Georgia loses $76 million arbitration dispute with Russian energy giant Inter Rao

Georgia has lost a $76 million arbitration dispute with the Russian energy giant Inter Rao. The  dispute has been ongoing at the International Center for Settlement of Investment Disputes (ICSID) with the World Bank since 2017. 

Georgia has  also lost a parallel investment dispute with Inter Rao at the Stockholm Arbitration Tribunal, in which the country was ordered to pay $112 million. It is not yet known which of these two judgments Georgia will have to enforce, because according to the existing definition, compensation for both disputes is not collected.

The subject of the dispute with Inter Rao was a tariff controversy. The investor claimed that Georgia had violated the terms of the investment agreement and a relevant memorandum, which caused it multi-million losses.

Inter Rao owns 75 percent  of the shares of Telasi, the company responsible for Tbilisi’s energy supply. In addition, the Russian energy giant owns two hydroelectric power stations in Georgia, Khramhesi 1 and Khramhesi 2, through the Netherlands-based company Gardabani Holdings B.V. Until December 2016, it also owned the old Gardabani thermal station.

A memorandum was signed between Inter Rao and the Georgian government on March 31, 2011, under the United National Movement government, where the Georgian authorities gave the company a guarantee that the electricity tariff in the country would not decline.