State of Georgia - Part II Country Report - Handbook on Third-Party Funding in International Arbitration

At present, Georgia has no statute specific to commercial TPF or otherwise regulating commercial funders, and the case law affords no definitive guidance on whether, as a general matter, commercial TPF agreements would offend state public policy or not. Among the contracts designated as specifically against public policy are “[c]ontracts of maintenance or champerty.” O.C.G.A. § 13-8-2. All indications, however, are that TPF arrangements governed by Georgia law or being considered by Georgia courts would not be implicated by this provision per se or otherwise represent any public policy violation. First, reported decisions invoking this provision to invalidate contracts on public policy grounds are scarce, with the last such occurring decades ago and involving an engagement agreement between lawyer and client. Second, a much more recent decision implicitly approved of a commercial litigation funding arrangement. In a dispute between an investor and the TPF, the investor plaintiff raised, among other arguments, a public policy challenge to the underlying TPF contract. In rejecting that challenge, the Georgia Court of Appeals noted that the plaintiff had not shown or alleged that the contracts’ purpose was in any way illegal.”

In addition to the predictive aspect of this authority, for the reasons discussed in the preceding United States discussion, the concerns that animate traditional doctrines of champerty and maintenance are far less applicable in the commercial arbitration context. There, a funded party and the Third-Party Funder typically have more equal bargaining power. Additionally, Georgia policy favors a party’s general freedom to contract, even where it may lead to hardship on one side or unreasonable provisions.