February, 2012. Issue I
Legal Grounds for Recognition and Enforcement of International (Foreign) Arbitral Awards in Georgia
1. Georgia has been a contracting state to 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards since 1994. In addition, recognition and enforcement of foreign arbitral awards is regulated by Law of Georgia on Arbitration (June 19, 2009), Law of Georgia on International Private Law (April 29, 1998) and Law of Georgia on Enforcement Proceedings (April 16, 1999).
Procedure of Recognition of Foreign Arbitral Awards
2. Interested party takes motion before the Supreme Court of Georgia on recognition and enforcement of foreign arbitral award.
3. In order motion to be executed, it shall be attached with certified copy of respective arbitral award and its Georgian translation as well as with the document confirming the entry of such award into force.
4. Supreme Court of Georgia directs the motion to the responding party and fixes time for presenting defense.
5. Court hearings shall not take place if it is not requested by the parties.
6. In case if the respondent fails to submit defense within the terms prescribed by Supreme Court, the motion on recognition and enforcement of foreign arbitral award shall be heard and decided without oral hearings.
7. If the defense is submitted, the motion shall be taken to Court hearing.
8. Arbitral award is not subject to re-examination by Supreme Court of Georgia. Thus, Supreme Court does not check the grounds and legality of award in question. The Court will only review existence of the grounds for denying recognition and enforcement.
9. Recognition of foreign arbitral award shall be rejected in the following cases:
i. If the party against whom arbitration award is issued applied to the court and proves that:
a. Party to arbitration agreement lacked legal capacity;
b. According to the provisions indicated by the parties in arbitration agreement, an in case of inexistence of such agreement – according to the law of the state where arbitration award was issued, arbitration agreement is void or invalidated;
c. Party was not duly informed regarding appointment of arbitration or arbitration hearings or was unable to take part in such hearings having reasonable excuse for it;
d. Arbitration award is issued on dispute which was not foreseen by arbitration agreement or concerns the issue which is out of the frames of arbitration agreement. Recognition and enforcement of arbitration award can be rejected in whole or in part which is out of the frames of arbitration agreement;
e.Composition of arbitration panel or arbitration proceedings did not correspond to arbitration agreement or in case of inexistence of such agreement – to the laws of the state where the arbitration case was dealt;
f. Arbitration award has not entered into legal force and/or has been invalid
ated or suspended by the court of the state where such award was issued or by the court of the state according to the law of which the award was issued.
ii. If the court establishes that:
a. According to the legislation of Georgia the dispute could not be subject to arbitration;
b. Arbitration award contradicts with public order.
10. Decision of the Supreme Court of Georgia on upholding or rejecting recognition and enforcement of foreign decisions is final and no appeal is admissible. However, according to judicial practice, the there is a sole possibility for appeal and making the ruling void due to the newly emerged circumstances.
Procedure of Enforcement of Foreign Arbitral Awards
11. If the Supreme Court takes ruling on recognition and enforcement of foreign arbitral award in Georgia, it issues enforcement writ, which is sent to National Enforcement Bureau under Ministry of Justice of Georgia according to the location of the debtor or the property of the debtor.
12. Enforcement of the writ is carried out as per the Law of Georgia on the Enforcement Proceedings, according to the same rules as applied to the enforcement of the decisions rendered by the courts of Georgia.
13. Respondent can challenge the enforcement officer.
14. Action of the enforcement officer can be appealed before the chairman of Enforcement Bureau within 15 days or before the Court within 30 days from the action is question.
15. Respondent is notified regarding the initiation of enforcement proceedings within 5 days.
16. Respondent has option to voluntarily comply with the decision within 7 days from the date of notification.
17. Georgian legislation does not prescribe limitation period for the enforcement.
18. The stages for enforcement for payment of amount are as follows:
a. Initiation of enforcement;
b. Seizure of property;
d. Payment of the amount to creditor.
19. Fees for the services rendered by National Enforcement Bureau vary according to the amount subject to enforcement (for example, enforcement service fee for the matters related to payment of amount ranges between 1 and 2 percents).
20. Please note that foreign arbitral awards are almost in all cases recognized by Supreme Court of Georgia however the party holding arbitral award frequently meets obstacles at the stage of enforcement.
21. The relevant Georgian legislation is frequently revised. Therefore, please contact MKD for the latest information.