When parties draft an arbitration clause, one of the first decisions concerns whether the arbitration will be administered or ad hoc — that is, a proceeding organised solely by the parties and the arbitrators, without the management of a specialised institution. The Georgian Law on Arbitration recognises both models equally, yet for each of them the law fills differently the gaps that remain undefined in the clause or agreement. On this page we explain Articles 2, 10 and 24 of the law: what legal effect the choice of an institution has, how the number of arbitrators is determined, and who sets the rules of the proceedings if the parties fail to agree.
The Choice of an Institution and the Incorporation of Its Rules (Article 2)
Paragraph 2 of the article contains the norm that gives institutional arbitration its decisive significance: an agreement of the parties on a specific arbitral institution comprises an agreement on the rules of that same institution. This means that when you indicate a specific arbitration institution in a contract, in the eyes of the law you agree not only on where the dispute will be heard, but also on the rules by which that institution administers its proceedings. In general, the parties may also agree on the rules of arbitral proceedings: such an agreement covers the rules indicated by the parties in the arbitration agreement. In ad hoc arbitration this norm works the other way round: no institution has been chosen, so the source of the rules is the parties’ direct agreement, and, in the event of a gap, the dispositive norms of the law and the arbitration’s own decision.