GEORGIA Law and Practice Contributed by: Lasha Nodia, Giorgi Kekenadze and Ani Akophashvili, Nodia, Urumashvili and Partners
• a party applies to the court and the opposing party challenges the jurisdiction of the court, requesting staying proceedings in favour of arbitration; • a party challenges the competence of the tribunal after said party has determined that the tribunal has competence to hear an arbitration claim; or • either annulment proceedings or recognition and enforcement of the award are being heard by the relevant court. In all of the above-mentioned circumstances, the lim - its and scope of court intervention vary. By way of example, recent court decisions suggest that some courts may undertake a prima facie review of an arbi - tration agreement when deciding whether to stay pro - ceedings in favour of arbitration, whereas in court pro - ceedings concerning the review of the competence of the tribunal ‒ as well as annulment and/or recognition and enforcement of arbitration awards – courts tend to undertake a de novo review. Furthermore, courts have also found that compliance with pre-arbitration procedures (eg, adherence to the Dispute Adjudication Board (DAB) procedure) is a matter for the tribunal to resolve. As such, this lim - its the court’s power to review the jurisdiction of the tribunal on the ground of non-complying with such pre-arbitration procedures. Lastly, courts in Georgia do not review negative rulings on jurisdiction by arbitral tribunals. 5.3 Timing of Challenge A party may declare that the arbitral tribunal lacks jurisdiction before submitting its response to the claim. The appointment of an arbitrator by a party or participation in the arbitrator’s appointment does not deprive that party of the right to make such a decla - ration. According to the Law of Georgia on Arbitration, a dec - laration that the arbitral tribunal has exceeded its juris - diction must be made within seven days of the party becoming aware of the relevant circumstances. Such declarations concerning the tribunal’s jurisdiction may also be made after the expiry of the aforementioned time limits if the arbitral tribunal considers the delay justified.
The arbitral tribunal may rule on the declaration of lack or excess of jurisdiction either by issuing a separate decision before the final award or by incorporating it into the final award. If the tribunal decides – prior to rendering the final award ‒ that it has jurisdiction, any party may challenge that decision before the court within 30 days of receiving notice of the decision. The court must issue a reasoned ruling on the tribunal’s jurisdiction within 14 days of receiving the application. This ruling is final and not subject to appeal. Pending the court’s decision, arbitral proceedings may be initiated or continued, and an award may be rendered. Where the parties have agreed, the arbitral tribunal will decide on its jurisdiction in accordance with such agreement, either prior to or together with the final arbitral award. 5.4 Standard of Judicial Review for Jurisdiction/Admissibility Georgian courts, when reviewing questions of juris - diction, mostly apply the de novo standard. Notably, when reviewing the arbitral tribunal’s decision on its own competence, the court examines the arguments and evidence of the parties, as well as the arbitral tri - bunal’s decision. The court is not bound by the tribu - nal’s findings and may consider additional arguments or evidence that were not raised during the arbitral proceedings. As for admissibility, several courts have recently found that it was up to the tribunal to review whether parties have complied with pre-arbitration procedures such as DAB. Therefore, as mentioned in 5.2 Circumstanc- es for Court Intervention , this matter is ultimately reserved for the competence of the tribunal. 5.5 Breach of Arbitration Agreement As per the Law of Georgia on Arbitration, a court before which an action is brought in a matter that is the subject of an arbitration agreement – based on a request by a party made before the expiration of the time period within which a statement of defence must be submitted ‒ is obliged to terminate the proceedings and refer the parties to arbitration, unless it finds that the agreement is void, invalid or incapable of being performed.
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