Recent Advances in International Arbitration in Georgia
| Publication year | 2013 |
| Pages | 0018 |
Winning the Race to the Top
by Stephen L. Wright and Shelby S. Guilbert Jr.
Key recent developments propel Georgia forward as a desirable jurisdiction for international arbitration proceedings and promise to increase international trade and investment in the state. Although Georgia is already an arbitration-friendly jurisdiction, these developments create an even more hospitable environment for international arbitral proceedings. Together with the state's well-known reputation as a transportation hub and place of hospitality, the advances in rules for international arbitration proceedings redound positively for the economy at large and increase opportunities for all Bar members.[1]
This article examines the recent confluence of developments promoting international arbitration in Georgia. Perhaps the single most important development in this regard is the passage and signing into law by Gov. Nathan Deal in 2012 of a new Georgia International Commercial Arbitration Code (the ICA Code).[2] With enhancements to the widely adopted United Nations Commission on International Trade Law (UNCITRAL) international model arbitration code, the new ICA Code targets an optimal balance of judicial aid to enable successful arbitration while nonetheless leaving parties free to structure the dispute resolution process that works best for them.
Complementing the statutory innovation are recent pro-arbitration decisions from the 11th Circuit and state courts in Georgia confirming the local judiciary's strong support for international arbitration, setting Georgia apart from other U.S. jurisdictions where judicial support for international arbitration is less clear. Finally, amendments to the State Bar Rules pave the way for easier appearance by foreign counsel in international arbitral hearings in the state and otherwise to provide services on a temporary and limited basis.
Georgia's New International Arbitration Code: A Strong Legal Framework to Support International Arbitration in Georgia
Last year, Gov. Deal signed into law the new SB 383, replacing Part 2 of the Georgia Arbitration Code pertaining to international transactions with a new Georgia International Commercial Arbitration Code. Although the pre-existing international arbitration code was pioneering when first adopted some 25 years ago, countries around the world have been updating their own law to keep pace with changes in practice stemming from the increased use of arbitration in increasingly globalized commercial trade and transactions.[3] When former senator now Judge Bill Hamrick was a member of the Georgia Senate and introduced SB 383 last year, he declared, "Amending Georgia's current code to incorporate internationally recognized law is a step in the right direction towards becoming a
prominent venue for international commercial arbitration."[4]
The new ICA Code went into effect on July 1, 2012, and applies to all international commercial arbitrations in Georgia.[5] The ICA Code itself is based primarily upon the 1985 UNCITRAL Model Law on International Commercial Arbitration (the Model Law), as amended in 2006.[6] In basing its new ICA Code on the Model Law, Georgia now joins more than 50 civil and common law jurisdictions around the world that have adopted some version of the Model Law.[7]
Many may ask about the Federal Arbitration Act (FAA), which is already applicable, and provides the rules for international arbitration proceedings. The FAA, along with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (the New York Convention),[8] and the Inter-American Convention on International Commercial Arbitration (the Panama Convention),[9] was in its time progressive and continues to provide a firm foundation for the enforceability of international arbitration agreements and international arbitral awards in the United States. Yet with 90 years in service and little updating, the FAA and ancillary laws do not reflect changes in the global commercial environment and provide only limited guidance on potentially critical issues that often arise in international arbitrations today, such as whether an international arbitral tribunal has the authority to award equitable relief, or standards for judicial assistance to assist parties in the taking of evidence for use in an arbitral hearing. As the FAA does not exclude state rules on international arbitration,[10] the Georgia state legislature stepped in to provide a modern legal framework for the promotion of international arbitration.
Greater Uniformity and Predictability
In basing the new ICA Code on the Model Law, the Georgia Legislature directed that "regard shall be given to its international origin and to the need to promote uniformity in its application."[11]The Model Law has been the subject of extensive, well-publicized commentary and case law that will aid Georgia courts and practitioners in applying the new ICA Code.[12] At the same time, foreign parties and their counsel will find greater predictability in the use of the new ICA Code and have greater comfort with Georgia as a suitable venue for arbitration.
Clarification on the Role of Georgia Courts in Facilitating International Arbitration
One highly prized advantage of arbitration, both in domestic and international settings, is the ability of parties to structure the dispute resolution process as they see best, free from excessive judicial interference. Yet because arbitrators lack the coercive powers of the state, occasions arise where courts must be relied upon to enforce arbitration agreements and arbitral awards. Georgia's new ICA Code attempts in numerous ways to tread the fine line between providing for judicial assistance where needed while avoiding excessive interference.
Independence of the parties is preserved as the ICA Code limits judicial intervention in arbitral proceedings to those instances called out in the ICA Code.[13] Courts must refer disputes to arbitration where so provided in a writing unless the provision is found void or unenforceable for one of a limited number of reasons.[14] The new ICA Code expressly incorporates the "competence-competence" and separability principles, which affirm arbitrators' authority to rule on questions relating to their own jurisdiction, including those on the validity and scope of an arbitration agreement.[15]
While assuring the independence of the arbitral process, the new ICA Code also brings Georgia law current with international practice[16] by allowing judicial enforcement of interim measures ordered in the arbitration proceedings.[17]Interim measures may, for example, protect property and preserve it from dissipation for the eventual enforcement of an arbitral award.[18]Resort to Superior Court enforcement of interim measure orders is expressly permitted.[19] As a corollary, provision in the arbitration agreement for interim measures and their judicial enforcement does not alone undermine enforceability of the arbitration agreement.[20] In a similar manner, interim awards are likewise judicially enforceable.[21]
Georgia Enhancements to the Model Law
Although the Georgia Legislature used the Model Law as its starting point when drafting the international arbitration code, it departed from the Model Law in several important respects that give the ICA Code a definite Georgia flavor. For example, in a state blessed with 159 counties, the Model Law's provision for centralized judicial supervision[22] would have required an amendment to the Georgia Constitution. Georgia's new ICA Code instead provides by default that supervisory functions be performed by the Superior Court in any county where any portion of the hearing has been conducted, although parties remain free to jointly select the court for the exercise of these functions.[23]
In another Georgia enhancement, the ICA Code provides that arbitrators may issue subpoenas for attendance of witnesses and for the production of records and other evidence.[24] By contrast, the generic provisions in the Model Law give little guidance on how courts should assist an arbitral...
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