2020 February-March Analysis

Interview: the Business Ombudsman as business mirror

Investor.ge sat down with Georgia’s recently-appointed new Business Ombudsman Mikheil Daushvili to talk about the state of arbitration in Georgia, what issues the office DEALs with the most and what initiatives are in the pipelines to strengthen the institution.

How has your former professional experience made you the right fit to head up the office of the business Ombudsman?

I started my professional path with the Georgian Young Lawyers Association, and was a member of the board of GYLA for six years until November 2019. Later moving to one of the leading Georgian law firms and American Chamber of Commerce member Gvinadze and Partners, I spent four years working on commercial issues, working to protect the interests of businesses of all sizes: this was a formative part of my career.

I spent several years at the Economic Council Administration under the office of the PM, and then at the Ministry of Economy where I worked in legislative and policy issues that affect the business environment. It was an important experience as far as obtaining knowledge of how bureaucracies work, and what are the prevailing attitudes and approaches of state agencies and bodies in relation to businesses and commercial entities.

I gained experience working on legislative issues, particularly concerning the management of state property. My group was involved in the supervision and monitoring of state-owned enterprises.

For the last two years before assuming my current office, I worked in the analytical department of the Ministry of Internal Affairs, which, while not directly related to business and commerce, still plays a roll in ensuring safety and security in the country, in turn allowing the business climate to remain strong.

What kind of issues is your office requested to intervene in the most?

The array of appeals we receive is like a mirror – a mirror that reflects the most important issues and concerns for the commercial entities in the country when it comes to their relationship with the state.

Many of the applications we receive deal with tax issues, and thus concern the Ministry of Finance and the Revenue Service. Most of the complaints we receive have to deal with the VAT refund and at times income tax, but there are plenty of other fields, too – import, export and property taxation, to name a few.

Issues related to the privatization of state property are also brought to our attention, when investors need additional clarification to fulfill the obligations they have taken on.

The discussion and fine-tuning of upcoming regulations and legislation is an area that businesses often ask us to weigh in on as well. There are a number of laws in the pipeline that are good for the resilience and strength of the economy, but that may be ‘heavy’ for private businesses to bear straight off the bat. This involves changes such as to the labor and tax codes, reforms on VAT and various decisions and regulations planned by administrative bodies.

In these cases, we try to work proactively to protect the interests of businesses and commercial entities, but to keep an eye on the public good, as well. The main aim of our office is to uncover obstacles in the legislation that impede doing business in the country and to rectify them.

The motions and recommendations your office makes are not legally binding – from where do they get their authority?

The authority of an office such as the business Ombudsman, which is incorporated by the law, gets much of its backing from the painstaking research and extensive study that goes into a case and the strength of its presentation.

Something worth noting here is that issuing motions and recommendations is not our only function: we also the play the role of mediator. We facilitate strong and coherent communication between private business and state bodies, and the mark of our success is when we are able to bring the two sides to an agreement.

The third pillar of the office’s influence is the quality of its work: when your claims are well-grounded, when you justify your case and prove the expediency of your recommendation – this has a very strong force of persuasion.

Yet another way in which we are able to enact change is by addressing what we perceive as systemic issues. When we see that one and the same complaint is being lodged, we look at the source of the problem, and work with state bodies to proactively address the issue. Here, too, working proactively in this regard is much more effective than working on a case-by-case basis.

We particularly encourage the state bodies we interact with to take an investment-friendly attitude given the current level of development of the country.

Ultimately what I want to say here is that the strength of the ombudsman’s office does not just lie in motions and recommendations – but in the vital role it plays in helping to fine-tune and perfect the legislation.

Can you talk about your vision for the office?

First on the agenda is strengthening our capacity. We are cooperating with donor organizations to do more trainings for our staff, to raise qualifications and turn out even better quality work. Self-development is the first part of our job.

We are supportive of efforts to improve the arbitration and mediation sector in the country which really took off a few years ago, and which again took serious steps forward with the passing of new laws on mediation by parliament in September 2019.

This will do much for the country’s arbitration and mediation sector, as it will send a very strong and powerful signal to investors and businesses, reinforcing Georgia’s image as indeed a country with a healthy investment climate, an agreeable taxation system and efficient bureaucracy.

In general, we have a strong legal framework and dispute resolution mechanisms in the country, but of courses there is always room to improve. As the Ombudsman’s office, we are well aware that currently, litigation procedures run a considerable amount of time and that this is a substantial problem for businesses and which can hinder their activity and growth.

Speaking about courts: the Ombudsman’s office implemented the amicus curiae (friend of the court) program last year, which affords businesses the possibility of appealing to us to present our opinion in legal proceedings. So far, the program does not have much traction, partially due to awareness, but we are planning to strengthen this institute.

In other spheres of the country’s life, bureaucracy has decreased enormously, wait times for documents and state services have been reduced to, in many cases, just days or even hours. This is one of our advantages as a country – we are efficient, light-weight and do not demand too many procedures, but litigation procedures could certainly be sped up and follow in the footsteps of this approach.

Other plans for the future include expanding cooperation with foreign Ombudsman offices. We currently have agreements with Albania, Uzbekistan, Kazakhstan and Poland – we really want to push to establish ties with European countries, so as to strengthen our capacity and implement the best global practices here in Georgia.

Lastly, I’d like to address readers and businesses: the office of the Business Ombudsman of Georgia is open to cooperation and works around the clock to protect the interests of companies working in Georgia. Working side by side, we will continue to support a healthy business environment in the country.