EY GEORGIA TAX & LAW BRIEF
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1 EY GEORGIA TAX & LAW BRIEF MARCH, 2017 Amendments to Civil Procedure Code of Georgia On 14 March 2017, an amendment to the Civil Procedure Code of Georgia became effective. According to the amendments, cassation appeal in property or non-property disputes is admitted if the cassator proves that: a) the case contains a legal issue, the solution of which would facilitate development of the legal system and establish a uniform judicial practice; b) the Supreme Court of Georgia has not made a decision on a similar legal issue before; c) after examining the cassation appeal, the Supreme Court of Georgia may make a decision, which is different from a previous decision on a similar a legal issue; d) the Court of Appeals decision differs from the previous practice of the Supreme Court of Georgia with regard to a similar legal issue; e) in examining the case, the Court of Appeals significantly violated the norms of substantive and/or procedural law that could have affected the outcome of the hearing; f) the decision of the Court of Appeals is in conflict with the Convention for the Protection of Human Rights and Fundamental Freedoms and Precedent Law of the European Court of Human Rights with regard to similar legal issues; g) the second default decision of the Court of Appeals or a judgement of the Court of Appeals upholding the default decision is being appealed. Source and date of publication: The Legislative Herald of Georgia, 13/02/2017.
2 Amendments to the Administrative Procedure Code of Georgia On 14 March 2017, an amendment to the Administrative Procedure Code of Georgia became effective. According to the amendments, the Supreme Court of Georgia admits a cassation appeal if the cassator proves that: a) the case contains a legal issue, the solution of which would facilitate development of the legal system and establish a uniform judicial practice; b) the Supreme Court of Georgia has not made a decision on a similar legal issue before; c) after examining the cassation appeal, the Supreme Court of Georgia may make a decision, which is different from a previous decision on a similar a legal issue; d) the Court of Appeals decision differs from the previous practice of the Supreme Court of Georgia with regard to a similar legal issue; e) in examining the case, the Court of Appeals significantly violated the norms of substantive and/or procedural law that could have affected the outcome of the hearing; f) the decision of the Court of Appeals is in conflict with the Convention for the Protection of Human Rights and Fundamental Freedoms and Precedent Law of the European Court of Human Rights with regard to similar legal issues; Source and date of publication: The Legislative Herald of Georgia, 13/02/2017. Expected Amendments to Law of Georgia on Public Procurement On 17 March 2017, a bill was introduced to the Parliament of Georgia on amending the Law of Georgia on Public Procurement. According to the bill, replacement of one or more motor vehicle(s), computer equipment(s) and/or electric installation(s) with one or more motor vehicle(s), computer equipment(s) and/or electric installation(s) that is/are new or has/have improved features, will not be subject to a simplified procurement. Therefore, such items will have to be purchased through regular tender procedures. The bill becomes effective upon publication. Source and date of publication: the website of the Parliament of Georgia, 17/03/2017. Bill on Deposit Insurance System On 3 March 2017, a bill was introduced to the Parliament of Georgia on Deposit Insurance System. The bill suggests a legal framework for administration of the deposit insurance system, the deposit insurance agency and the fund in Georgia. The bill regulates mandatory insurance of deposits placed with commercial banks in Georgia by individuals and any relationships related to it.
3 According to the bill, this law, with the exception of chapter 3 article 11 paragraph 1 subparagraph b and f and paragraph 4, article 12 paragraph 2, articles 13 and 15 and chapters 4 and 5, will become effective upon publication; chapter 3 article 11 paragraph 1 subparagraph b and f and paragraph 4, article 12 paragraph 2, article 13 article paragraphs 1-4, articles 14 and 15 and chapters 4 and 5 of this law will become effective on 1 January 2018, and chapter 3 article 13 paragraph 5 of this law on 1 January Source and date of publication: The Legislative Herald of Georgia, 03/03/2017. Landmark Court Decision The Court of Appeals examined payment of insurance premium Background: On 1 June 2012, JSC IE (hereinafter - Plaintiff) and LLC A (hereinafter - Respondent) made a health insurance agreement (hereinafter Agreement). The Plaintiff demands payment of the insurance premium due to the Respondent s failure to observe contractual obligations, according to the appeal claim. The Plaintiff claims that the Respondent insured the individuals included in Annex 2 of the Agreement for the term of 12 months, and undertook to pay the total of 7,260 GEL of insurance premium, however, paid only 1,210 GEL, a two-month premium. The Respondent admits the insurance relationship between the parties, however asserts that the insurance service agreement was made for two months and extension of the term depended on whether the insured was happy with the service offered by the insurer. According to the Respondent, after the agreement term (two months) elapsed, the Respondent decided not to extend the agreement, notifying the insurance company by phone. The Respondent therefore believes that the legal relationship between the parties under the insurance contract terminated in August 2012 and therefore LLC A has no obligations to JSC I.E. According to the appeal claim, the requirements of the Plaintiff are to charge the Respondent (in favor of the Plaintiff) with: 1. payment of 6,050 GEL, 2. payment of 1, GEL as unearned income, and 3. payment of 1.90 GEL per overdue day as unearned income from the date the appeal claim was filed until the court decision is enforced. Civil Court With its decision of 10 November 2015, Tbilisi City Court partially satisfied the complaint: the Respondent was charged with payment of 6,050 GEL of insurance premium in favor of the Plaintiff, but the complaint was not satisfied in the part of unearned income claims. The Respondent appealed the Tbilisi City Court decision, demanding the appealed decision to be overturned and a new decision to be made that will not satisfy the complaint.
4 Tbilisi City Court decision was appealed by the Plaintiff too, demanding the appealed decision to be overturned in the part of waiving the claim and a new decision to be made that will fully satisfy the complaint. Court of Appeals On 27 May 2016, Tbilisi Court of Appeals made a decision on case N2B/ The Court of Appeals decided that the facts of the case that LLC A and JSC I.E. signed a health insurance agreement for the term of 12 months are not proven by the evidence in the case. According to the Court of Appeals, the condition precedent to considering the signatures made by the Respondent on the annexes to the Agreement as the signatures on the complete Agreement would exist if the provision that Annexes are inseparable part of the Agreement were included in the document, i.e. the Annex, personally signed by the party. According to the Court of Appeals, the information about annual amount of the insurance premium mentioned in a column of the Annex cannot be deemed as the validity term of the agreement. Besides, the next column of the same Annex which also contains information about insurance premium (for the family plan), includes only the amount of a monthly insurance premium. This works against the Plaintiff s reasoning that the parties had determined the amount of insurance premium for one year in the Annex because the agreement had been made for 12 months. The Court of Appeals decided that the civil law stipulates the right to expression of will in both oral and written forms, as well as through implicative actions. The Court of Appeals noted that no evidence presented in the case proved any actions had been taken by the insured, the policyholders or the insurer to provide the court with inner conviction founded upon assurance gained by evidence that the term of the disputed agreement was one year. The Court of Appeals determined that considering all the above said, the Respondent s appeal claims must be fully satisfied, by changing the appealed decision, a new decision must be made that will not satisfy the complaint. The Respondent appealed the decision of 27 May 2016 by Tbilisi Court of Appeals on case N2B/ with the Supreme Court of Georgia, however, the cassation appeal was not admitted. Therefore, the decision by Tbilisi Court of Appeals is final and legally binding. Source and date of publication: Tbilisi Court of Appeals webpage, 07/03/2017 Competition Law Decision by LEPL Competition Agency on declining launch of investigation based on the complaint of 4 January 2017 by iplus LLC Based on Order N04-55 of 1 March 2017 (hereinafter the Order) by the Chairman of LEPL Competition Agency of Georgia (hereinafter the Agency), a decision was made on declining launch of investigation based on the complaint of 4 January 2017 by iplus LLC (hereinafter - the Claimant).
5 According to the Order, the complaint refers to an attempt of itechnic LLC (hereinafter the Respondent) to delude its consumers by using the Apple trademark, which, the Claimant believes is a possible breach of Article 11 3 of the Law of Georgia on Competition. According to the Order, the analysis of the materials presented by the Claimant to the Agency does not clearly identify what constitutes the limits of illegal use of the Apple trademark and what is the status of the Claimant and the Respondent economic agents in this relationship. According to the Order, based on the information provided by Sakpatenti, among the trademarks protected in Georgia, neither the Claimant nor the Respondent economic agents represent holders of the international trademarks of Apple Inc. and none of them denies that they are not official representatives of Apple in Georgia. Therefore, when it comes to the right of using the trademark, they are not each other s competitors. According to the Order, based on the case materials, it is impossible to identify the form of the damage caused to iplus LLC and the cause-and-effect link between the Respondent s actions and the possible damage caused to the Claimant. It is also noted in the Order that considering no information was presented about damages, it is not clear whether iplus LLC, as an entity, has the right to file such a claim with the Agency in the first place. According to the Order, complaint N01/01 of 4 January 2017 filed by iplus LLC was declined. Source and date: LEPL Competition Agency website
6 Contact Information: Zurab Nikvashvili Partner Head of Tax & Law in Georgia and Armenia EY Georgia LLC Kote Abkhazi st. 44, 0105, Tbilisi, Georgia Office: +995 (32) Dr. George Svanadze LL.M., MLB (Bucerius/WHU) Head of Law Practice Tax & Law EY Georgia LLC Kote Abkhazi st. 44, 0105, Tbilisi, Georgia Office: +995 (32) EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com EY Georgia LLC All Rights Reserved This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice. The views of parties set out in this publication are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were expressed.
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