Georgian civil law imposes no single prescribed form for a distribution or agency agreement, but the structural choices foreign investors make at the outset of a construction or real estate project carry consequences that can be difficult to unwind mid-engagement. For companies entering the Georgian market in this sector – whether as a manufacturer distributing building materials, a developer appointing a local sales agent, or a foreign contractor engaging a project-management intermediary – understanding how Georgian law characterises these relationships, and what that characterisation triggers, is the practical priority.
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Georgian commercial and civil law draws a functional distinction between a distributor – who acts in its own name, takes title to goods or services, and bears commercial risk – and an agent, who acts on behalf of the principal and creates obligations directly in the principal's name. This distinction is not always self-evident in construction and real estate arrangements, where intermediaries frequently perform a blend of both functions: sourcing subcontractors, representing the foreign principal in procurement negotiations, and sometimes holding contractual positions in their own name for tax or regulatory convenience.
The characterisation matters for three reasons. First, under Georgian tax legislation, a foreign entity that operates through a dependent agent – one with authority to conclude contracts on its behalf – may be treated as having a taxable presence in Georgia, broadly analogous to a permanent establishment analysis under OECD principles, even if no Georgian legal entity has been registered. Foreign investors relying on what they intend to be a straightforward distribution or referral arrangement should therefore review the scope of authority granted to the local counterparty before agreements are signed. Second, Georgian civil law governs the liability chain differently depending on whether the intermediary contracted in its own name or as the foreign principal's disclosed representative: disputes with Georgian subcontractors, suppliers, or buyers will turn on this characterisation when the foreign party seeks to rely on – or limit – contractual rights. Third, construction and real estate projects in Georgia are increasingly subject to sector-specific licensing and technical regulation; certain procurement, design, or supervision functions may only be performed by a licensed Georgian entity, which affects how agency or distribution structures can be drafted in practice.
There is no general registration requirement for distribution or agency agreements under Georgian law, and no state approval is required for the agreement itself. However, where the arrangement involves the transfer of intellectual property rights (for example, proprietary construction technology, design rights, or a franchise of a real estate brand), a licence or assignment should be registered with the National Intellectual Property Centre of Georgia (Sakpatenti) to be enforceable against third parties.
In the construction and real estate context, the most common structural tension arises between operational convenience and legal risk allocation. A local intermediary that holds contracts with Georgian subcontractors in its own name – for administrative ease, because it holds the relevant construction licences, or because the foreign principal prefers not to appear in Georgian public registries – is legally a distributor or a contractor in its own right, regardless of what the underlying agreement with the foreign party calls it. If the foreign principal nonetheless exercises substantive control over that intermediary's decisions, Georgian courts and tax authorities are likely to look through the formal structure.
Foreign companies that have historically used Russian entities as intermediaries for CIS-adjacent markets, and who are now restructuring those arrangements through Georgian vehicles or Georgian-registered counterparties, should be particularly attentive to this issue. The restructuring of cross-border supply chains through Georgia has accelerated in recent years; Georgian courts are correspondingly developing a body of practice on substance-over-form questions in commercial intermediary arrangements, though that body of practice remains relatively thin by comparison with more established jurisdictions.
For real estate sales and development mandates, agency arrangements are subject to the general rules on mandate contracts under the Georgian Civil Code. A key practical point: Georgian law does not require an agency agreement to be in writing to be valid as between the parties, but proof of authority – particularly in the context of real estate transactions where the agent may be executing documents on the principal's behalf – will in practice require written authorisation, and for transactions involving registered immovable property, notarisation is typically required. Foreign principals should ensure that the scope of the agent's authority is defined precisely in writing, with particular attention to whether the agent is authorised to bind the principal in preliminary agreements, which Georgian law treats as enforceable contracts.
Exclusivity provisions are enforceable in Georgia and do not require regulatory approval, but should be drafted with reference to Georgian competition law principles: exclusive arrangements that foreclose a market segment may attract scrutiny from the Competition Agency of Georgia, particularly in sectors – including construction materials and real estate services – where market concentration is a live regulatory concern.
For clients structuring these arrangements from outside Georgia, Vetrov & Partners works with trusted local counsel in Tbilisi to advise on the Georgian law dimension. Our coordination role typically covers cross-border structuring, Russian-side documentation, and ensuring consistency between the Georgian arrangement and the wider group structure.
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Vetrov & Partners is a Russian boutique law firm established in 2009, recognised by Pravo-300 for eight consecutive years. For matters in Georgia and other CIS-adjacent jurisdictions, the firm coordinates with trusted local counsel and advises on the Russian-side and cross-border structuring dimensions. The firm's distribution and franchising practice assists foreign companies entering post-Soviet markets – including Georgia, Kazakhstan, and Uzbekistan – with intermediary structuring, agreement drafting, and regulatory compliance.
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.
— Nino Beridze Contributing Regional Analyst — Georgia, Vetrov & Partners vetrovpartners.com/contributions/