Investor-State Dispute Settlement (ISDS) represents one of the most complex and specialized areas of international law. This mechanism grants foreign investors the right to directly sue a host state in international arbitration if the state violates obligations undertaken through international treaties (BITs, MITs). Georgia, as a country actively attracting foreign capital, is a party to numerous bilateral and multilateral investment treaties. These agreements provide investors with high standards of protection, such as protection from expropriation, fair and equitable treatment, and full protection and security. When these rights are violated, ISDS is the instrument through which an investor can seek compensation for damages.
Disputes between an investor and a state are not limited to breach of contract; they often concern legislative changes, revocation of licenses, deterioration of the tax regime, or discriminatory actions by administrative bodies. Conducting such disputes requires deep knowledge of public international law, as it involves the liability of a sovereign state. The process is often conducted under the auspices of institutions such as ICSID (International Centre for Settlement of Investment Disputes) or under UNCITRAL rules. Specialists featured on Legal.ge offer high-quality legal support in this extremely complex process, ranging from assessing the risks of dispute origination to representation before the arbitral tribunal.
What does the Investor-State Disputes service cover?
- Analysis of Investment Treaties: Detailed research of Bilateral Investment Treaties (BITs) and the Energy Charter Treaty (ECT) concluded by Georgia to determine investor rights.
- Pre-dispute Negotiations: Managing the mandatory "cooling-off period," preparing the Notice of Intent for the state, and conducting negotiations to resolve the dispute before arbitration.
- Qualification of Violation: Assessing state actions against international standards (e.g., indirect expropriation, discrimination, violation of legitimate expectations).
- Representation in International Arbitration: Full legal services in proceedings conducted under ICSID, SCC, ICC, or UNCITRAL rules.
- Damage Assessment: Collaborating with financial experts for precise calculation of damages incurred, including lost profits.
- Enforcement of Awards: Managing procedures for enforcing arbitral awards both in Georgia and in other jurisdictions based on the New York Convention.
Common scenarios requiring this service
A typical scenario occurs when a foreign investor obtains a license for mineral extraction, invests heavily in infrastructure, but the state subsequently revokes the license on environmental or political grounds without compensation. This can be considered indirect expropriation. Another common case involves energy projects (e.g., HPPs), where the state breaches a Power Purchase Agreement (PPA) or changes tariffs, rendering the project unprofitable. A third scenario is discriminatory treatment, where the state grants tax or administrative privileges to a local company but not to a foreign investor, thereby violating the "national treatment" principle.
Georgian Legal Framework
The field is regulated by a combination of international and domestic legislation. The primary source is Bilateral Investment Treaties (BITs), which Georgia has signed with over 30 countries. At the domestic level, the Law of Georgia on Promotion and Guarantees of Investment Activity operates, recognizing the investor's right to recourse to international arbitration. Also significant are the 1965 Washington Convention (ICSID Convention), of which Georgia is a member, and the 1958 New York Convention, which ensures the enforcement of awards. This legal framework creates a solid foundation for protecting investor rights.
Step-by-step service process
The process begins with a jurisdictional analysis: is the client an "investor" and have they made an "investment" within the meaning of the treaty? Then, a factual and legal assessment of the violation takes place. If a violation is evident, the lawyer prepares a notice of dispute and initiates negotiations with the government (which often last 3-6 months). If no agreement is reached, an arbitration claim is registered. This is followed by the constitution of the tribunal, exchange of written submissions, witness examination, and oral hearings. The process concludes with the issuance of a final award.
Why choose a specialist on Legal.ge?
Disputing with a state requires an understanding of not only jurisprudence but also the political and economic context. It is a "David and Goliath" battle where the entire administrative resource stands on the state's side. On Legal.ge, you will find specialists who have experience participating in international arbitration disputes and can effectively defend your multimillion investment at the highest level.
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