The conclusion formed part of an opinion jointly published last week by Europe's Venice Commission and the Council of Europe Directorate General of Human Rights and Rule of Law, after it was asked to examine two amendments made to Georgia's Electronic Communications law in July 2020.
Article 46 allowed the country's regulator, GNCC, to appoint a special manager with executive powers to run a company, while Article 11 granted GNCC the power to enforce "legal decisions".
They immediately triggered international concern around media independence and censorship in the country. Now the Venice Commission has stated Article 46 “significantly altered” regulatory power and is “overly broad and vague".
In its press announcement following the report, the commission said the amendments created "far reaching consequences for the right to property and media freedom, as well as to the right of a fair trial".
It further stated: "Since the Republic of Georgia is a signatory to the European Convention on Human Rights (ECHR) and a participating State of the Council of Europe, it is bound by the various standards and instruments set forth by the European Court of Human Rights (ECtHR) and the Council of Europe (CoE)."
Setting out its recommendations, on Article 46 the Venice Commission advised Georgia to:
Conduct the Regulatory Impact Assessment and conduct consultations with all stakeholders;
Rectify Article 46 No. 1, seeking a comprehensive solution in line with Article 1 Protocol 1 and Article 10 of the ECHR;
Specify the scope of Article 46 No. 1 by introducing legal definitions for “economic interest of the country”, “critical infrastructure” and “security interests”;
Amend Article 46 No. 1 so as to clearly stipulate that the provision in no way applies to the broadcasting operations of the electronic communications operator.
On Article 11, the commission recommended that Georgia:
Revokes the amendment to Article 11 and return to the general principle of domestic administrative procedure law that appeals have suspensive effect for appointment decisions taken by the GNCC under Art 46 No. 1;
Stipulates clearly who, in the case of the appointment of a special manager under Article 46 No.1, has the right to appeal the appointment decision and extend the timeframe for lodging such an appeal; on the basis of the equality of arms principle, provide explicitly that the person/s entitled to lodge the appeal should be given free access to information and documents necessary for the appeal.
Caucasus Online
As Capacity reported, the new laws were applied for the first time in September last year, when they were used to expropriate Georgian ISP Caucasus Online, which is recognised by the Venice Commission as a "one of the leading communications companies in Georgia".
This followed a year-long dispute over the firm's acquisition by NEQSOL, which closed in August 2019.
GNCC has always said it was not informed about the change in share ownership, while NEQSOL has maintained that it had all the necessary approvals for its €51 million acquisition of Caucasus Online.
Although NEQSOL acquired 100% of Caucasus Online in 2019, it took control of the company in two parts, 49% initially with a call option for the remaining 51%. The call option was exercised in August, immediately following the introduction of Article 46, following which special manager Mariam Sulaberidze, was appointed.
In line with Article 46, Sulaberidze had the power to sell off assets, ban media interviews and fire other executives, among other measures.
The special manager's role was suspended on 1 March, however, GNCC will appeal this in a hearing scheduled for 7 April.
On this point, the Venice Commission stated the special manager "enjoys extraordinary powers resembling a court-appointed administrator in a bank or financial institution or a court-appointed liquidator in relation to a company in distress".
The Venice Commission said it was “unaware” of such powers in the hands of a regulatory authority in the field of communications in the European context.
It further said the powers are “so vast and over-reaching” that the only limitation seems to be the alienation of the shareholding, leaving the shareholders with no say in the decision-making structures or processes within the company.
Georgia's government has yet to respond to the opinion, itself embroiled in an acute political crisis that is currently being mediated by the European Council. However, GNCC published a statement last week in which it said it introduced the amendments "to provide the government with a more effective and less damaging tool than the suspension of authorisation / revocation of license and leaving millions of subscribers without access to the internet and other means of electronic communications."
