Compliance screening in recovery mandates in Georgia in the construction and real estate sector: a checklist for foreign clients

In the course of advising foreign creditors on recovery mandates across the South Caucasus, one pattern recurs with particular frequency in the Georgian construction and real estate sector: clients who have secured a judgment or arbitral award arrive at the enforcement stage without having completed the compliance groundwork that Georgian procedure and Georgian regulatory requirements demand. The gap is rarely strategic – it reflects an understandable assumption that a favourable decision is the hard part. In Georgia, however, enforcement creditors face a distinct set of regulatory, corporate, and sector-specific compliance obligations that, if unaddressed, can delay or defeat recovery at the execution stage. This checklist sets out the key screening points for foreign clients instructing counsel on recovery mandates in Georgia's construction and real estate sector.

Before any enforcement step is taken, confirm that the debtor remains a validly registered legal entity in Georgia. Georgian law permits the voluntary or administrative removal of companies from the National Agency of the Public Registry, and construction-sector entities – particularly project-specific special purpose vehicles – are dissolved with some frequency once a project concludes or enters financial difficulty. A creditor pursuing enforcement against a dissolved or struck-off entity may find that Georgian courts decline jurisdiction or that the enforcement writ cannot be directed at any available assets.

Screening steps: confirm current registration status via the Business Registry of the National Agency of the Public Registry; verify whether any liquidation, reorganisation, or insolvency proceedings have been filed; check whether the debtor's registered address and authorised representative details remain current. If the entity is a foreign-registered company with Georgian assets, verify that the Georgian branch or subsidiary registration is also current.

Note: Where insolvency proceedings have been opened in Georgia, creditor rights in construction sector matters are treated under Georgian insolvency legislation, which provides for a creditor claims procedure with defined deadlines. Missing the filing window materially affects priority. Foreign creditors unfamiliar with Georgian insolvency timelines frequently arrive late – counsel should be instructed as soon as insolvency risk is identified.

Foreign creditors – particularly those with nexus to EU, UK, or US jurisdictions – must confirm that enforcement activity does not constitute a prohibited transaction under applicable sanctions regimes before instructions are given to Georgian counsel. Georgian law itself does not replicate EU or US sanctions frameworks, and Georgian courts will not refuse enforcement on that basis. However, a foreign client's own regulatory exposure under its home jurisdiction's sanctions rules is a live concern independent of Georgian procedure.

In the construction and real estate sector specifically, beneficial ownership structures are frequently layered, and principals of Georgian construction entities may include persons or entities subject to EU, UK, or US designations. Compliance screening at this stage should cover the debtor company, its registered directors, its ultimate beneficial owners disclosed in the Georgian registry, and any project co-investors identified from transaction documents.

Note: Counsel cannot provide a sanctions clearance opinion under foreign law. For EU, UK, or US sanctions analysis, the client must obtain separate advice from counsel admitted in the relevant jurisdiction. Vetrov & Partners collaborates with trusted advisers for this purpose. Do not instruct enforcement proceedings until sanctions clearance is confirmed.

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Not all foreign judgments and arbitral awards are enforceable in Georgia on the same terms. Georgia is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and Georgian courts have generally recognised awards from major institutional seats including ICC and LCIA, subject to procedural compliance. Bilateral treaty coverage for foreign court judgments varies and is not universal.

Screening questions: Was the original award or judgment issued by a recognised forum? Has the limitation period for recognition proceedings under Georgian procedural law been observed? Are the formal requirements for translated and apostilled documents met? Has the Georgian court had prior proceedings involving the same claim (parallel proceedings risk)? In construction matters, there is a further consideration: where the dispute concerns Georgian immovable property or construction rights, Georgian courts treat those matters as falling within the exclusive jurisdiction of Georgian courts, and this classification may affect how a foreign award is received.

Note: The limitation period for filing a recognition application in Georgian courts is a firm procedural deadline. Creditors who delay recognition proceedings after obtaining an award risk losing the right to enforce in Georgia entirely, regardless of the award's merits.

A compliance screening exercise for a recovery mandate in the Georgian construction and real estate sector must include a preliminary asset trace before proceedings are commenced or continued. Georgian real property records are publicly accessible through the National Agency of the Public Registry, and registration data for immovable property – including development plots, constructed units, and works in progress – is generally reliable and searchable by owner entity.

The asset trace should confirm: whether real property assets are registered in the debtor's name or have been transferred, whether any mortgages or pledges are registered against identified assets, whether construction permits and development rights attached to the assets are current, and whether any co-ownership interests exist (common in Georgian construction joint ventures). Assets transferred to third parties within a period preceding insolvency or enforcement may be subject to challenge under Georgian avoidance provisions, depending on the circumstances and timing.

Foreign creditors who proceed to enforcement without an asset trace frequently discover at execution stage that identifiable assets are encumbered, transferred, or registered in the name of a related party. In the construction sector, this pattern – informal asset migration between related SPVs – is a documented feature of distressed situations.

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In the Georgian construction and real estate sector, enforcement creditors who seek to realise value from development assets must account for the regulatory and licensing framework governing those assets. A mortgage over a partially constructed building, a pledge over a construction permit, or a charge over development rights each carries a different realisation profile under Georgian law. Enforcement counsel needs to verify whether the assets subject to recovery are freely transferable or encumbered by regulatory conditions.

Specific screening points: whether the construction permit is issued to the debtor company personally (in which case it may not transfer automatically on asset sale); whether any pre-sale agreements with retail purchasers of units have been registered, creating prior claims on specific units; whether the development is subject to Georgian urban planning or environmental conditions that affect use or transfer; and whether the asset sits within a free industrial zone or special economic zone, each of which has a distinct regulatory regime under Georgian legislation.

Note: Pre-sale agreements with individual apartment purchasers registered with the Georgian Public Registry carry rights that may take priority over subsequent creditor enforcement in some circumstances. A creditor holding security over a development with multiple registered pre-sales faces a materially more complex enforcement picture than the headline asset valuation suggests. Sector counsel should assess the pre-sale register before enforcement strategy is finalised.

Georgian counsel – including internationally operating counsel advising on Georgian matters – is required to conduct client due diligence under Georgian anti-money laundering rules before accepting instructions on recovery mandates. Foreign clients should anticipate, and proactively prepare for, the KYC and source-of-funds documentation process as part of instructing counsel. Delays at this stage are common when clients have complex holding structures or where the commercial origin of the receivable is difficult to document quickly.

Required documentation typically includes: corporate registration and ownership documents for the instructing entity (including UBO declarations); documentation establishing the origin of the claim or receivable being enforced; transaction documents underlying the original dispute; identification for the authorised signatory; and, where the client is a fund or institutional creditor, relevant fund-level documentation. Where the instructing client has a Russian, Belarusian, or other sanctioned-jurisdiction nexus in its ownership structure, additional due diligence layers should be anticipated regardless of the absence of Georgian domestic sanctions rules.

Note: Failure to complete KYC on time is a frequent cause of delay in the early stages of Georgian enforcement mandates. Beginning the documentation process in parallel with the initial legal assessment – rather than after a strategy has been agreed – typically saves several weeks. Proactive preparation also signals to Georgian courts and counterparties that the instructing creditor is a well-organised enforcement claimant.

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• [Cross-border Disputes in Georgia: an overview for foreign creditors](/jurisdictions/georgia/disputes/)
• [Asset Tracing & Recovery in Georgia](/jurisdictions/georgia/asset-recovery/)
• [Enforcement of Foreign Judgments & Awards in Georgia](/jurisdictions/georgia/enforcement/)

Q: What are the main compliance risks for a foreign creditor pursuing recovery in Georgia's construction sector? A: The primary risks arise at three points. First, at the pre-instruction stage: the instructing entity must complete KYC and confirm that enforcement activity does not engage its home-jurisdiction sanctions obligations. Second, at the recognition stage: foreign awards and judgments require a formal recognition procedure in Georgian courts, with firm procedural deadlines. Third, at the execution stage: construction-sector assets are frequently encumbered by registered pre-sale agreements, co-ownership arrangements, or sector-specific licensing conditions that affect transferability and realisation value. Screening all three points before proceedings begin avoids delays that would otherwise appear only under the pressure of live enforcement.

Q: Does Georgian law impose restrictions on foreign creditors enforcing against Georgian real estate and construction assets? A: Georgian law does not, as a general rule, prohibit foreign creditors from enforcing against real property or construction assets registered in Georgia, and the Public Registry provides accessible title and encumbrance data. However, practical restrictions arise from sector-specific features: development permits may be non-transferable; registered pre-sale agreements with retail purchasers create priority interests in specific units; and assets held through special-purpose vehicles require tracing beyond the immediate debtor. Foreign creditors who have conducted a preliminary asset trace and legal standing review before instructing enforcement counsel are materially better positioned than those who begin with enforcement filings.

Q: How long does a typical recovery mandate in Georgia's construction sector take from instruction to outcome? A: Timelines vary considerably depending on whether the creditor holds an existing Georgian judgment or a foreign award requiring recognition, whether the debtor assets are clearly identified and unencumbered, and whether insolvency proceedings are running in parallel. As a general guide, recognition proceedings for a foreign award in a Georgian court, followed by enforcement execution against real property, will commonly extend to twelve to eighteen months in straightforward matters, with more complex multi-party or insolvency-adjacent matters extending beyond that. Creditors who complete the compliance screening steps described in this checklist before instruction typically encounter fewer procedural interruptions, which is the most controllable factor affecting timeline.

Vetrov & Partners is a Russian boutique law firm established in 2009, recognised by Pravo-300 – Russia's principal legal directory – for eight consecutive years, and listed as a trusted adviser by the German Consulate General in Novosibirsk.

The firm's cross-border disputes practice advises foreign creditors and distressed investors operating across Russia and the wider CIS and South Caucasus region, including on enforcement and recovery mandates with a Georgian dimension. For matters governed by Georgian law, the firm works with trusted local counsel – including contributing regional analysts with Georgian court experience – to provide coordinated advice from instruction through to outcome. With over 1,000 matters handled since inception, every engagement involves direct partner involvement.

Enquiries: info@vetrovpartners.com | WhatsApp / Telegram: +7 (983) 510-38-76 | t.me/vitvetcom

This publication is provided for informational purposes only and does not constitute legal advice under Russian or any other applicable law. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Vetrov & Partners is a Russian-qualified law firm. For matters governed by foreign law or requiring local admission in another jurisdiction, we collaborate with trusted counsel in the relevant jurisdiction. For advice regarding your particular situation, please contact info@vetrovpartners.com.

— Vitaliy Vetrov Managing Partner, Vetrov & Partners vetrovpartners.com/team/vetrov/

With contributions from Giorgi Kavtaradze Contributing Regional Analyst — Georgia, Commercial Disputes & Enforcement vetrovpartners.com/contributions/