Energy disputes — disagreements arising from contracts for generation, transmission, supply and infrastructure — are often high-value, technically complex and time-sensitive. The use of arbitration in this field in Georgia is regulated by the Law on Arbitration: the individual statutes of the energy sector contain no norms of arbitral procedure, so the referral of a dispute to arbitration, its conduct and security are governed precisely by that law. On this page we explain Articles 1, 17 and 18 of the law: which disputes are arbitrable and how the category of public-private partnership contracts is described, and how interim measures operate in high-value supply and infrastructure disputes.
Which Disputes Are Arbitrable (Article 1)
Under paragraph 2 of Article 1, the arbitration is competent to examine property disputes of a private nature based on the equality of persons, which the parties are able to settle between themselves. In the energy market this means that property claims arising from supply, procurement, service and technical cooperation contracts — unpaid amounts, contractual defects, quality disputes — are resolved through arbitration where an arbitration agreement exists. The next sub-paragraph of the same paragraph is particularly important: disputes connected with a public-private partnership contract provided for by the Law of Georgia on Public-Private Partnership are also subject to arbitration. For generation and transmission projects this category is the usual format: large infrastructure contracts in which a state party and a private investor take part are directly recognised by the law as arbitrable.
The practical consequence is that qualification starts from the content of the contract and the status of the parties. As a rule, a dispute between private operators falls directly within the competence of the arbitration, while contracts concluded under the law on public-private partnership are protected by a separate sub-paragraph. At the same time, make sure the arbitration agreement is valid and clearly formulated: in energy projects the contract package often spans many documents, and if the arbitration clause is unevenly distributed among them, the arbitrability of the dispute becomes a subject of separate argument.
Interim Measures in High-Value Disputes (Article 17)
The characteristic risk of an energy dispute is that if the examination is drawn out, the facility or the counterparty’s assets change to such an extent that the final award in fact ceases to be enforceable. Against this, Article 17 gives the arbitration the power to apply interim measures: before the commencement of the arbitral proceedings or at any stage of them, prior to the final award, a party may apply to the arbitration by motion, provided this does not contradict the arbitration agreement. By a written decision the arbitration may, within a reasonable time, order the party to maintain the original state of affairs, to take measures to prevent harm, to preserve the assets against which the award will be enforced, or to protect evidence — in infrastructure disputes this last instrument is often critical, since technical documentation and the state of the facility are lost over time.
Conditions, Proportionality and Security (Article 18)
Article 18 measures the soundness of a request for measures. The party must substantiate that the non-application of the measures may cause harm whose avoidance by compensation from the other party will be impossible; that the harm caused by non-application significantly exceeds the harm that may be caused to the party against whom the measures are directed; and that a well-founded assumption exists that the claim will be satisfied. This last assumption does not influence the subsequent decision of the arbitration — the application of measures is thus not a prejudgment of the case. The arbitration is also entitled to demand that the party provide a corresponding security — in high-value energy disputes this is a figure of practical importance, because a suspended supply or frozen assets inflict heavy damage on the opponent, and the law balances this harm through proportionality. Where the arbitration establishes that the measures should not have been applied, the author of the request bears the costs and the harm.
Frequently Asked Questions
Below we answer the questions most frequently asked in connection with energy disputes.
Can a dispute under a public-private partnership contract be referred to arbitration?
Yes. Article 1 directly names disputes connected with a public-private partnership contract as a category within the competence of arbitration.
How can assets be protected while the proceedings drag on?
Through Article 17: on the basis of a motion the arbitration may order the party to maintain the state of affairs, prevent harm, protect assets or evidence — until the final award.
Does a request for measures require security?
It may. The arbitration is entitled to demand the provision of a corresponding security, and where the request turns out to be groundless, its author compensates the costs and harm.
Does an energy dispute face the boundary of arbitrability?
Private property disputes and public-private partnership contract disputes are arbitrable; other categories provided for by law remain with the courts.
How We Help on Legal.ge
The advocates of Legal.ge work with companies of the energy sector and with investors: we draft arbitration clauses for supply and infrastructure contracts, prepare claims and statements of defense, and draw up requests for interim measures with complete substantiation of the conditions of Articles 17 and 18 — taking the possible need for security into account. Contact our team — we will assess your dispute and build the right defence strategy.