Georgia has lost its appeal in a long-running arbitration case against Russian energy giant Inter Rao, with the International Centre for Settlement of Investment Disputes (ICSID) upholding a $76 million compensation award. The decision, published on August 21, 2025, rejected Georgia’s request to annul the earlier ruling issued on October 27, 2022.
Background of the dispute
The case originated in 2017 when Inter Rao’s Dutch-registered subsidiaries, Gardabani Holdings B.V. and Silk Road Holdings B.V., initiated two arbitration claims against Georgia.
The disputes were split between two arbitration bodies:
- TheArbitration Institute of the Stockholm Chamber of Commerce which ordered Georgia to pay $112 millionin September 2022.
- ICSID, operating under the World Bank, which one month later awarded an additional $76 million.
The ICSID tribunal clarified that its $76 million award was included within the $112 million already determined in Stockholm rather than an additional sum.
Appeals and current status
Georgia contested both decisions. While the Stockholm arbitration appeal is still pending, ICSID has now definitively upheld its award, meaning Georgia must pay the $76 million.
It is unclear whether this amount covers interest accrued since 2022 which could significantly increase the total compensation due.
Basis for Inter Rao’s claims
Inter Rao, through Gardabani Holdings, owns the Khramhesi 1 and Khramhesi 2 hydropower plants, as well as a 75% stake in Telasi, Tbilisi’s electricity distribution company.
The arbitration rulings were based largely on a 2011 memorandum signed between Georgia and Inter Rao which guaranteed that electricity tariffs would not be reduced for 15 years. The tribunal found that Georgia breached this agreement, giving Inter Rao, as a Dutch investor, the right to claim damages under the bilateral investment protection treaty between Georgia and the Netherlands.
With the ICSID appeal exhausted, Georgia faces a binding obligation to pay at least $76 million. Whether additional payments, including accrued interest, will be required remains uncertain.
The Ministry of Justice has not yet issued an official response.
