The Opinion of the Ministry of Justice on the Namakhvani HPP project, published by “Mtis Ambebi” yesterday that previously was unlawfully kept secret, unequivocally confirms the incompatibility of the terms of the Namakhvani HPP Agreement with the state interests. The Opinion criticizes the scale and scope of the commitments made by the government and state-owned companies while concluding that "on the other hand, [the company's] rights are protected to the maximum extent and its responsibilities and obligations are limited."

The Opinion of the Ministry of Justice, which consists of 22 critical remarks, is not almost at all integrated into the text of the signed agreement. This means that the agreement that is currently in force contains significant legal risks for the state. The Opinion highlights the problematic issues that became a subject of our vocal criticism as soon as the contract was made public, and which demonstrates the extreme imbalance of the interests of the state and the private company in the contract.

The public is aware that a few weeks ago, in response to the current protest the Prime Minister Irakli Gharibashvili instructed the Ministry of Justice to study the agreement. It is obvious that this action aims at creating a false impression that the government has considered the matter and has responded to the public concerns; however, in reality, the government was aware of the critical position of the Ministry of Justice and it did not take it into account. Moreover, the government did not insure those risks that were indicated by the Ministry and it signed the agreement that contained legal risks.

The Opinion of the Ministry of Justice, which, as it turns out, was prepared in March 2019, a month before the conclusion of the agreement and was signed by then the First Deputy Minister Mikheil Sarjveladze, was illegally kept secret by the Ministry. Prior to the signing of such an agreement, the Ministry of Justice shall assess the legal risks of the agreement and, if requested, make this assessment public as the public has the right to know the content of an Opinion. This whole time, the Ministry not only violated the requirement of transparency established by law, but also despite the high public interest regarding its Opinion deliberately refused to disclose it and remained silent about its position.

As of now, after announcing the Conclusion of the Ministry of Justice to the public, the Ministry is responsible for formally stating its Opinion and position on the legal risks of the Namakhvani HPP Agreement and provide explanation as to the process that resulted in the Agreement being signed without the considerations of the legal risks.

In addition to the general assessment of the Ministry of Justice that the agreement refers to the imbalance of interests of the signatories, some of the specific remarks of the Ministry substantially coincide with the findings of the Social Justice Center:

The evaluation of the contract published by us, similarly to the Opinion of the Ministry of Justice, negatively evaluates that although the state has no control over the force majeure circumstances under the Agreement the state still bears the heavy financial liability and commits to compensate the company.

Similar to our assessment, the Ministry of Justice is, also, critical of the unequal term of the Namakhvani HPP Agreement that alleviates the obligations of the company in times of a political force majeure, while leaving the obligations of the Georgian government and other public institutions fully in force.

The Opinion of the Ministry of Justice criticizes the provisions of the contract that oblige the government to compensate the damage not only to the company, but also to other project participants, including contractors. In our assessment of this issue, it is stated that according to the contract, the company participating in the project is defined as the company (along with the affiliates), the sponsors, and the contractors, which unreasonably expands the scope of the responsibility of the government. Like the Ministry of Justice, the Social Justice Center found the inclusion of contractors in this definition particularly problematic: the company may hire more than one contractor during the project implementation process, and based on this provision, the state will have to compensate all of them.

The Ministry of Justice also points to the need to revise the terms of termination of the Agreement. It is our assessment that the unilateral and indefinite financial obligations of the government are related to the terms of the contract termination and thus, put the state in a particularly disadvantageous position. The Social Justice Center is critical of the fact that according to the contract, no matter what happens around the project, and regardless of whether the contract is violated by the government or by the company, the financial responsibility, in any case, lies with the state. The inevitability of the government’s financial liability and the extremely wide scope of that responsibility was one of the reasons why the Agreement was assessed by us as containing potentially significant fiscal risks. Presumably, this is why the Ministry of Justice, points out in its Opinion that in assessing the termination clauses of the Agreement the position of the Ministry of Finance should have taken into account. The opinion of the Ministry of Finance is kept secret to this day and there is a reasonable doubt to believe that this important document on fiscal risks does not exist at all.

The Ministry of Justice also deems the restriction of the government's remedies unacceptable; In particular, the Ministry notes that the agreement provides for state can only demand the payment of the fines from the Company and negatively assesses the fact that, contrary to the regulation of the Civil Code of Georgia, the agreement does not allow that the company to pay damages to the state. In the assessment of the Social Justice Center, in addition to this limitation, it has also been criticized that this restriction applies only to the government, while the company is entitled to claim compensation for all kinds of damages.

It is our assessment that the combination of these unjust and unbalanced contractual terms conditions extreme inequality of the parties to the Agreement and the concession of the public interests in favor of the private interest. Moreover, the Opinion of the Ministry of Justice contains several other critical remarks, the absolute majority of which were not reflected in the Agreement by the government.

Although the remarks set out in the legal opinion of the Ministry of Justice are not reflected in the final version of the Agreement, after disclosing the critical content of the opinion, representatives of the authorities utilize all means to mislead the public into thinking that those remarks were taken into account.

In reality, an absolute majority of the remarks of the Ministry of Justice is not reflected in Namakhvani HPP Agreement:

After leaking of Namakhvani HPP Agreement, another document “paper of concurrence” appeared in the media, which, according to JSC “Georgian Energy Development Fund”, sets out the status of the remarks of the Ministry of Justice.

Even in this document, number of remarks are marked as “not reflected” due to the fact that “the investor does not agree with the content of the remark”. Furthermore, those paragraphs which are marked as “reflected” are even more attention deserving. Most of the remarks of the Ministry of Justice is worded in a way that it demands a review of the problematic clauses of the Agreement, this demand is accompanied by relevant argumentation. Thus, on all of the remarks by which the Ministry of Justice deems certain clauses problematic and calls upon the Ministry of Economy to review them, “paper of concurrence” states that the remark was “reflected”, because the “issue was submitted to the government of Georgia for the final decision” – in “reflection” – only submission to the government and subsequent review/additional evaluation” is meant, however, why the respective remark was not reflected in the agreement as a result of the review - is not stated. Therefore, this document once again confirms that the largest part of the remarks of the Ministry of Justice is not reflected in the Agreement.

Moreover, following the publication of the Opinion of the Ministry of Justice, another false information - that the opinion was not kept secret before - spread. The Public is aware that our organization has been attempting to obtain this opinion from authorities for a long time; in parallel to public calls we have been officially applying to the relevant state agencies, the Ministry of Justice and the Ministry of Economy, Administration of the Government with no success. For this reason, Social Justice Center has even brought a complaint to the court demanding the disclosure of the opinion of the Ministry of Justice.

It is worth noting that in several paragraphs of the Opinion of the Ministry of Justice it is stated that while deciding on the certain issues it is important to take into account the position of the Ministry of Finance of Georgia. In the “paper of concurrence” prepared by the Ministry of Economy, as a response to those remarks of the Ministry of Justice it is noted on numerous occasions that the specific issue would have been submitted to the Ministry of Finance for its consideration. It has been a long time since Social Justice Center first demanded the disclosure of the Opinion of Ministry of Finance. Apart from the fact that this opinion is imperatively required by the legislation, the documents that were published yesterday, once again demonstrated that any discussion on the benefits of Namakhvani HPP and the economic feasibility of its implementation without the opinion of Ministry of Finance is pointless and illogical.

In order to prevent further manipulations, when the government by spreading false information attempts to evade the critical questions of the public, we once again call on the government of Georgia, to put an end to the illegal practice of concealing and closing of the significant documentation related to Namakhvani HPP project and immediately make all the documents public that will allow the society, to verify the accuracy of the information spread by the different sources.

In particular, given the extremely high public interest, the following documents shall be made public immediately:

• The draft version of the Agreement on which the opinion of the Ministry of Justice was issued;
• The opinion of the Ministry of Finance of Georgia;
• Cost-benefit analysis of the project;
• The explanatory note of the Decree of the government of Georgia dated April 23, 2019 (which approved the Namakhvani Agreement) together with related documentation.

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