Litigation 2021 Comparisons

Last Updated December 04, 2020

Law and Practice

Authors



Nodia, Urumashvili and Partners Ltd is one of the leading full-service law firms based in Georgia, currently employing 13 law practitioners. The firm is renowned for its banking and finance, real estate and construction, restructuring and insolvency, energy, intellectual property, corporate, competition and tax law practices, with outstanding expertise in each field, as well as a well-established dispute resolution practice. The firm offers full legal support across a wide range of industries. The firm’s client base is diverse and includes the leading companies from virtually all major sectors in Georgia. The firm has a particularly strong presence in financial services, real estate and hospitality, energy and infrastructure, manufacturing, agriculture and retail sectors. The company has a unique experience and understanding of cryptocurrency and blockchain technology.

Having endured the heavy footprints of a soviet legacy, Georgia is among those countries who struggled to build up their statehood and independence after the ethnic and civil wars of the 1990s. United under the “Cultural and Legal Revolution”, reforms steadily transformed Georgians from “homo sovieticus” into “homo Europaeus” and now Georgia now follows the path of other civil law jurisdictions.

The Georgian civil law system has developed in line with German law. A written constitution enshrines basic rights and duties and is ranked highest in the hierarchy of normative acts. Legislative enactments are considered binding for all and there is little scope for judge-made law in civil and criminal courts, although, in practice, judges tend to follow the previous judicial decisions and explanatory notes of highest court. The laws nullified by Constitutional Court are binding for all.

It is also worth mentioning that legal research and writing of legal scholars have significant influence while interpreting the law or gap-filling exercise. The judges often refer to legal doctrine to strongly influence the deployment of law.

Adversarial and Inquisitorial Models

There is not strict delineation between adversarial and inquisitorial model in Georgia. In civil and administrative matters, the judiciary mainly sympathises adversarial approach. Generally, courts limit their scope of judgement to the facts presented by the parties. The submission of evidence is a sole responsibility of the party and court may not interfere in it.

Quite recently, the tendency shows that judges do often indicate whether a party has submitted relevant and sufficient information. This development may be regarded as an inclination towards the inquisitorial model in the judicial practice, especially in consumer and labour law disputes.

Procedural law basically acknowledges that judgement shall be based on the oral and written pleadings, the latter having more impact on the final decisions.

The Georgian judiciary is undergoing a significant transformation process via intensive reforms. Justice is administered by the common courts through the civil, administrative and criminal procedures. The common courts of Georgia are district (city) courts, the court of appeals and the Supreme Court of Georgia.

City Courts and the Court of Appeals

The city court is the court of first instance which examines cases attributed to its jurisdiction by one judge under the procedure established by the procedural law or in case directly stipulated by the law - by a panel of three judges. The court of appeals, with a panel of three judges, scrutinise appeals on decisions rendered by city courts under the rules established by the procedural law.

The main legal source governing judiciary is the Organic Law of Georgia On Common Courts. This Law establishes system and organisation of general courts of Georgia, the legal status of judges, the procedure for their recruitment, appointment and discharge, guarantees for social and legal protection of judges, the procedure for communication. It also includes the norms on judges’ liability.

The Supreme Court

The Supreme Court of Georgia is the court of cassation, or final instance administering justice through all Georgia. The Supreme Court of Georgia provides supervision over the administration of justice at common courts of Georgia.

The Constitutional Court

The Constitutional Court of Georgia is composed of 9nine judges and is the authority that exercises constitutional control. In cases of violation of rights and freedoms, any person shall have the right to apply to the Constitutional Court for protection of rights and freedoms. The Constitutional Court of Georgia safeguards the supremacy of the Constitution, constitutional legitimacy and the protection of human rights and freedoms.

The decision of Constitutional Court is final and not subject to appeal or review. Its activity is regulated by the organic Law of Georgia On Constitutional Court of Georgia and the Law of Georgia On Constitutional Procedures.

The ECJ

Standing at the crossroads of Europeanisation, the judgements and decisions of European Court of Justice (ECJ) play important role in developing the judicial practice. Although they are not directly binding, in certain novel areas stemming from the EU-Georgia Association Agreement of 2016, they constitute the chief instrument in the field.

As a general rule, court proceedings are open to the public, though may be closely held in exceptional circumstances. A judge or a party may request full or partial closure of the trial in administrative, civil and criminal proceedings to protect personal data, trade or other secrets, a persons safety, state interests or in cases involving sexual assaults or trafficking. The judge is obliged to publicly announce the grounds for closing the court session.

A court shall provide for audio/video recording of a trial and disseminate to the parties upon request. A public broadcaster may take photos and video and audio recordings of a trial, without limitation, except where the court has ruled to close the session in part or in whole. The public broadcaster shall release the record to any other media upon request.

Any person present in the courtroom may perform the audio recording from a place designated in advance by the court. If the session proceeds with the participation of jurors, they shall not be photographed, nor their identities disclosed. Based on a substantiated motion of a party, the court may prohibit the photographing of a victim or witness and the disclosure of their identity.

Court decisions are public in every case. A court decision made at an open session as a result of hearing a case on the merits shall be fully published on the website of the court, and if a court decision is made at a closed session as a result of hearing a case on the merits, only the resolution part of the decision shall be published on the website of the court.

The Civil Procedure Code explicitly mentions that citizens may pursue proceedings in court personally, but legal persons or other organisations must do so through an official who is authorised to act on their behalf under the respective regulations or statute. Parties also may pursue proceedings in court through a legal representative that does not deprive parties from participating themselves in the proceedings.

There is a general rule that any capable person may serve as representative in the court of first instance. However, only attorneys admitted to the Georgian Bar can represent a party in the Court of Appeals and the Supreme Court of Georgia. The same restriction applies to foreign lawyers.

A person who participated in the case as a mediator, judges, investigators and prosecutors may not act as representatives in a court unless they participate in proceedings as parents, guardians, custodians or as representatives of respective agencies.

Powers of advocate shall be set out in a duly issued and certified power of attorney. Powers of attorney issued by a citizen shall be certified by a notary or an organisation where the principal works or studies.

A court may refuse to accept a person as a representative if the judge finds that the representative does not have sufficient qualification to represent a party and protect its interests. A court ruling on such refusal shall not be appealed, however, can be subject to a complaint that can be presented within a time limit.

While Georgian legislation does not explicitly regulate third-party litigation funding, there is no prohibition of using this instrument. Its framework may stem from the general contract law and general rules applicable to legal services. It is noteworthy that the mechanism is not commonly used in practice and, therefore, there are no signs of future development at this stage.

This is not applicable in Georgia.

This is not applicable in Georgia.

This is not applicable in Georgia.

This is not applicable in Georgia.

Under the Georgian legal system, contingency fees are agreed on individual basis.

This is not applicable in Georgia.

There is no specific pre-action needed to commence court proceedings, however, parties may seek alternative dispute resolution (ADR) mechanisms at the first stage of their dispute. Such mechanisms include mediation, conciliation, expert determination, etc.

The common practice before initiation a court proceeding is to send a warning letter with a presentation of a claim, request to pay or a notification of starting direct enforcement.

Statutes of limitation can be found in Georgian Civil Code. General limitation period is ten years. For contractual claims the limitation period is three yearsand for contractual claims relating to immovable property, six years. The period of limitation on claims arising out of obligations subject to periodic performance shall be three years.

In individual cases, other periods of limitation may be fixed by law. For instance, the limitation period on claims for damages caused by tort shall be three years from the moment when the victim becomes aware of the damage or of the person liable for damages. According to the Law of Georgia on Entrepreneurs, the general limitation period for claims shall be five years from the moment of their legal registration. However, it shall be inadmissible to appeal decisions of a meeting of partners, as well as of the Supervisory Board after two months from the date that minutes of the meeting are prepared, except where the meeting is called or held in gross violation of the provisions of law or the Charter. In this case, the limitation period for an appeal shall be one year.

The general limitation period, according to the Labor Code of Georgia, is one year after the objective acknowledgement of the violation. Nevertheless, it does not apply to the claims arisen from termination of employment contract. An employee may, within 30 calendar days from receiving an employer’s written substantiation, appeal in court against the employer’s decision on terminating employment agreement.

A period of limitation shall commence from the moment at which the claim arises. The claim shall be deemed to have arisen from the moment at which the person became or ought to have become aware of the violation of the right. A court may dismiss a claim based on statute of limitations only if the defendant invokes the statute of limitations, otherwise the court will not take the limitation aspect into consideration, even if the claim is obviously time barred.

The first step to be determined is the jurisdiction of the court and whether the subject matter is essential enough to meet the requirements under the Civil Procedure Code of Georgia.

Generally, a claim shall be filed with a court according to the place of residence of the defendant, unless it falls under exclusive jurisdiction clause. A claim against a legal person shall be filed with a court according to the location of the legal person. For proceedings where no claim is lodged, the jurisdiction shall be determined according to the place of residence of the person against whom an application (complaint) has been filed. If a defendant has no place of residence, the claim shall be reviewed in a court according to his/her location in the territory of Georgia, and if a defendant's location is unknown, then a claim may be filed according to last place of residence.

It is also worth mentioning that if a case falls under the jurisdiction of several courts, a plaintiff may choose the court or, if the exclusive jurisdiction of a court has not been established, then the parties may choose a jurisdiction by agreement in writing. A court lacking jurisdiction may nevertheless acquire jurisdiction if a defendant does not oppose.

These general rules apply to all the courts. Moreover, a court shall hear a pending lawsuit with the court that is in compliance with the rules of jurisdiction, and shall decide on its merits, even if the case subsequently falls under the jurisdiction of another court. It becomes inadmissible to start disputing over a jurisdiction between courts when there is a referral of the case.

Court proceedings in Georgia are initiated by a written statement of claim with the court referred as application. During the COVID-19 pandemic, an online platform provided the means to file a case. It should be mentioned that this was implemented prior to COVID-19, however, to encourage the remote working and ensure the access to court services, it became free of charge.

A claim may be filed to establish the existence or non-existence of rights or legal relationship, to recognise the authenticity of a deed or to establish that it is false, if the plaintiff has a legitimate interest in having such recognition established by a court judgment. A claim may also be filed for future fulfilment of obligations if it meets the requirements of the law.

The plaintiff may amend a statement of claim in subsequent submissions or add additional claims to the proceedings. Clarification, specification and supplementation of the circumstances indicated in the claim, a reduction of the amount of the claim or claiming the granting of another item instead of the originally claimed one, or reimbursement of the cost of this item shall not be considered a change of the claim.

Filing a statement of claim shall be followed by plaintiff’s payment of the court fees. This is a mandatory requirement. Without it the court will not serve the statement of claim on the defendant.

Judicial summons shall be sent using technical means, mail, court courier or a different service procedure agreed between the parties. The court shall determine the method of notification and the address where judicial summons is to be sent in any order. The court may also serve judicial summons on a person in a court building.

If judicial summons could not be served on the addressee at the time when they were first sent, the summons shall be sent again to the person at least once to the same address or to a different address known to the court. If the location of a party is unknown or it is impossible to serve judicial summons in any other way, the court may, by its ruling, approve service by publication. Public dissemination of the court notice shall be carried out by hanging notification on a prominent place in the court building concerned or by placing it on a website, or at the request of an interested party, by publishing, at the party’s expense, in the newspaper widely circulated in the administrative-territorial unit where the party resides, or by publishing in other media.

Judicial summons shall be deemed served on the party on the seventh day after the summons are placed at a prominent place in the court building concerned, or on a website, or published in a newspaper or other media.

After receiving copies of the claim and of the supporting documents, the defendant shall, within the time provided, file their response (statement of defence) to the claim and to the questions raised in the claim; also the statement of their position regarding the supporting documents and shall provide the court with a document confirming that copies of the response and of the enclosed documents have been sent to the plaintiff.

The time limit set shall not exceed 14 days and, for complex cases, the time limit shall not exceed 21 days. This period may not be extended, unless there is a reasonable cause. If a statement of defence is not filed within the time limit determined by the court, the judge may deliver a default ruling.

Georgian civil law system does not recognise collective or presentative actions. Only parties to disputes are bound by the outcome of court proceedings, unless the case refers to breaching the collective employment agreement. In this case, the case is governed by the Labour Code of Georgia, Article 63 of which defines collective dispute as a dispute between employer and employee number of which exceeds 20 persons. It says that the parties should first apply to conciliation and negotiation proceedings.

Under general approach and ethics, the client should be informed by the lawyers of the costs that may arise in the proceedings. Court fees can be roughly estimated through the norms containing trial costs and state fees. Advocate’s fees, lost wages (lost earnings), costs incurred for providing evidence, as well as other necessary costs of the parties, shall constitute extra-judicial costs       

The lowest amount of the dispute shall be 100GEL. The general rule that applies to most of the cases is 3% of the value of a subject matter of dispute. Nevertheless, there is detailed court fees for different types of claim presented in the Civil Procedure Code of Georgia.

The Georgian Civil Procedure Code recognises a number of interim applications that a party may file before management starts. These interim motions include:

  • securing a claim to ensure its enforceability;
  • protection of a party from irreparable harm;
  • motions to discover and preserve some types of evidence; and
  • dividing the burden of state fees to the parties.

Based on the application of the plaintiff, a court may decide on provisional measures that ranges from:

  • attachment of the property, securities or money belonging to the defendant and held by the defendant or another person;
  • the injunction against the defendant to take certain actions;
  • the enforcement measure against the defendant to transfer to a bailiff in the form of sequestration;
  • the injunction against other persons to transfer property to the defendant, or perform any obligation towards the defendant; and/or
  • the suspension of sale of the property.

A court may also apply other provisional measures. If necessary, several types of provisional measures may be applied.

Security and Unfounded Measures

If the court assumes that the enforcement of provisional measures will cause damage to the defendant, the court may enforce the provisional measures and, at the same time, request the person who applied provide security to compensate possible damages that the other party may incur. The court may also order the provision of security based on the application of the opposite party.

If the provisional measure applied turns out to be unfounded due to the fact that the plaintiff’s claim was dismissed or that the court cancelled the provisional measure, then the party that obtained its enforcement shall be obliged to indemnify damages incurred by the other party as a result of the provisional measures been enforced.

The term early judgement application is not known to the Georgian Civil Procedure Code. However, specific types of judgements may be included under this definition, inter alia, court order on expert determination, netting or setting-off, or debt forgiveness.

The defendant may plead a motion to a court on dismissing a case if there is a valid arbitration clause at place. Moreover, same motion can be presented if administrative proceeding is running with the relevant connection to the dispute.

Generally, third parties wishing to join a pending lawsuit either with independent or dependent claim shall obtain a consent of a court before joining the proceedings. Each interested person who asserts an independent claim for the subject matter of a dispute, or part thereof, may file an action against both or either party before the parties start oral arguments. An action of the third party shall be admitted and reviewed in accordance with general procedures. A decision on the claim of a third party and on the claim of the original plaintiff shall be made simultaneously.

Meanwhile, all interested persons who do not assert an independent claim for the subject matter of a dispute or part thereof may apply to a court to allow them to intervene as a third party in the proceedings in support of the plaintiff or the defendant, on the grounds that the court decision on this case may subsequently affect their rights and duties with respect to one of the parties. Intervention of a third party to the proceedings shall be decided by the court, taking into consideration the opinions of the parties.

Beyond an option to get involved in the proceedings themselves, an engagement of an interested party may be initiated by either of the parties. In doing so, the third party shall submit a reasoned request to the court. Such application may be made in writing or orally before a court makes a decision. The court shall deliver a ruling allowing or refusing the intervention of the third party in the proceedings, taking into consideration the opinions of the parties.

Third parties who do not assert independent claims for the subject matter of a dispute, shall have the same procedural rights and duties as parties to the proceedings, except for the rights to:

  • increase or reduce the amount of the claim;
  • change the grounds or the subject of the claim;
  • acknowledge the claim;
  • renounce the claim or settle on the claim amicably;
  • file a counterclaim; and
  • request enforcement of a court decision.

The Civil Procedure Code of Georgia may specify that a party is ordered to provide security for the damages that the opposing party may incur as a result of the procedural action in question. Unless otherwise agreed between the parties, the party shall provide such security by depositing money or securities to the deposit account of the Department of Common Courts of the High Council of Justice of Georgia. Such deposit is acceptable as security under the Civil Code of Georgia. 

A court may allow other forms of security under preferential terms, in particular, a warranty issued by a credit institution. If the grounds for which security was provided no longer exist, then the party in whose favour the security was provided shall be obliged to return the security.

The costs of an action are allocated between the parties according to the outcome of the case and is beard by an unsuccessful party. This general rule also applies to the costs of interim applications/motions.

A court shall decide whether to admit a claim within three days after the claim has been filed. If a claim has not been filed in compliance with the requirements of the legislation of Georgia, the court shall establish the deficiency and give the plaintiff reasonable time (three days at least) to correct it. If the deficiency has been corrected within the set time limits, which shall be at least three days, the court shall admit the claim.

A court judgement refusing to admit a claim may be appealed within three days after the judgement has been communicated to the plaintiff. After a claim has been admitted, copies of the claim and of the enclosed documents shall immediately be sent to the defendant according to the procedure prescribed by the legislation of Georgia. The defendant shall have ten days for filing an answer.

The Civil Procedure Code of Georgia does not recognise the possibility for a party to request urgent hearing of its claim. However, if there is an insolvency case ongoing, expedited timeframes and special jurisdiction is foreseen.

The law explicitly mentions that legal proceedings shall be conducted based on adversarial principle. Parties shall enjoy equal rights and opportunities to substantiate their claims, reject or extinguish claims, opinions or evidence presented by the other party.

Parties shall determine, on their own, the facts and evidence upon which their claims shall be based and each party shall prove the circumstances on which it bases its claim or response. The standard that applies to discovery of evidence is decided in relation to the case. 

Parties shall submit evidence to a court themselves. The court may offer parties the opportunity to provide additional evidence. If, for any reason, the parties fail to personally procure and submit evidence to the court, the court may request the evidence, irrespective of who holds it. If a certain type of evidence related to the claim is kept with the opposing party, the court may, on the petition of a party, assign the other party deliver the evidence. Evidence that has been obtained in violation of the law shall have no legal force.

Witness testimony is commonly used during civil proceedings. Any person who is aware of any circumstances concerning the case may be summoned to court at the request of an interested party. A court may refuse to examine the summoned witness, or may refuse to summon a witness, if it establishes that the circumstances which the witness is expected to confirm are not essential to making a decision on the merits of the case.

Although third parties are not subject to discovery, in exceptional circumstances court may order a third party to provide the evidence in case the parties to the dispute themselves are not able to present it or the evidence is in factual ownership and possession of third parties. Here, the general standard of discovery applies, that means that a court shall not accept or request the production of or remove from the case evidence that is not relevant to the case.

The burden of proof lies on a requesting party to assert that the evidence is explicitly related to the case, is in the ownership of third parties and is itself unable to obtain the evidence. The opposing party is also eligible for expressing an opinion on the matter. The final decision is made by the court.

There are no detailed rules governing document disclosure. As a general rule, each party shall prove the circumstances upon which it bases its claim or response and shall provide the evidences that they feel support their claims. The evidence provided shall hold up the factual ground of the claim or response.

Generally, the plaintiff collects relevant material that corresponds to its claim. Preparation of a case usually starts by reviewing all available documents and witness testimonies. The plaintiff shall itself collect all publicly available information and present it to the court. Expert consultancy may also be used in very complex cases for the sake of technical advice.

The main source parties to obtain information is Public Registrar that encompasses database of business, real estate, commercial, debtor, insolvency, etc. In order to acquire evidence from these registers the party must file an application unless available online. Such requests are only rejected if there is a public interest prevailing the application.

The concept of legal privilege is recognised by Georgian legal system. Legal counsels cannot be obliged to testify before authorities without the consent of the client. The attorney-client privilege includes any correspondence, advice, call or e-mail between the attorney and the client.

For Georgian legal system it does not matter whether there is an in-house or external counsel present since it holds admission to the bar and is bound by professional standards.

Since the information provided to court is genuine and correct, neither party is obliged to disclose all information available to them. Motion to disclose certain types of information may also fall under privilege. This includes but is not limited to:

  • professional secrecy;
  • family, private life secrecy;
  • commercial secrecy;
  • public servant secrecy; and
  • disclosure of which may cause unreasonable harm and burden to the party.

Injunctive relief, often being combined with preliminary injunctions, serves to secure a possible future judgement or legal relationship before a final decision. Types of injunctive relief depends on the claim.

Injunctive relief may be obtained within 24 hours. This means that interim proceedings in Georgia is quite fast and secures the interest of the parties. Time depends on the arrangement and attachment and registrar requirements.

It is not obligatory for an interim injunction to be served to the opposing party and it can be issued on ex parte basis. However, this does not mean that the opposing party is left without any protection. The Civil Procedure Code of Georgia recognises indemnification of damages incurred from provisional measure.

It should be noted that an appeal may be filed:

  • against a ruling refusing the provisional measures;
  • on cancelling the provisional measure;
  • on the replacement of one provisional measure with another;
  • on the replacement of the subject of the provisional measure; or
  • on granting consent for the delimitation of the seized property.

The time limit for appealing a ruling shall be five days. This time limit may not be extended, and the period shall commence once the ruling on provisional measures is served on the party.

If the court assumes that the enforcement of provisional measures will cause damage to the defendant, the court may enforce the provisional measures and, at the same time, request the person who applied to the court for provisional measures to provide security to compensate possible damages that the other party may incur. The court may also order the provision of security based on the application of opposed party.

A person applying for provisional measures shall provide security for possible damages to the defendant within 30 days. Otherwise, the court may cancel provisional measures, which is subject to appeal in the form of a complaint. The time limit for such appeal is five days and is not extendable.

Georgian courts cannot issue interim orders or decisions on the worldwide assets of the respondent unless it has international jurisdiction on a subject matter. However, the Supreme Court of Georgia becomes competent to recognise and enforce the injunctive relieves applied by the foreign courts.

An injunctive relief may be applied only against the respondent to secure plaintiff’s claim.

A party that does not comply with the provisions of an injunction may face same consequences as a party that does not comply with a regular judgment.

The Georgian legal system recognises oral proceedings conducted by a presiding judge. There is no practice of launching a trial on purely written procedure. Proceedings are opened with a brief summary of a case by the presiding judge, generally followed by a discussion between parties, pointing out their arguments. The whole proceeding is recorded in minutes by a trial secretary.

It is an obligation to conduct proceedings speedily, with the length generally dictated by the nature of the individual case. Evidentiary proceedings take place on a separate date and the parties to be able to get ready for the trial in advance.

The court makes its decision or asks the parties to settle based on the summons, discussion and evidences. Settlement may occur at any stage of proceedings.

Georgian Civil Procedure does not recognise case management hearings as such, however, similar procedure is held by the court prior to main hearing called preparation of a case.

If, after a claim has been admitted, the case shall be prepared by the judge. If the case under the Civil Procedure Code of Georgia is to be heard by a panel of judges, then the case shall be prepared by one of the court members in order to expedite the hearing and ensure the completion of the hearing and proper settlement of the case in one hearing. A judge, may task a judicial assistant with preparing a case for hearing.

In order to prepare a case for main hearing, a judge may:

  • direct the parties to provide further information, and if necessary, to clarify the written pleadings;
  • ask them to provide any items or documents relevant to case;
  • at the request of the parties, obtain evidence that the parties failed to obtain;
  • decide whether or not to admit third parties and joined parties to the proceedings;
  • examine the evidence;
  • perform on-site inspection;
  • order measures for securing a claim;
  • appoint expert examination;
  • decide whether to invite a specialist; and/or
  • summon witnesses, experts and specialists.

A judge may also take other actions that will facilitate preparation of the case for main hearing.

If the judge reasonably assumes that the parties may resolve the case amicably, they may, within five days after receiving the written pleadings of the parties, appoint an advance first hearing or a phone interview or video conference with the parties.

There are no jury trials in civil cases in Georgia.

As Georgian civil proceedings are based mainly on adversarial principles, each party shall prove the circumstances upon which it bases its claim or response. These circumstances may be proved by the explanations of the parties (third parties), witness testimonies, fact-finding material, written or material evidence and expert findings. The circumstances of the case that, according to law, require certain type of evidence, may not be proved by other type of evidence.

Unless the parties have difficulties in collecting the evidence, the party shall itself submit evidence to a court. Evidence submitted before the preparatory stage of a case is completed shall be attached to the case and reviewed and examined by the court. The court shall consider the issue of accepting the evidence submitted after the preparatory stage of the case is completed, taking the opinions of the parties into account with an oral hearing.

A court shall not accept or request the production or removal of evidence that is not relevant to the case. It shall not accept as evidence information or documents disclosed under violation of confidentiality in a judicial mediation process, unless otherwise agreed between the parties.

Expert reports are very frequently used by the courts. They are applied in complex cases, that need specialised knowledge. If a judge has no specialised knowledge of a matter related to the case at hand, the court may, on its own initiative, order an expert examination at any stage of the hearing, only if clarification of this matter is essential to deciding the case and if it is impossible to make a decision without it.

The parties may arrange expert examination independently from the court. In this case, an expert’s report shall be submitted to the court upon filing a claim or during the preparatory stage of the proceedings. A party may present an expert report during the main hearing only if it could not have been aware of the necessity to submit an expert report during the preparatory stage due to objective reasons.

Failure of a party to submit an expert report may not serve as ground for postponing the case hearing. A court may set certain period for a party to submit an expert report.

When selecting experts, while the court takes parties’ opinions into consideration, the court itself makes final decision based on the scope of the issues that require expert report. The parties may also submit to the court the questions that are to be clarified by an expert.

Generally, oral hearings are open to the public. Nevertheless, in exceptional situations the court may close the proceedings at the request of the parties or at its own discretion. The transcripts are usually available to the parties to the dispute.

Despite the fact that proceedings are held in compliance with the principle of party autonomy, a judge still has an active role. It steers the process, leads the proceedings, points out evidence needed, sanctions non-compliance and examines the experts. In fact, the judge can freely intervene in investigation of facts and may also facilitate to reach a settlement between the parties.

Georgian Courts have a good faith obligation to expedite proceedings. A court shall hear a civil case no later than two months after receiving the application. This time limit may be extended by no more than five months, except for cases on claims for maintenance payments, compensation of damages incurred as a result of injury or other bodily harm, or the death of a breadwinner. Further, claims with respect to labour relations, matters related to the Law of Georgia on Relations Arising during the Use of a Dwelling Place, and cases on recovery of the property from illegal ownership, which must be heard not later than one month.

Civil cases shall be reviewed no later than 45 days after the document confirming the receipt of the notice by the defendant is submitted to court, or after notice is served on the defendant by publication. A court that hears particularly complex cases may rule to extend this term by no more than 60 days.

The court shall consider a case for granting the right of expropriation under the Law of Georgia on Procedures for Deprivation of Property for Necessary Public Need no later than two months after receiving the application. This time limit may be extended by no more than one month. The time limits established by law for appealing court judgments and rulings may not be extended or restored.

The Georgian legal system generally differentiates between two types of settlement:

  • that parties reach themselves and the court renders a decision on approval of the party’s settlement; and
  • the settlement reached during the mandatory judicial mediation.

In both cases, the court examines and approves the settlement and renders a ruling for its enforcement. When the court has rendered a decision on approving a settlement, it later becomes the ground for a court to dismiss an action. Parties may submit an act of settlement at any stage of proceedings.

Under general principles, the settlement may remain confidential if parties wish so. The confidentiality requirement also applies to a judicial mediation process. A mediator may not disclose the information that they learned in their capacity as a mediator, unless otherwise agreed between the parties. A party may not disclose the information that was confided to them during judicial mediation, unless otherwise agreed between the parties.

The enforcement of settlement depends on where the settlement was reached. A settlement reached and approved in the court may be executed and enforced in the same way as a final judgement. An out-of-court settlement is not per se enforceable. A breach of out-of-court settlement is subject to new civil action or may seek for the issuance of an enforcement paper by notary public or a specialist.

Settlement agreements follow the general rule of pacta sunt servanda. Here, also a difference shall be made according to where the settlement is rendered. An out of court settlement can be set aside similar to setting aside any contract. However, a settlement approved by the court cannot be withdrawn unless one of the parties specifies the arguments to formally object it in writing within a timeframe defined by law.

Following the German Civil Procedure Model, there are three main categories of judgement that can be rendered by the Georgian Courts:

  • judgments for affirmative relief;
  • declaratory judgments; and
  • judgments directly altering a legal relationship.

Similar to Germany, the court issues judgements that directly alter a legal relationship in a very rare situations by virtue of the law.

Georgia’s civil procedure follows the principles of ne ultra petita implying that courts cannot go beyond the request of a plaintiff. The court may not award more to the winning party than it requested.

Damages are subject to substantive law and is defined as an involuntary loss of a property. The Georgian legal system recognises following types of damages: restitution, restoration, future losses due to loss of profits, immaterial loss and punitive damages. There is limit set by the legislation to damages, however, it should be relevant to the claim itself.

There are no rules specifying pre- and post-judgement interest. According to the basic rule of ne ultra petita, interest can be obtained if the plaintiff explicitly claimed that interest.

Civil proceedings in Georgia mainly recognises two types of enforcement: public and private. Enforcement mechanisms to be applied to the judgement is chiefly dependent on the judgement and the assets that need to be enforced against. The Law of Georgia on Enforcement Proceedings covers the procedures and conditions for the enforcement of acts adopted by the common courts, administrative authorities (officials), arbitration, the Restitution and Compensation Commission and its Committee, the European Court of Human Rights, and by the International Criminal Court, as well as the procedures and conditions for enforcement of decisions enforceable under this Law. The compulsory enforcement of decisions enforceable under this Law shall be carried out by the National Bureau of Enforcement – a legal entity under public law within the Ministry of Justice of Georgia.

Private enforcement is led by the private bailiff, a natural person who has the right of public authority to conduct enforcement activities based on the enforcement of the activities licence issued by the Ministry of Justice. National Bureau of Enforcement shall maintain the Register of Private Bailiffs. A private bailiff shall perform enforcement only if the parties to enforcement are natural persons and/or legal entities under private law and if the monetary claim enforceable under the enforcement document does not exceed GEL500,000.

According to the Law of Georgia on Private International Law Georgia shall recognise legally effective court decisions of foreign countries unless:

  • it does not fall under exclusive jurisdiction of Georgia;
  • a party was not notified of summoning by way of delivering the writ of summons under the law of a country adopting the decision or other procedural violations have occurred;
  • there is a legally effective court decision of Georgia on the same dispute between the same parties, or a legally effective court decision of a third country which has been recognised in Georgia;
  • foreign court that adopted the decision is not considered as competent under the legislation of Georgia;
  • foreign country does not recognise court decisions of Georgia; 
  • proceedings are pending in Georgia between the same parties on the same issue and on the same basis; or
  • the decision contradicts the basic legal principles of Georgia. 

The issue of recognising and enforcing of foreign court decision shall be considered by Supreme Court of Georgia. Foreign court decisions on cases of civil and labour laws shall be executed if they are subject to execution. The decision on execution shall be made after an interested party filed and appropriate petition.

Generally, there is no limit to using the right of appeal by the aggrieved party. Georgian Procedural Law explicitly mentions three types of appeal: appeal against the judgements of the courts of first and second instance and the complaint against procedural decisions of the courts.

The parties may appeal a judgment delivered by the court of first instance with an independent claim to the court of appeals within the time limits prescribed by law. An appeal in a property dispute shall be admissible only if the value of the subject matter of the dispute exceeds GEL2,000. This value shall be determined based on the extent to which the party requests that the judgment appealed be modified. A default judgment may not be appealed by the party against which the judgment has been delivered.

An appeal may be admitted only against such default judgment that has been delivered after repeated non-appearance due to which the judgment may not be appealed again to the court that has delivered it. Such judgment may be appealed in a court of appeal only on the grounds that there were no appropriate legal prerequisites for delivering a repeated default judgment. An appeal shall be filed with the court that has delivered the judgment.

As mentioned in 10.2 Rules Concerning Appeals of Judgments, an appeal shall be filed with the court that has delivered the judgment. If an appeal does not comply with the requirements under Civil Procedure Code or state fees are not paid, the court shall allow the person filing the appeal to correct the deficiency, within appropriate time limits set by the court.

After receiving a notice of appeal, the court of first instance shall within five days, refer to the court of appeal the entire case, as well as all additional materials received. A court may extend the time limit set by the court of appeal for correcting the deficiency in the appeal only at the request of the parties.

The time for filing an appeal shall be 14 days. This time limit may not be extended and shall commence on the day when a reasoned judgment has been handed over to the party. If a person authorised to file an appeal is present during the announcement of the reasoned judgment, the time limit for filing an appeal shall start from the time when the judgment is announced. However, if after the court announces the judgment a party declares in writing to the court or to the adversary party about the waiver of the right to file an appeal, an appeal shall not be admitted.

A case shall be prepared for the main hearing by one of the judges of the court of appeals (the reporting judge), who shall check admissibility of the appeal and set time limit for the adversary party to submit a written response.

Within ten days after an appeal has been filed, the court of appeals shall review whether the appeal is admissible. If, after reviewing the appeal, it is discovered that the appeal is admissible, the court shall deliver a ruling granting leave to appeal or a ruling leaving the appeal untried. While the procedure may be similar to cassation appeal, it sets 21 days for as a time limit for the second appeal.

By a ruling admitting appeal, the court shall determine the time for oral hearing and notify the parties within three days after the ruling has been delivered. The court of appeal shall take all measures prescribed by law in order to ensure review of the appeal within the established time limits.

If an appeal is based on a breach of law and requires reviewing the judgment appealed only in legal terms, the court of appeals may review the case and deliver a judgment without an oral hearing, of which the parties shall be notified in advance. The court of appeals shall deliver a ruling on scheduling the time for reviewing the case without an oral hearing.

If an appeal requires reviewing the judgment appealed not only in legal terms but also on factual terms, but the appellant has not provided new facts and evidence or has provided new facts and evidence that are inadmissible, the court of appeals may, with the written consent of the parties, review the case without an oral hearing.

If an appeal concerns the ruling delivered by the first instance court on the refusal to allow the appeal and the upholding the judgment in absentia, and if a case refers to the recovery of an item from illegal ownership and disputes arisen from the agreements concluded by the banking institutions, microfinance organisations, and non-banking deposit institutions of Georgia – qualified credit institutions (including the ones made in an electronic form) on granting a loan, the court of appeals can consider the case without oral hearing.

Reviewing a Judgment

The court of appeals shall review a judgment within the scope of an appeal on fact and law. Those decisions taken by the court of first instance prior to the court’s final judgment may also be subject to the review of the court of appeals regardless of whether or not they may be challenged by way of filing a complaint subject to a time limit.

The court of appeal shall check if the case is within the substantive jurisdiction of the court and whether it has international jurisdiction with regard to the case in question. It may only check the jurisdiction of the court of the first instance only if requested by the defendant. Such request shall be admissible, if it has been made by the defendant during the review of the case in the first instance, or if there is an excusable cause due to which such request could not be made before the court of prior instance.

When hearing a case at the court of appeals, new facts and evidence can be presented. The court of appeal shall not admit new facts and evidence that the party may have submitted during the hearing at the court of first instance, but failed to do so due to an inexcusable cause. A subject matter of dispute may not be modified or increased, nor may a cross appeal may not be filed with the court of appeals.

The court of appeals may modify the judgment of the court of first instance only within the scope requested by the parties. If an appeal is admissible and the case is not to be referred back to the court of the first instance, the court shall decide the matter on its own. The court of appeals shall, by its judgment, refuse to satisfy the appeal, or deliver a new judgment with regard to the case by modifying the judgment appealed.

While there are no restrictions on the first appeal, the second appeal is possible only if the appellate court expressly admits second appeal in the judgement and meets the requirements of the law. 

The appellate court has two options: dismissal of the case or granting the appeal. If the appeal is granted, the judgement of the lower court will be reversed or remitted to the court of first instance for further proceedings. It is noteworthy, that the facts that have been determined as true by the court of appeals shall be binding upon the court of cassation, unless it has been challenged by an admissible and justified petition (objection).

The court of cassation may modify the judgment of a court of appeals only within the scope requested by the parties. The court of cassation shall dismiss a cassation appeal, if:

  • the breach of law referred to in the cassation appeal did not take place;
  • the judgment of the court of appeals is not based on the breach of law; and/or
  • the judgment of the court of appeals is substantially correct, despite the fact that the reasoning part of the judgment does not provide reasons.

The court of cassation shall deliver a judgment on the case on its own, unless there are grounds for reversing the and for referring the case back to the court of appeals for a second hearing.

As a rule, the costs incurred by the party in whose favour a decision is made, shall be paid by the other party, even if this party is exempted from court costs payable to the state budget. If a claim was satisfied in part, then the plaintiff shall pay the amount in proportion to the portion of the claim satisfied by the court, and the defendant shall pay the amount in proportion to the portion of the claim that was not satisfied by the court.

The court shall impose costs for the assistance of the representative of that party in whose favour the decision was made, on the other party within reasonable limits, but not exceeding the amount of 4% of the value of the subject matter of dispute, or during a non-property dispute up to the amount of GEL2,000, taking into consideration the importance and complex nature of the case.

The issue of compensating the Legal Assistance Office for costs of providing legal assistance shall be regulated under the Law of Georgia on Legal Assistance.

These procedures also apply to the distribution of the court costs incurred by the parties during appeal and cassation proceedings. If a court of appeals or a court of cassation changes the judgment or delivers a new judgment, it shall respectively change the distribution of court costs. If a court of appeals or a court of cassation remands a case, all court costs incurred with respect to the review of this case, starting from the filing of the claim, shall be summed up and then distributed between parties.

The general rule of allocation of costs is linked to the proportion of win and loss between the parties. However, the Civil Procedure Code of Georgia names number of circumstances when the reduction of the amount of state fees are applicable.

Moreover, a court may defer the payment of court costs payable to the state budget or reduce their amount for one or both parties, taking into consideration their material status, provided the party submits a reliable proof to the court. If there is no ground for exempting a plaintiff from payment of state fees, their payment of state fees with regard to a case on recovery of the property from illegal ownership shall be deferred till the end of the hearing. This procedure shall also apply to a respondent if they bring a counterclaim for such a case.

There is no interest awarded on costs.

The year 2019-20 has been marked as one of the most important years in the process of fostering alternative dispute resolution (ADR) mechanisms in Georgia both at national and international level. The country has recently developed quite a solid ADR legal framework. It is worth mentioning that by obtaining a long-awaited approval on the Law of Georgia on Commercial Mediation that fully promulgates quick and effective dispute settlement mechanism based on mutual understanding in the country, Georgia is taking a lead in the region towards reverting itself into a regional hub for ADR opportunities.

According to the statistical data and scrutinising legal framework, arbitration and mediation are two most prominent types of ADR in Georgia. However, quite recently, many cases are referred for expert determination, that also constitutes one the ADR methods.

Along with statutory encouragement and backing, there is a huge support from the judiciary system for ADR in Georgia. The recent judgements have shaped two important standards for arbitration: first, the reference to the rules of arbitration suffices to hold the respective arbitration clauses valid and, second, the court is not obliged to go through the arbitration award in details on the request of setting aside an award.

As far as mediation concerns, it is noteworthy that quite recently the Civil Procedure Code of Georgia has been amended by placing mandatory court (judicial) mediation in it. After a claim has been filed with the court, a case that falls within the jurisdiction of a judicial mediation may be transferred to a mediator in order to conclude the dispute by a settlement between the parties. A ruling on referring the case to a mediator may not be appealed.

While it is a general rule to facilitate to evolving ADR opportunities, there is no sanction as such for its refusal. However, Civil Procedure Code of Georgia explicitly mentions that if a party fails to appear at the meeting in the process of judicial mediation appointed with an inexcusable cause, the party shall pay the court costs in full, irrespective of the outcome of the hearing, and a penalty of GEL150. If a dispute in the process of judicial mediation is concluded by an amicable settlement between the parties, the party shall not be charged with the payment of this penalty.

There are large number of institutions that administer ADR as mechanisms for dispute resolutions. Speaking of their form, the arbitration centres in Georgia are mainly for-profit companies, however, today the tendency changes towards establishing non-profit arbitration institutions. The Georgian Association of Mediators directly founded under the ambit of the Law of Georgia on Mediation, is a membership-based legal entity under public law that ensures the self-regulation of mediators.

In 2009, the Parliament of Georgia adopted a new arbitration law. It did not correspond to the UNCITRAL Model law. Therefore, in 2015 amendments, mainly concerned the following:

  • opportunity to conduct an ad hoc arbitration;
  • use of interim measures before filing the arbitration claim; and
  • courts becoming more adaptive to changes and try to take the aim and purpose of the law into consideration.

As far as recognition and enforcement concerns, arbitration award, irrespective of the country in which it is rendered, shall be binding and, upon bringing a written motion in court, shall be enforced in accordance with the provisions of the Arbitration Acts. The competent courts shall be courts of appeal in case awards rendered in the territory of Georgia. If the awards are rendered outside Georgia, the competent court shall be the Supreme Court of Georgia. Recognition or enforcement of an arbitration award, may be refused only if so provided by law.

There is no statutory limitation to the subject matter. Any claim with an economic direct or indirect interest is arbitrable. As a general rule, criminal law matters, certain aspects of family and the matters explicitly mentioned in the Civil Procedure Code to be subject to court review are not involved in arbitration.

An arbitration award has same final effect as court judgement. Similar to the Article V of the New York Convention and Article 34 of the UNCITRAL Model Law an arbitration award made in Georgia may be set aside by a court only is so provided by law. It ranges from incapability of the party and breaching the procedural rules to conflicting with the public order of Georgia.

An arbitration award rendered in Georgia shall be enforced based on the court ruling in accordance with the Law of Georgia On Enforcement Proceedings (see 9.4 Enforcement Mechanisms of a Domestic Judgment). Foreign arbitral awards are to be recognised and enforced according to the New York Convention 1958 and the Law of Georgia on Arbitration (see 9.5 Enforcement of a Judgment from a Foreign Country).

Georgia is currently implementing important changes to the judicial system. While the first three waves of reform based on recommendations developed by civil society has shaped many positive changes, there is still rocky road to cover to reach full independence and impartiality of the judiciary.

The fourth waves of proposals actively promulgate gender equality in the judiciary, modernise the system of appointing and the competitive selection of judges and members of the High Court of Justice and enhance transparency and accountability to the public as well as disciplinary liability of judges and media coverage. 

By amending the Organic Law of Georgia on High Courts, it is envisaged proceedings will be expedited and this will help the judges recover from the workload in an effective and efficient manner. It also aims to recover the judiciary from non-formal coalition that abuses its power of governance.

The package of reforms includes, inter alia:

  • specialisation of judges in the Court of Appeal;
  • expanding scope of operation to the Magistrate Judges; and
  • appointment of the Chairman and Deputy Chairman in the Court of Appeals.

The High Court of Justice has been quite active in preventing the spread of the COVID-19 pandemic. It has issued several recommendations that aim to halt a spread of the virus, among them are:

  • common courts should conduct hearing cases without oral hearings if applicable by law;
  • common courts should encourage remote access to justice via the technical means;
  • there should not be more than 20 people in the reception of the court simultaneously; and
  • court visits, out of court public events and public attendance is restricted unless it is urgent.

Since courts are actively following the instructions and decrees issued by the Ministry of Health and Social Welfare on preventing the spread of COVID-19, this also impacts on their operation. It should be positively assessed that system of electronic proceedings is becoming more and more attractive. Making court services available online free of charge is one of the accomplishments achieved during the pandemic.

Beyond and above, it should also be mentioned that conducting court hearings online is feasible for cases without many parties being involved in it. It should also be mentioned that the court tries to avoid the hearings with many attendants unless the subject matter requires expediting of proceedings.

As far as limitation period concerns, the COVID-19 pandemic has traced its footprint only on the limitation period that set by the courts. Restoration of the time limit set by the court for the party is permissible for the existence of an objective and honourable reason. The hindrance caused by COVID-19 pandemic can inter alia be regarded as such an objective criterion.

Nodia, Urumashvili and Partners Ltd

Vaja-Pshavela Ave 71
Block 4, Office 28
Tbilisi
Georgia 0186

+995 322 207 407

+995 32 2 207 407

info@nplaw.ge www.nplaw.ge
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Law and Practice in Georgia

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Nodia, Urumashvili and Partners Ltd is one of the leading full-service law firms based in Georgia, currently employing 13 law practitioners. The firm is renowned for its banking and finance, real estate and construction, restructuring and insolvency, energy, intellectual property, corporate, competition and tax law practices, with outstanding expertise in each field, as well as a well-established dispute resolution practice. The firm offers full legal support across a wide range of industries. The firm’s client base is diverse and includes the leading companies from virtually all major sectors in Georgia. The firm has a particularly strong presence in financial services, real estate and hospitality, energy and infrastructure, manufacturing, agriculture and retail sectors. The company has a unique experience and understanding of cryptocurrency and blockchain technology.