Investor-state arbitration is a fundamentally different regime from the commercial arbitration governed by the Georgian Law on Arbitration. This page explains where the boundary runs: what the scope of that law covers under Article 1, what role is played by the incorporation norm for an agreement on institutional rules set out in Article 2, and why treaty-based (international investment) arbitration does not fall within the framework of this law. We present ICSID as a regime built on international treaties — in a general, institutional description, since the text of those conventions is not found in the Georgian legal corpus examined here and their detailed analysis is a subject of separate study.
The Scope of the Law and Its Boundary (Article 1)
Article 1 provides that the Law on Arbitration establishes the rules for the creation of arbitration, arbitral proceedings and arbitral awards in Georgia, as well as the rules for the recognition and enforcement of awards rendered outside Georgia. Under paragraph 2 of the same article, 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, and disputes connected with a public-private partnership contract provided for by the Law of Georgia on Public-Private Partnership. The boundary is therefore clear: a dispute between an investor and a state grounded on a treaty — whether a bilateral investment treaty or the Energy Charter Treaty — does not fit these categories. Such a dispute arises not from private law but from a source of international public law, and it is examined within mechanisms created by international treaties.
Incorporation of Institutional Rules and the Bridge to ICSID (Article 2)
Paragraph 2 of the article again offers a useful frame: an agreement of the parties on the rules of arbitral proceedings covers the rules indicated by the parties in the arbitration agreement, and an agreement on a specific arbitral institution covers an agreement on the rules of that same institution. In commercial arbitration it is precisely this norm that makes the choice of an institution decisive. In the case of ICSID similar logic works on a different level: investment treaties and the rules for resolving their disputes are determined by the international treaty itself, and not by a private agreement of the parties — this regime therefore does not rest on the incorporation norm of the Georgian law. It must also be said clearly: ICSID awards are subject to recognition and enforcement under the special rules established by the international convention, and not under the general provisions of the corresponding chapter of the Law on Arbitration.
How a Commercial and an Investment Dispute Differ in Practice
In practice the distinction is drawn as follows: if the parties to the dispute are private persons on an equal footing and the matter is of a property nature, or a public-private partnership contract is at issue, the dispute falls within the competence of arbitration defined by the Georgian law. If, by contrast, a foreign investor challenges measures of a state and the dispute is grounded on an international treaty, the examination goes to the arbitration provided for by the treaty, where international rules apply rather than a national arbitration law. Mistaking this boundary has serious consequences: a claim filed in the wrong forum is rejected for lack of competence, and missing the treaty deadlines leads to the loss of the claim. Precise qualification of the grounds of the claim — a private contract or an international treaty — is therefore the first and decisive step.
Frequently Asked Questions
Below we answer the questions most frequently raised about investor-state arbitration.
Can an ICSID arbitration proceed on the basis of the Law on Arbitration?
No. Article 1 assigns the arbitration competence over private property disputes and disputes over public-private partnership contracts; an investor-state dispute arises from a treaty source and is subject to a separate regime.
How does Georgia recognise ICSID awards?
It may be said in general terms that such awards are recognised and enforced under the special rules established by the international convention, and not under the general provisions of the national arbitration law; the details of that convention are a subject of separate study.
What is the difference in the choice of institution between a commercial and an investment dispute?
In a commercial dispute, an agreement on an institution also covers its rules and rests on a norm of national law; in an investment dispute the forum and the rules are determined by the international treaty itself.
Does a public-private partnership contract dispute fall within the competence of the law?
Yes — Article 1 directly covers disputes connected with a contract provided for by the Law on Public-Private Partnership as a category within the competence of arbitration.
How We Help on Legal.ge
The Legal.ge team helps you qualify your dispute correctly: we separate a property dispute of private law from a treaty dispute, assess which forum is available and which rules apply, and build the position even before the claim is filed. If you operate in the environment of an investment project and need a distinction between national arbitration and treaty mechanisms, contact us for a consultation — we will review your situation and implement the right strategy in good time.