- Supreme Court
DISPUTE BETWEEN A GEORGIAN INDIVIDUAL AND A GEORGIAN COMPANY - REFERENCE TO UNIDROIT PRINCIPLES IN SUPPORT OF APPLICABLE DOMESTIC LAW (GEORGIAN LAW)
PRINCIPLE OF GOOD FAITH – BEHAVIOR OF THE CEO AND THE SUPERVISORY BOARD OF A COMPANY - ACCORDING TO ART. 8 OF THE CIVIL CODE OF GEORGIA PARTIES TO A LEGAL RELATIONSHIP MUST EXERCISE THEIR RIGHTS AND DUTIES IN GOOD FAITH – REFERENCE TO ART. 1:201 PECL AND TO ART. 1.7 UNIDROIT PRINCIPLES TO CONFIRM THAT SOLUTION ADOPTED BY APPLICABLE DOMESTIC LAW IS IN CONFORMITY WITH INTERNATIONAL STANDARDS
In a dispute between a Georgian individual and a joint-stock company registered in Georgia and several of its shareholders, the Supreme Court affirmed that the minimum standard of good faith imposes an obligation on the CEO and the members of the supervisory board of the company to inform the shareholders in accordance with the procedure prescribed by the law and to be guided not by the individual, but by the public interests in the decision-making process.
In this contest the Court cited Art. 8 of the Civil Code of Georgia, which requires the parties to a legal relationship to exercise their rights and duties in accordance with good faith. In support of its findings the Court recalled that the principle of good faith is internationally recognized by the Principles of the European Contract Law (Art. 1:201) and by Art. 1.7 of the UNIDROIT Principles stating that “Each party must act in accordance with good faith and fair dealing in international trade. The parties may not exclude or limit this duty.”