian side a last line of defence where the terms of the contract, or the chosen law, extinguish its basic rights. For that reason the possibility of a public policy review should be anticipated at the drafting stage rather than discovered in litigation.
Jurisdiction Agreements with an American Partner
The parties may agree on the international competence of a Georgian court even where, under other norms of the law, it is not competent. The agreement is made in writing or orally with written confirmation, and in international commercial relations in a form consistent with international trade usages known, or ought to have been known, to the parties. Georgian courts also acquire competence where the defendant, without protest, agrees to participate in the proceedings — irrespective of representation by an advocate and of the judge's notification, which is recorded in the minutes. In transactions with an American company the jurisdiction clause is often the most sensitive point: the American side habitually selects its home state, which the Georgian side perceives as costly and risky. The law leaves two options here — the parties' agreement on a Georgian court, or on a foreign court where one of the parties has its residence abroad — while agreements on specially protected categories of competence are void. Negotiating this clause deliberately, with the cost of enforcement in view, is part of what makes the transaction defensible.
Choice of Law and Its Absence
Rights and obligations arising from contractual relations — interpretation, performance, termination, consequences of invalidity and breach, including pre-contractual and post-contractual duties — are governed by the law of the country chosen by the parties. The chosen law may be replaced by agreement after the contract is concluded, but the choice is void if it disregards the imperative norms of the country most closely connected with the contract. Absent a choice, the contract is governed by the law of the country most closely connected with it: presumed to be the country in which the party performing the characteristic contractual obligation had, at the time of conclusion, its habitual residence or administration. For carriage, insurance and land-related contracts the law sets separate presumptions. For an American contract this means: omitting the choice-of-law clause lets a presumption decide, and that presumption often leads not to Georgia but to the partner's country of administration — a legal system the Georgian side neither knows nor controls.
Frequently Asked Questions
May American law be chosen in a contract?
Yes, the parties choose the law; but foreign law is not applied in Georgia if it contradicts Georgia's fundamental legal principles, and a choice disregarding imperative norms is void.
Can a dispute be brought before a Georgian court?
Yes. By agreement of the parties a Georgian court's competence may be established even where other norms would not make it competent.
How is such an agreement formalised?
In writing or orally with written confirmation; in international trade a form consistent with usages known, or ought to have been known, to the parties suffices.
What happens if no law is chosen?
The closest-connection rule applies: the presumed country is that of the performing party's habitual residence or administration.
How We Help on Legal.ge
On Legal.ge we assist at every stage of contracts with American partners: we draft and review the contract so that jurisdiction, choice of law and public policy risks are addressed from the outset. We assess which country's law applies to your transaction and which norms are imperative, and we protect the Georgian party from clauses that extinguish its basic rights. In negotiations with the American market much of the power sits in the text: if the first draft is the American side's template, reflecting Georgian interests requires amendment. Contact us before the contract is signed — experience shows that the right clauses are better planned before the dispute than discovered in it.