The Essence and Scope of Private Arbitration
Private arbitration is a form of dispute resolution outside the courts, before an arbitral tribunal created by agreement of the parties. Under the first article of the Georgian Law on Arbitration, it establishes the rules for the creation of arbitration in Georgia, for arbitral proceedings and awards, and for the recognition and enforcement of awards made outside Georgia. Arbitration is competent to consider a property dispute of a private nature, based on the equality of persons, which the parties can settle between themselves, and a dispute connected with a public and private partnership agreement. Such proceedings give the parties flexibility: they may determine the procedural rules themselves and take part in appointing the arbitrators.
The Arbitration Agreement: Concept and Form
The basis of arbitration is the arbitration agreement — an agreement by which the parties submit to arbitration all or some disputes arisen or that may arise between them out of a contractual or other legal relationship. The agreement may be concluded as an arbitration clause in a contract or as a separate agreement, and must be in written form. It is deemed concluded in writing where its content is recorded in any form, irrespective of the form of the conclusion of the contract. The written form is also fulfilled by an electronic communication accessible for subsequent use and by an exchange of a claim and a defence where one party asserts and the other does not deny the agreement. Special requirements apply where a party is a natural person: where both parties are natural persons, the agreement must also be signed by the parties' advocates or certified by a notary.
The Number, Appointment and Challenge of Arbitrators
The arbitration consists of one or several arbitrators; their number and the procedure of appointment are determined by the parties, who appoint an equal number of arbitrators unless otherwise agreed. Where an even number is agreed, the appointed arbitrators must appoint one more arbitrator within ten days of the appointment, and where the number is not determined, the arbitration must be composed of three arbitrators. Appointing a person as arbitrator without that person's consent is inadmissible, and the consent must be declared in writing. Where no agreement exists or the agreed procedure cannot be carried out, in a three-arbitrator tribunal each party appoints one arbitrator and those two appoint the chairman; failing this within the thirty-day periods, the court appoints an arbitrator upon a party's request. The law also sets grounds for challenge: a party may request it where the arbitrator does not meet the agreed qualifications or where circumstances give rise to justifiable doubts as to independence and impartiality.
The Procedure of the Hearing and the Role of the Parties
The procedure of the hearing is determined by the parties in compliance with the law; in the absence of an agreement, the dispute is considered under the procedure determined by the arbitration. The parties may agree on the rules of arbitral proceedings, and an agreement referring to a specific arbitral institution includes agreement on the rules of that institution. The law also defines its terms: an electronic communication is any information prepared, sent, received or stored by electronic, magnetic, optical or similar means, including data transmission, e-mail, telegram, telex or telefax. Using this flexibility requires precision: the requirements of the law must be observed at every stage, otherwise the award risks being set aside.
Setting Aside, Recognition and Enforcement of the Award
The only procedural remedy against an arbitral award is its setting aside. The court will set aside an award made in Georgia only in defined cases: for instance, where the arbitration agreement is invalid, where a party was not properly informed of the appointment of the arbitrator or of the proceedings and could not present its position, where the award exceeds the parties' claim, or where the composition or the proceedings did not correspond to the agreement. The application may be submitted within ninety days of receipt of the award. An award, regardless of the country in which it was made, is binding and enforceable: for awards made in Georgia the competent courts are the courts of appeal, and for awards made outside Georgia — the Supreme Court of Georgia. Enforcement is carried out on the basis of a court ruling, which may, upon a party's motion, suspend it for not more than thirty days where corresponding security is provided.
Frequently Asked Questions
Which disputes may be considered in arbitration?
Arbitration considers a property dispute of a private nature based on the equality of persons which the parties are able to settle, as well as a dispute connected with a public and private partnership agreement.
How is the number of arbitrators determined?
The number and the appointment procedure are determined by the parties. Where an even number is agreed, the appointed arbitrators must appoint one more within ten days, and where the number is not determined the arbitration must consist of three arbitrators.
In what form is the arbitration agreement concluded?
The agreement is concluded in written form and may be an arbitration clause in a contract or a separate agreement. It is deemed written wherever its content is recorded in any form, including by electronic communication accessible for subsequent use.
Can an arbitral award be appealed?
The only remedy against an award is its setting aside, which requires an application to the court. The application is submitted within ninety days of receipt of the award and only on the grounds provided by law.
How We Help on Legal.ge
The team of Legal.ge will assist you at every stage of private arbitration: we draft the arbitration clause, design the arbitrator appointment procedure, represent you in the hearing and prepare applications to set aside or enforce the award. Contact us — every detail of the arbitral process is reflected in the fate of the award.