Since 2004, Georgia has implemented a proactive strategy in developing its legal framework in order to attract investment as well as to protect investors and their assets. Below are highlights of Georgias legal framework as it relates to international investment.
Promoting investment is considered to be a primary goal of the State economic policy. Georgian legislation provides for the protection of investors and their assets through domestic regulations, as well as through the number of Bilateral Investment Treaties and international agreements with partner countries and organizations. With few exceptions, foreign investors are guaranteed fair and equal treatment under the law, regardless of their nationality, and have the same rights and guarantees as Georgian companies.
Georgian legislation offers unconditional protection of investments. Assets of a foreign investor shall not be subject to expropriation, except when it is explicitly provided in the law, decision of the court or constitutes a matter of urgent necessity as envisaged in the respective organic law and with fair compensation, including the amount of damages born by investor from expropriation. In any event investors have the right to challenge the decision regarding the expropriation of the investment in the local courts of Georgia.
The State protects investment during the state of war and provides equal treatment of foreign and domestic investors while compensating for damages.
Most significantly, should new laws be adopted worsening the investment conditions it shall not have a retrospective application to the existing investment for the period of ten years and the investor will conduct its activity in accordance with law applicable at the time when the investment was carried out.
Georgia has one of the most liberal Labor Codes in the World. According to the Heritage Foundation, Georgia's ranking on the Labor Freedom Index was 99.9. Georgia is a member of the International Labor Organization, and investors are guaranteed authorization to hire foreign workers, who are permitted to transfer their income abroad once they have complied with all state duties and levies.
Choice of Law
Georgian legislation provides the possibility to foreign investors to have their contractual obligations governed by the law of the country they choose. The choices of law provisions are legal, valid and binding under the laws of Georgia and will be recognized and followed by Georgian courts.
According to the Law of Georgia on Promotion and Guarantees of Investment Related Activities, unless otherwise agreed between the parties, any dispute arising out of or in connection with the investment activity between the Government of Georgia and a foreign investor shall be resolved by the courts of Georgia. However, the most commonly favored tribunal is the International Center of Settlement of Investment Disputes decisions of which are final and binding on the parties and are easily enforceable through the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards to which Georgia joined on June 2, 1994.
EU & OECD REGULATIONS AGREEMENTS
Georgia is party to the EU initiative, the European Neighborhood Policy, which, from a legislation standpoint, means that Georgian legislation should be brought in line with the EU laws.
Furthermore, Georgia has recognized technical regulations of European Council, Organization for Economic Cooperation and Development (OECD), and its main trading partner countries and permitted their comparable activities, which will consequently promote the development of business environment and the reduction of technical obstacles in trading.
INTERNATIONAL TRADE AGREEMENTS
Georgia has been a member of The World Trade Organization since 2000 and benefits from Most Favored Nation Regime with WTO Members, which provides lower tariffs for WTO members. It has joint major bilateral agreements within the WTO.
Georgia benefits from a Generalized System of Preferences when trading with the USA, Canada, Switzerland and Japan. Accordingly, lower tariffs are applied on goods exported from Georgia into these countries.
Georgia is beneficiary of GSP Plus trading regime, which allows Georgia to export 7200 products to the 495 million EU market duty free. From January 2006, Georgia has also enjoyed GSP Plus status with Turkey which envisages entire liberalization of trade on industrial goods as well as essential preferences in the field of agriculture.
Georgia Double Tax Treates