Client alert: change affecting choice of arbitral seat and institution in Georgia under the Law on Rehabilitation and the Collective Satisfaction of Creditors' Claims

Alert: Change affecting choice of arbitral seat and institution in Georgia under the Law on Rehabilitation and the Collective Satisfaction of Creditors' Claims Effective: December 2027

Recent amendments to Georgia's Law on Rehabilitation and the Collective Satisfaction of Creditors' Claims have introduced constraints that directly affect how parties to Georgian-law-governed or Georgia-connected contracts may designate their arbitral seat and arbitral institution in the event of a dispute involving a debtor subject to rehabilitation proceedings.

Foreign creditors holding Georgian-law security, loan agreements, or supply contracts where the Georgian counterparty is a company of sufficient size or systemic importance to be eligible for rehabilitation under the Law should treat this development as a live review trigger. Where a rehabilitation application has been filed or is reasonably foreseeable, the effect of the amended provisions is that the enforceability of pre-agreed arbitration clauses -- including those designating a foreign seat such as London, Vienna, or Stockholm -- may be subject to challenge by the rehabilitation administrator or by the court supervising the proceedings. Creditors who proceed on the assumption that their arbitration clause operates as agreed, without first mapping it against the amended Law, risk having their choice of forum contested at a procedurally inconvenient moment.

Recommended action:

• Identify all contracts with Georgian counterparties that contain arbitration clauses designating a foreign seat or a non-Georgian arbitral institution, and assess whether those counterparties are capable of being subject to rehabilitation under the Law on Rehabilitation and the Collective Satisfaction of Creditors' Claims.
• Review whether rehabilitation proceedings have been initiated or are publicly indicated for any such counterparty -- Georgian court registers and published notices should be checked.
• Take legal advice before filing or responding to any arbitral claim where the Georgian counterparty is in rehabilitation or pre-rehabilitation status, to confirm whether the agreed seat and institution remain unaffected or whether the Law creates a basis for the administrator or court to intervene.

[CTA: Speak to our team about your Georgian dispute clause or creditor position -- info@vetrovpartners.com | WhatsApp/Telegram: +7 (983) 510-38-76]

Vetrov & Partners is a Russian boutique law firm established in 2009, recognised by Pravo-300 for eight consecutive years. The firm advises foreign creditors and investors on cross-border disputes, enforcement, and insolvency matters across Russia and CIS and adjacent jurisdictions, including Georgia. Enquiries: info@vetrovpartners.com | WhatsApp / Telegram: +7 (983) 510-38-76 | t.me/vitvetcom

This alert is for informational purposes only and does not constitute legal advice. Vetrov & Partners is a Russian-qualified law firm. Contact info@vetrovpartners.com for advice on your specific situation.

-- Giorgi Kavtaradze Contributing Regional Analyst -- Georgia, Commercial Disputes and Enforcement vetrovpartners.com/contributions/