Violation of the Duty of Disclosure as a Ground for Challenging an Arbitrator Under Georgian Arbitration Law

The independence and impartiality of arbitrators are fundamental guarantees of due process. Arbitration derives its legitimacy not only from party autonomy and procedural flexibility, but also from the parties’ confidence that their dispute will be decided by an impartial and independent tribunal.

In this respect, the duty of disclosure performs an important preventive function. It allows the parties to assess whether a relationship, interest, or circumstance may affect the arbitrator’s independence or impartiality. Disclosure is therefore not a mere ethical formality. It is a procedural safeguard protecting the integrity of the arbitral process and, ultimately, the enforceability and legitimacy of the award. Under Georgian arbitration law, defects concerning the composition of the arbitral tribunal may provide grounds for setting aside an award or refusing its recognition and enforcement (Law of Georgia on Arbitration (2009), Articles 42(2)(a.d) and 45(1)(a.d)).

This post examines the duty of disclosure under Georgian arbitration law and its practical consequences for challenges to arbitrators. It outlines the approach taken by Georgian arbitral institutions and state courts when faced with a potential conflict of interest and provides a conclusion on the current state of affairs. The discussion is particularly timely in light of recent Georgian case law, which considered whether an arbitrator’s failure to disclose prior professional ties with a party’s representative could justify their challenge. That decision, together with earlier domestic arbitral practice, suggests that Georgian decision-makers may be adopting a strict approach to non-disclosure, even where the underlying relationship would not necessarily, by itself, prove actual bias.

Legal Framework in Georgia

Georgian arbitration law follows the widely recognized international standard. Article 12 of the Law of Georgia on Arbitration (2009) gives a party the right to challenge an arbitrator if the arbitrator does not meet the qualifications agreed by the parties or if circumstances exist that may cause reasonable doubt as to the arbitrator’s impartiality or independence. The same article imposes a continuing duty on a person to be appointed as an arbitrator, as well as on an already appointed arbitrator, to immediately notify the parties and the arbitral tribunal of any circumstances that make his or her impartiality or independence doubtful.

This approach is broadly consistent with the UNCITRAL Model Law standard, under which a prospective or appointed arbitrator must disclose circumstances likely to give rise to justifiable doubts as to their impartiality or independence. As Lady Arden explained in her concurring opinion in Halliburton v Chubb, disclosure is a secondary obligation arising from the arbitrator’s primary duty to act fairly and impartially (para. 160). The duty of disclosure is therefore not detached from the arbitrator’s core obligation to act independently and impartially.

Moreover, the Georgian Association of Arbitrators’ Code of Ethics specifies the duty of disclosure in more detail. It provides that a prospective arbitrator should disclose known direct or indirect financial or personal interests in the outcome of the arbitration, as well as existing or past financial, business, professional, or personal relationships that may reasonably affect impartiality or independence in the eyes of the parties. Importantly, the Code expressly states that any doubt as to whether disclosure should be made must be resolved in favor of disclosure.

This approach is consistent with international standards. The IBA Guidelines (General Standards 2(a) and 3(d)) provide that an arbitrator must decline appointment or refuse to continue if he or she has doubts as to his or her ability to be impartial and independent, and require that the arbitrator should resolve any doubt in favor of disclosure. Separately, where facts or circumstances may, in the eyes of the parties, give rise to doubts, the arbitrator must disclose them.

However, the Code of Ethics is not, by itself, a universally binding statutory instrument applicable to every arbitrator in every Georgian-seated arbitration. Its application depends on the parties’ agreement, the applicable institutional rules, or the fact that the arbitration is conducted by arbitrators who are members of the Georgian Association of Arbitrators (GAA). This distinction is important. While the Code may serve as a persuasive interpretative reference, the statutory ground for challenging an arbitrator remains Article 12 of the Law of Georgia on Arbitration.

Two questions therefore arise under Georgian law. First, what is the applicable standard of disclosure: which circumstances must be disclosed? Second, what is the legal consequence of a failure to disclose? More specifically, does a breach of the duty of disclosure automatically justify the removal of an arbitrator?

Georgian Arbitral Approach

In one domestic institutional arbitration in 2021, after the arbitral tribunal itself rejected a challenge, the challenge was considered by the internal body of the arbitration institution. The challenged arbitrator was the presiding arbitrator of the tribunal. The ground for challenge was that the presiding arbitrator and counsel for one of the parties were both members of the managing board of a legal professional association and the presiding arbitrator had failed to disclose this fact.

The deciding body distinguished ordinary membership in a professional association from membership on its managing board. It reasoned that board membership involved more frequent interaction, closer professional cooperation, and a relationship going beyond passive participation in the same professional organization. On that basis, it concluded that the relationship created at least an appearance requiring disclosure.

The significance of this decision does not lie in the proposition that every professional connection between an arbitrator and counsel must lead to disqualification. Such a rule would be unrealistic, especially in smaller legal markets like Georgia, where arbitration practitioners often know each other through professional associations, academic work, or bar-related activities. Rather, the importance of the decision lies in its treatment of non-disclosure. The deciding body considered that the undisclosed relationship was sufficiently material to trigger the duty of disclosure, and that the failure to disclose it justified the challenge. As a result, the challenge was upheld and the presiding arbitrator was removed.

Georgian Court Approach

A similar approach was adopted by Tbilisi City Court in its decision of 3 December 2025, which made a further important clarification.

In that case, a party sought to challenge an arbitrator on the ground that the arbitrator had failed to disclose two circumstances: first, that the arbitrator and the representative of the opposing party had served as judges at the same court during the same period; and second, that they had later represented the interests of the same party as lawyers.

The court reasoned that these circumstances, taken in isolation, did not necessarily and directly establish the existence of grounds for challenge. In other words, the mere fact that two legal professionals had previously served as judges at the same court or had later been involved in the representation of the same party’s interests did not automatically prove partiality or lack of independence.

However, the court placed particular emphasis on the arbitrator’s failure to disclose those circumstances. Notwithstanding that the GAA Code of Ethics does not have binding statutory force in every Georgian-seated arbitration, the court relied on it as an expression of the applicable professional standard for arbitrators. It held that the arbitrator had breached the second principle of the GAA Code of Ethics by failing to disclose circumstances potentially relevant to the challenge. According to the court, such an omission could create doubts, particularly in the eyes of the parties, as to the arbitrator’s impartiality. The court also relied on the principle that any doubt as to whether disclosure is required must be resolved in favor of disclosure.

On this basis, the court granted the application and upheld the challenge to the arbitrator.

This decision is notable because the court did not appear to treat the underlying relationship alone as automatically sufficient for disqualification. Instead, the court’s reasoning focused on the combination of two elements: the existence of circumstances capable of raising doubts and the arbitrator’s failure to disclose them. The non-disclosure therefore played a central role in transforming potentially arguable circumstances into a successful challenge.

The court’s reasoning illustrates an important distinction between disclosure and disqualification. The duty of disclosure is preventive and operates at an earlier stage than the challenge analysis. Its purpose is not to determine conclusively whether the arbitrator is biased, but to ensure that the parties are informed of circumstances that they may reasonably wish to examine. For that reason, the disclosure threshold is lower than the one for removal. A circumstance may require disclosure even if, after full consideration, it would not necessarily justify disqualification. In the Georgian court’s approach, the failure to disclose such a circumstance was relevant because it deprived the parties of the opportunity to assess the relationship and decide whether to raise an objection.

Perspective: IBA Guidelines and Halliburton v Chubb

This distinction is also reflected in the IBA Guidelines. Under the IBA Guidelines, an arbitrator should disclose facts or circumstances that may, in the eyes of the parties, give rise to doubts as to the arbitrator’s impartiality or independence (General Standard 3(a)). At the same time, disclosure does not imply the existence of a conflict of interest, and non-disclosure does not automatically mean that the arbitrator must be disqualified (General Standards 3(c) and 3(g)). Any challenge must still be assessed by reference to an objective standard.

The UK Supreme Court addressed a similar conceptual issue in Halliburton v Chubb, examining whether non-disclosure is distinct from, but relevant to, the assessment of apparent bias. The Supreme Court affirmed that an arbitrator may have a legal duty to disclose circumstances that could reasonably give rise to doubts as to impartiality, and that a failure to disclose may be taken into account in the apparent-bias analysis. On the facts, the Supreme Court held that the arbitrator had breached that duty, but that the breach did not justify his removal. Crucially, the Supreme Court did not treat non-disclosure as automatically requiring the arbitrator’s removal. Ultimately, unlike the outcome in the Georgian cases discussed above, the UK Supreme Court dismissed the challenge and rejected the application for the arbitrator’s challenge.

Conclusion

On the basis of these decisions, it is difficult to say that Georgia has an established practice with respect to arbitrators’ challenges, although these decisions may point to an emerging trend. However, in both cases, the decision-makers demonstrated a strict approach to the duty of disclosure and, in the court case, accepted that the undisclosed circumstances did not necessarily amount, by themselves, to automatic proof of bias. Nevertheless, in both cases, the failure to disclose was treated as a decisive factor supporting the removal of the arbitrator.

This approach is broadly consistent with the international understanding that disclosure and disqualification are conceptually distinct. A breach of the duty of disclosure should not automatically result in removal in every case.

Taken together, the two decisions suggest that the Georgian standard may tentatively be described as follows: non-disclosure does not automatically warrant removal. However, a breach of the duty of disclosure may justify the removal of an arbitrator even where the undisclosed circumstance, taken in isolation, would not necessarily have justified the challenge. In such cases the failure to disclose may itself become a decisive factor. For arbitrators sitting in Georgian-seated proceedings, the practical lesson is clear: when in doubt, disclose. This protects the parties’ confidence in the process, reduces the risk of later challenges, and strengthens the legitimacy of arbitration in Georgia.

Author’s disclosure: The law firm where the author is a partner was involved as counsel for one of the parties in both Georgian cases discussed above. The proceedings in both cases have been fully concluded. The analysis above reflects the author’s independent academic assessment and is presented in a neutral manner. Publication of this post does not and cannot affect the concluded proceedings.