- Supreme Court
SHARE PURCHASE AGREEMENT - BETWEEN A GEORGIAN COMPANY AND A GEORGIAN INDIVIDUAL - REFERENCE TO UNIDROIT PRINCIPLES IN SUPPORT OF APPLICABLE DOMESTIC LAW (GEORGIAN LAW)
PRINCIPLE OF GOOD FAITH – 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. 1.7 OF UNIDROIT PRINCIPLES AND TO ART. 1:201 OF THE PRINCIPLES OF EUROPEAN CONTRACT LAW TO CONFIRM THAT SOLUTION ADOPTED BY APPLICABLE DOMESTIC LAW IS IN CONFORMITY WITH INTERNATIONAL STANDARDS
In a dispute between a Georgian company and a Georgian individual relating to the purchase of shares of a state-owned joint-stock company, the Supreme Court referred to the obligation of the parties to act in good faith, which is enshrined in the Article 8 of the Civil Code of Georgia. The Court affirmed that such principle imposes on all the economic actors, be they individuals or companies, a duty to act with proper responsibility and respect of each other’s rights. Moreover, good faith permits to fill in gaps in both the law and in contracts. In support of its findings the Court recalled that the principle of good faith is recognized in Article 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.” And it is also provided in the Principles of the European Contract Law, in particular in Article 1:201 stating that “Each party must act in accordance with good faith and fair dealing“.