GEO

NGOs respond to the Rustavi 2 asset freeze

17 August, 2015

 

On August 11, upon request of Rustavi 2’s former owner Kibar Khalvashi and his company Panorama LLC, Tbilisi City Court ordered freeze on the assets of TV company Rustavi 2 and restricted some of the functions of its director and stakeholders. The channel’s management claim they are now incapable of carrying out full-scale management, putting the TV company’s proper functioning into danger.

Rustavi 2 is the highest-ranking TV channel in Georgia and is often critical of the authorities. It has been an important actor on the Georgian media market for 20 years now, with resources to affect public opinion.

Rustavi 2 was founded in 1994 by Erosi Kitsmarishvili, Jarji Akimidze and Davit Dvali. Akimidze and Dvali withdrew from their shares in the company in 2004, however, after the 2012 parliamentary elections they stated that they would pursue legal action to recover their stake.

Between 2004 and 2012, the ownership of Rustavi 2 changed almost 20 times in opaque deals involving persons linked to the UNM government.

Since the 2012 parliamentary elections, Rustavi 2 has been critical of the government. High-ranking government officials often voice their discontent with the TV company’s editorial policies, citing Rustavi 2’s loyalty to the former government.

On 5 August the news broke that, ten years after, Kibar Khalvashi is suing against the current owners of the channel.

The court has partially granted Khalvashi’s application for securing the claim and passed a corresponding ruling. We believe that this ruling contains certain deficiencies:

1. The ruling fails to meet the standard of reasonable assumption and causes disproportionate restriction of right.

The ruling does not challenge the fact of bona-fide acquisition of shares by the current owners of Rustavi 2. Rustavi 2 has changed hands a number of times since Kibar Khalvashi and Panorama LLC sold their shares, which makes it highly likely that the current owners are bona-fide buyers. This rules out the recovery of shares by Kibar Khalvashi, even if the claim is granted; the more so that Mr. Khalvashi has not disputed that the current owners are bona-fide acquirers. Hence, it is not clear why the court froze the assets of the company and its owners without considering the degree of substantiation of the claim and proportionality of the measure to the claim.

2. When applying the measure to secure the claim, the court did not refer to the circumstances indicated by the claimant.

The judge referred to the comments of the European Court of Human Rights and the Supreme Court of Georgia. However, when reviewing the essence of the measure to secure the claim, he failed to provide an argument for whose reinforcement the aforementioned deliberation was necessary. The judge also failed to offer detailed substantiation of the circumstances due to which the failure to apply measures to secure the claim would complicate enforcement of the decision (an obligation imposed on the claimant by law) and which, accordingly, should have been reflected in the court ruling.

3. The court did not deliberate on obligating the claimant to provide certain security to appropriately compensate the damage that the defendant may incur as a result of application of the measure to secure the claim.

The freeze of assets carried out on the basis of the ruling restrained the TV company and its owners from selling and encumbering their assets. In addition to that, the management’s functions were restricted, which may hinder the company’s effective management and result in material damage to Rustavi 2. Under these circumstances, it is unclear why the court did not deliberate on Article 199 of the Code of Civil Procedure of Georgia. According to this regulation, if the court assumes that the enforcement of measures for securing the claim may cause damage to the defendant, the court may enforce the measures for securing the claim and, at the same time, request the person who applied to the court to secure the claim to provide security to compensate possible damages that the other party may incur. In this case, if the dispute were decided in favor of Rustavi 2, there would be security available to compensate damages incurred upon the company as a result of freeze of assets. Accordingly, in order to protect the principle of fair trial declared by the court, it is important to ensure that the interests of both the claimant and the defendant are pursued and protected proportionally.

Accordingly,

1. It should be taken into account that the defendant is the TV company with the highest ratings in Georgia which, in recent years, has more than once accused the current authorities of political pressure on the TV channel.

This first such case took place in 2014 when the Audit Department of the Revenue Service launched the inventory check of TV MR GE – the only company that conducts TV ratings measurements in Georgia. The leadership of Rustavi 2 claimed that these acts were directed against the private TV company with the highest rating in the country and aimed at controlling the advertisement market.

Later, the director of Rustavi 2 protested against the amendments passed by the Parliament in the Law on Broadcasting to introduce new regulations on broadcast advertising.

A few days ago, the municipalities of first Kutaisi and then Poti and Batumi refused to allow Rustavi 2 to hold concerts. The reasons were unspecified. The concerts, however, did eventually take place on different dates. As these events unfolded, the management of the channel has systematically emphasized critical statements of high-ranking officials about Rustavi 2, including those that were voiced in live TV programs. On several occasions high government officials reminded Rustavi 2 that the issue of the channel’s ownership needed to be revised.

2. This seemingly private legal dispute raises questions about political influences.

The case of Rustavi 2 bears the character of a private legal dispute, though a political context is attached to it, creating risks of damaging media freedom. Rustavi 2 plays an important role in informing the public and in forming critical views about government policies. Accordingly, any interference in its activities raises doubts that the State may be exerting influence on the TV company.

3. Politicians should refrain from public statements that may influence the court’s decision.

In order to rule out any political interest in this case, it is very important to ensure that the legal proceedings do not interfere with the channel’s proper functioning. Whatever the quality of Rustavi 2’s reporting, interruption of the operation of the highest-ranking TV channel is going to pose a danger to the pluralistic and free media environment in the country. This may become a  problem particularly in the run-up to the 2016 parliamentary elections when presenting diverse political opinions in the media will be a decisive factor for the democratic process.

 

Transparency International Georgia

Identoba

Human Rights Education and Monitoring Center (EMC)

Open Society Georgia Foundation

International Society for Fair Elections and Democracy (ISFED)

Economic Policy Research Center (EPRC)

Civil Development Agency (CiDA)