Investment Climate in Georgia Discussed at Georgia-US Meeting in Washington

As part of the celebrations dedicated to the 25th anniversary of the establishment of diplomatic relations between Georgia and the United States, a special session was held, during which the investment climate and relations between the two countries was discussed.

First Deputy Infrastructure Minister Irakli Matkava was asked questions about improper treatment of major companies and investors operating in Georgia. The participants of the session were particularly interested in the cases of the Georgian Manganese and Phillip Morris.

Former USAID Deputy Administrator Thomas Melia said that the Government of Georgia carried out “factual expropriation” of Georgian Manganese. Matkava responded by saying that the process of implementing reforms is still underway in Georgia. He added that if investors have any problems, they can apply to international arbitration.

Georgian Manganese is a major producer of high-grade and regular-grade manganese in Georgia. Its mining operation includes seven mines and eight quarries throughout the country. The Ministry of Environment and Natural Resources of Georgia appointed the head of private company Georgian Manganese on May 11. This is the first case in the history of Georgia when the state has interfered in the management of a private company and appointed its own representative. The decision was made after a court verdict, which ruled that the company had created extremely dangerous ecological conditions in the town of Chiatura, in the Imereti region of western Georgia.

“After detailed studies were carried out, it was revealed that the company had not been working to eliminate the contamination and degradation of the river and soil, but rather the situation had worsened. This created an ecological catastrophe at the scene,” a statement from the Ministry of Environment said. The ministry appointed Nikoloz Chikovani as the Manager of the Chiatura Manganese Mine, adding that he will be responsible for improving the ecological situation in the town.

The Phillip Morris case involved a dispute between JSC Tbilisi Tobacco Ltd and the private tobacco company Philip Morris, which was reviewed by the City Court this February. The Tbilisi City Court delivered its verdict on February 10, which included high fines on the tobacco companies Phillip Morris and British American Tobacco of GEL 93 million and GEL 270 million, respectively.

The court claimed that the Georgian law on competitiveness had been violated. At the same time, the court found the accused party to be holding a dominating position on the Georgian tobacco market. However, an appeals court overturned the verdict of the City Court on June 9 and released the tobacco companies from the obligation to pay the fines.

After the decision by the appeals court, the Philip Morris Company issued a statement saying that justice had been served. “The decision of the Court of Appeals was objective and impartial. We will continue to operate in Georgia as before,” the company's statement reads. The statement added that the decision would have a positive impact on foreign businesses in Georgia.

Thea Morrison