Small Carriers vs. State
03 October, 2013
Small Carriers vs. State

Georgian small-sized carrier companies won the case at the appellation court against the Finance Ministry of Georgia on providing special treatment to the state-owned Georgian Post thus putting the state carrier in the monopolist position. The Ministry may appeal to the supreme court; however, as the Transparency International Georgia, a non-governmental watchdog defending the private carriers’ rights at court advises, the government had better comply with the appellation court’s decision or else face more losses than gains probably.

On 19
September, Tbilisi Appeals Court upheld the ruling by Tbilisi City Court, annulling an order of the Ministry of Finance of Georgia (MOF) that gave preferential treatment to Georgian Post due to which commercial activities of small-sized carriers became practically impossible. As a matter of fact, the annulled order was issued to cancel the previous one introduced early this year and the actual reason leading private carriers to either suspension of its operation or act through Georgian Post and face 25% higher expenses. The point is that the new regulation required stricter licensing terms according to which private carriers might implement customs clearance procedures only if they were reputable and experienced, owned a warehouse, managed to install own special software system for declaring cargos in electronic system, and organize timely payment of import duties and the service fee by the importer. TI Georgia found the new terms violating competition rules as well as countering to Georgian legislation. MOF put out anti-smuggling policy as an excuse to unfairly stringent rules to which only Georgian Post turned out capable to fit. Ultimately 10 carriers stopped activity facing bankruptcy. Two tried to find the truth through the court and asked for help TI Georgia. Meanwhile, MOF went on a sort of concession and in April of 2013 issued a new Order canceling the hazardous licensing terms since January 1, 2014 that actually aimed to keep the disputed regulation in force for 8 months more than enough to oust small and medium sized shipping companies off the market and insure monopolist position to Georgian Post. Carriers won the both civil and appellation courts against this Order. And whether or not the Ministry will go ahead with the litigation process at the last chain of the Supreme Court, TI Georgia plans to file a lawsuit in the court requesting that the Ministry should pay compensatory damages to the carriers. To make the compensations as small as possible, TI Georgia advises the MOF to comply with the appellation court decision for Supreme Court. Otherwise procedures will be protracted and the amount of the carriers’ financial losses will continue to rise.
Tea Machavariani, founder of Stargroup LLC, which was directly affected by the Order, plans to ask for at least GEL 2 million of compensation for both financial and health damages the MOF regulations made to her. MOF makes no comments as of yet however its two week period for appealing the higher instance court expires soon. Machavariani believes MOF is intent to keep the monopolist position to Georgian Post and will go ahead either by court procedures or imposing artificial technical barriers in the future.
“I have already complied with almost all new technical requirements but now they claim my company lacks experience. Stargroup was actually founded in 2012 but I had been in carrier business since 1993 until 2008 when the ex-ruling power ousted private carriers from the market. I got a cancer recently as a result of the stress I have been going through since MOF undertook new regulations and crackdown on me starting this year. I will ask for no less than GEL 2 million in compensation,” Machavariani told Georgian Journal.


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