In “Rescuing Arbitration in the Developing World: The Extraordinary Case of Georgia,” author Steven Austermiller examines the development of arbitration law in Georgia, the limitations of current legislation, and solutions to preserve further development. Arbitration in Georgia currently faces uncertainty regarding the role of the courts and mandatory consumer arbitration. Austermiller asserts that legislative clarification and a disclosure, appointment, and licensing (DAL) approach will help address these issues while preserving and supporting further legislative development. By implementing these measures and successfully addressing the shortcomings of the current legislation, Georgia has the opportunity to serve as a model upon which other developing countries may base their own arbitration legislation.
Role of the Judiciary: The Law of Georgia on Arbitration (2010, “LOA”), based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law, made great strides towards conforming to international norms regarding the recognition and enforcement of both domestic and foreign awards. However, some roles of the judiciary in arbitration proceedings are not clearly defined. The LOA limits matters that may be arbitrated to “property disputes of a private character.” Currently, property is defined as “everything [sic], as well as any intangible property benefit, which may be possessed, used and disposed of by natural and legal persons.” This interpretation is more expansive than the scope contemplated by the UNCITRAL Model Law. The “private character” limitation is not used in the UNCITRAL Model Law and Georgian courts have not elaborated on what matters this limitation might encompass. Further clarification on the scope of the terms “property” and “private character” will improve predictability and make Georgia a more attractive arbitration forum for foreigners. In addition, the public policy exception in setting aside or modifying awards has been problematic and goes against international norms. First, public policy is not defined. The Georgian Supreme Court has recognized and enforced a foreign award on the grounds that it did not contradict provisions of the Georgian Civil Code, which is directly in contravention with international norms. Second, there is no clear authority for the modification of awards. The LOA authorizes refusal of awards, but not alteration. Austermiller suggests clarification “could be accomplished through legislative action or a special judicial task force.” As with the clarification of scope, this would also provide more predictability.
Mandatory Consumer Arbitration: Soviet-era courts and the Law on Private Arbitration (1997) provided an environment for partiality, and this issue is still present under the LOA. The use of providers and the ability of parties to contract around default court appointment in a single-arbitrator proceeding have allowed for partiality to continue under the current legislation. Austermiller suggests that through a licensing regime and amendments to the appointment process, Georgia will be better able to ensure appointment of impartial arbitrators and alter negative public perceptions. A licensing regime administered by a neutral party, implementing standardized professional requirements that build upon the existing Georgian Arbitration Association Code of Ethics for Arbitrators (2014), will increase public confidence in the qualifications of arbitrators. Appointment procedures may be improved by making the default court appointment rule mandatory. However, Austermiller argues that either placing the appointment burden on an independent authority or implementation of the list system would better address this issue. In a list system, a list of potential arbitrators is provided to both parties to strike names without cause; from these preferences an independent authority will choose an arbitrator.
The total prohibition of mandatory consumer arbitration would hinder the substantial benefits that consumer arbitration has for the judicial system in terms of efficiency and cost. To prevent this, Austermiller argues that a disclosure requirement on mandatory consumer arbitration proceedings would help to preserve and further develop the arbitration system by promoting transparency and improve behavior. These requirements would be aimed primarily at providers and would ensure impartiality in arbitration appointments and proceedings. Through public disclosure, use of known partial providers will be discouraged. Implementation of these measures will help to rectify the faults in the current mandatory consumer arbitration model.
NOTE: This summary is produced by the Rule of Law Collaborative, not by the original author(s).