Legal Foundations of Investor-State Disputes
A dispute between an investor and the state arises when a state action or decision affects the investor's rights — expropriation of property, the terms of compensation, repatriation of profits, or restrictions on activity. The substantive foundation of such disputes is embedded in the law on investment activity: it defines what counts as an investment, who is an investor, which rights and guarantees the investor receives, and under which conditions deprivation of property is permissible. Establishing a violation of precisely these norms reveals the state's obligation and creates the basis for a compensation claim.
The Concept of Investment and Protected Forms
An investment is every kind of property and intellectual value or right that is invested and used for the purpose of deriving possible profit in entrepreneurial activity carried out on the territory of Georgia. The law recognizes as such values monetary funds, shares, stocks and other securities; immovable and movable property — land, buildings, equipment; the right to use land or other natural resources, including concessions, patents, licenses, know-how and experience; and other property or intellectual values recognized by law. The first question in a dispute is often exactly this — the defense must establish that the disputed object was made through a form of investment protected by law.
The Investor and the Foreign Investor
An investor is a physical or legal person, as well as an international organization, carrying out investment in Georgia. A foreign investor is a citizen of a foreign state; a stateless person who does not permanently reside in Georgia; a Georgian citizen permanently residing abroad; and a legal entity registered outside the borders of Georgia. Investment may be made in an object of any form of ownership where investment is not prohibited by law; in certain objects specified by the law, investment is permissible only on the basis of a corresponding special permit or license. Correct determination of status defines which guarantees apply to the person — including the right of repatriation.