The Government of Georgia defeats an ICC arbitration claim of US$ 1.5 billion at its highest over its termination of an investment agreement for the development of the Anaklia Port

White & Case Sovereign Focus

On 29 July 2024, an ICC arbitration tribunal, chaired by Stephen Drymer and including Jean Kalicki and Charles Adams as co-arbitrators, issued, by majority, an award in favour of the Government of Georgia in a high-profile ICC dispute initiated by Anaklia Development Consortium (ADC).

The dispute concerned the termination of an investment agreement governed by Georgian law concluded between Georgia and ADC in October 2016 for the development and operation of a deep-sea port in the town of Anaklia, on Georgia’s Black Sea coast. Georgia terminated the investment agreement in January 2020 after ADC had failed to secure financing for the project despite multiple extensions of the financing deadlines in the investment agreement.

ADC initiated ICC arbitration proceedings against Georgia in July 2020, claiming that Georgia’s termination was unlawful under the terms of the investment agreement as well as the applicable Georgian law, and seeking compensation of over US$ 1.5 billion (reduced to around US$ 500 million over the course of the arbitration). 

The Parties fervently argued their positions, providing the tribunal with more than 1200 pages of written pleadings, dozens of witness statements and expert reports, hundreds of legal exhibits and more than a thousand factual exhibits. The hearing itself lasted two weeks and was followed by two days of closing arguments in 2023. The dispute was highly mediatised in Georgia and involved allegations of a government conspiracy to kill the Anaklia port project. 

In its award, the majority of the tribunal dismissed ADC’s claims in their entirety. The tribunal majority notably found that Georgia’s conduct did not constitute force majeure under the terms of the investment agreement, that ADC was not under hardship, that Georgia was not otherwise responsible for ADC’s inability to fulfil its financing obligations under the investment agreement, and that Georgia’s termination of the investment agreement was accordingly lawful.

The dispute, however, does not end here as an indirect minority Dutch shareholder of ADC is pursuing the proverbial second bite at the apple through duplicative claims against Georgia at ICSID brought under the Georgia-Netherlands bilateral investment treaty. An ICSID arbitration tribunal chaired by Bernard Hanotiau, and including Klaus Sachs and Charles Poncet as co-arbitrators, is due to render its award later this year.

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