On 21 September 2015, the global law firm of Baker & McKenzie, acting on behalf of KazTransGas JSC, delivered a letter to Georgian officials proposing that the parties begin negotiations to settle the dispute over the investments of KazTransGas JSC in KazTransGas-Tbilisi LLP without resorting to arbitration.
KazTransGas JSC created KazTransGas-Tbilisi LLP in 2006, pursuant to the Investment Memorandum signed between KazTransGas JSC and the Georgian Ministry of Economic Development on 26 December 2005 to ensure the supply of natural gas to the capital of Georgia and adjacent regions.
Between 2006 and 2009, the total investments of KazTransGas JSC in the development of KazTransGas-Tbilisi LLP and in the gas transit system of Tbilisi amounted to approximately 130 million US dollars.
Despite KazTransGas JSC's 100% ownership of OOO KazTransGas-Tbilisi, the Kutaisi City Court, by its 16 March 2009 Ruling, satisfied a request by the National Regulatory Commission of Georgia for Energy and Water Supply to approve the appointment of a Special Administrator of KazTransGas-Tbilisi LLP. As a result, KazTransGaz JSC is no longer able to participate in the business operations of its subsidiary.
In the opinion of KazTransGas JSC, the Georgian authorities have breached its rights as a foreign investor under Georgian national law as well as international treaties for the protection of investments.
KazTransGas JSC is hoping that the Georgian party will take a constructive approach and that the dispute will be resolved without arbitration.
If the dispute cannot be settled through negotiation, KazTransGas JSC will refer it to investment arbitration in accordance with the Energy Charter Treaty of 17 December 1994, the Agreement between the Government of the Republic of Kazakhstan and the Government of Georgia on Encouragement and Reciprocal Protection of Investment of 17 September 1996, and other international treaties as well as the national legislation of Georgia, and will seek the recovery of control over KazTransGas-Tbilisi LLP as well as damages equal to or greater than the amount of its investments.