Georgia vs. Kaladze?
06 October, 2011
Georgia  vs. Kaladze?

Georgian State and Arsenal City project initiated by Georgian legionary of football club “Milan” Kakha Kaladze hired a legal company to find solution to the two-year dispute whether or not the investor failed to meet its obligations. 
Arsenal City, the USD 1.5 billion-worth real estate project started by famous Georgian soccer star in cooperation with ex-Prime Minster of Georgia Zurab Nogaideli in spring of 2008, faced problems in attracting promised

investments within the timetables due to the war with Russia in August of 2008 and global financial crisis. 
The project’s idea was to construct a completely new mini-town on 80 ha on the Arsenal hill in the old Tbilisi within 10 years.  The development compound was to consist of administrative [including governmental residences] and residential buildings, conference centers, villas, office and retail spaces, five-star hotels and leisure centers. According to the preliminary estimates the project “Arsenal” was supposed to contribute to the growth of GDP by 1% and condition creation of about 25 thousand working places. Arsenal Development company is in charge with the project.
Kaladze bought the land on Arsenal Mountain with the existing buildings for USD 38 million in 2008. According to the contract signed with the Ministry of Economic and Sustainable Development of Georgia (MOED), the payment had to be cleared by December of 2008 and USD 700 million should be invested by 2016.
Kaladze paid the first tranche of about USD 19 million but failed to attract remainder sum within the deadline due to financial crisis aggravated by August war and asked Georgian government to delay timelines. Georgian government refused and started charging the failed investor by USD 19 thousand per overdue day for unfulfilled obligations.
Kaladze repeatedly appealed to MOED to reschedule the project terms before the deadline expired and required to postpone the privatization and investments implementation deadlines by three years, but to no avail. The famous soccer player even appealed to his Excellency President of Georgia for help through an open letter but all attempts turned out futile.
And now Arsenal City owes to Georgian state about USD 15-16 million in the face of fine above the unfulfilled privatization obligations totaling to approximately USD 19 million.
However in spring of 2011 Kaladze’s company found out that about 14 hectare out of the land privatized for Arsenal City project was in double ownership as far as Georgian government sold the questioned land plot twice. In fact the disputed land was already in ownership of Patriarchy of Georgian Orthodox Church [that deploys a large monastery complex in the adjacent area] when Georgian government sold it to Kaladze, the news agency Pirveli reported in this past May. 
To find the truth Milan legionary did not rule out to refer to London arbitrage court. Ministry of Economic Development does not make any comment respective to Kaladze case. However later in this past summer Georgian justice ministry offered to find solution through independent legal expertise that is already on. “This expertise should find out whether or not Kaladze failed to meet investment obligations and whether or not the dispute must be solved through legal pursuit or private agreement,” Khatuna Iosava, a Spokesperson of Justice Ministry explained to Georgian Journal. She did not elaborate details of the expertise at the moment.

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