The Concept and Form of the Arbitration Agreement
Domestic arbitration in Georgia is governed by the Law of Georgia on Arbitration, and the gateway to these proceedings is the arbitration agreement. Under Article 8, an arbitration agreement is an agreement by which the parties agree to submit to arbitration all or certain disputes which have arisen or may arise between them out of a contractual or other legal relationship. It is made in the form of an arbitration clause in a contract or a separate agreement, and requires written form.
The requirement of writing is satisfied by modern means too: the agreement is deemed made in writing if its content is recorded in any form; the requirement is met by an electronic message where the information in it is accessible for subsequent use; likewise by the exchange of claim and defense recognizing the agreement, or by a reference in a contract to a document containing an arbitration clause. Special care is needed in two cases: where a party is a natural person or an administrative organ, the agreement must be made in classical written form only; and where both parties are natural persons, the agreement must also be signed by their advocates or be notarized.
Competence over Competence
Under Article 16, the arbitral tribunal is empowered to rule on its own jurisdiction, including the determination of the existence or validity of the arbitration agreement. An arbitration clause that forms part of a contract is independent of the other conditions of the contract: a declaration that the contract is null and void does not entail the invalidity of the arbitration clause — this principle of separability detaches the fate of the dispute from the fate of the contract.
The deadlines for raising objections to jurisdiction are also defined: a plea that the tribunal does not have jurisdiction must be raised before the submission of the statement of defense; a plea that the tribunal is exceeding the scope of its authority — within 7 days of learning of the relevant circumstance. Where the tribunal, before the final award, determines that it has jurisdiction, any party may challenge that decision in court within 30 days of receiving notice, and the court issues a reasoned ruling within 14 days of accepting the application — that ruling is final and not subject to appeal; meanwhile the arbitral proceedings may continue.
The Rules of Procedure and the Rendering of the Award
Under Article 24, the parties themselves determine the rules of the arbitral proceedings in compliance with the requirements of the law; absent an agreement, the dispute is examined under the rules determined by the tribunal. This is party autonomy — the procedural design fits the business logic, not the other way round.
Under Article 39, the arbitral award must be rendered within 180 days of the commencement of the proceedings, unless otherwise agreed by the parties; where necessary, the arbitrator may extend that period by no more than 180 days. Performance of the award is mandatory for the parties; it is rendered in writing, signed by the arbitrator — in a multi-member tribunal, by the majority of arbitrators; it must contain a reasoned part, unless the parties have agreed otherwise. The award enters into force from the moment of its rendering.
The Setting Aside and Enforcement of the Award
Under Article 42, the sole procedural remedy against an arbitral award is its setting aside, and the court will set it aside only on closed grounds: a party's incapacity at the time of the agreement or the invalidity of the agreement; a party's lack of proper notice of the appointment of the arbitrator or of the proceedings, or its inability to present its case; the award deciding a dispute not submitted or exceeding the scope of the claims; the composition of the tribunal or the proceedings not conforming to the agreement or the law; and the court's own finding that the dispute is not capable of settlement by arbitration or that the award is contrary to public order. A complaint may be filed within 90 days of the delivery of the award.
Under Article 44, an arbitral award is binding for enforcement regardless of the country in which it was rendered: enforcement takes place on the basis of a court ruling; for awards rendered in Georgia the competent courts are the appellate courts. The application must be accompanied by a duly certified original or copy of the award and of the arbitration agreement, with a Georgian translation where the documents are not in Georgian; the court may suspend enforcement for no more than 30 days where corresponding security is provided.
Frequently Asked Questions
What form does an arbitration agreement require?
Written — with the content recorded in any form, including an electronic message; between two natural persons, the signatures of advocates or notarization are also required (Article 8).
Does the agreement depend on the contract?
No — the arbitration clause is independent of the other conditions, and the nullity of the contract does not invalidate the clause (Article 16).
Within what time is the award rendered?
Within 180 days of the commencement of the proceedings, extendable by up to another 180 days (Article 39).
Where is the award enforced?
It is mandatory and enforced by a court ruling; applications concerning Georgian awards belong to the appellate courts (Articles 42, 44).
How We Help on Legal.ge
The value of domestic arbitration lies in three elements: a properly drafted arbitration agreement, procedural rules tailored to the party's needs, and knowledge of the deadlines of jurisdiction. A breach of any of these reflects on time and outcome — a poor clause returns the dispute to court, and a poor procedure becomes a ground for setting the award aside.
The lawyers working on Legal.ge will help you draft the arbitration clause, design the rules of procedure, observe the deadlines of jurisdiction-related applications, defend against and enforce awards. Contact us for a consultation — arbitration is swift when its foundations are sound from the start.