VALIDITY REQUIREMENTS OF ARBITRATION AGREEMENT UNDER CASE LAW OF SUPREME COURT OF GEORGIA

Abstract

The cornerstone of the international commercial arbitration is an agreement, by which the parties undertake to submit the disputes to an institutional or ad hoc arbitral tribunal. The arbitration agreement is the first step for formation of the arbitral tribunal and rendering the arbitral award. The validity of the arbitration agreement also plays a pivotal role during the enforcement stage in different jurisdictions. Article V.1.a of the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) provides the possibility to refuse recognition and enforcement of the foreign arbitral award if “the parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.” The Supreme Court of Georgia (the Supreme Court) has established the practice by which the substantive validity of the arbitration agreement depends on the specific reference to the arbitration institution. That approach does not correspond to any legal provision in the Law of Georgia on Arbitration (the Law) and the New York Convention. The present article provides critical analysis of recent judgment of the Supreme Court and explains the right approach for determining the substantive validity of the arbitration agreement under the New York Convention.