The International Court of Arbitration of the International Chamber of Commerce (ICC) denied Anaklia Development Consortium’s claim against the Government of Georgia. The plaintiff tried to “recover the value of the investment of ADC and its investors following the Georgian Government’s January 2020 termination of the investment agreement with ADC to develop the Anaklia Deep Water Port,” the Supervisory Board of the Anaklia Development Consortium (ADC) says in a statement on July 30. The compensation sum demanded by the plaintiff was USD 1.5 billion. Details about the decision and the arbitration proceedings are confidential.
“We are naturally disappointed in this outcome of the ICC tribunal as we continue to believe that the Georgian Government acted inappropriately to the detriment of all Georgians in its campaign to undermine the Anaklia Port Project, which has now been delayed for close to a decade with the loss of thousands of jobs along with millions in unrealized taxes and earnings for Georgia,” the statement says, adding that “ADC and its investors did the right thing for Georgia by taking on the project” and accusing the Georgian government of “undermining” it.
The statement stresses that the important issue is Georgia’s economic development, which it says “lies with its Western future” and “getting the Anaklia port built and working as an integrating project with the West, and not with Russia and China.”
“We initiated this arbitration case because we had a fiduciary responsibility to protect our investors’ financial interests. Nevertheless, it has always been our intention to see this project through to success.” The statement notes that for this reason, “ADC made countless efforts to work with the government, even after filing the arbitration claims, to find a path forward to develop the project.” It says that each of those efforts was either rebuffed or ignored, leading to the 1 delays in developing Anaklia Port. “However, we remain optimistic that Anaklia Port will be developed as it was originally envisioned for the benefit of all Georgians,” the ADC Supervisory Body says.
Earlier, the leader of the opposition Lelo party, Mamuka Khazaradze made a statement regretting the decision of the International Arbitration Court, calling it “heart-breaking, as tens of thousands of jobs have been lost for Georgians.”
Khazaradze reiterated accusations against the Georgian government, alleging that it obstructed and ultimately prevented the progress on the project. “In October, the Georgian people must hold the government accountable for this failure. The Georgian Dream claims it will proceed with the project with a Chinese company of dubious reputation, which is sanctioned in the West, controlled by the Communist Party, and exposed for corruption, environmental damage, unfinished projects, and labor exploitation,” Khazaradze wrote on Facebook.
Among other things, Khazaradze touched on the problems associated with the involvement of Chinese companies in large infrastructure projects in Georgia, noting that Chinese companies bring their employees from abroad, who take the jobs created by these projects instead of Georgians.
“We will bring back bona fide Western investors, complete the project to high Western standards, and create tens of thousands of jobs in Anaklia…,” Khazaradze promised.
Prime Minister of Georgia Irakli Kobakhidze reacted to the decision of the Arbitration Court, saying “Georgia came out the winner for one simple reason – the state always follows the rules when it acts.”
Justice Minister of Georgia, Rati Bregadze reacted to the decision during the briefing on July 30. “The arbitration fully shared the legal arguments and evidence presented by the Ministry of Justice of Georgia and determined that In spite of numerous postponements of the deadlines set by the Georgian government for obtaining financing for the construction, the investor was unable to fulfill its obligation entirely due to its own fault,” Bregadze said.
“…The Government neither directly nor indirectly hindered the investor to carry out the project,” Bregadze added.
“The arbitration confirmed that the Georgian government terminated the investment contract lawfully,” the Justice Minister noted, adding that the claim of the plaintiff to receive the compensation of USD 1.5 billion was “completely rejected”. According to him, on the contrary, the plaintiff was obliged to pay USD 650,000 to the Georgian government.
The Georgian Government headed by then PM Giorgi Kvirikashvili awarded Anaklia Development Consortium – a joint venture by Georgian TBC Holding and U.S.-based Conti International – the Anaklia Port Project in 2016.
In January 2019 the Prosecutor’s Office announced that TBC Bank, the leading Georgian banking company, was facing a criminal investigation over money-laundering allegations. TBC’s Mamuka Khazaradze then claimed the investigation, among others, aimed at stalling the construction of the Port. The Conti International, one of the main partners of the venture, quit ADC in August 2019. This move, reportedly, stemmed from a lack of agreement between the government and international financial institutions.
In January 2020, the Government terminated the contract with the Consortium. Speaking about the importance of the port in terms of the country’s economic development and security, then Georgian Infrastructure Minister Maia Tskitishvili said in January that the Government was beginning to look for “more serious and financially stronger” partner to implement the project. In July 2020, the Anaklia Development Consortium (ADC) and Bob Meijer, one of its principal investors, filed separate arbitration claims against Georgia in relation to their rights in the Anaklia Port Project.
