Georgian Court Recognizes DABs as a Pre-Arbitration Procedure

Key Takeaways

• 2021 ruling declared DAB‑linked arbitration agreements void.
• 2025 appeal recognized DAB as valid pre‑arbitration step.
• Court prioritized parties' intent over statutory gaps.
• Decision enhances Georgia’s appeal for international construction projects.
• Legal certainty improves for foreign investors using multi‑tier clauses.

Summary

Georgia’s appellate courts have shifted their stance on Dispute Adjudication Boards (DABs). A 2021 decision invalidated multi‑tier dispute clauses that required a DAB before arbitration, deeming them void under Georgian law. In contrast, a 2025 ruling recognized DABs as legitimate pre‑arbitration mechanisms and upheld the subsequent arbitral award. The reversal aligns Georgia with its ADR‑friendly agenda and international construction‑contract norms.

Pulse Analysis

Georgia has been actively modernising its alternative dispute resolution (ADR) framework, highlighted by the 2019 Law on Mediation that placed arbitration and mediation on a solid legislative footing. Yet, the absence of explicit statutory guidance on Dispute Adjudication Boards left a gap for parties relying on multi‑tier clauses common in international construction contracts. The early 2021 Tbilisi Court of Appeals decision reflected a literalist approach, treating the lack of a DAB statute as fatal to the arbitration agreement’s validity, which raised concerns among practitioners about contractual freedom.

The 2025 appellate decision marks a decisive pivot toward a pragmatic, intent‑based analysis. The court emphasized that the parties’ clear contractual language demonstrated an unequivocal intention to use the DAB as a pre‑arbitration step, thereby upholding the arbitration clause despite the statutory silence. This reasoning aligns Georgian jurisprudence with global arbitration standards that prioritize party autonomy over formal legislative enumeration, reinforcing the principle that contractual mechanisms can be enforceable even when not expressly codified.

For investors and contractors, the recognition of DABs translates into heightened predictability and reduced litigation risk in Georgia’s construction and infrastructure sectors. The ruling reassures foreign entities that multi‑tier dispute resolution clauses will be respected, encouraging capital inflows and positioning Georgia as a competitive ADR hub in the Caucasus region. As courts continue to endorse functional ADR tools, Georgia’s reputation as an ADR‑friendly jurisdiction is likely to strengthen, supporting its broader economic development goals.