An arbitration clause is the contract term under which the parties' dispute will be heard by an arbitration tribunal instead of a court. The Law of Georgia on Arbitration imposes precise form requirements on this clause and leaves to the parties those decisions that shape the entire architecture of the proceedings. This page examines Article 8 of the law — the concept and form of the arbitration agreement, Article 10 — the number of arbitrators, Article 25 — the place of the arbitration, and Article 29 — the language of the proceedings.
The Concept of the Arbitration Agreement and the Writing Requirement
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 may be concluded in the contract as an arbitration clause or in the form of a separate agreement, and it must be concluded in writing. The writing requirement is satisfied where the content of the agreement is recorded in any form, irrespective of the form in which the contract or the agreement itself is concluded. The requirement is also fulfilled by an electronic message, provided that the information contained in it is accessible for subsequent use.
How the Clause May Be Incorporated — Exchange of Submissions and Reference to a Document
The law treats form flexibly. The arbitration agreement is deemed concluded in writing where it is formalised by an exchange of the arbitral claim and the statement of defense, when one party asserts the existence of the agreement and the other does not deny it. Likewise, a reference in the contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference makes that clause part of the contract. In practice this means that the clause may be written directly into the contract text or set out in a separate document incorporated into the contract.
Heightened Form Where a Natural Person or an Administrative Body Is a Party
Where a party to the contract or the arbitration agreement is a natural person or an administrative body, the agreement must be concluded in writing, and the relaxed form rules of paragraphs 4 to 6 of Article 8 do not apply to such an agreement. Where both parties to the arbitration agreement are natural persons, the agreement must also be signed by the parties' advocates or be notarised. These requirements must be taken into account at the drafting stage, otherwise the operation of the agreement becomes disputable.
The Number of Arbitrators — a Key Decision of the Clause
Article 10 provides that the arbitration tribunal consists of one or several arbitrators, and the number of arbitrators and the procedure for their appointment are determined by the parties. The parties appoint an equal number of arbitrators unless otherwise agreed. If the clause defines an even number of arbitrators, the arbitrators already appointed are obliged, within 10 days of appointment, to appoint one further arbitrator. If the number of arbitrators is not determined by the parties' agreement, the tribunal must be composed of three arbitrators — this is the statutory default.
Place of the Arbitration and Language of the Proceedings
Two practical decisions rest with the parties. Under Article 25, the place of the arbitration is determined by the parties' agreement; absent an agreement, the place is determined by the tribunal taking into account the circumstances of the case and the convenience of the place for the parties, and a hearing may be convened at any location. Under Article 29, the parties may determine the language of the proceedings; absent an agreement, the language is determined by the tribunal taking into account all relevant circumstances, including the language of the contract. Writing these choices directly into the clause removes potential conflict in advance.
Frequently Asked Questions
The following questions arise most often in connection with drafting an arbitration clause.
What form must an arbitration clause take?
It must be concluded in writing, although its content may be recorded in any form. The requirement is fulfilled by an electronic message, and the agreement is also deemed concluded in writing where formalised by an exchange of the arbitral claim and the statement of defense or by a reference to a document containing the clause.
What happens if the clause does not specify the number of arbitrators?
If the number of arbitrators is not determined by the parties' agreement, the tribunal must be composed of three arbitrators. Where an even number is defined, the appointed arbitrators must appoint one further arbitrator within 10 days.
Does the clause need an advocate's signature or notarisation?
Only where both parties to the arbitration agreement are natural persons — then the agreement must also be signed by the parties' advocates or be notarised. Where a natural person or an administrative body is a party, strict written form applies and the relaxed forms do not.
May the parties determine the seat and the language in the clause?
Yes. The place of the arbitration and the language of the proceedings are determined by the parties' agreement. If the clause is silent, the tribunal determines them taking into account the relevant circumstances, including convenience and the language of the contract.
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