Israeli company Elbit Systems sues Georgia for USD 100 million

Israeli defense electronics company Elbit Systems has sued the Georgian Government at the UK High Court of Justice for an amount of about USD 100 million. According to the press release of the Company, the lawsuit was filed as a result of the Georgian government’s failure to pay amounts due to the Company in connection with deliverable items under several contracts signed in 2007.

The Israeli company claims the Georgian side has not paid for unmanned drones Hermes 450. According to Israeli media, the company has provided the Georgians side with about 40 unmanned aircraft systems. Israel stopped selling arms to Georgia following the Russian-Georgian war in August 2008, Israeli media reports.

Georgian officials have confirmed that Elbit Systems have filed a lawsuit against Georgia, however have refrained from giving out any additional details. Speaking to the journalists on Monday, Georgian Deputy Foreign Minister, Nino Kalandadze said the Ministry “does not possess detailed information” on which debt and deal the Israeli side is talking about. “As far as we know, the abovementioned company has already applied to court. So the court will find out how justified the Company’s lawsuit against Georgia is.”

At the same time the Georgian Deputy Foreign Minister denied reports disseminated by Israeli and Georgian media outlets that Israel has allegedly listed Georgia among “dangerous states” and has suggested that its citizens refrain from traveling to this country during religious holidays. “The Georgian Foreign Ministry contacted the Israeli representation in Georgia, which did not confirm this information,” Kalandadze noted “If indeed this is true, speculation that this can somehow be related to the detained Israeli businessmen is wrong. Officially Israel does not confirm this and we have no grounds to cast doubts on this issue,” she added.

Two Israeli businessmen Ron Fuchs and Zeev Frenkiel were detained in Georgia last year and sentenced to 7 and 6 years in prison on April 1. Ron Fuchs won a 98.1- million dollar dispute with Georgia in an international arbitration and was arrested together with his associate Zeev Frenkiel on October 14, 2010 on charges of offering bribe to Georgia’s deputy finance Minister. The Georgian law enforcers claim that Fuchs and Frenkiel offered 7 million dollars to the Deputy Minister if the latter would persuade the Georgian authorities not to appeal the decision of the International Center for Settlement of Investment Disputes. Fuchs and Frenkiel arrived to Georgia with an official invitation of the Georgian Prime Minister, Nika Gilauri, according to the businessmen’s lawyers. The businessmen have denied the accusations of the Georgian law enforcers.

The arrest of the Israeli businessmen has triggered speculation about possible deterioration of relations between Georgia and Israel. The speculation heated up after the postponement of the visits of the Georgian Parliament Speaker Davit Bakradze and the Georgian Economy Minister Vera Kobalia to Israel. The Georgian side has denied that the postponement of the visits was linked with the Israeli businessmen's arrest.