Contracts with a Georgian element carry three clauses nobody argues about until there is an argument: governing law, forum, dispute resolution. Two of them are usually set correctly. The third decides whether a dispute you win is worth anything in the end.
Choice of law: free — with a sharper limit
The Georgian Private International Law Act lets the parties choose the law governing their contractual relations, expressly covering interpretation, performance, termination, the consequences of invalidity, and breaches including pre- and post-contractual duties. The choice may even be changed after the contract is concluded.
The third paragraph of the same provision draws the limit, and it does so more strictly than a European reader expects: the choice of law is void insofar as it disregards mandatory rules of the country most closely connected with the contract. The wording contains no restriction to purely domestic situations of the kind European conflicts law knows, and it does not confine the consequence to the particular rules concerned.
Two further limits sit alongside: mandatory rules of Georgian law remain unaffected whatever law is chosen, and consumer and employment relationships carry their own protective provision where the contract was concluded in the protected party’s country of residence and such rules exist there.
Forum: what you cannot agree
A forum agreement in favour of a foreign court is permitted where one party has its domicile, seat or habitual residence abroad. In German or Austrian-Georgian contracts that condition is met. The form is written, or oral with written confirmation; in international trade a form corresponding to the relevant trade usages suffices.
The counter-exception is what matters. Wherever Georgia has exclusive jurisdiction, any diverging agreement is void:
- Real estate located in Georgia
- Validity or termination of resolutions of a Georgian company or its organ
- Registration of legal entities
- Registration of patents, trade marks and comparable rights
- Enforcement measures applied for or carried out in Georgia
The second point hits practice most often and is overlooked most often: a shareholder dispute over resolutions of a Georgian LLC belongs in Georgia, without exception. Articles of association providing for a German court on that question provide for nothing.
The judgment stops at the border
This is the point the article exists for. On the Georgian side it is not the Civil Procedure Code but the Private International Law Act that governs the recognition of foreign judgments. It provides for it expressly — final judgments of foreign courts are recognised — and lists the grounds for refusal exhaustively. One of them reads: the foreign state does not recognise Georgian judgments. The Supreme Court of Georgia decides.
The reverse direction is built as a mirror image. Germany conditions recognition under § 328(1)(5) ZPO on reciprocity being guaranteed. Austria goes further and requires, in § 406 of the Enforcement Act, that reciprocity be “guaranteed by treaties or by regulations” — a formal instrument, not merely a settled practice.
The arbitral award travels
For arbitral awards the instrument that is missing for judgments exists. Georgia acceded to the New York Convention of 1958 on 2 June 1994, in force since 31 August 1994, and according to the official status list without reservations — neither the reciprocity nor the commercial reservation.
The Georgian Arbitration Act draws the consequence: an award is binding irrespective of the country in which it was made and is to be enforced on written application. For awards made outside Georgia the Supreme Court decides; what must be produced is the duly certified original award, the arbitration agreement, and a certified Georgian translation. The grounds for refusal follow the Convention’s pattern.
| Feature | State judgment | Arbitral award |
|---|---|---|
| Basis of recognition | reciprocity, presupposed on both sides | New York Convention, in force since 1994 |
| Georgian reservations | not applicable | none |
| Competent body in Georgia | Supreme Court | Supreme Court |
| Predictability when drafting | turns on a question the statute leaves open | a named instrument, exhaustive refusal grounds |
The formal trap in the arbitration clause
The Arbitration Act requires written form but reads it broadly: it suffices that the content is recorded in any form, an electronic communication is enough, as is an exchange of claim and reply without objection, or incorporation by reference.
Those relaxations fall away in one place. Where a party to the contract or to the arbitration agreement is a natural person or an administrative body, the arbitration agreement must be concluded in writing in a document signed by the parties. So as soon as a shareholder, a guarantor or a managing director signs in a personal capacity, an email exchange no longer suffices.
Two further points make the route workable in practice: arbitrable are private pecuniary disputes the parties may dispose of. And a state court must, on application, discontinue proceedings and refer the parties to arbitration unless the agreement is null, inoperative or incapable of being performed.
Who may negotiate such a clause in Georgia and represent you in court at all is covered in Who may advise you in Georgia; the employment side is in Employment contracts in Georgia.
Choice of law and forum — frequently asked
Can I choose German law in a contract with a Georgian element?
In principle yes. The Georgian Private International Law Act permits a choice of law for contractual obligations and even allows it to be changed after the contract is concluded. The limit is drawn more sharply than in European conflicts law, however: the choice is void insofar as it disregards mandatory rules of the country most closely connected with the contract.
May I agree a forum outside Georgia?
Yes, where one party has its domicile or habitual residence abroad — which is satisfied in German or Austrian-Georgian contracts. The agreement is void, however, wherever Georgia has exclusive jurisdiction: Georgian real estate, resolutions of Georgian companies, registrations, and enforcement measures in the country.
Why is an arbitration clause the safer route?
Because there is a named instrument behind it. Georgia has been a party to the New York Convention since 1994 without reservations, and the Georgian Arbitration Act declares awards binding irrespective of the country in which they were made. For state judgments there is no comparable convention; recognition turns on reciprocity.
What is the most common formal trap in an arbitration clause?
Where a natural person is a party to the contract or to the arbitration agreement, the Georgian Arbitration Act requires a document signed by the parties; the usual relaxations — email, incorporation by reference, exchange of pleadings — do not apply. As soon as a shareholder or guarantor signs in a personal capacity, the stricter form applies.
Does that make a German judgment worthless in Georgia?
That would go too far. The Georgian Private International Law Act expressly provides for the recognition of final foreign judgments and lists the grounds for refusal exhaustively — one of them being an absence of reciprocity. Whether the courts treat reciprocity with Germany as established is a question of case law and cannot be answered from the statutory text.
This article is general information and does not constitute legal or tax advice. The Georgian provisions are sourced in their Georgian text, § 406 EO through RIS, and Georgia’s status under the New York Convention through the official status list. The German provisions are named by section but carry no link to the official consolidated text, which was unreachable at the time of writing. Whether a convention on the recognition of civil judgments exists in relation to Germany or Austria is something we were unable to establish conclusively; none is known to us, and the article therefore treats its absence as an open question rather than an established fact. As at August 2026.
Sources
Every legal statement in this article is backed by the primary source listed below.
- Law of Georgia on Private International Law No. 1361, Arts. 6, 10, 18, 35, 38 and 68 — Georgian text, publication 6, as at 15 December 2023
- Law of Georgia on Arbitration No. 1280, Arts. 8, 44 and 45 — Georgian text, publication 8
- Civil Procedure Code of Georgia, Arts. 12 and 21 — arbitrability and forum agreements; publication 178
- New York Convention 1958 — status of contracting states (UNCITRAL) — Georgia: accession 2 June 1994, in force 31 August 1994, no reservations
- Austrian Enforcement Act (Exekutionsordnung), § 406 — reciprocity “guaranteed by treaties or by regulations”