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Issue no: 870/40

• AUGUST 16 - 18, 2016

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue... Cartu Fund Gifts Georgia Architectural Miniatures Park

NEWS PAGE 3

FOCUS ON RESORT DEVELOPMENT Ahead of the elections, the PM is busy promising infrastructural development in both Adjara PAGE 5&6 and Bakuriani

Georgia’s TBC Bank Places Premium Shares on London Stock Exchange BY NICHOLAS WALLER

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eorgia’s TBC Bank received a premium listing on the London Stock Exchange (LSE) last week after it placed 49,159,880 premium shares on the bourse following the completion of a tender offer on August 4, BNE Intellinews reported on August 12. With the listing, TBC, the country’s second-largest bank by assets, becomes the third Georgian company to secure a premium listing on the LSE, following in the footsteps of the country’s largest lender and TBC’s main rival, Bank of Georgia Holdings and its healthcare wing Georgia Healthcare Group in 2012 and 2015. Continued on page 2

PwC: Law on Innovations & its Effect on How We Do Business PAGE 4

New Manual for Melioration to Boost Agricultural Education & AgriBusiness PAGE 8

Dechert OnPoint: A Positive Step Forward for the Civil Procedural Code of Georgia PAGE 9

Dublin Library Docs Reveal Interest of Henry VIII, Elizabeth I in Georgian Battles SOCIETY PAGE 10 Prepared for Georgia Today Business by

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NEWS

GEORGIA TODAY

AUGUST 16 - 18, 2016

Russia Guarantees Arms Supplies to Armenia; Will Continue Selling to Azerbaijan BY NICHOLAS WALLER

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ussian President Vladimir Putin assured his Armenian counterpart Serzh Sargsyan that Moscow would continue to supply Yerevan with major arms supplies, including many of the most sophisticated weapons in Russia’s arsenal, but said Russia would continue to sell military equipment to Armenia’s arch rival Azerbaijan. "Armenia for us is a strategic partner in the Caucasus, and we consistently build our mutual alliance…we are cooperating together in the Eurasian Union and in the CIS (Commonwealth of Independent States)," Putin said during a meeting with Sargsyan. Armenia is Russia’s staunchest ally in

the Caucasus, while the increasingly authoritarian Sargsyan has enjoyed a close personal relationship with Putin since coming to power in 2008. That alliance, however, has been severely tested in recent months following a major escalation in fighting in the Armeniancontrolled breakaway region of NagornoKarabakh. The clashes claimed the lives of hundreds of ethnic Armenians and left Azerbaijan in control of small patches of territory that it had lost in the first phase of the war in 1988-1994. The Armenian public was outraged to find out that Russia had sold highly sophisticated air-to-air and surface-toair weaponry to Azerbaijan, most of which was far superior to Armenia’s Soviet-era equipment. Armenia’s opposition politicians have accused Putin of seriously jeopardizing

Continued from page 1

Russian-Armenian relations with continued weapons sales to Baku. Russia has flatly denied the charges, saying they are simply carrying out regular business on the international arms market and have no intention of weakening their ties to their closest allies in Yerevan. “Regarding weapons, we have a cooperation program with Armenia and we have mutual obligations to supply and

defend the country. Russia has always adhered to its obligations and it always will,” Putin said. Putin was quick, however, to say that any country has the right to buy weapons from whomever, so long as it has the money. "A country like Azerbaijan - oil-producing, with a booming economy, sufficiently large volumes of gold and currency reserves - of course, it can buy arms from anywhere it wants,” said Putin.

Georgia to Host Annual Plenary Session of the Global Forum BY THEA MORRISON

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ccording to the Ministry of Finance of Georgia, the Annual Plenary Session of the Global Forum on Transparency and Exchange of Information for Tax Purposes of the Organization of Economic Cooperation and Development (OECD) will be held in Tbilisi on November 1-3, 2016. Around three hundred delegates from member states of the Global Forum and officials of ten international organizations will take part in the Plenary Ses-

Georgia’s Finance Ministry held a special meeting of the Government Commission on August 11

sion, which is a keynote policy event of international magnitude, now to be hosted by Georgia. According to the governmental decree, a special governmental Commission has been established which will ensure superior quality planning and hosting

Georgia’s TBC Bank Places Premium Shares on London Stock Exchange

of the event. The Commission is chaired by Nodar Khaduri, Minister of Finance of Georgia, responsible for logistics and organization issues. The Government Commission had its first meeting on August 11, attended by

officials of the engaged government agencies, whereby they discussed details of the preparation process and distributed specific instructions to the involved public institutions. It was noted that the Global Forum Secretariat is actively engaged in the process, with its management team expected to visit Tbilisi in late August to oversee the necessary preparation works. The previous Annual Plenary Session of OECD was held in Barbados in 2015. The event has also been hosted by Johannesburg, Paris and Mexico. The OECD Session is a highly important event which will underline Georgia’s significant role on an international level.

TBC is Georgia’s market leader in retail lending to small and medium-sized enterprises (SMEs), and currently owns a market share of 28 percent in loans and 27.3 percent in non-banking deposits, according to data from the National Bank of Georgia. The bank’s shares were first admitted to the LSE as Global Depository Receipts (GDR) in June 2014. LSE investors own 70 percent of TBC’s shares and have been eager to swap the GDRs for a premium listing. The bank posted a 29 percent year-onyear increase in profit to GEL 58.7 million (EUR 23.5 million) in the first three months of the year, while assets grew 11 percent year-on-year to GEL 6.65 billion (EUR 2.54 billion) in January-June, according to BNE Intellinews. Founded in 1992 by Mamuka Khazaradze and Badri Japaridze, TBC’s other owners include the European Bank for Reconstruction and Development (12.4 percent), International Finance Corporation (6.2 percent) and Dutch Development Bank FMO (4.4 percent).


NEWS

GEORGIA TODAY AUGUST 16 - 18, 2016

3

Georgian Police Arrest Cartu Fund Gifts Georgia Suspect for Murder of Architectural Miniatures Park American Tourist BY THEA MORRISON

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eorgian police arrested a 20-year-old man suspected of killing an American male tourist Thursday night in the country’s eastern Kakheti region. On Saturday, Georgia’s Ministry of Internal Affairs (MIA) released a statement saying a 40-year-old US citizen - who had just returned from the isolated mountain region of Tusheti - was stabbed to death on August 12 by a young local man following a dispute. The MIA’s report said the incident took place on a road near Lechuri, a remote village at the foot of the Cau-

casus Mountains. The suspect immediately fled the scene, but was arrested only a few hours after the incident. According the statement police confiscated a knife from the detainee, who has admitted his guilt and is cooperating with the authorities. If found guilty the suspect could face up to 15 years in prison for premeditated murder. The victim, Fritz W. Musser, was said to have been undertaking a monthlong journey through the Transcaucasus on foot. His friends have reacted with shock and disbelief to the news.

harity Foundation Cartu Fund has gifted a new theme park ‘Georgia in Miniatures’ to the State. The park, located in the Black Sea coastal resort of Shekvetili, west Georgia, presents 44 miniatures of architectural monuments from all around Georgia. Of 1:25 scale, they aim to display the rich architectural heritage of the country. Cartu Fund also donated to the State a unique database which includes accurate measurement and drawings of all of the park's miniature prototypes- both expensive and valuable information for the National Agency of Monument Protection. The handover ceremony was held Saturday. The document was signed by the Cartu Fund Board Chairman, Nikoloz Chkhetiani, and the Deputy Economic Minister, Genadi Arveladze. As Nikoloz Chkhetiani exclusively told GEORGIA TODAY, the idea of the project belongs to the Fund and its founder and donor, ex-PM Bidzina Ivanishvili. “Many foreign countries have such parks and they mainly serve for the development of tourism. Our aim was the same- stimulating tourism and demonstrating the culture of our country,” Chkhetiani told us. He says a special commission was set up, composed of Georgian art critics and specialists, who chose the most outstanding architectural monuments according to certain criteria. “These criteria were: uniqueness, importance and individualism of the

monuments. They also needed to be from different eras and needed to have different functions, as the Park is meant to be highly interesting and diverse,” Chkhetiani said. The Cartu Fund Chairman noted that at present there are 44 miniatures of cultural monuments in the Park. However, 5 more miniatures are to be added in the near future and by 2017 there will be 57 miniatures in total. Prime Minister of Georgia, Giorgi Kvirikashvili, also attended the handover ceremony where he thanked Cartu Fund and Bidzina Ivanishvili for the gift. “I am sure the Park will become a favorite of both Georgian citizens and tourists alike,” he stated. The construction process of the Park was launched in summer 2014 on 2 hectares of land owned by Cartu Group and which encompassed the concrete base of an abandoned former sewing factory. The project was designed by 'Laboratory of Architecture #3,' according to whom visitors go through a poetic space,

flanked on one side by a 60 meter long curved black bamboo fence and on the other by a ribbed fiber concrete pavilion. The characteristic intensive light of the sun plays a crucial role in forming a dynamic and colorful composition. The Park complex includes the miniatures and a visitor center, which has a mini-amphitheater, cafes and other functional spaces. Cartu Fund invested 10 million GEL in the project. This is the second gift of the Foundation to the State, the first being the Black Sea Arena, also in Shekvetili, designed by German architects, which can accommodate about 10,000 spectators and can host concerts, sport competitions and other events.


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BUSINESS

GEORGIA TODAY

AUGUST 16 - 18, 2016

PwC: Law on Innovations & its Effect on How We Do Business BY SIMON PARSONS AND VANO GOGELIA, PRICEWATERHOUSECOOPERS

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ith the new Law on Innovation, adopted by the Parliament of Georgia in June 2016, it is a good time to think about the future, consider what the new law aims to achieve and also take a look at some of the recent technological trends which are affecting how we do business.

LAW ON INNOVATION The new law intends to promote the knowledge and innovation economy in Georgia via the establishment of a number of new mechanisms. First, the law provides for the creation of the Innovation & Research Board at the Prime Minister's Office. The Board will be charged with defining the national strategy for innovation and coordination of the creation of an innovation ecosystem in the regions. Second, a new Agency for Innovation and Technology will be created within the Government of Georgia which will try to commercialize research work and provide various incentives for innovation. Third, the law provides for the creation of various new types of infrastructure hub to promote innovation. For example, it is intended to found scientific/technological parks which should

nesses that manage assets dispersed over large areas have a long history of issues that new drone powered solutions can address.” For example, drones can be used to gather high quality data in hard to reach places, supervise ongoing investments and support the maintenance of existing infrastructure. Our colleagues think that other industries ripe for drone innovation are Transport, Security, Media & Entertainment, Insurance, Telecommunication and Mining. Beyond taking pictures and gathering data, drones may even be used to deliver items or perform other tasks in populated areas. Whilst giving consumers more convenience, a drone falling from the sky would be clear risk to public safety. It gives rise to the question how should the use of drones be regulated and by whom, if they are becoming bigger and heavier and if their use is more prevalent. http://press.pwc.com/News-releases/ global-market-for-commercial-applications-of-drone-technology-valued-atover--127-bn/s/AC04349E-C40D-47679F92-A4D219860CD2

provide universities and other interested parties access to various services which will foster innovation. Business incubators will provide infrastructure and administrative support to certain businesses, selected via a competitive process. Another type of infrastructure which the law envisages is the business accelerator - centers which will provide competitively selected businesses with services, such as business modelling, concept development and, in some cases, financial support. Finally, under the new law, patented innovations which have been financed by the government may have to be licenced out by the patent holder to suitable applicants, if the government chooses. In some cases, if the government has provided financing, the relevant agency may require a share from the revenues, and the law specifies that this should not exceed 5 percent per annum. It is too early to say how the law will impact on innovation in Georgia, but it is nonetheless worth looking at some of the avenues which might be explored by businesses and universities which are looking to innovate.

DRONES You might have seen spectacular online videos which show images of Narikala, Gergeti or other famous sites captured by drones from above. But do these remote controlled flying robots have an application beyond holiday photos? Our colleagues at PriceWaterhouseCoopers (PwC) Drone Powered Solutions Center

INTERNET OF THINGS The emerging global market for “drone powered solutions” is estimated at over USD 127 billion. Source: www.bhphotovideo.com

of Excellence in Poland have carried out research and the answer is clear: Yes. A broad spectrum of industries will be able to use drones, equipped with cameras and other sensors, to do business better, whether doing existing jobs more

efficiently or creating new products and services. They value the emerging global market for “drone powered solutions” at over USD 127 billion. Infrastructure and Agriculture are the sectors which could benefit most. “Busi-

Drones are not the only things which are gathering images and other data, bringing to mind another technological trend: the “Internet of Things” (“IoT’) – where “connected sensors” are built into physical products allowing them to talk to each other. Soon your fridge may remind you that you have run out of milk or matsoni. Continued on page 6


BUSINESS

GEORGIA TODAY AUGUST 16 - 18, 2016

Azeri Economy Continues to Falter Despite Rise in Oil and Gas Output

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PM Pledges to Further Develop Mountainous Tourism in Georgia’s Black Sea Region Source: GoBatumi

BY TAMAR SVANIDZE

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eorgia’s Black Sea region Adjara continues to gain popularity for its sea and mountainous places among foreign visitors choosing to spend their holidays in Georgia. Prime Minister of Georgia, Giorgi Kvirikashvili, while presenting the majoritarian candidate for the region, announced that the government is working on a plan to turn Adjara into a developed four season tourist destination. “I am happy to see that the region is full of tourists and visitors. We have a plan and definite intentions for both coastal and mountainous Adjara, aiming to make them even more attractive for tourists,” Kvirikashvili said. The PM emphasized that the plan

includes renovation of new roads leading from seaside areas to the mountainous parts of Adjara, as well as construction and promotion of new European style mountain resorts in the region. The latest statistics published by the Tourism and Resorts Department of Adjara state that the number of tourists visiting the region during the January-

July period increased by 73.35 percent y-o-y to reach 21,500 people. The majority of guests are from Russia, Poland, Ukraine and Israel. The information is based on data provided by tourist information centers. According the Adjara Tourism Department, most visitors are interested in high-mountainous areas and ecotourism.

New Geocell Concept Shop Opens in Batumi BY NICHOLAS WALLER

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nergy-rich Azerbaijan’s oil and gas output has steadily risen by 0.7 percent to 24.7 million tons in the first half of the year, while natural gas production rose by by 500 million cubic meters, according to the Azeri State Statistics Committee. Despite a major spike in production from January to July, the country’s faltering economy contracted by a stagger-

ing 3 percent compared to the same period a year earlier. Azerbaijan expects to produce 41 million tons of oil this year and 29 cubic meters of gas. The State Statistics Committee said it was also the first rise since May last year. Sustained low oil prices and a massive currency devaluation caused the South Caucasus country’s economic growth to slow to 1.1 percent last year, a precipitous drop from 2.8 percent in 2014, news agency Reuters reported. Azeri authorities are forecasting a 1.8 percent growth this year.

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eocell recently opened a unique new concept shop in Batumi, enabling local customers as well as visiting guests to enjoy the benefits of different types of customer service in a very distinct environment. In an era of high-paced technological developments, it is very important that the customer stays in tune with the latest innovations and adjusts communications means to their needs. “This is why we (Geocell) introduced this concept- it incorporates a wide choice of mobile phones at the best affordable prices, the most favorable offers, and a team of highly skilled pro-

fessionals who are always ready to offer the customers specially tailored products or services,” said company representatives.

Geocell, currently owned by Teliasonera, the leading telephone company and mobile network operator in Sweden and Finland, has been working to introduce its new concept shops since 2013. At this stage, there are 12 such shops in Georgia. Geocell representatives say the company has other important initiatives in relation to Adjara. One of the main components will be the new social project of the company “taking care of the country with mobile internet” (Movla), which Geocell initiated with the support of the Ministry of Environment and Natural Resources of Georgia and Georgian National Tourism Administration.


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BUSINESS

GEORGIA TODAY

AUGUST 16 - 18, 2016

PwC: Law on Innovations & its Effect on How We Do Business Continued from page 4 Our colleagues at PwC UK have analysed this technological advancement. “IoT helps businesses achieve the goal of ‘intelligence at the moment’–giving them insights and analysis into parts of their physical operations that just wasn’t measurable in the past.” For example, sensors can be used to monitor stock levels, soil quality, engine efficiency and tyre wear and tear, among many others. From these new sources of data, businesses “can make and implement better strategic and operational decisions–and in many cases, to gain competitive advantage.” Our colleagues explain: “The 10 sectors leading the IoT charge include Financial Services, Technology, Healthcare and Automotive- but it’s energy and

mining that currently tops the list. In that industry, sensors are dramatically improving safety in mines by monitoring carbon dioxide levels and noxious gasses.” In sum, IoT is about more data from more sources delivered more quickly. Given Georgia’s economic make up, the use of IoT has the potential to help many industries. This opportunity to make better decisions is not without risks. Connecting devices to the internet can cause “cyber security headaches” – without adequate protection, connected assets are susceptible to being hacked, causing loss of confidential data or, worse even, loss of control. http://www.pwc.com/gx/en/researchinsights/spotlight/internet-of-things. html

SHARING ECONOMY Just as devices and machinery are, we humans are also reaping the rewards of better connectivity. The internet allows us to keep in contact with friends across the country and globe via social networks. More recently, the internet lets us as individuals sell and buy goods and services from others. This is the so called “sharing economy.” Perhaps the most well-known sectors of the sharing economy are Transportation and Accommodation. By downloading an app and signing up to its terms and conditions, we can use our cars or homes to become a small-scale taxi business or a mini hotel. Other areas where the peer-to-peer model has established itself are, Professional, Household (e.g. food delivery, cleaning and dating) and

even Financial services. For example, in some countries you can get funding for your business from private individuals via a website rather than a bank. According to its The Future of the Sharing Economy in Europe 2016 analysis, PwC UK thinks that the sharing economy in Europe could see a 20-fold increase to EUR 570 billion by 2025. The key message is that hiring property or getting services from individuals is increasingly popular among younger consumers and it may become “a shining beacon amid a “new normal”’ of lower growth across Europe.” Again, in Georgia there appears to be room for “sharing” service providers to connect individuals with one another, whether it is for a ride, a room or romance. As with the other trends, the sharing

economy does challenge traditional forms of regulation and perhaps more so, taxation. Sharing economies give more individuals the opportunity to earn extra income, but governments around the globe are still deciding how – or even if – this economic activity should be taxed. http://press.pwc.com/News-releases/ europe-s-five-key-sharing-economysectors-could-deliver--570-billion-by2025/s/45858e92-e1a7-4466-a011a7f6b9bb488f For the Law on Innovation and all the above-mentioned trends, it will be interesting to see how existing and new businesses in Georgia will be affected and inspired to innovate in new ways. There will also be work for the government to do to make sure regulation keeps pace with the changes.

Government to Turn Winter Resort Bakuriani into All-Season Destination BY TAMAR SVANIDZE

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he Georgian government has launched a new tourism development project to turn the country’s popular winter ski resort Bakuriani into a four-season mountain destination for holiday seekers. The project includes development of tourism infrastructure in the region. New hotels, guest houses, cottages and restaurant and entertainment facilities catering for up to 500 peo-

ple are to be built there. On August 12, Georgia’s Prime Minister, Giorgi Kvirikashvili, visited Bakuriani and its neighbouring Mitarbi area to see construction works of a new ski lift, expected to be finished by the end of the year. “This project will be beneficial for the local population, will boost development of tourism and will set Bakuriani on the list of popular international ski resorts,” Kvirikashvili said. The government head emphasized that several international companies have participated in designing the 10-15 year development concept for both Mitarbi and Bakuriani.


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BUSINESS

GEORGIA TODAY

AUGUST 16 - 18, 2016

New Manual for Melioration to Boost Agricultural Education & Agri-Business

Prof. Givi Gavardashvili (right) at a reception in the residence of the previous US Ambassador, Richard B. Norland, under the aegis of the Cochran Fellowship Program, 2014.

Eduard Kukhalashvili, Doctor of Engineering Science, Professor of the Engineering Faculty of the Georgian Technical University. Discussed in the manual, comprising 410 pages and consisting of 21 chapters, are all present-day developments compiled in the science of various world leading countries (USA, Israel, China, German, Poland, Russia, etc.) over the past 50 years that are required for professional growth in the strategic field of the country or in one of the high-priority subfields of agriculture – melioration. The manual, as clear by its title, consists of three main parts: irrigation, drainage and erosion, where innovative approaches to all three trends of melioration, as well as its problems, are provided in detail: soil-plant-water and the ways to solve issues by use of modern methods and technologies. The manual provides various engineering-biological innovative solutions for improvement of soil properties (modern trends of irrigation – raining down, drip irrigation, fertigation, etc.) and protection against erosion, new constructions of the combined three-floor drainage system (approved by Georgian patent) and solutions that have already been designed and put into effect by Prof. Gavardashvili. The issues discussed in chapters 20 and 21 are of particular interest- with Prof. Gavardashvili, with the financial assistance of USAID and NALAG, providing a climate outlook according to each municipality of Georgia for three different periods: 2015-2020, 2021-2050 and 2071-2100, as well as calculating melioration and forest resources risks

instructions of Academician Archil Prangishvili, Rector of the Georgian Technical University, based on recommendations on preparing a manual before expiry of the new accreditation period of the training program Agricultural Melioration held September 24-28, 2012, by the National Center of Experts for improving education level, as set out by the Ministry of Education and Science of Georgia. In the manual the author extends his special gratitude to the rector of the Georgian Technical University. With his support, the agricultural melioration program in the directions of professional, Bachelor’s, Master’s and Doctorial courses was accredited at the Ministry of Education and Science and put into effect in 2012 at the Engineering Faculty of the Georgian Technical university. From 2012 to date, the Engineering Faculty of the Georgian Technical University, in the subfield of Agricultural Melioration, and under the supervision of Prof. Gavardashvili, has seen two young Ph.D. candidates, Tamriko Supatashvili and Maka Guguchia, and Master’s candidate Valerian Mchedlidze, earn successfully relevant academic degrees. This was achieved with the financial assistance of the doctorial grant program of the Shota Rustaveli National Scientific Fund, another clear illustration of the development potential of innovative projects provided in the manual “Irrigation, Drainage, Erosion.” Givi Gavardashvili, Professor, Doctor of Technical Science, Head of the Doctoral Program in Agricultural Melioration at the Engineering Faculty of the Georgian Technical University, and

considering water demand of plants, soil and water resource conditions and climate change background. The author considers the significance of the problem at the highest scientific level for each municipality and discusses existing scientific research, climate sensitivity indicators and recommendations for reducing socio-economic risks in order to solve the problems caused by climate change. Fully represented in colored illustrations, the risks of irrigation, drainage, erosion and forest resources are calculated by the author to a high precision with research results laid down on colored maps – making the manual visually appealing to young scientists. The manual “Irrigation, Drainage, Erosion” was prepared under the direct

Director of the Tsotne Mirtskhulava Water Management Institute of the Georgian Technical University, has been cooperating with the program- Cochran Fellowship Program of the US Department of Agriculture - for more than 17 years, working with team leader Lev Kuchevsky, Senior Program Manager, Eastern Europe and Eurasia. Gavardashvili has merited recognition for his retraining of agricultural personnel in Georgia, enabling them to meet modern standards, and provision of relevant professional education to students, for example, by setting up an educational and scientific stand of drip irrigation at the hydro-technical laboratory, based on cooperation with the Water Management Institute.

Prof. Givi Gavardashvili with Lev Kuchevsky, Senior Program Manager of the Cochran Fellowship Program

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nder the aegis of the Cochran Fellowship Program at the Water Management Institute, Program Coordinator at the US Embassy to Georgia, Demna Dzirkvadze, organized a number of scientific workshops while Prof. Givi Gavardashvili and scientists and specialists of the Institute, with the aim of professional development, traveled to California and North Carolina, USA, and there gathered information regarding melioration, rational use of water resources, as well as protection against soil erosion. At the US universities and Water Management Associations the Georgian delegation became familiar with the achievements of agricultural melioration both in terms

of scientific and practical approach. The main objective of the Cochran Fellowship Program is to develop farm management and promote the raising of the agricultural education level of young specialists that in turn will result in agribusiness development. As a result of participation in the Cochran Fellowship Program, as well as based on the scientific and practical experience gained, the manual for agricultural melioration – “Irrigation, Drainage, Erosion,” authored by Prof. Gavardashvili, was published. Georgia has not seen such a publication in the past 50 years. The new manual “Irrigation, Drainage, Erosion” was compiled according to the currently operating accredited program Agricultural Melioration and is intended

for agro-engineering Bachelors of the faculties of Hydro-Engineering and Agricultural Sciences and Bio-System Engineering of the Engineering Faculty of the Georgian Technical University, as well as Masters, Ph.D candidates and young research scientists working in the fields of agro-ecology, engineering ecology and hydro-melioration. The manual can also be used by the faculties of Agriculture and Natural Sciences, including specialists of Environment Protection as well as other interested engineerspecialists. The science editor of the manual was Academician Otar Natishvili, the academician-secretary of the Agricultural Science Division of the Georgian National Academy of Science and the editor is


BUSINESS

GEORGIA TODAY AUGUST 16 - 18, 2016

9

Dechert OnPoint: A Positive Step Forward for the Civil Procedural Code of Georgia

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echert Georgia, through the contribution of partners Archil Giorgadze and Nicola Mariani, joined by senior associate Irakli Sokolovski as well as Ana Kostava and Ana Kochiashvili, is partnering with Georgia Today on a regular section of the paper which will provide updated information regarding significant legal changes and developments in Georgia. In particular, we will highlight significant issues which may impact businesses operating in Georgia.

Amendments to the Civil Procedural Code of Georgia (the “Procedural Code”) entered into force on 24 June 2016. The main focus of the overhaul were those regulations which are applicable to provisional measures in civil disputes; many Georgian businesses have been subjected to provisional measures against their movable or immovable properties. The amendment process included a long discussion on the disadvantages of the existing procedural framework, and ultimately legislators decided to introduce new mechanisms. According to the explanatory note to the new law, the amendments aim to best serve and equally protect the interests of both parties to civil disputes. This edition of OnPoint provides an overview of the amendments and the new regulatory framework.

PROBLEMS WITH THE PREVIOUS REGULATIONS Generally, each claimant can apply to the court with an application for provisional measures. The list of possible provisional measures includes freezing the respondent’s properties or placing

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TBILISI - ISTANBUL ATATURK AIRPORT

ISTANBUL ATATURK AIRPORT - TBILISI TBILISI - ISTANBUL SABIHA GOKCEN AIRPORT ISTANBUL SABIHA GOKCEN AIRPORT - TBILISI BATUMI - ISTANBUL ISTANBUL - BATUMI

an injunction against the respondent’s taking of certain actions (e.g. selling or otherwise transferring, mortgaging, pledging or otherwise encumbering the property, etc.). The application for such provisional measures shall refer to the conditions that demonstrate the necessity for the provisional measure. The claimant should also show the court how the absence of the provisional measure can affect the rights and interests of the claimant and the enforceability of the final court decision, in case the court finds in favor of the claimant. Georgian case law includes a significant number of cases where the court defined the provisions of the Procedural Code and attempted to set out clear clarifications for the use of provisional measures by the court. One of the main challenges in Georgian case law is that the provisional measures shall be used based on the specific circumstances of each case, which makes it almost impossible to have a clear-cut rule for their application. However, case law and the Procedural Code are absolutely clear on one aspect: when applying provisional measures the court should equally consider the interests of the claimant and the respondent and strike a balance between their interests. Despite a substantial amount of case law, provisional measures remain controversial. Practice has shown that they are often used against the respondent when the claimant has not provided sufficient argumentation and has not proven the necessity of provisional measures. As a result, in some cases the material rights of respondents are restricted and the operations of business entities are disturbed, suspended or even paralyzed.

FLIGHT NUMBER

TK 379 TK 387 TK 383 TK 386 TK 382 TK 378 TK 381 TK 381 TK 380 TK 391 TK 393 TK 390 TK 392

WEEK DAYS

EVERYDAY

EVERYDAY 1/2/4/5/6/7 3 EVERYDAY 1/2/4/6/7 1/3/4/5/7 1/2/4/6/7 1/3/4/5/7

DEPARTURE

ARRIVAL

02:35 06:35 22:55 01:40 18:10 21:15 04:25 05:05 19:40 10:35 20:15 06:25 16:20

04:05 08:05 00:30+1 04:55 21:30 00:30+1 05:50 06:30 22:55 11:40 21:20 09:20 19:20

striking a balance between the interests of adverse parties, especially when the parties are business entities.

CONCLUSIONS

In some cases the property subject to the provisional measure has a much higher value than stated in the claim of the claimant, which irreparably damages the interests of the respondent.

NEW REGULATIONS ON PROVISIONAL MEASURES In order to deal with the above mentioned controversial issues, a new provision was introduced into the Procedural Code. The provision directly restricts the application of a provisional measure to the property, the value of which is higher than the claim. The exception can be made only if the respondent owns one property item. In such case, the respondent is entitled to offer a separate property item with a value comparable to the claim or request the consent of

10 Galaktion Street

the court on division of the property. The new regulations also require that the order of the court specify the amount of the claim. In this sense, the Tbilisi Appellate Court has recently issued a decision finding that freezing the bank accounts of the respondent is a measure of last resort. The Appellate Court specifically highlighted the risks of paralyzing the company by such invasive measures and found that the bank accounts of the respondent shall only be frozen if the respondent has no other property against which a provisional measure can be used and other conditions for the use of the provisional measure are present. In sum, the recent changes to the Procedural Code and the case law of Georgian courts underline the necessity of

The new regulations described above show a clear trend toward a more flexible system in terms of provisional measures: a system which equally protects the claimant and the respondent and is actively concerned with the potential outcomes of the measures for business entities and has more flexibility to deal with complex and controversial issues with regard to the provisional measures. The new regulations are a positive step forward for Georgia’s overall business climate. *** Note: this article does not constitute legal advice. You are responsible for consulting with your own professional legal advisors concerning specific circumstances for your business. Dechert’s Tbilisi office combines local service and full corporate, tax and finance support with the global knowledge that comes with being part of a worldwide legal practice. Dechert Georgia is the Tbilisi branch of Dechert LLP, an international specialist Law firm that focuses on core transactional and litigation practices, providing world-class services to major corporations, financial institutions and private funds worldwide. With more than 900 Lawyers in our global practice groups working in 27 offices across Europe, the CIS, Asia, the Middle East and the United States, Dechert has the resources to deliver seamless, high quality legal services to clients worldwide. For more information, please visit www. dechert.com or contact Nicola Mariani at nicola.mariani@dechert.com.

Tel: (995 32) 2 45 08 08 E-mail: info@peoplescafe.ge


10

SOCIETY

GEORGIA TODAY

AUGUST 16 - 18, 2016

Dublin Library Docs Reveal Interest of Henry VIII, Elizabeth I in Georgian Battles BY VAZHA TAVBERIDZE

I

f there is something we Georgians are really good at celebrating, it’s our history. Though facing stiff competition from a certain neighbor in the Caucasus in this noble endeavor, it can be said that Georgians are fiercely proud (and rightfully so) of our heritage. Therefore, it always becomes a major news story and a matter of much rejoicing when some snippets of our history, previously unknown, are revealed. One such story hit our website late Saturday evening, as the Art Palace director Giorgi Kalandia jubilantly wrote to us about a recent discovery made in the National Library of Ireland. Here is our official story on the matter: “The National Library of Ireland has presented the Art Palace of Georgia with 16 unique historical documents that were preserved in the library. The documents consist of royal correspondence letters attributed to two famous monarchs that ruled over the British Isles: Henry the VIII (r. 1509-1547) and Elizabeth I (r. 1558-1603).

Contact: www.edelbrand.ge Phone: 599 461908

Apparently, both of these royal figures shared a keen interest in Georgian affairs and so commanded their ambassadors in Constantinople to send them extraordinary correspondence meticulously detailing the matters-at-hand in the KartlKakheti and Samegrelo provinces. Each of the documents is handwritten and all were unknown to Georgian society to date. Some of the letters are written in Latin, and the remainder in English. The project that aims to transfer the copies of the unknown English and Irish documents dedicated to Georgia to the Arts Palace (State Museum of Theater, Music, Cinema & Choreography, Kargareteli Str. 6) is being carried out through the support of Ambassador of Georgia in the Republic of Ireland, Giorgi Zurabishvili, and embassy representative, Natia Kalandia. Additionally, this year, Cartu Fund funded a project that aims to translate and research such historic documents. The project will ensure that in the near future, hundreds of European documents about Georgia, dated from the 16th to 18th century, will become accessible for researchers and scholars alike.” Continued on page 11


SOCIETY

GEORGIA TODAY AUGUST 16 - 18, 2016

11

VIII reveals that the author was suitably impressed by the battle prowess of Georgians: ''25,000 Georgians met the Persians on their return, but not being able to prevail on them to renew the fight, pursued them... The latter, reaching a rapid river, sent forward their horses into the stream to moderate the violence of the current, but lost more than 4,000 men and 30 gems, which were afterwards recovered by the Georgians." While the letters might betray a hint of historical inaccuracy here and there, their uniqueness is unquestionable, and when translated and printed into Georgian, they’ll prove a valuable asset for both scholars and history geeks. Of especial importance is the fact that, judging from the nature of these letters, Georgia was undoubtedly considered a diplomatic power by the greats in the West. And lastly, giving credit where its due – without the dedication and work of Mr. Kalandia and his partners in the Republic of Ireland, including the Chargé d'Affaires of Georgia, Mr. George Zurabashvili, these materials would possibly have had to stay in the annals of the Irish library for many more years. To make documents like that accessible to Georgian scientists and, consequently, the general public, is a noble deed indeed. And the search goes on- and with a pace like this, the British chronicles might soon yield many more secrets of days past.

King Henry VIII (1509-1547)

Continued from page 10 If you, like us, became interested what it is that Henry VIII and Queen Elizabeth might have wanted to know about Georgia, here are the answers that Mr. Kalandia and his team promptly provided: Most of the letters reflect the Georgian people's continual fight for their independence. During the 16th century, Georgia found itself in a vastly unequal fight against two great empires: Persia and Turkey. Aside from battle accounts, the letters report on the customs and traditions of Georgian people and especially their devotion to the Christian religion. We can say that the Ambassadors present Georgian people to Henry VIII and Queen Elizabeth I as a warrior people that are fiercely devoted to their faith and homeland. A Fragment from official correspondence sent to Henry

The National Library of Ireland has presented the Art Palace of Georgia with 16 unique royal letters attributed to two famous monarchs that ruled over the British Isles: Henry the VIII (r. 15091547) and Elizabeth I (r. 1558-1603)

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Issue #870 Business  

August 16 - 18, 2016

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