საქართველოს სამოქალაქო კოდექსი

საქართველოს სამოქალაქო კოდექსი
დოკუმენტის ნომერი 786
დოკუმენტის მიმღები საქართველოს პარლამენტი
მიღების თარიღი 26/06/1997
დოკუმენტის ტიპი საქართველოს კანონი
გამოქვეყნების წყარო, თარიღი პარლამენტის უწყებანი, 31, 24/07/1997
სარეგისტრაციო კოდი 040.000.000.05.001.000.223
კონსოლიდირებული პუბლიკაციები
786
26/06/1997
პარლამენტის უწყებანი, 31, 24/07/1997
040.000.000.05.001.000.223
საქართველოს სამოქალაქო კოდექსი
საქართველოს პარლამენტი
ყურადღება! ვერსია, რომელსაც ამჟამად ეცნობით, არ წარმოადგენს დოკუმენტის ბოლო რედაქციას. დოკუმენტის ბოლო რედაქციის გასაცნობად აირჩიეთ შესაბამისი კონსოლიდირებული ვერსია.

კონსოლიდირებული ვერსია (28/06/2023 - 03/07/2023)

Law of Georgia

Civil Code of Georgia

 

Book One

General Provisions of the Civil Code

 

Introductory Provisions

 

Article 1 – Concept; scope of application

This Code regulates property, family and personal relations of a private nature based on the equality of persons.

Article 2 – Civil legislation

1. The Civil Code, other acts of private law and their interpretations shall conform to the Constitution of Georgia.

2. If legal norms of the same rank are in conflict, the special and the most recent law shall apply. If general norms provided for in this Code are in conflict with special norms, special norms shall be applied.

3. Subordinate normative acts shall be applied to regulate civil relations only if they supplement the norms of a law. If such acts contravene the law, the law shall prevail.

4. Customary norms shall be applied only if they do not contravene universally accepted principles of justice and morality or public order.  

Article 3 – Entry into force of a civil law

1. A law and subordinate normative acts shall take effect only after they are published in an official journal for general knowledge according to established rules.

2. Ignorance or misunderstanding of the law shall not serve as an excuse for not applying the law or for release from liability stipulated by law.

3. A law shall lose force if so expressly indicated by a new law, or if any former law contravenes a new law, or if a new law encompasses the relations regulated by the former law, or if the relations regulated by the former law no longer exist.

4. A law of a general nature shall not repeal a special law unless such repeal was the direct intention of the legislator.

5. Repeal of a law that repeals a former law shall not reinstate the former law.

Article 4 – Inadmissibility of denying justice in civil proceedings

1. A court may not refuse to administer justice in civil cases even if no legal norm exists or the legal norm is vague.

2. A court may not refuse to apply a law on the grounds that in its opinion a norm of the law is unjust or immoral.

Article 5 – Analogy of law and justice

1. To regulate a relationship that is not expressly provided by law the legal norm that regulates the most similar circumstance (analogy of law) shall be applied.

2. If an analogy of law cannot be used, then the relationship shall be regulated by the general principles of justice and the requirements of fairness, good faith and morality (analogy of justice).

3. Norms regulating special relationships (norms on exceptions) may not be applied by analogy.

Article 6 – Retroactive force of civil laws

Laws and subordinate normative acts shall not be retroactive except as expressly provided for in law. A law may not be given retroactive force if it is prejudicial to or disadvantages a person.

Article 7 – Objects of private law

An object of private legal relations may be a tangible or intangible good having tangible or intangible value, which has not been removed from circulation by law.

Article 8 – Subjects of private law

1. Any natural or legal person may be a subject of private law. This rule shall apply to both entrepreneurial and non-entrepreneurial persons of Georgia and of other countries.

2. Private law relationships between state bodies and legal entities under public law, on the one hand, and other persons on the other hand, shall likewise be regulated by civil laws, unless these relationships, in the interests of the state or the public, are to be regulated by public law.

3. Participants in a legal relationship shall exercise their rights and duties in good faith.

Article 9 – Purpose of civil laws

Civil laws ensure the freedom of civil circulation in the territory of Georgia, unless the exercise of such freedom prejudices the rights of third parties.

Article 10 – Independence of civil rights from political rights; imperative norms of civil law

1. The exercise of civil rights shall not depend on political rights regulated by the Constitution or by other laws of public law.

2. Participants in a civil relationship may exercise any action not prohibited by law, including any action not expressly provided by law.

3. Imperative norms of civil laws protect the freedom of others from the abuse of rights. Actions that contravene these norms shall be void except where the law explicitly defines other effects. Individual interventions through administrative acts shall be prohibited, unless such acts are applied on the grounds of a specific law.

Section One

Persons

 

Chapter One

Natural Persons

Article 11 – Capacity for rights

1. The capacity for rights of a natural person is the ability to have civil rights and duties that arise from the moment of the person’s birth.

2. The right to inherit shall arise upon conception; the exercise of this right shall depend on birth.

3. The capacity for rights of a natural person shall be terminated by his/her death. The moment of death shall be the moment in which the brain ceases to function.

4. A natural person may not be deprived of his/her capacity for rights.

Article 12 – Legal capacity

1. L egal capacity or the ability of a natural person to fully acquire and exercise civil rights and duties of his/her own will and with his/her action shall arise upon attainment of the age of majority.

2. A person who has attained the age of eighteen years shall be a person of the age of majority.

3. A person who has entered into marriage before attainment of the age of eighteen years shall be deemed to have legal capacity.

4. A person with legal capacity is deemed to be a person in need of psychosocial support (the ‘beneficiary of support’), or a person who has a fixed psychological, mental/intellectual disorders which, when interrelating with other impediments, may prevent him/her from participating in public life fully and effectively on equal terms with others if such a person meets the conditions under paragraphs 2 and 3 of this article; furthermore, these impediments, without appropriate advice and aid, significantly make it harder for the person to freely express his/her own will and to make an informed and conscious choice in an area defined by the court.

5. The court may also recognise a minor as a beneficiary of support within the limits when, under the legislation of Georgia, the consent of his/her legal representative is not required while the minor exercises his/her rights and duties.

6. A minor under the age of seven years (an underage) shall be a person with legal capacity.

Decision No 2/4/532,533 of the Constitutional Court of Georgia of 8 October 2014 – website, 28.10.2014

Law of Georgia No 3339 of 20 March 2015 – website, 31.3.2015

Article 13 – Inadmissibility of limiting legal capacity by an agreement

Legal capacity may be limited only where so provided by law. Legal capacity may not be limited by an agreement.

Article 14 – Limited legal capacity

1. A minor from the age of seven to eighteen years shall have limited legal capacity.

2. An adult over whom a court has established a custodianship shall also be deemed to be a person with limited legal capacity. A person with limited legal capacity and a minor shall be equal in their legal capacities.

3. Limitation of legal capacity shall cease when the grounds for limitation of a person’s legal capacity no longer exist.

Article 15 – Consent of a legal representative in cases of limited legal capacity

In order for the declaration of intent of a person with limited legal capacity to be valid the consent of his/her legal representative shall be required, except when the person with limited legal capacity acquires a benefit from the transaction.

A rticle 16 – Limitation of legal capacity by reason of use of alcohol or narcotic substances

1. A court may establish custodianship over an adult who abuses alcohol or narcotic substances and because of this puts his/her family in material hardship. He/she may conduct transactions to administer property or wages, pension or other income only with the consent of his/her custodian, except for minor everyday transactions.

2. Full restoration of limited legal capacity shall cause the cancellation of custodianship.

Article 17 – Right to a name

1. Every natural person shall have the right to a name that includes a given name and a surname.

2. Change of name shall be allowed. Change of name shall require the person’s application stating the grounds for change. An appropriate body shall consider the application according to established rules.

3. Change of name shall not serve as the basis to terminate or alter the rights and obligations acquired or assumed under the former name. The person shall be bound to undertake all necessary actions to notify his/her creditors and debtors of the change of his/her name. 

Article 18 – Personal non-property rights

1. A person whose right to a name is contested or whose interests are prejudiced as a result of an unauthorised use of his/her name may demand that the wrongdoer cease or refrain from such action.

2. A person may protect in court, according to the procedures laid down by law, his/her honour, dignity, privacy, personal inviolability or business reputation from defamation.

3. If information defaming the honour, dignity, business reputation or privacy of a person has been disseminated in the mass media, then it shall be retracted in the same media. If such information is contained in a document issued by an organisation, then this document shall be corrected and the parties concerned shall be informed of the correction.

4. A person whose honour and dignity has been defamed by information disseminated in the mass media may disseminate information in answer to the defamation through the same media.

5. A person may exercise the rights described in paragraphs 1 and 3 of this article also when his/her image (photograph, film, video, etc.) has been disseminated without his/her consent. The consent of the person shall not be required when photo-taking (video recording, etc.) is connected with his/her public recognition, the office he/she holds, the requirements of justice or law enforcement, scientific, educational or cultural purposes, or when the photo-taking (video recording etc.) has occurred in public circumstances, or when the person has received compensation for posing.

6. The values referred to in this article shall be protected regardless of the culpability of the wrongdoer. And, if the violation has been caused by culpable action, a person may claim damages. Damages may be claimed in the form of the profit accrued to the wrongdoer. In the case of culpable violation, the injured person may also claim compensation for non-property (moral) damages. Moral damages may be recovered independently from the recovery of property damages.

Law of Georgia No 222 of 24 June 2004 – LHG I, No 19, 15.7.2004, Art. 91

 

Article 181 – Right to obtain personal data

1. A person may have access to the personal data and records about him/her that are related to his/her financial/material status or other private matters, and obtain copies of such data except as otherwise provided for in the legislation of Georgia.

2. A person may not be denied information that includes personal data and records about him/her.

3. Any person, upon written request, shall transfer the personal data and records held by him/her to another person if that person presents a written consent of the person whose personal data is requested. In that case, the person shall protect the confidentiality of such data or information.

Law of Georgia No 5919 of 14 March 2008 – LHG I, No 7, 26.3.2008, Art. 39

 

Article 19 – Protection of personal rights after death

The rights referred to in Article 18 may also be exercised by a person who, although not the bearer of the name or the right to personal dignity himself/herself, nevertheless has an interest deserving protection. He/she may exercise the right to demand such protection of his/her name and dignity which determines the essence of the person and survives his/her death. It shall not be allowed to claim material compensation for moral damages for defamation of the name, honour, dignity or business reputation of a person after his/her death.

 

Article 20 – Place of residence

1. The place where a natural person chooses his/her ordinary dwelling shall be deemed to be the place of residence of the person. The person may have several places of residence.

2. The place of residence of a minor shall be the place of residence of parents having parental rights, and the place of residence of a ward shall be the place of residence of his/her guardian.

3. The place of residence of a person shall not be cancelled if he/she leaves this place under compulsion or for performance of a state duty for a certain period of time.

 

Article 21 – Declaring a person missing

1. Based on the application of an interested person, a court may declare a natural person missing if his/her whereabouts are unknown and he/she has not appeared at his/her place of residence for two years. Upon the entry into force of the court’s decision, the legal heirs of the missing person shall obtain the right to administer the property of the missing person as property held in trust and the right to receive benefits from it. From this property maintenance shall be paid to the missing person’s dependents and debts shall be paid.

2. If the missing person reappears or his/her whereabouts become known, the court decision on the administration of his/her property shall be vacated. He/she may not demand compensation for the benefits received by proper management of the property during his/her absence.

 

Article 22 – Declaring a person dead

1. A person may be declared dead by a decision of a court, if there has been no information at his/her place of residence on his/her whereabouts for five years, also if he/she went missing under circumstances threatening his/her life, or if his/her death may be presumed because of some unfortunate accident, and no such information has been obtained for six months.

2. A member of the armed services or any other person who went missing in connection with wartime operations may be declared dead by a decision of a court not earlier than two years after the day on which the wartime operations ended.

3. The day of entry into legal force of a court decision declaring a person dead shall be considered to be the day of his/her death.

4. In the cases referred to in paragraphs 1 and 2 of this article, a court may declare that the day of a person’s death is the day of his/her presumed death.

 

Article 23 – Effect of reappearance of a person declared dead

1. If a person who has been declared dead reappears or if his/her whereabouts become known, the court shall vacate its decision regarding the person’s death.

2. Regardless of the time of reappearance, the person may recover any remaining property that has been gratuitously transferred to another person following the declaration of his/her death.

3. A person who paid to acquire the property of a person who was declared dead shall return the property to him/her if it is proved that at the time of acquisition of the property the acquirer knew that the person declared dead was alive.

4. If the property of the person declared dead was transferred to and subsequently sold by the state, then after the vacation of the court decision declaring the person dead the proceeds of the sale of his/her property shall be returned to the person.

Law of Georgia No 2239 of 9 December 2005 – LHG I, No 54, 20.12.2005, Art. 360

 

Chapter Two

Legal Persons

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

I – General Provisions

 

Article 24 – Concept; types

1. A legal person is an organised entity created to accomplish a certain purpose that owns property, is independently liable with its own property, acquires rights and duties in its own name, enters into transactions and can sue or be sued.

2. A legal person may be organised as a corporation, based on membership, dependent or independent of the status of its members, and engage or not engage in entrepreneurship.

3. Legal entities under public law participate in civil law relations in the same manner as legal entities under private law. The procedures for their creation, organisation and operation shall be regulated by law.

4. The State and municipalities participate in civil law relations in the same manner as legal entities under private law. In this respect, the powers of the state or of a municipality shall be exercised by its organs (departments, institutions, etc.) without being legal persons.

5. A legal person whose purpose is entrepreneurial (commercial) activity or its branch shall be created according to the Law of Georgia on Entrepreneurs.

6. A legal person whose purpose is non-entrepreneurial activity shall be registered according to the procedures contained in this Code.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 6989 of 1 5 July 2020 – website, 28.7.2020

 

Article 25 – Capacity for rights of legal persons

1. A legal entity under public law may engage in an activity corresponding to the objectives provided for in law or by its articles of association.

2. A legal entity under private law (entrepreneurial or non-entrepreneurial (non-commercial)) may engage in any activity not prohibited by law, regardless of whether or not this activity is provided for in its articles of association.

3. A legal person may engage in certain kinds of activities, the list of which is determined by law, only after obtaining a special license/permit or authorisation. The right of a legal person to engage in such activity shall arise from the moment the license/permit or authorisation is obtained.

4. The capacity for the rights of a legal person shall arise from the moment of its registration and shall cease to exist from the moment that the completion of its liquidation is registered.

5. A non-entrepreneurial (non-commercial) legal person may engage in an entrepreneurial activity of an auxiliary nature the profit from which shall be used for achieving the objectives of the non-entrepreneurial (non-commercial) legal person. The profit made from such activity may not be distributed to the founders, members, or donors of the non-entrepreneurial (non-commercial) legal person or to those having managerial and representative powers in such non-entrepreneurial (non-commercial) legal person.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 3537 of 21 July 2010 – LHG I, No 47, 5.8.2010, Art. 304

 

Article 26 – Domicile of a legal person

1. The location of the administration of a legal person shall be deemed to be the domicile of the legal person. A legal person may have only one domicile (legal address).

2. Any other residence of a legal person shall be deemed to be the domicile of its branch.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

II – Non-entrepreneurial (Non-commercial) Legal Persons

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 27 – Name of a non-entrepreneurial (non-commercial) legal person

1. A non-entrepreneurial (non-commercial) legal person shall have a name that includes the indication that it is a non-entrepreneurial (non-commercial) legal person.

2. The name of non-entrepreneurial (non-commercial) legal person may not include any graphic symbols that do not have any sound or verbal equivalent established by linguistic standards or the indications characteristic of the legal person or legal entity under public law specified by the Law of Georgia on Entrepreneurs and the Organic Law of Georgia on Political Associations of Citizens. The name may not include any addition that may mislead a third person and/or cause a mistake and/or misunderstanding of the form or activity of the entity.

3. The name of a non-entrepreneurial (non-commercial) legal person must not be the same as that of an already registered non-entrepreneurial (non-commercial) legal person.

4. A person who unlawfully uses the name of another legal person shall cease such use at the demand of the authorised person and compensate damages caused by such unlawful use.

41. When determining the name of a non-entrepreneurial (non-commercial) legal person, the rules established for company names by Article 16 of the Law of Georgia on Entrepreneurs shall additionally apply.

5. In the case of defamation of the business reputation of a legal person, the rules of Article 18 of this Code shall apply.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

Law of Georgia No 887 of 2 August 2021 – website, 4.8.2021

 

Article 28 – Procedure for the registration of non-entrepreneurial (non-commercial) legal persons and branches (representative offices) of foreign non-entrepreneurial (non-commercial) legal persons

1. Non-entrepreneurial (non-commercial) legal persons and branches (representative offices) of foreign non-entrepreneurial (non-commercial) legal persons shall be registered in the Register of Non-entrepreneurial (Non-commercial) Legal Entities.

2. The Register of Non-entrepreneurial (Non-commercial) Legal Entities is maintained by the Legal Entity under Public Law (LEPL) – National Agency of Public Registry of the Ministry of Justice of Georgia.

3. Non-entrepreneurial (non-commercial) legal persons and branches (representative offices) of foreign non-entrepreneurial (non-commercial) legal persons shall be registered according to the procedures contained in this Code as well as by the legislation of Georgia for registration of entrepreneurial entities and branches (representative offices) of foreign entrepreneurial legal persons.

Law of Georgia No 1902 of 28 December 2002 – LHG I, No 4, 22.1.2003, Art. 20

Law of Georgia No 179 of 24 June 2004 – LHG I, No 19, 15.7.2004, Art. 79

Law of Georgia No 3140 of 25 May 2006 – LHG I, No 18, 31.5.2006, Art. 134

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

Law of Georgia No 2458 of 25 December 2009 – LHG I, No 49, 30.12.2009, Art. 370

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

 

Article 29 – Conditions for registration of non-entrepreneurial (non-commercial) legal persons

1. If the registration of a non-entrepreneurial (non-commercial) legal person is requested, the interested person shall submit to the registration authority the partners’ agreement and an application. The application shall contain the necessary details required under paragraph 2 of this article and under the Law of Georgia on Entrepreneurs for the registration of entrepreneurial legal persons.

2. If the registration of a non-entrepreneurial (non-commercial) legal person is requested, in addition to the data required by paragraph 1 of this article, its articles of association shall contain:

a) the object of the activity of the non-entrepreneurial (non-commercial) legal person;

b) the procedures for admitting, withdrawing and excluding members of the non-entrepreneurial (non-commercial) legal person if it is a non-entrepreneurial (non-commercial) legal person based on membership;

c) name of the body (person) making a decision on reorganisation or liquidation and the decision-making procedure;

d) the procedures for creating (electing) and the tenure of the management body (managing person) of the non-entrepreneurial (non-commercial) legal person.

21. The registration authority shall, in addition to the registration of a non-entrepreneurial (non-commercial) legal person , create within a single electronic portal an electronic address of a non-entrepreneurial (non-commercial) legal entity to which the procedures established by Article 18 of the Law of Georgia on Entrepreneurs shall apply.

22. A non-commercial (non-commercial) legal person may have a registered telephone number and/or e-mail address to which electronic messages can be sent. Sending an electronic message to a registered phone number and/or e-mail address shall be deemed as serving such message on a person concerned.

3. Other procedures for registration of non-entrepreneurial (non-commercial) legal persons shall be defined by the Law of Georgia on Entrepreneurs, the Law of Georgia on Creative Workers and Creative Unions, and the Organic Law of Georgia on Trade Unions.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

Law of Georgia No 2458 of 25 December 2009 – LHG I, No 49, 30.12.2009, Art. 370

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

Law of Georgia No 3827 of 30 November 2018 – website, 14.12.2018

Law of Georgia No 887 of 2 August 2021 – website, 4.8.2021

 

Article 30 – (Deleted)

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

Law of Georgia No 2458 of 25 December 2009 – LHG I, No 49, 30.12.2009, Art. 370

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

 

Article 31 – Registration of changes made by non-entrepreneurial (non-commercial) legal persons and branches (representative offices) of foreign non-entrepreneurial (non-commercial) legal persons

1. The decision of an authorised person/body duly made and certified or the transaction made by authorised persons according to the procedures laid down by the legislation of Georgia shall serve as the basis for changing the registered records.

2. The changes made by non-entrepreneurial (non-commercial) legal persons and branches (representative offices) of foreign non-entrepreneurial (non-commercial) legal persons, which cause a change in their registration documents, shall require registration. A change shall be deemed to have been made from the moment the change is registered in the Register of Non-entrepreneurial (Non-commercial) Legal Entities.

3. Changes made in the registered records of non-entrepreneurial (non-commercial) legal persons/branches (representative offices) of foreign non-entrepreneurial (non-commercial) legal persons shall be registered according to the procedure laid down for the registration of entrepreneurial legal persons/branches (representative offices).

Law of Georgia No 179 of 24 June 2004 – LHG I, No 19, 15.7.2004, Art. 79

Law of Georgia No 3140 of 25 May 2006 – LHG I, No 18, 31.5.2006, Art. 134

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

Law of Georgia No 2458 of 25 December 2009 – LHG I, No 49, 30.12.2009, Art. 370

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

 

Article 32 – Procedure for making decisions on the registration of non-entrepreneurial (non-commercial) legal persons and branches (representative offices) of foreign non-entrepreneurial (non-commercial) legal persons

1. On the matters defined by this chapter and the matters falling within the scope of its authority, the registration authority shall make decisions required by the Law of Georgia on Public Registry and the Law of Georgia on Entrepreneurs for registration and access to information.

2. Non-entrepreneurial (non-commercial) legal persons shall be dissolved in the accordance with the general rule established by the Law of Georgia on Entrepreneurs.

21. The procedure for dissolving non-commercial (non-commercial) legal persons that are established by the State or a municipality shall be approved by the Minister of Economy and Sustainable Development of Georgia.

3. If the registration of a non-entrepreneurial (non-commercial) legal person or of the branch (representative office) of a foreign non-entrepreneurial (non-commercial) legal person is requested, or when the alteration of the registered records is requested, the registration authority, except for the grounds defined by the legislation of Georgia for an entrepreneurial entity, shall make a decision on suspending the registration proceedings if:

a) the objectives of the non-entrepreneurial (non-commercial) legal person or of the branch (representative office) of the foreign non-entrepreneurial (non-commercial) legal person the registration of which is sought, contradict the applicable laws, recognised moral standards or the constitutional and legal principles of Georgia;

b) there are conditions provided for in Article 26(3) of the Constitution of Georgia.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

Law of Georgia No 2458 of 25 December 2009 – LHG I, No 49, 30.12.2009, Art. 370

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

Law of Georgia No 887 of 2 August 2021 – website, 4.8.2021

 

Article 33 – State control over the activities of non-entrepreneurial (non-commercial) legal persons

1. A decision to suspend or prohibit the activity of non-entrepreneurial (non-commercial) legal persons shall be made by a court in the cases and in the manner provided by an organic law of Georgia.

2. If a non-entrepreneurial (non-commercial) legal person has substantively engaged in entrepreneurial activity, a court, based on the application from the registration authority and/or the interested person, shall consider and make a decision to suspend or prohibit the activity of the non-entrepreneurial (non-commercial) legal person.

3. After the court makes a decision to prohibit the activity of a non-entrepreneurial (non-commercial) legal person, the registration authority shall revoke the registration of the non-entrepreneurial (non-commercial) legal person.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

 

Article 331 – (Deleted)

Law of Georgia No 5282 of 11 July 2007 – LHG I, No 30, 30.7.2007, Art. 346

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

 

Article 34 – (Deleted)

Law of Georgia No 179 of 24 June 2004 – LHG I, No 19, 15.7.2004, Art. 79

Law of Georgia No 3140 of 25 May 2006 – LHG I, No 18, 31.5.2006, Art. 134

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

 

Article 35 – Management and representation of non-entrepreneurial (non-commercial) legal persons

1. A founder/member of a non-entrepreneurial (non-commercial) legal person may grant exclusive right to one person to manage the activities of a non-entrepreneurial (non-commercial) legal person and/or may establish joint management and/or representation by two or more persons.

2. Managerial authority means making decisions on behalf of a non-entrepreneurial (non-commercial) legal person within the scope of its authority, and representative authority means acting on behalf of a non-entrepreneurial (non-commercial) legal person in relations with third parties. Unless otherwise determined by the registration documents, a managerial authority shall include representative authority.

3. The organisational structure of a non-entrepreneurial (non-commercial) legal person shall be regulated by its charter (founders’/members’ agreement) that shall be duly certified.

4. The general rules established by the Law of Georgia on Entrepreneurs for persons authorised to represent entrepreneurs shall apply to the origination and termination of managerial and representative powers of a non-entrepreneurial (non-commercial) legal person.

5. The rules established by Article 17 of the Law of Georgia on Entrepreneurs for business letters and websites shall apply to non-entrepreneurial (non-commercial) legal persons. Law of Georgia No 179 of 24 June 2004 – LHG I, No 19, 15.7.2004, Art. 79

Law of Georgia No 617 of 26 November 2004 – LHG I, No 36, 8.12.2004, Art. 168

Law of Georgia No 1051 of 25 February 2005 – LHG I, No 9, 17.3.2005, Art. 59

Law of Georgia No 3140 of 25 May 2006 – LHG I, No 18, 31.5.2006, Art. 134

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

Law of Georgia No 887 of 2 August 2021 – website, 4.8.2021

 

Article 36 – Transfer of assets owned by non-entrepreneurial (non-commercial) legal persons

The assets owned by a non-entrepreneurial (non-commercial) legal person may be transferred if the transfer serves the activity of the non-entrepreneurial (non-commercial) legal person, its organisational development, promotes the achievement of its objectives or serves charitable purposes.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 37 – Compensation for damage

1. A non-entrepreneurial (non-commercial) legal person shall be liable for damages incurred to third parties as a result of an action performed by a person(s) with managerial and representative authorities in the course of his/her duties, which gives rise to the obligation to pay damages.

2. The person(s) vested with managerial and representative authority shall run the affairs in good faith. In case of nonfulfillment of the duties, he/she shall be accountable to the non-entrepreneurial (non-commercial) legal person for damages incurred. Waiver of a claim for damages shall be void if it is necessary to satisfy the claims of third parties.

3. A non-entrepreneurial (non-commercial) legal person shall be independent from the status of its member(s) or from that of its manager(s) and representative(s). The liability of the non-entrepreneurial (non-commercial) legal person shall be limited to its property. The members of a non-entrepreneurial (non-commercial) legal person or its manager(s) and representative(s) shall not be liable for the obligations of the non-entrepreneurial (non-commercial) legal person. Nor shall the non-entrepreneurial (non-commercial) legal person be liable for the obligations of its members or person(s) with managerial and representative authorities.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 38 – Reorganisation of non-entrepreneurial (non-commercial) legal persons

1. The legal form of a non-entrepreneurial (non-commercial) legal person may not be changed, except when a change in its legal form transforms the non-entrepreneurial (non-commercial) legal person into a legal entity under public law.

11. A non-entrepreneurial (non-commercial) legal person shall be divided (by demerger, separation), combined (by merger, acquisition) and liquidated according to the procedures contained in the legislation of Georgia for liquidation/reorganisation of entrepreneurial entities.

2. Founders/members of a non-entrepreneurial (non-commercial) legal person shall determine the person entitled to receive the assets remaining after the liquidation of a non-entrepreneurial (non-commercial) legal person in the application for registration. When the non-entrepreneurial (non-commercial) legal person is liquidated, its assets may be transferred if:

a) the transfer promotes the achievement of its objectives;

b) the transfer serves charitable purposes;

c) the property is transferred to another non-entrepreneurial (non-commercial) legal person.

3. The assets remaining after the liquidation of a non-entrepreneurial (non-commercial) legal person may not be distributed to its founders/members or persons with managerial and representative authorities.

4. If the founders/members of a non-entrepreneurial (non-commercial) legal person do not identify the person entitled to receive the assets remaining after its liquidation, a court shall transfer the assets remaining after the liquidation of the non-entrepreneurial (non-commercial) legal person to one or several non-entrepreneurial (non-commercial) legal entities with the same or similar objectives as those of the liquidated non-entrepreneurial (non-commercial) legal person. If no such legal persons exist or can be found, a decision may be made on transferring the assets to the State. The court may distribute the assets after six months from the registration of the commencement of the liquidation proceedings.

5. Based on a final judgment of conviction in a criminal case, the liquidator(s) appointed by the court shall carry out the liquidation of a non-entrepreneurial (non-commercial) legal person. Liquidation and reorganisation procedures may not be initiated against a non-entrepreneurial (non-commercial) legal person from the moment of initiation of criminal proceedings until the entry into force of a judgment of conviction or until the termination of criminal proceedings.

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

Law of Georgia No 651 of 30 May 2013 – website, 12.6.2013

 

Article 381 – (Deleted)

Law of Georgia No 1964 of 3 November 2009 – LHG I, No 35, 19.11.2009, Art. 253

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

 

Article 39 – Non-registered unions (associations)

1. The matters related to the organisation and structure of a non-registered union (association) shall be determined by a mutual agreement of its members. A non-registered union (association) shall not be considered a legal person.

2. The membership dues paid by members and the assets acquired with those dues make up the common property of a non-registered union (association).

3. A non-registered union (association) may be represented by its members or duly authorised persons in court or in out-of-court relations.

4. Creditors’ claims may be fulfilled from the common property of a non-registered union (association). At the same time, the persons who acted on behalf of the non-registered union (association) shall also be liable as debtors both individually and jointly.

Law of Georgia No 179 of 24 June 2004 – LHG I, No 19, 15.7.2004, Art. 79

Law of Georgia No 3140 of 25 May 2006 – LHG I, No 18, 31.5.2006, Art. 134

Law of Georgia No 3536 of 25 July 2006 – LHG I, No 37, 7.8.2006, Art. 277

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 40 – (Deleted)

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 41 – (Deleted)

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 42 – (Deleted)

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 43 – (Deleted)

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 44 – (Deleted)

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 45 – (Deleted)

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 46 – (Deleted)

Law of Georgia No 3140 of 25 May 2006 – LHG I, No 18, 31.5.2006, Art. 134

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 47 – (Deleted)

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 48 – (Deleted)

Law of Georgia No 3140 of 25 May 2006 – LHG I, No 18, 31.05.2006, Art. 134

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

Article 49 – (Deleted)

Law of Georgia No 3140 of 25 May 2006 – LHG I, No 18, 31.5.2006, Art. 134

Law of Georgia No 3967 of 14 December 2006 – LHG I, No 48, 22.12.2006, Art. 336

 

III – Collective Investment Funds, Sub-funds of Investment Funds

Law of Georgia No 6814 of 14 July 2020 – website, 22.7.2020

 

Article 491 – Collective investment funds

1. The issues of organisation and structure of collective investment funds shall be determined by the Law of Georgia on Collective Investment Undertakings. A collective investment fund shall be an organisational formation that is not a legal person.

2. A collective investment fund shall be represented in court or out-of-court relations by a company managing its assets.

Law of Georgia No 6814 of 14 July 2020 – website, 22.7.2020

 

Article 492 – Sub-funds of investment funds (sub-funds)

1. An umbrella fund is an independent part of an umbrella fund (investment company or collective investment fund), the organisation and structure of which are determined by the Law of Georgia on Collective Investment Undertakings. A sub-fund of an investment fund shall not be a legal person.

2. A sub-fund of a collective investment fund shall be represented in court or out-of-court relations by a company managing the assets of the collective investment fund.

3. A sub-fund of an investment company shall be represented in court or out-of-court relations by a person authorised to represent the investment company or by an asset management company, provided he/she/it was appointed by the investment company.

Law of Georgia No 6814 of 14 July 2020 – website, 22.7.2020

 

Section Two

Transactions

 

Chapter One

General Provisions

 

Article 50 – Concept

A transaction is a unilateral, bilateral or multilateral declaration of intent aimed at creating, changing or terminating a legal relation.

 

Article 51 – Validity of a unilateral declaration of intent

1. The declaration of intent that requires acceptance by another party shall be considered valid from the moment it reaches the other party.

2. The declaration of intent shall not be considered valid if the other party rejects it in advance or contemporaneously.

3. The validity of the declaration of intent may remain unaffected by the death of the party to the transaction, or in a case provided for under Article 1293(4) of this Code, if this event occurred after the declaration of intent.

Law of Georgia No 3339 of 20 March 2015 – website, 31.3.2015

 

Article 52 – Interpretation of a declaration of intent

In interpreting the declaration of intent, the intention shall be determined by a reasonable deliberation, and not only from the literal meaning of the wording.

 

Article 53 – Non-existence of a transactions when its content cannot be ascertained

A transaction shall not exist when its content cannot be ascertained from its form of expression or from other circumstances.

 

Article 54 – Unlawful and immoral transactions

A transaction that violates the rules and prohibitions laid down by law or that contravenes the public order or principles of morality shall be void.

 

Article 55 – Invalidity of a transaction by reason of abuse of influence

A transaction that has been made by one party’s undue influence over the other party when their relationship is based on exceptional confidence shall be void.

Law of Georgia No 6151 of 8 May 2012 – website, 25.5.2012

 

Article 56 – Sham and fraudulent transactions

1. A transaction that has been made only for the sake of appearances, without intent to create legal implications (sham transaction), shall be void.

2. If, by making a sham transaction, the parties intended to hide another transaction, then the rules applicable to hidden transactions shall apply (fraudulent transactions).

 

Article 57 – Invalidity of a transaction when the declaration of intent lacks seriousness

1. The declaration of intent that has been made not seriously (humorously), under the presumption that the lack of seriousness of the declaration would be understood, shall be void.

2. A recipient of the declaration of intent shall be paid damages resulting from the fact that he/she trusted the seriousness of the declaration, provided he/she did not know and could not have known of its lack of seriousness.

 

Article 58 – Voidance of a transaction due to minority or mental disorder

1. The declaration of intent made by a minor shall be void.

2. The declaration of intent made by a person during loss of consciousness or temporary mental disorder may be deemed void.

3. The declaration of intent made by a person with mental disorder while concluding a transaction shall be void when it is inconsistent with the correct perception of reality if the person does not benefit from this transaction, even if the court has not recognised him/her as a beneficiary of support.

Decision No 2/4/532,533 of the Constitutional Court of Georgia of 8 October 2014 – website, 28.10.2014

Law of Georgia No 3339 of 20 March 2015 – website, 31.3.2015

 

Article 581 – Conclusion of a transaction by a beneficiary of support

1. If a beneficiary of support concludes a transaction without having received the support defined by the court decision, the validity of the transaction shall depend on whether the supporter approves it or not, except when the beneficiary of support benefits from the transaction.

2. The procedure established under Articles 64 and 66 of this Code shall apply to the conclusion of a transaction by a beneficiary of support without having received the support defined by the court decision.

Law of Georgia No 3339 of 20 March 2015 – website, 31.3.2015

 

Article 59 – Transaction made without observance of the form

1. A transaction shall be void if made without observance of the form provided by law or the contract, or without permission, if permission is required for the transaction.

2. A voidable transaction shall be void from the moment of its execution if it is rescinded. Rescission shall be declared to the other party to the contract.

3. An interested person shall have the right to rescind.

 

Article 60 – Conversion of transactions

If a void transaction meets the requirements established for another transaction, then the latter transaction shall be applied, provided that the parties, upon detecting that the first transaction is void, wish the second transaction to be valid.

 

Article 61 – Significance of confirmation when transactions are void

1. An indisputably void (null and void) transaction shall be deemed void from the moment of its making.

2. If a person making an indisputably void transaction confirms it, then his/her action shall be considered as the making of a new transaction.

3. If a person having a right to rescind confirms the transaction, by doing so he/she shall forfeit the right to rescind.

4. If the parties confirm an indisputably void bilateral transaction, then they are bound, when in doubt, to transfer to each other everything that would have accrued to them if the transaction had been valid initially.

5. The confirmation shall become valid only when the contract or the transaction does not contravene the principles of morality and the requirements of public order.

 

Article 62 – Invalidity of parts of a transaction

Invalidity of part of a transaction shall not cause the invalidity of its other parts, if it can be presumed that the transaction would have been made even without the void part.

 

Chapter Two

Legal Capacity as a Condition for Validity of Transactions

 

Article 63 – Transactions made by a minor

1. If a minor makes a bilateral transaction (contract) without the required consent of his/her legal representative, then the validity of the transaction depends on whether the representative subsequently approves it or not, except when the minor acquires a benefit by the transaction.

2. If a minor becomes a person with legal capacity, he/she may decide the validity of his/her own declaration of intent.

 

Article 64 – Repudiation of a transaction made by a minor

1. Before a contract made by a minor is approved, the other party may repudiate the contract.

2. If the other party knew of the minority of the person, then he/she may repudiate the contract only if the minor deceived him/her by claiming that consent from the legal representative had been obtained.

 

Article 65 – Emancipation of a minor

1. A contract made by a minor without the consent of his/her legal representative shall be deemed valid if the minor has performed his/her part of the contract with the means transferred to him/her for this purpose or for his/her free disposal by the legal representatives or with these representatives’ consent by third parties.

2. If a legal representative gives the right to independently manage an enterprise to a minor who has attained the age of sixteen, then the minor shall acquire full legal capacity in the relations routine for this field. This rule shall apply to the establishment and the liquidation of an enterprise as well as to the commencement and completion of labour relations.

3. The permission to manage an enterprise requires the legal representative’s consent with the approval of the guardianship and custodianship authority.

 

Article 66 – Invalidity of transactions made without the required consent of the representative

A unilateral transaction made by a minor without the necessary consent of the legal representative shall be void. Such a transaction shall be void also if the legal representative gave his/her consent but the minor failed to present a written document confirming it, and for this reason the other party repudiates the transaction without delay. Such repudiation shall not be allowed if the other party has been informed of the consent of the legal representative.

 

Article 67 – Obligation of permission before the limitation of legal capacity

A transaction made before the limitation of legal capacity shall require permission if it is established that the grounds for which the legal capacity has been limited obviously existed at the time of making of the transaction.

 

Chapter Three

Form of a Transaction

 

Article 68 – Significance of form for the validity of a transaction

For a transaction to be valid the form of the transaction prescribed by law shall be observed. If no such form is prescribed, the parties may determine it themselves.

 

Article 69 – Form of a transaction

1. A transaction may be made verbally or in writing.

2. A transaction may be made in writing if so provided for in law or by agreement of the parties.

3. If the transaction is in written form, the signatures of the parties to the transaction shall be sufficient.

31. When a beneficiary of support concludes a written transaction, in addition to the parties involved, it shall be signed by a supporter. By signing it, the supporter confirms that he/she will provide the support defined by the court decision at the time of concluding the transaction by the beneficiary of support.

4. Restoration, reproduction or imprinting of a signature by mechanical means shall be allowed where this practice is customary, inter alia, when signing securities issued in large numbers.

5. When a transaction is in a written form the genuineness of the signatures of the parties to the transaction shall be certified by a notary or any other person determined by law in cases provided by law or by agreement of the parties.

Law of Georgia No 3879 of 8 December 2006 – LHG I, No 48, 22.12.2006, Art. 321

Law of Georgia No 3339 of 20 March 2015 – website, 31.3.2015

 

 

Article 70 – Entrusting the signature of a transaction to another person

A person who cannot sign a transaction due to illiteracy or long-term or permanent physical, mental, intellectual or sensory impairment, or in other cases provided for in law may entrust the signature of the transaction to another person. The signature of that person shall be officially authenticated. At the same time, the reason for which the person making the transaction was unable to sign the transaction shall be indicated.

Law of Georgia No 3709 of 15 October 2010 – LHG I, No 57, 25.10.2010, Art. 366

Law of Georgia No 1982 of 02 November 2022 – website, 11.11.2022

 

Article 701 – Concluding a transaction by a literate blind person

1. If a transaction is concluded in writing by a literate blind person, such person shall sign the transaction by himself/herself, without entrusting the signature of a transaction to another person, or shall entrust the signature of a transaction to another person in accordance with the procedure established by Article 70 of this Code.

2. In cases provided for by this article, a literate blind person shall sign a transaction by himself/herself , using a mechanical signature, facsimile or other appropriate technical means established by the legislation of Georgia. When a literate blind person signs a transaction using a facsimile, such person shall also present an identity document and a document on the validity of the facsimile, certified by a notary.

3. If a transaction involving a blind literate person is concluded in Braille, by agreement of the parties, the transaction concluded in Braille shall be attached to a transaction in large print.

Law of Georgia No 1982 of 02 November 2022 – website, 11.11.2022

 

Article 71 – Making a transaction by drawing up several documents

If a transaction is made by drawing up several documents of the same content, it shall be sufficient that each party sign a copy of the document that is intended for the other relevant party.

 

Chapter Four

Voidable Transactions

I – Transactions Made by Mistake

 

Article 72 – Concept

A transaction may become voidable if the declaration of intent has been made on the basis of a substantial mistake.

 

Article 73 – Types of substantial mistakes

A mistake shall be deemed substantial when:

a) a person intended to make a different transaction than that to which he/she expressed his/her consent;

b) a person was mistaken about the content of the transaction that he/she intended to make;

c) the circumstances, which the parties consider to be the grounds for the transaction under the principles of good faith, do not exist.

 

Article 74 – Mistake with respect to the identity of a contracting party

1. A mistake with respect to the identity of a contracting party shall be deemed substantial only when the identity of the contracting party itself or the consideration of his/her personal characteristics is the principal basis for making the transaction.

2. A mistake with respect to basic characteristics of an object shall be deemed substantial only when these features are significant in determining the value of the object.

 

Article 75 – Mistake with respect to a right

A mistake with respect to a right shall be deemed substantial only if the right was the sole or principal basis for making the transaction.

 

Article 76 – Mistake with respect to the grounds of a transaction

A mistake with respect to the grounds of a transaction shall not be deemed substantial, except when the grounds were the subject of the agreement.

 

Article 77 – Consent of a contracting party in transactions made by mistake

The declaration of intent made by mistake shall not become voidable if the other party agrees to perform the transaction according to the wish of the party that intends to make the transaction voidable.

 

Article 78 – Petty mistakes

Petty mistakes in computations or in a written declaration of intent shall give rise to the right only to correct the mistake, not to rescind the transaction.

 

Article 79 – Validity of rescission

1. Rescission shall be declared within one month after the moment at which the grounds for rescission were detected.

2. If a transaction has become voidable and a mistake has been caused by the negligence of the person entitled to rescind, then he/she shall compensate the other party for damages caused as a result of the invalidity of the transaction. The obligation to compensate shall not arise if the other party knew of the mistake or it was unknown to him/her due to his/her negligence.

 

Article 80 – Mistakes caused by an intermediary

The declaration of intent that has been incorrectly communicated by an intermediary may become voidable under the same conditions that apply to the transactions made by mistake under Article 73.

 

II – Transactions Made by Deceit

 

Article 81 – Concept

1. If a person has been deceived into making a transaction, then he/she may demand avoidance of the transaction. Avoidance shall occur when it is evident that the transaction would not have been made without the deception.

2. If one party keeps silent with respect to the circumstances in the case of disclosure of which the other party would not have declared his/her intent, then the deceived party may demand avoidance of the transaction. The obligation to disclose shall exist only when the other party expected it in good faith.

 

Article 82 – Transaction rendered void by reason of deceit

When rendering a transaction void, it makes no difference whether by communicating wrong information the party intended to gain some advantage or to inflict harm on the other party.

 

Article 83 – Deceit by a third person

1. In the case of a deception by a third party, the demand for avoidance of the transaction may be made if the person benefiting from the transaction knew or ought to have known of the deception.

2. If both parties to the transaction have acted deceitfully, then neither of them may demand avoidance of the transaction or compensation for damages on the grounds of deception.

 

Article 84 – Limitation period for rescission

A transaction made by deceit may be rescinded within one year. The period shall be computed from the moment at which the party rightful to rescind becomes aware of the existence of the grounds for rescission.

 

III – Transactions Made by Duress

 

Article 85 – Concept

The use of duress (violence or threat) for the purpose of making a transaction shall entitle the person subjected to the duress to demand avoidance of the transaction even when the duress is exercised by a third person.

 

Article 86 – Nature of duress

1. Avoidance of a transaction shall be justified because of duress that by its nature may influence a person and inspire a fear of real injury to his/her person or property.

2. In assessing the nature of duress, the age, sex and life circumstances of persons shall be taken into consideration.

 

Article 87 – Duress against near relatives of a person

Duress serves as the basis for voiding a transaction also when it is directed against the spouse, other family members or near relatives of one of the parties to the transaction.

 

Article 88 – Duress by lawful means

Actions exercised neither for illegal purposes nor by using illegal means shall not constitute duress under Articles 85-87, except when the means and purpose do not coincide.

 

Article 89 – Period for rescission

A transaction made by duress may be rescinded within one year after the moment in which the duress ends.

 

Chapter Five

Conditional Transactions

 

Article 90 – Concept

A transaction shall be deemed conditional when it is contingent upon a future or uncertain event so that the performance of the transaction is either postponed until the occurrence of the contingency, or the termination of the transaction is timed to coincide with the occurrence of the contingency.

 

Article 91 – Invalidity of unlawful and/or immoral conditions

A condition that contravenes the provisions of law or the principles of morality, or the performance of which is impossible, shall be void. A transaction that depends upon such a condition shall be void in full.

 

Article 92 – Condition dependent upon will

A condition shall be deemed to be dependent upon will when its occurrence or non-occurrence depends only on the will of the parties to a transaction. A transaction made with such a condition shall be void.

 

Article 93 – Positive condition precedent

1. If a transaction is made on the condition that some event will occur within a certain period of time, then the condition shall be deemed legally ineffective if this period of time has elapsed and the event has not occurred.

2. If no period of time is fixed, then the condition may be fulfilled at any time. The condition may be considered invalid when it is obvious that the occurrence of the event is already impossible.

 

Article 94 – Negative condition precedent

1. If a transaction is made on the condition that some event will not occur within a certain period of time, then the condition shall be deemed fulfilled if this period of time has elapsed without the occurrence of the event. The condition shall be deemed fulfilled also when before the complete lapse of the period it is obvious that that the occurrence of the event is impossible.

2. If no period of time is fixed, then the condition shall be deemed fulfilled only when it is obvious that the event will not occur.

 

Article 95 – Inadmissibility of influencing the occurrence of a condition

1. A person who has made a transaction contingent upon a certain condition may not perform, before the occurrence of the condition, any action that may hinder the performance of his/her obligation.

2. If the condition occurs at a certain time and the person has already performed such action, then he/she shall compensate the other party for damages caused by such action.

 

Article 96 – Transactions with a condition of postponement

A transaction shall be deemed to be made with the condition of postponement if the creation of rights and duties stipulated by the transaction depends on a future or uncertain event or on an event that has already occurred but is yet unknown to the parties.

 

Article 97 – Transactions on a condition subsequent

A transaction shall be deemed to be made on a condition subsequent when the occurrence of this condition causes termination of the transaction and reinstates the state of affairs existing before the making of the transaction.

 

Article 98 – Significance of good faith with respect to the occurrence of a condition

1. If the party for whom the occurrence of the condition is unfavourable delays its occurrence in bad faith, the condition shall be deemed to have occurred.

2. If the party for whom the occurrence of the condition is favourable promotes its occurrence in bad faith, then the condition shall not be deemed to have occurred.

 

Chapter Six

Consent in Transactions

 

Article 99 – Concept

1. If the validity of a transaction depends upon the consent of a third party, both the consent and the refusal of it may be declared to either party to the transaction.

2. The consent need not be in a form that is prescribed for a transaction.

3. If a transaction, the validity of which depends upon the consent of a third party, has been made with the consent of that person, then the second and third sentences of Article 66 shall apply accordingly.

 

Article 100 – Consent granted in advance (permission)

Consent granted in advance (permission) may be revoked before making a transaction, unless otherwise agreed by the parties. Both parties shall be notified of the revocation of the consent (permission).

 

Article 101 – Subsequent consent (approval)

Subsequent consent (approval) shall be retroactive from the moment at which a transaction is made, unless otherwise established.

 

Article 102 – Administration of property by an unauthorised person

1. Administration of property by an unauthorised person shall be valid if it is done with the prior consent of the authorised person.

2. The administration shall become valid if approved by the authorised person.

 

Chapter Seven

Agency in Transactions

 

Article 103 – Concept

1. A transaction may be made through an agent as well. The power of an agent may arise either by operation of law or out of a mandate (power of attorney).

2. This rule shall not apply when, in view of the nature of a transaction, it is to be made by a particular person, or when the law prohibits the making of a transaction through an agent.

 

Article 104 – Agency and the effects of a transaction on an addressee

1. A transaction made by an agent within the scope of his/her authority, and on behalf of the person represented by him/her shall give rise only to the rights and obligations of the principal.

2. If a transaction is made on behalf of another person, then the other party to the transaction may not use the absence of the agent’s authority, if the principal has created the circumstances that led the other party to the transaction to believe in the existence of such authority in good faith.

3. If when making a transaction an agent fails to indicate his authority of agency, then the transaction shall have legal consequences for the principal only if the other party ought to have presumed the existence of the agency. The same rule shall apply when it does not matter for the other party with whom he/she makes the transaction.

 

Article 105 – Limited legal capacity of an agent

A transaction made by an agent shall be valid even if the agent had limited legal capacity.

 

Article 106 – Defect of the declaration of intent in agency

1. When a transaction is voidable by reason of a defect in the declaration of intent, the declaration of intent of the principal shall prevail.

2. If the defect in the declaration of intent relates to the circumstances determined by the principal in advance, then this defect may give rise to the right to rescind only if the defect was caused by the principal.

 

Article 107 – Power of agency

1. Authority (power of attorney) shall be conferred by the declaration of intent made with respect to the person who is given the power of attorney or a third person with whom the agency is to be exercised.

2. The declaration of intent need not be in the form prescribed for making the transaction for which the power of attorney has been granted. This rule shall not apply when a special form is prescribed.

 

Article 108 – Obligation of notification upon changing the authority

Third persons shall be notified of alterations in or revocation of authority. If this requirement is not fulfilled, such alterations and revocation of authority shall not be valid with respect to third parties, except when the parties knew or should have known about it when making the transaction.

 

Article 109 – Grounds for termination of power of agency

A power of agency shall be extinguished by:

a) expiration of the term for which the authority was granted;

b) renunciation by the authorised person;

c) revocation of the authority by the grantor of the authority;

d) the death of the grantor of the authority;

e) performance;

f) recognition of a grantor of the authority as a beneficiary of support if the support was assigned to him/her to exercise representative authority or property disposal rights.

Law of Georgia No 3339 of 20 March 2015 – website, 31.3.2015

 

Article 110 – Obligation of agent upon extinguishment of authority

Upon extinguishment of his/her authority, an agent shall return the instrument of authority to the grantor. The agent may not retain the instrument.

 

Article 111 – Entering into a transaction without a power of agency

1. If a person enters into a transaction on behalf of another person without the power of agency, the validity of the transaction shall depend on the ratification of the principal.

2. If the other party demands ratification from the principal, then only he/she shall be notified of the ratification. The ratification may be given within two weeks after a demand; otherwise the demand for ratification shall be deemed to have been rejected.

 

Article 112 – Right to repudiate a contract

Before a contract is ratified, the other party may repudiate the contract, except when this party knew of the defect in the power of agency at the time the contract was entered into. Repudiation of the contract may be declared also to the agent.

 

Article 113 – Agent’s obligation when there is a defect in the power of agency

1. If a person who makes a transaction as an agent fails to prove his/her power of agency, then he/she shall, at the option of the other party, either perform the obligation assumed or pay damages, if the principal refuses to ratify the contract.

2. If the agent did not know of the defect in his/her authority, then he/she shall be bound to compensate only those damages that the other party sustained in relying upon the authority.

3. The agent shall not be liable if the other party knew or should have known of the defect in his/her power of agency. Likewise, the agent shall not be liable if his/her legal capacity was limited, except when he/she acted with the consent of his/her legal representative.

 

Article 114 – Inadmissibility of entering into a transaction with oneself

Unless otherwise provided by the consent an agent may not make a transaction on behalf of the principal and with himself/herself, either in his own name or as an agent of a third party, except when the transaction already exists for the performance of certain obligations.

 

Section Three

Exercise of Rights

 

Article 115 – Inadmissibility of abusing rights

A civil right shall be exercised lawfully. A right may not be exercised with a sole intention to inflict damages on another person.

 

Article 116 – Damage inflicted within the limits of necessary self-defence

1. An action exercised within the limits of necessary self-defence shall not be unlawful and the damages caused by it shall not be recovered.

2. Self-defence shall be deemed necessary if it is required to ward off a present unlawful assault on oneself or others.

 

Article 117 – Damage caused by extreme necessity

1. Any damages caused to ward off a danger that in the given circumstances could not be warded off by other means, provided that the damage inflicted is less significant than the damage avoided, shall be compensated by the one who inflicted the damage (extreme necessity).

2. In view of the factual circumstances under which damages have been inflicted, the liability to pay damages may be imposed on a third party in whose interests the one who inflicted the damages acted, or both the third party and the one who inflicted the damages be released from liability in whole or in part.

 

Article 118 – Self-help

If help from authorities cannot be obtained in good time, and without immediate intervention there is a danger that the realisation of the claim will be prevented or be considerably more difficult, then the action of a person who for the purpose of self-help removes, destroys or damages a thing, or who for the same purpose restrains the liberty of a responsible person who may escape, or overcomes the resistance to an action of a responsible person who has a duty to perform that action shall not be deemed unlawful.

 

Article 119 – Limits of self-help

1. Self-help may not extend further than is necessary to ward off danger.

2. If property is removed, it is necessary to immediately make a declaration on the attachment of the property.

3. If the liberty of a responsible person is restrained, he/she shall be taken before the relevant authorities without undue delay.

 

Article 120 – Obligation to pay damages

A person who does the actions provided for in Article 118 under the mistaken assumption that it was necessary to ward off an unlawful action, shall reimburse the other party damages caused at that time.

 

Section Four

Periods of Time

 

Chapter One

Computation of Periods of Time

 

Article 121 – Scope of the rules for computing periods of time

The rules prescribed in this chapter shall apply to the fixing of periods of time contained in laws, court decisions and transactions.

 

Article 122 – Beginning of a period of time

If a period commences on the occurrence of an event or at a point of time falling in the course of a day, then the day on which the event or point of time occurs shall not be included in the computation of the period.

 

Article 123 – End of a period of time

1. A period of time specified by days shall end on the expiry of the last day of the period.

2. A period of time specified by weeks, by months or by a duration of time comprising more than one month – year, half-year, quarter – ends on the expiry of the day of the last week or of the last month which corresponds to the day on which the event or the point of time occurs.

3. If a period of time specified by months lacks a specific day on which the period is due to expire, then the period ends on the expiry of the last day of that month.

 

Article 124 – Concepts

1. A half-year denotes a period of time of six months, a quarter year denotes a period of three months computed from the beginning of a year, and a half-month is understood to mean a period of fifteen days.

2. If a period of time comprises one or more full months and a half-month, then the fifteen days shall be counted last of all.

 

Article 125 – Computation of a period of time in the event of its extension

If a period of time is extended, the new period shall be computed from the expiry of the previous period.

 

Article 126 – Computation of a period of time by months

1. If a period of time is specified by months or years in such a manner that they need not run consecutively, a month shall be computed as thirty days, and a year as three hundred and sixty-five days.

2. The first day of a month shall be deemed to be the beginning of the month, the fifteenth day of a month the middle of the month, and the last day of a month the end of the month.

 

Article 127 – Days off and holidays

If an action is to be performed on a certain day and that day or the last day of the time period falls on a

non-business day or on a day declared to be an official holiday or on another non-business day at the place of performance of the action, then the next business day shall be used instead of that day.

 

Chapter Two

Period of Limitation

 

Article 128 – Concept; Types

1. The right to demand that another person perform or refrain from a certain action shall be subject to a period of limitation.

2. A period of limitation shall not apply to:

a) personal non-property rights, unless otherwise provided by law;

b) claims of depositors for deposits made with a bank or other credit institutions.

3. The standard period of limitation shall be ten years.

 

Article 129 – Period of limitation on contractual claims

1. The period of limitation on contractual claims shall be three years and on contractual claims relating to immovable property six years.

2. The period of limitation on claims arising out of obligations subject to periodic performance shall be three years.

3. In individual cases, other periods of limitation may be fixed by law.

 

Article 130 – Commencement of the period of limitation

1. A period of limitation shall commence from the moment at which the claim arises. The claim shall be deemed to have arisen from the moment at which the person became or ought to have become aware of the violation of the right.

2. In the case of sexual, economic, domestic or other forms of violence against a minor, the period of limitation on the right to file a claim for damages with a court shall be suspended until the minor attains the age of majority or until the minor applies to a court during the period of his/her minority.

Law of Georgia No 5013 of 20 September 2019 – website, 27.9.2019

Law of Georgia No 5913 of 21 May 2020 – website, 25.5.2020

 

Article 131 – Origination of a claim

If the origination of a claim depends upon an action of an obligee, then the period of limitation shall commence from the moment at which the obligee could have taken this action.

 

Article 132 – Suspension of running of the period of limitation

The running of the period of limitation shall be suspended:

a) if performance of an obligation is postponed by executive authorities or by the National Bank of Georgia on the basis of the Organic Law of Georgia on the National Bank of Georgia under the regime of a resolution of a commercial bank (moratorium);

b) if filing of a claim is prevented by extraordinary and, under given circumstances, unavoidable force majeure;

c) if a creditor or a debtor is in a unit of the defence forces of Georgia that has been put in a state of war;

c1) if private mediation provided for by the Law of Georgia on Mediation is initiated;

d) in other cases provided by law.

Law of Georgia No 3607 of 31 October 2018 – website, 21.11.2018

Law of Georgia No 4596 of 18 September 2019 – website, 27.9.2019

Law of Georgia No 5667 of 20 December 2019 – website, 31.12.2019

 

Article 133 – Suspension of the running of the period of limitation during marriage

The period of limitation for claims between spouses shall be suspended for as long as the marriage exists. The same rule shall apply to claims between parents and children until the attainment of the age majority as well as to claims between guardians (custodians) and their wards during the whole period of guardianship.

 

Article 134 – Suspending the running of the period of limitation for a person with limited legal capacity and a beneficiary of support

If a claim has been brought by a person with limited legal capacity that has no legal representative, or a beneficiary of support who has not been provided with an appropriate support, or the claim is directed against such a person, then the period of limitation shall be deemed suspended until the person acquires full legal capacity, or until a legal representative or a supporter is designated for him/her.

Law of Georgia No 3339 of 20 March 2015 – website, 31.3.2015

 

Article 135 – Time during which the running of the period of limitation is suspended

The time, during which the running of the period of limitation is suspended, shall not be counted in computing the period of limitation.

 

Article 136 – The moment of suspending the running of the period of limitation

1. The period of limitation shall be suspended if the circumstances under Article 132 have arisen or continued to exist in the last six months of the period of limitation. If this period is less than six months, then at any time during the period of limitation.

2. From the day of eliminating the circumstances leading to the suspension of the period of limitation, the period of limitation shall continue to run for another six months; and if the period of limitation itself is less than six months, then until the period of limitation expires.

 

Article 137 – Interruption of the running of the period of limitation

The running of the period of limitation shall be interrupted if the obligor acknowledges the claim towards the obligee by paying an advance or interest, by providing security, or otherwise.

 

Article 138 – Interruption of the running of the period of limitation by bringing an action

The running of the period of limitation shall be interrupted if the rightful person brings an action for satisfaction of the claim or for its ascertainment, or tries to satisfy the claim by some other means such as by filing a declaration of the existence of the claim with a state body or with a court, or by obtaining a writ of execution. Articles 139 and 140 shall apply accordingly.

 

Article 139 – Duration of interruption of the period of limitation

1. Interruption of the running of the period of limitation on the grounds of bringing an action shall continue until the court decision takes effect or until the litigation is otherwise completed.

2. If the litigation is interrupted by agreement between the parties or by reason of the impossibility of its further continuation, then the running of the period of limitation shall be interrupted along with the agreement between the parties or upon completion of the last proceedings of the court. If one of the parties continues the proceedings, then the new limitation period that has begun after the interruption of the legal proceedings shall be interrupted again in the same manner as the running of the period of limitation is interrupted by the filing of a claim.

 

Article 140 – Renunciation of a claim

1. The filing of a claim shall not interrupt the running of the period of limitation if the claimant renounces the claim or if a court dismisses the claim by a final decision.

2. If the rightful person files a new claim within six months, then the period of limitation shall be deemed interrupted from the time of filing the first claim.

 

Article 141 – Computation of the running of limitation period anew

If the running of the period of limitation is interrupted, then the time elapsed before the termination shall not be counted and the period shall begin to run anew.

 

Article 142 – Period of limitation on claims confirmed by a court decision

1. The period of limitation on a claim confirmed by a court decision that has entered into legal force shall be ten years, even if the claim is subject to a lesser limitation.

2. If the court’s confirmation of the claim relates to periodically repeated actions to be performed in the future, then the limitation under Article 129(2) shall apply to them.

 

143 – Period of limitation on real claims

If property with respect to which a real claim exists is transferred by succession of title to a third person, then the period of limitation which elapsed during possession by the predecessor in title shall apply to the successor in title also.

 

Article 144 – Rights of an obligor upon the lapse of the period of limitation

1. After the period of limitation expires, the obligor may refuse to perform an action.

2. If the obligor has performed the obligation after the lapse of the period of limitation, then he/she may not revoke the performance, even if at the time of performance he/she did not know that the period of limitation had elapsed.

3. The same rule shall apply to the acknowledgement and the security of an obligor.

 

Article 145 – Period of limitation on additional claims

The period of limitation on additional claims shall be deemed to expire simultaneously upon the lapse of the period of limitation on the principal claim, even if the period of limitation on additional claims has not elapsed yet.

 

Article 146 – Inadmissibility of altering the period of limitation by agreement of the parties

Periods of limitation and the rule of computing them may not be altered by agreement of the parties.

 

Book Two

Law of Things

 

Section One

Property

 

Article 147 – Concept

Property, according to this Code, is all things and intangible property, which may be possessed, used and administered by natural and legal persons, and which may be acquired without restriction, unless this is prohibited by law or contravenes moral standards.

 

Article 148 – Types of things

A thing may be either movable or immovable.

 

Article 149 – Immovable things

Immovable things shall include a plot of land with its subsoil minerals, the plants growing on the land, and buildings and other structures firmly attached to the land.

 

Article 150 – Essential component parts of a thing

1. Any part of a thing that cannot be severed without either destroying the whole thing or such part or extinguishing their purpose (an essential component part of a thing) may be the object of separate rights only if so provided by law.

2. The essential component parts of a plot of land shall include buildings, structures and things firmly attached to the land and not intended for temporary use, which may also be stipulated by a contract.

 

Article 151 – Accessories

1. An accessory is a movable thing which, although not being a component part of the principal thing, is intended to serve the economic purpose of the principal thing and is in spatial relationship with the principal thing and, according to common usage is deemed to be an accessory.

2. A thing that is attached to land and may be severed from it without losing or substantially decreasing its commodity value shall also be deemed to be an accessory.

 

Article 152 – Concept of intangible property

Claims and rights that may be transferred to other persons or that are intended either for bringing a material benefit to their possessor or for entitling the latter to claim something from other persons shall constitute intangible property.

 

Article 153 – Accessory and limited rights

1. A right that is connected to another right in such a manner that it cannot exist without the latter right is an accessory right.

2. A limited right is the one which is derived from a broader right and which encumbers the broader right.

 

Article 154 – Fruits of a thing and fruits of a right

1. Fruits of a thing shall be income, accrual and/or advantage derived from the thing.

2. Fruits of a right shall be income and/or advantage received as a result of the exercise of the right.

3. Income and advantage, the derivation of which is ensured by a thing or a right through a legal relation, shall also constitute the fruit of the thing or of the right.

4. Entitlement to a thing or a right makes it possible to receive the fruit of such thing or right within the scope and duration of such entitlement, unless otherwise provided by law.

5. If a person is obligated to return the fruits, he/she may claim the expenses incurred on the fruit, provided that such expenses arise from proper economic management and do not exceed the value of the fruit.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Section Two

Possession

 

Article 155 – Concept; Types

1. Possession of a thing shall be acquired by obtaining actual control of the object, coupled with the intention of doing so.

2. A person who, although exercising actual control of a thing, nevertheless is doing so in favour of another person from whom he/she has received the right to possess the thing shall not be deemed to be the possessor. Only the person who conferred the right to possess the thing shall be deemed to be the possessor.

3. If a person possesses a thing by virtue of a legal relation that either entitles or obligates him/her to possess the thing for a certain period of time, then this person shall be deemed to be a direct possessor, and the one who conferred the right to possess the thing or imposed the obligation on him/her shall be deemed to be an indirect possessor.

4. If one thing is jointly possessed by a number of persons, then those persons shall be deemed to be joint possessors.

5. If parts of one thing are possessed by a number of persons, then those persons shall be deemed to be the possessors of the individual parts.

 

Article 156 – Termination of possession

Possession shall be deemed terminated if the possessor cedes the thing forever or otherwise loses actual control of the thing.

 

Article 157 – Transfer of possession to heirs

Possession shall be transferred to heirs in the same form in which it was held by the decedent (a testator or an intestate).

 

Article 158 – Presumption of ownership

1. The possessor of a thing shall be presumed to be its owner.

2. This rule shall not apply if the nature of the ownership relation is identified through the Public Registry. The presumption of ownership shall not apply to the previous possessor if he/she lost this thing or it was stolen or otherwise dispossessed from him/her. Presumption of ownership shall operate in favour of the previous possessor only during the period of his/her possession.

 

Article 159 – Bona-fide possessor

A possessor shall be deemed to be bona fide if he/she possesses a thing lawfully or if he/she may be deemed to be entitled to possession based on the due diligence required in business relations.

 

Article 160 – Demand by a bona-fide possessor to restore a thing retained illegally

If a bona-fide possessor is dispossessed, he/she may recover the thing from the new possessor within a three-year period. This rule shall not apply when the new possessor has a better right to possess the thing. The right to return property may also be applied against the person having a better right to the thing if he/she has acquired it by duress or deception.

 

Article 161 – Demand by a bona-fide possessor to remove an unlawful disturbance

If a bona-fide possessor is not dispossessed of a thing but is otherwise obstructed in the exercise of his/her possession, then he/she may, as if he/she were the owner, demand that the obstruction be ended. In addition, he/she may claim damages sustained because of the disturbance of his/her possession. This rule of compensation for damages shall likewise apply when it is impossible to demand that the obstruction be ended.

 

Article 162 – Rights of a lawful possessor

1. A claim to return a thing may not be made against a lawful possessor. During lawful possession, the fruits of a thing and of a right shall belong to him/her.

2. This rule shall also apply to relations between direct and indirect possessors.

 

Article 163 – Duty of a non-entitled bona-fide possessor

1. A bona-fide possessor who did not have the right to possession originally or who has lost the right shall return the thing to the rightful person. Until the rightful person exercises this right, the fruit of the thing or of the right shall belong to the possessor.

2. The bona-fide possessor may claim from the rightful person reimbursement for the improvements made and expenses incurred by the possessor during possession of the thing in good faith, and which have not been compensated by the use of the thing or by the fruit derived from it. The value of fruit not derived due to the possessor’s fault shall be deducted. The same rule shall apply to the improvements that enhance the value of the thing, provided the enhanced value still exists at the moment of the return of the thing.

3. The bona-fide possessor may refuse to return the thing until his/her claims are satisfied.

 

Article 164 – Duties of a mala-fide possessor

A mala-fide possessor shall return to the rightful person the thing and the benefit derived, the fruit of the thing or of the right. The possessor shall compensate for the fruit that the he has not received for a culpable reason. He/she may claim compensation for the improvements he/she made and the expenses he/she has incurred on the thing only if at the moment the thing is returned they result in the enrichment of the rightful person. Other claims against the mala-fide possessor shall remain unchanged.

 

Article 165 – Acquiring movable things by prescription

1. If a person has uninterruptedly possessed a movable thing for five years as his/her own thing, he/she shall obtain the right of ownership to it (acquisition by prescription).

2. Acquisition by prescription of a movable thing shall not be allowed if the acquirer has possessed the thing in bad faith or if he/she subsequently discovered that the thing did not belong to him/her.

 

Article 166 – Presumption of uninterrupted possession of things

If a person possessed a thing at the beginning and at the end of a certain period of time, he/she shall be presumed to have possessed the thing during the interval of the period as well.

 

Article 167 – Acquisition of immovable things by prescription

If a person is recorded in the Public Registry as the owner of a plot of land or of any other immovable property, while he/she did not in fact acquire title to it, he/she shall obtain title, provided the registration has existed for fifteen years and during that period the person possessed the property as his/her own.

 

Article 168 – Termination of possession of a thing by claim of the owner

Possession of a thing shall be terminated if the owner asserts a substantiated claim against the possessor.

 

Article 169 – (Deleted)

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

 

Section Tree

Ownership

 

Chapter One

Subject Matter of Ownership

 

Article 170 – Concept; Subject matter of the right of ownership

1. An owner may, within the limits of legal or other, namely contractual restraints, freely possess and use any property (thing), exclude others from using the property, and administer it, unless doing so would violate the rights of neighbours or other third persons or unless such act constitutes abuse of rights.

2. Use of the property in such a way that damage is done only to others so that the priority of the owner’s interest is not evident and the necessity of his/her action is unjustified, shall be deemed to be an abuse of rights.

3. A person’s right to use shall also include the possibility of not using his/her thing. If non-use or non-maintenance of the thing is prejudicial to public interests, then the law may prescribe an obligation to use, maintain or keep the thing. In that case, the owner may be required to either perform the obligation by himself/herself or transfer the thing, in exchange for appropriate consideration, to another person.

 

Article 171 – Right of ownership of the essential component part of a thing

The right of ownership of a thing shall also extend to the essential component parts of the thing.

 

Article 172 – Demand for restoring a thing from defective possession and for removing a disturbance

1. An owner may recover a thing from its possessor, except if the possessor had the right to possess it.

2. If encroachment on or other disturbance of the right of ownership occurs without seizure or dispossession of the thing, then the owner may demand that the disturber end the disturbance. If the disturbance continues, the owner may seek a prohibitory injunction.

3. (Deleted – 11.12.2015, No 4625).

Law of Georgia No 3885 of 8 December 2006 – LHG I, No 48, 22.12.2006, Art. 327

Law of Georgia No 4625 of 11 December 2015 – website, 29.12.2015

 

Article 173 – Common property

1. Common (joint and shared) property shall arise by operation of law or on the grounds of a transaction. Each co-owner may assert a claim against third persons over the property under common ownership. Each co-owner may recover the thing only in favour of all co-owners.

2. A thing under common ownership, if so agreed by the co-owners, may be pledged or otherwise encumbered in favour of and in the interests of one of the co-owners.

3. Expenses on maintaining and keeping a thing under common ownership shall be borne equally by the co-owners, unless otherwise provided by law or contract.

4. Unless directly established by the legislation of Georgia, the pre-emptive right to the acquisition of any share of the common property may be determined by agreement among the co-owners.

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

Law of Georgia No 4851 of 25 June 2019 – website, 2.7.2019

 

Chapter Two

Law of Neighbouring Tenements

 

Article 174 – Concept; Duty of mutual respect

The owners of neighbouring plots of land or other immovable properties shall, in addition to the rights and duties prescribed by law, hold each other in respect. All such plots of land or other immovable properties between which a reciprocal nuisance may arise shall be deemed to be neighbouring ones.

 

Article 175 – Obligation to tolerate neighbouring nuisances

1. The owner of a plot of land or any other immovable property may not prohibit the introduction of gases, steam, smells, smoke, soot, warmth, noise, vibrations and similar influences emanating from another plot of land to the extent that they do not interfere with the use of his/her plot of land, or interfere with it only to an insignificant extent.

2. The same rule shall apply to the extent that a material interference is caused by use of the other plot of land or other immovable property and cannot be prevented by measures that are deemed to be regular economic activities for users of this kind.

3. If the owner is bound to tolerate such a nuisance, he/she may demand from the owner of the other plot of land appropriate monetary compensation, where the nuisance exceeds the use regarded as customary in the location and is beyond economically permissible limits.

 

Article 176 – Unallowable encroachment

An owner of a plot of land may demand the prohibition of erection and utilisation of such buildings on neighbouring plots that impermissibly encroach on the right to use his plot of land and such encroachment is foreseeably evident beforehand.

 

Article 177 – Demand for elimination of danger

If a plot of land is endangered by the collapse of a building from a neighbouring plot, the owner may demand that the neighbour take the precautions necessary to avert the danger. It shall not be allowed to change the direction of or manipulate watercourses and groundwater running through several plots of land in such a manner that may reduce the amount of the water and/or deteriorate its quality. It shall not be allowed to interfere with the natural flow of rivers.

 

Article 178 – Right of the owner of a neighbouring plot of land to the fruit

1. The fruit of a tree or bush that falls onto a neighbouring plot of land shall be deemed to be the fruit of that plot.

2. The owner of a plot of land may cut off the branches or roots of a tree or of a bush that intrude from the neighbouring plot of land.

 

Article 179 – Monetary compensation for the obligation of tolerance

1. If when erecting a building the owner of a plot of land unintentionally encroaches on a neighbouring plot of land, then the owner of the neighbouring plot shall tolerate the encroachment, unless the latter objects to the encroachment before or immediately upon detecting it.

2. The encroaching neighbour shall pay monetary compensation annually in advance.

 

Article 180 – Right of way of necessity

1. If a plot of land lacks a connection to public roads, electricity, oil, gas and water supply lines that are necessary for its proper use, the owner may require that a neighbour tolerate the use of his/her plot to create the necessary connection. The neighbours on whose plots of land the right of way of necessity or transmission line passes shall be given monetary compensation which, by agreement of the parties, may be made as a lump-sum payment.

2. The obligation to tolerate the right of way of necessity or transmission line shall not arise if an already existing connection to the plot of land was discontinued by the voluntary action of the owner.

 

Article 181 – Duty to mark boundaries

1. The owner of a plot of land may require from the owner of a neighbouring plot of land that the latter participate in erecting fixed boundary markers or in restoring an already existing boundary marker if it has been damaged or become unrecognisable. The expenses for marking boundaries shall be borne equally by the neighbours unless otherwise stipulated by either mutual agreement or another legal relation.

2. If exact boundary lines cannot be determined, then the boundary markers shall be established according to the actual possession by the neighbours. If actual possession cannot be exactly determined, then the disputed land shall be divided in equal parts between the plots of land. If such division results in an unjust outcome, then a court shall determine the boundary lines based on the application of one of the parties.

 

Article 182 – Right to use boundary installations

1. When two plots of land are separated by a fence or any other structure used as a boundary, the owners of the plots of land shall be presumed to have equal right to use the structure, unless the outward features of the structure expressly indicate that it belongs to one of the neighbours alone.

2. If both neighbours are entitled to joint use of the boundary structure, then each of them may use the structure so as not to obstruct joint use by the other neighbour.

3. The expenses of maintaining and keeping the structure shall be borne equally by the neighbours.

4. As long as one of the neighbours has an interest in the existence of the boundary structure, it may not be removed or altered without the consent of that neighbour.

 

Chapter Three

Acquisition and Loss of Ownership

I – Acquiring the Ownership of Immovable Things

 

Article 183 – Acquiring the ownership of immovable things by agreement

1. In order to acquire an immovable thing the transaction shall be made in writing and the acquirer’s ownership right shall be registered in the Public Registry.

2. An immovable thing owned by a child may be disposed of by his/her parent or other legal representative in the best interests of the child, on the basis of the consent of the court.

Law of Georgia No 3879 of 8 December 2006 – LHG I, No 48, 22.12.2006, Art. 321

Law of Georgia No 2799 of 23 March 2010 – LHG I, No 14, 30.3.2010, Art. 94

Law of Georgia No 5017 of 1 July 2011 – website, 14.7.2011

Law of Georgia No 5013 of 20 September 2019 – website, 27.9.2019

Law of Georgia No 5913 of 21 May 2020 – website, 25.5.2020

 

Article 184 – Abandonment of the ownership of immovable things

In order to abandon ownership or other rights to an immovable thing the rightful person shall declare it and register the declaration in the Public Registry. The declaration shall be submitted to the Office of Public Registry. Only after the submission shall the declaration on the relinquishment of the right become binding.

 

Article 185 – Protection of acquirer’s interests

Considering the acquirer’s interests, the transferor shall be deemed as the owner if he/she is registered with the Public Registry as such, except when the acquirer knew that the transferor was not the owner. (The normative content of Article 185, according to which ‘the transferor shall be deemed as the owner if he/she is registered with the Public Registry as such’, shall be recognised as unconstitutional when the record in the Registry has been appealed against and the acquirer is aware of this fact) – Decision No 3/4/550 of the Constitutional Court of Georgia of 17 October 2017 – website, 26.10.2017

 

II – Acquiring Ownership of Movable Things

 

Article 186 – Grounds for acquiring ownership of movable things

1. The transfer of ownership of a movable thing shall require the transfer of the thing by the owner to the acquirer on the grounds of a valid right.

11. An immovable thing valued at more than GEL 1000 and owned by a child may be disposed of by his/her parent or other legal representative in the best interests of the child, on the basis of the consent of the court.

2. The following shall be deemed to be a transfer of a thing: handing over the thing to the acquirer into direct possession; transfer of indirect possession by a contract under which the previous owner may remain the direct possessor; granting, by the owner to the acquirer, of the right to claim possession from a third person.

Law of Georgia No 5013 of 20 September 2019 – website, 27.9.2019

Law of Georgia No 5913 of 21 May 2020 – website, 25.5.2020

 

Article 187 – Bona-fide acquirer

1. An acquirer shall become the owner of a thing even if the transferor was not the owner, but the acquirer is in good faith with respect to this fact. The acquirer shall not be deemed to be in good faith if he/she knew or should have known that the transferor was not the owner. Such good faith shall exist before the transfer of the thing.

2. A bona-fide acquirer cannot become the owner of a thing if the owner has lost that thing, or it has been stolen, or the owner has otherwise been dispossessed of it against his/her will, or if the acquirer has received the thing free of charge. These restrictions shall not apply to money, securities and/or to things transferred at an auction.

Law of Georgia No 5667 of 28 December 2011 – website, 30.12.2011

 

Article 188 – Conditional ownership

1. If a transferor conditioned the transfer of ownership to an acquirer upon the prior payment of the price of a thing, then it is presumed that the ownership shall be transferred to the acquirer only after the price has been paid in full. If the acquirer delays the payment of the price, and the transferor repudiates the contract, then the parties shall return the performance already rendered bilaterally.

2. The condition defined in paragraph 1 shall also be deemed to be fulfilled if the transferor is satisfied in any manner other than by payment of the price or if the acquirer relies upon the limitation period on the claim.

 

Article 189 – Transfer of ownership through securities

If, instead of the transfer of a thing, the transfer of securities is required in order to transfer ownership to the acquirer, then the ownership shall be deemed to have been transferred from the moment the transferor transfers the securities to the acquirer.

 

Article 190 – Acquiring the ownership of ownerless movable things

1. If a person takes possession of an ownerless movable thing, he/she acquires the ownership of the thing unless the appropriation is prohibited by law or unless the taking of possession injures the right of appropriation of another person.

2. A movable thing shall be deemed ownerless if the previous owner, in the intention of waiving ownership, gives up possession of the thing.

 

Article 191 – Finding

1. A finder of a lost thing shall immediately notify the person who lost the thing, the owner, the rightful person or, if their identities are unknown, the police or other local authority of the finding, and hand the thing over to them.

2. One year after notification of the finding, the finder shall acquire ownership of the thing, unless the owner has become known to the finder or the owner notified the police of his/her right. All other rights to the thing shall be extinguished simultaneously upon the acquisition of the ownership of the thing.

3. If rightful person recovers the thing, the finder may demand from him/her a reward (finder’s reward) in the amount of up to five per cent of the value of the thing. In addition, the finder may demand from the rightful person or from the appropriate authority, compensation for the expenses incurred in safekeeping the property.

4. If the finder relinquishes ownership, the competent authority may sell the thing after one year at an auction and receive the profits or, if the thing is of low value, gratuitously transfer or destroy it.

5. The one-year period shall not apply when animals, perishable items or things, the keeping costs of which are high, are found, and the proceeds of their sale shall be returned to the owner.

 

Article 192 – Treasure trove

If a thing that has lain hidden for so long that the owner can no longer be established (treasure trove) is discovered, one half of the ownership shall be acquired by the discoverer and the other half by the owner of the thing in which the treasure was found.

 

Article 193 – Acquiring ownership of essential component parts of a plot of land

If a movable thing is attached to a plot of land in such a manner that it has become an essential component part of it, then, under Article 150(2), the owner of the plot of land shall simultaneously be the owner of the thing.

 

Article 194 – Co-ownership of things created by merger of movable things

1. If movable things are attached to each other in such a manner that they have become essential component parts of a new integrated thing, or if the movable things have merged, the previous owners shall become the co-owners of the new thing. The shares shall be determined according to the values of the things at the time of their merger.

2. If one of the things, according to established understanding, is deemed to be the principal thing, then its owner shall acquire ownership of the accessories as well.

 

Article 195 – Co-ownership of new movable things created by processing of material

If a new movable thing is created by processing or altering some material, then the manufacturer and the owner of the material shall become co-owners of the new thing. The shares shall be determined according to the value of the material and the costs of manufacturing, unless otherwise stipulated by agreement.

 

Article 196 – Extinction of rights upon the transfer of ownership

If ownership is transferred under Articles 193-195, all other existing rights to that thing shall be extinguished.

 

Article 197 – Claim for damages against the new owner

1. A person who loses ownership under Articles 193-195 or whose right is otherwise impaired may claim damages from the person who has become the owner. Claim for restoration of the initial state of affairs shall not be allowed.

2. The claim under paragraph 1 of this article shall not arise if the new owner has acquired the thing under a commutative contract from a third person.

 

III – Acquiring Ownership of Rights and Claims

 

Article 198 – Concept; Subject matter

1. A possessor of a claim or a right that can be assigned or pledged may transfer it to the ownership of another person. Claims and rights are transferred to a new owner in the same state in which they existed with the former possessor.

2. The former possessor shall hand over to the new possessor all the documents in his/her possession that are related to the claims and rights, as well as all information necessary for exercising those claims and rights.

3. The former possessor shall also hand over to the acquirer, at the acquirer’s request, a duly authenticated document on the assignment of these claims and rights. The expenses for authentication of this document shall be borne by the new possessor.

 

Article 199 – Assignment of claims

1. An owner of a claim (creditor) may assign the claim to a third person without the consent of the debtor, unless to do so would contravene either the essence of the obligation, the agreement with the debtor, or the law (assignment of claim). An agreement with the debtor on the inadmissibility of assignment of a claim may be made only if the debtor has a valid interest.

2. A claim shall be assigned under a contract concluded between the owner of the claim and a third party. In that case, the third party shall occupy the place of the original owner.

 

Article 200 – Rights of a debtor in the case of assignment of claim

Until a debtor is notified of the assignment of the claim, he/she may perform the obligation to the original owner of the claim.

 

Article 201 – Transfer of the means of security upon assignment of a claim

1. By assignment of a claim, both the means of security and other rights in connection with the claim shall be transferred to the new owner.

2. The debtor may assert against the new owner all the defences that he/she had against the original owner at the time he/she received notice of the assignment of the claim.

 

Article 202 – Order of priority of owners of a claim

If an owner of a claim has agreed to assign the claim with a number of persons, then the person with whom the owner of the claim first entered into relations shall be entitled before the debtor. If this cannot be determined, then priority shall be given to the person of whom the debtor was earliest notified.

 

Article 203 – Assignment of debt

1. A third person may also assume a debt by agreement concluded with the creditor (assignment of debt). In such case, the third person shall stand in the place of the original debtor.

2. The original debtor may disagree with this agreement between the creditor and a third person and pay the debt itself.

 

Article 204 – Consent by the creditor upon assumption of debt

If a debtor and a third person enter into an agreement on an assumption of debt, then the validity of the assumption shall depend upon the consent of the creditor. Exceptions to this rule shall be established by law.

Law of Georgia No 1901 of 23 December 2017 – website, 11.01.2018

Law of Georgia No 2117 of 29 November 2022 – website, 16.12.2022

 

Article 205 – Rights of a new debtor

The new debtor may assert against the creditor all the defences arising from the relations that existed between the creditor and the original debtor. He/she may not offset the claims that belonged to the original debtor.

 

Article 206 – Termination of a means of security upon assignment of debt

Immediately upon assignment of a debt any guarantee or pledge securing the claim shall be terminated, unless the guarantor or the pledger expresses his/her consent to continue the relationship. Exceptions to this rule shall be established by law.

Law of Georgia No 1902 of 28 December 2002 – LHG I, No 4, 22.1.2003, Art. 20

Law of Georgia No 5667 of 20 December 2019 – website, 31.12.2019

Law of Georgia No 2117 of 29 November 2022 – website, 16.12.2022

 

Article 207 – Assignment of claim by operation of law

The rules for acquisition of ownership of rights and claims shall apply accordingly to the assignment of claims by operation of law or on the basis of a decision made by a court or by a competent state body.

 

Chapter Four

Ownership of a Flat in a Block of Flats

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

I. General Provisions

Article 208 – Grounds for acquiring an object of individual ownership (a flat and/or a non-residential space)

To acquire an object of individual ownership (a flat and/or a non-residential space), it shall be necessary to sign a written agreement and register the acquirer’s ownership defined by such agreement in the Public Registry.

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 209 – Acquiring a rented flat

If a person acquires a rented flat, he/she shall take the place of the landlord.

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 210 – (Deleted)

Law of Georgia No 3879 of 8 December 2006 – LHG I, No 48, 22.12.2006, Art. 321

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 211 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 212 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 213 – (Deleted)

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 214 – (Deleted)

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

 

Article 215 – (Deleted)

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 216 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 217 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 218 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 219 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 220 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 221 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 222 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 223 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 224 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 225 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 226 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 227 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 228 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 229 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 230 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 231 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Article 232 – (Deleted)

Law of Georgia No 5278 of 11 July 2007 – LHG I, No 29, 27.7.2007, Art. 322

 

Chapter Five

Limited Use of Property Belonging to another Person

I – Superficies

 

Article 233 – Concept

1. A plot of land may be transferred to another person for use for a fixed period of time in such a manner as to grant him/her the heritable and alienable right to erect on or beneath the plot some structure, as well as the right to lend or lease such right (superficies).

2. Superficies may extend to the part of a tract of land that is not necessary for building but allows for a better use of the structure.

3. The duration of superficies shall be determined by agreement of the parties and shall not exceed ninety nine years.

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

 

Article 234 – Origin, acquisition and termination of the right of superficies. Ownership of superficies

1. The rules governing the acquisition of immovable things shall accordingly apply to the origin and acquisition of the right of superficies.

2. A structure erected under the right of superficies shall be deemed an essential component part of the right of superficies and shall be registered as the property of the person having the right of superficies.

3. Upon termination of the right of superficies, the structure erected under superficies shall become an essential component part of the plot of land.

Law of Georgia No 2978 of 27 April 2010 – LHG I, No 24, 10.5.2010, Art. 144

 

Article 235 – Transfer of superficies

If by agreement of the parties the consent of the owner of the plot of land is required to transfer or lease the right of superficies, the owner may withhold such consent only if there are significant grounds to do so.

 

Article 236 – Payment for the right of superficies

1. An owner of the right of superficies may be bound by contract to pay fee. This right of the owner of a plot of land shall be inseparable from the ownership of the plot of land.

2. The right of superficies may be unilaterally terminated by the owner in case of non-fulfilment of this obligation for two years, unless otherwise provided for under the agreement of the parties.

3. The parties may predetermine the superficies fee for a ten-year period. If economic conditions materially change, then the parties shall agree on a new fee.

Law of Georgia No 4336 of October 2015 – website, 20.10.2015

 

Article 237 – Registration of the right of superficies

The right of su 16 perficies shall be entered on the Public Registry only as ranking before all property rights of non-owners. This ranking may not be altered.

 

Article 238 – Termination of the right of superficies

1. Termination of the right of superficies shall require consent of the owner.

2. The right of superficies shall not be terminated with the collapse of a structure erected on the plot of land.

 

Article 239 – Termination of non-gratuitous superficies

1. In case of expiration of the non-gratuitous superficies, unless otherwise provided for under the agreement of the parties, the owner of the plot of land shall pay the superficiary an appropriate compensation in the amount of two thirds of the value of the structure erected on the plot of land.

2. The owner of the plot of land may, in return for paying the compensation, extend the right of superficies for the superficiary for a period for which the structure erected on the plot of land is presumed to exist, unless otherwise provided for under the agreement of the parties. If the superficiary declines the extension of the right of superficies, he/she shall lose the right to claim compensation as well.

3. The superficiary may not remove the structure or its component parts after the right of superficies expires.

Law of Georgia No 4336 of 16 October 2015 – website, 20.10.2015

 

Article 240 – Registration of the claim for compensation in the Public Registry

1. Following the termination of the right of superficies, the right to claim compensation arising from the superficies (if any) shall take the place of the right of superficies in the Public Registry and replace it in the same order.

2. If upon the expiration the right of superficies is still encumbered with a mortgage, then the mortgagee shall have a lien upon the claim for compensation.

Law of Georgia No 4336 of 16 October 2015 – website, 20.10.2015

 

Article 241 – Succession in title upon termination of superficies

If superficies is terminated, the owner of the plot of land shall become a party to a tenancy or lease agreement concluded by the superficiary.

 

II – Usufruct

 

Article 242 – Concept

An immovable thing may be transferred to the use of another person in such a manner as to grant to him/her the right to use this thing as if he/she were the owner, and to exclude third persons from using it; provided, however, that unlike the owner, he/she has no right to transfer, mortgage or transfer the thing by inheritance (usufruct). The renting or leasing out of the thing shall require the consent of the owner. After the usufruct is cancelled, the owner shall become a party in the existing tenancy or lease relations.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 243 – Legal regulation of creating a usufruct

The rules governing the acquisition of immovable things shall apply to the creation of usufruct.

 

 

Article 244 – Kinds of usufruct

1. Usufruct is either onerous or gratuitous.

2. Usufruct may exist either for a fixed term or for the lifetime of its beneficiary (usufructuary). Usufruct shall be cancelled by the death of the natural person or liquidation of the legal person in whose favour the usufruct has been established.

 

Article 245 – Usufructuary’s rights and duties

1. Before the commencement of usufruct the parties may assess the condition of the things transferable by usufruct.

2. The usufructuary may not alter the purpose of use without the consent of the owner.

3. The usufructuary shall be entitled to the fruit of, and benefits from, the thing that are not derived from an ordinary economic use of the thing. In that case he/she shall compensate the owner for damages done to the thing as a result of such use.

4. The usufructuary shall not be liable for natural wear and tear of the thing. The usufructuary shall cover the current expenses, make repairs to the thing and take care of the normal economic maintenance of the thing.

5. The usufructuary shall insure the thing for the duration of the usufruct if so provided by law or by agreement of the parties. If the object of usufruct is a state-owned or municipality-owned immovable thing and the usufructuary is a legal entity under public law, or a municipality (where the object of usufruct is owned by other municipality), or a non-entrepreneurial (non-commercial) legal entity established by the State or a municipality, the thing need not be insured.

6. If the thing has been destroyed, damaged, or unexpected expenses have arisen for its maintenance, the usufructuary shall immediately notify the owner accordingly. The usufructuary shall tolerate the measures that the owner undertakes to cure the situation. The owner shall not be obligated to undertake appropriate measures. If the usufructuary itself undertakes these measures, then at the end of the usufruct the usufructuary may remove from the thing the objects attached to it by him/her as a result of such measures or demand from the owner proper compensation for those objects.

7. If the usufructuary transfers, within the limits of normal economic activities, individual objects, then objects acquired by him/her shall take the place of the transferred objects.

Law of Georgia No 1541 of 17 July 2009 – LHG I, No 21, 3.8.2009, Art. 124

Law of Georgia No 6989 of 1 5 July 2020 – website, 28.7.2020

 

Article 246 – Termination of usufruct

1. Upon the end of usufruct the usufructuary shall return the thing to the owner.

2. Usufruct shall be extinguished if both the usufruct and the ownership are in the hands of the same person.

 

III – Easements

 

Article 247 – Concept

1. A plot of land or any other immovable property may be used (encumbered) in favour of the

owner of another plot of land or of other immovable property so that the owner may use the plot of land in particular instances or so that certain actions may not be undertaken on this plot of land or so that the exercise of a right towards the other plot of land is excluded (easement). The rules for the acquisition of immovable things shall apply to the creation of easement.

2. Compensation may be determined in the form of periodic payments.

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

 

Article 248 – Conditions of easement

1. An easement may exist only when it creates a benefit for the person entitled to use a plot of land.

2. When using an easement, the rightful person shall protect the interests of the owner of the used (servient) plot of land.

 

Article 249 – Duty of maintenance of an installation

If, in order to properly use an easement, there is an installation on the servient plot of land, then the rightful person shall maintain the installation. At the same time, the parties may determine that the owner of the servient plot of land maintain the structure to the extent that the interests of the rightful person require this.

 

Article 250 – Effect of division of a plot of land

If the plot of land of the rightful person is divided, then the easement shall continue to exist on each part separately. In such case, the use of the easement shall be permissible only if it does not become more burdensome for the owner of the servient plot of land.

 

Article 251 – Parts released from easement following division

Where the servient plot of land is divided, then, if the use of the easement is restricted to a particular part of the servient plot of land, the parts that lie outside the area of use shall be released from the easement.

 

Article 252 – Protection of the rights of the rightful person

If the rightful person is obstructed in the exercise of his/her rights, he/she shall have the same right to avoid the obstruction as if he/she were a bona-fide possessor.

 

Article 253 – Personal easement

1. An immovable thing may be encumbered with an easement for the benefit of a specific person under the conditions provided for in Article 247. Such encumbrance may be expressed in such a manner that the rightful person, excluding the owner, may use a building or a part of the building as a residence for himself/herself or share it with his/her family.

2. A personal easement restricted in the manner defined in paragraph 1 of this article may not be transferred to another person.

 

Chapter Six

Title to Property as a Security for a Claim

I – Pledge

 

Article 254 – Concept

1. A debtor’s or a third person’s movable things and/or intangible property that may be transferred to another person may be used as security for a monetary or non-monetary claim in such a manner that the creditor (pledgee) acquires the right to satisfy his/her claim by selling or, if the parties so agree, by taking possession of the pledged property (pledged item) if the debtor does not fulfil or improperly fulfils his/her obligation.

2. The pledgee has a pre-emptive right over other creditors to satisfy his/her claim at the expense of the pledged item.

3. A pledge may secure future or contingent claims.

31. In the case of pledged intangible property, the procedure established by Article 7 of the Organic Law of Georgia on Agricultural Land Ownership shall also be taken into account.

32. A pledger shall not pledge intangible property that is an asset included in a collateral pool as defined in Article 2(1)(b) of the Law of Georgia on Bonds Secured by Mortgages.

4. A pledge securing a non-monetary claim shall be valid only if it can be expressed in a monetary form.

41. A pledge may extend to a thing or part of a thing, the combination of things or their part and/or to intangible property or to the whole movable property.

5. The things and intangible property that the pledger will acquire in future (future property) may be used as security for a claim. Future property shall become security for a claim upon its acquisition and the priority of a pledge with respect to future property shall be determined by the time of its registration.

6. A transport vehicle defined under Article 53(1) of the Law of Georgia on Traffic and/or an auxiliary technical equipment of an agricultural machine, and a railway means of transportation may not be used as security for a claim proceeding from a loan/credit agreement to be granted/granted to a natural person (including to an individual entrepreneur).

(Article 254(6) was declared invalidated) – Decision No 1/4/1380 of the Constitutional Court of Georgia of 18 December 2020 – website, 22.12.2020

7. ( Deleted – 22.7.2021, No 808).

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 5127 of 29 June 2007 – LHG I, No 27, 17.7.2007, Art. 260

Law of Georgia No 4323 of 9 March 2011 – website, 22.3.2011

Law of Georgia No 3315 of 21 July 2018 – website, 7.8.2018

Law of Georgia No 4851 of 25 June 2019 – website, 2.7.2019

Decision No 1/4/1380 of the Constitutional Court of Georgia of 18 December 2020 – website, 22.12.2020

Law of Georgia No 808 of 22 July 2021 – website, 26.7.2021

Law of Georgia No 2117 of 29 November 2022 – website, 16.12.2022

 

Article 255 – Types of a pledge

Pledge types shall be:

a) a possessory pledge;

b) a registered pledge.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 256 – Scope of a pledge

1. A pledge secures a claim and other additional claims relating to it (including interest and contractual penalties) as well as the expenses related to property maintenance, court and sale costs, unless otherwise provided by law or an agreement between the parties.

2. A pledge shall extend to the fruits derived from a pledged item, unless otherwise provided by agreement between the parties.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 4323 of 9 March 2011 – website, 22.3.2011

Law of Georgia No 5668 of 28 December 2011 – website, 16.1.2012

 

Article 257 – Possessory pledge

1. Possessory pledge in a movable thing arises by agreement of the parties and by transferring the thing into the possession of the pledgee or a third person designated by the pledgee.

2. If the thing is already in the possession of the pledgee or a third person designated by the pledgee, the agreement of the parties shall suffice for a pledge to arise.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 258 – Registered pledge

1. A registered pledge shall arise by entering into a written transaction and registering the pledge stipulated in the transaction with the Public Registry (except as provided for in paragraph 4 of this article). In this case, a movable thing need not be transferred to the pledgee’s possession.

2. The transaction shall indicate:

a) date of execution;

b) details of the pledger, the pledgee and a possible third person debtor;

c) description of the pledged item with general or specific characteristics so that it can be identified. If the pledged item is the entire movable property, it need not be described, unless otherwise determined by agreement of the parties;

d) a general or specific description of the secured principal claim and the maximum sum with which the secured claim is to be satisfied.

3. The procedure for registration of a pledge shall be determined by law.

31. Relations with respect to financial collaterals are governed by the Law of Georgia on Financial Collaterals, Mutual Setoffs and Derivatives .

4. For the pledge registered on vehicles and auxiliary equipment of agricultural machines specified in Article 53(1) of the Law of Georgia on Road Traffic to arise, the transaction shall be made in writing and the pledge stipulated in the transaction shall be registered with the Legal Entity under Public Law (LEPL) – Service Agency of the Ministry of Internal Affairs of Georgia (‘the Service Agency’). At the same time for the transaction to be valid the transaction or the signatures of the parties need not be authenticated if:

a) the parties to the transaction sign the transaction in the registration authority in the presence of an authorised person;

b) the pledgee and the Service Agency have signed a contract for registration of a pledge on the vehicle by using an electronic document system.

5. The Minister of Internal Affairs of Georgia shall determine the procedure for the registration by the Service Agency of a pledge on vehicles and auxiliary equipment of agricultural machines specified in Article 53(1) of the Law of Georgia on Road Traffic based on paper or electronic documents.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 3879 of 8 December 2006 – LHG I, No 48, 22.12.2006, Art. 321

Law of Georgia No 4310 of 29 December 2006 – LHG I, No 2, 4.1.2007, Art. 35

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

Law of Georgia No 314 of 2 October 2008 – LHG I, No 24, 20.10.2008, Art. 160

Law of Georgia No 4323 of 9 March 2011 – website, 22.3.2011

Law of Georgia No 6311 of 25 May 2012 – website, 12.6.2012

Law of Georgia No 1833 of 24 December 2013 – website, 3.1.2014

Law of Georgia No 5674 of 20 December 2019 – website, 31.12.2019

 

Article 2581 – Certificate of pledge

1. If a debtor fails to fulfil the obligation under Article 281(1) of this Code within two weeks after the pledgee’s written request, the Service Agency shall issue, based on the pledgee’s application, a certificate of pledge.

2. A certificate of pledge is an enforceable act evidencing the fact that the pledge provided for in Article 258(4) of this Code has been registered with the Service Agency. In the circumstances determined by the legislation of Georgia the pledgee may request the authorised body (official) to transfer the pledged item to his/her possession to satisfy the claim secured by the pledge.

 3. A certificate of pledge shall not be issued if the registered pledge transaction does not contain the agreement of the parties required by Article 283(1) and/or Article 2601 of this Code for securing the claim.

4. The responsibility for the legitimacy of the request for the certificate of pledge submitted by the pledgee to the Service Agency shall rest with the pledgee.

5. The form and procedure for issuing a certificate of pledge shall be determined by an order of the Minister of Internal Affairs of Georgia.

Law of Georgia No 1541 of 17 July 2009 – LHG I, No 21, 3.8.2009, Art. 124

Law of Georgia No 1833 of 24 December 2013 – website, 3.1.2014

 

Article 259 – Procedure for pledging claims and securities

1. Claims shall be pledged by signing a written transaction and registering the right under the transaction with the Public Registry. The requirements laid down in Article 258(2) of this Code shall apply to such transactions.

2. Until the debtor is notified in writing about pledging a claim, the debtor may perform the obligation before the holder of the claim. In that case, the procedure under Article 264(1) shall apply.

3. Securities shall be pledged under the procedures laid down for their acquisition. The procedures for pledging public securities are defined by the Law of Georgia on Securities Market.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 3879 of 8 December 2006 – LHG I, No 48, 22.12.2006, Art. 321

 

Article 260 – Procedure for pledging things in pawnshops

1. Things in a pawnshop shall be pledged by a written agreement between the parties and by transferring things into the direct possession of the pawnshop.

2. (Deleted – 21.7.2018, No 3315).

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 3315 of 21 July 2018 – website, 7.8.2018

 

Article 2601 – Transfer of pledged items to the creditor (pledgee)

A pledged item may be transferred to the creditor (pledgee) on the grounds provided for in this Law only in the case of a registered pledge. Such transfer shall be expressly indicated in the agreement.

Law of Georgia No 5127 of 29 June 2007 – LHG I, No 27, 17.7.2007, Art. 260

 

Article 261 – Rights and duties of a pledgee and a pledger

1. A pledger or a pledgee in the case of a registered pledge, and a pledgee or a third person designated by the pledgee in the case of a possessory pledge, shall properly keep and maintain the pledged item in their possession. Each party may inspect the condition (including size, weight, storage conditions) of the pledged item that is in the possession of the other party.

2. If a pledged item is held by the pledger, he/she may receive benefit from the pledged item. A pledgee may receive benefit from the pledged item in his/her possession if so provided by agreement of the parties. The pledgee shall be presumed to be entitled to the fruit of the pledged item if the pledged item bears fruit by its nature. The received benefit shall be set off against the secured claim. Upon request of the pledger, the pledgee shall present to the pledger an account of the received benefits.

3. A pledgee may claim from the pledger reimbursement of necessary expenses incurred on the pledged item. The procedure for reimbursement of other expenses shall be determined under the rules governing agency without specific authorisation.

4. If a pledger defaults on his/her obligation to properly keep and maintain the pledged item, the pledgee may demand that the pledged item be handed over to him/her or to a third person. If the pledgee defaults on his/her obligation to properly keep and maintain the pledged item, the pledger may demand that the pledged item be handed over to a third person.

5. If a pledged item is stock or a share in a business entity, then in making decisions or entering into transactions in connection with the business entity, the pledger shall act in good faith in his/her and the pledgee’s interests.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 262 – Insurance of pledged items

A pledger shall insure the pledged item only if so provided by law or by agreement of the parties.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 263 – Rights of a pledger that is not a personal debtor of a pledgee

A pledger that is not a personal debtor of the claim secured by a pledge may assert against the pledgee the defences to which a personal debtor is entitled, including the defences that the pledgee’s personal debtor waived after the creation of the pledge.

 Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 264 – Substitution

1. If a claim is pledged and the debtor performs an obligation before the expiry of the pledge, then performance shall take the place of the claim, unless the parties agreed otherwise.

2. Any compensation, including insurance compensation received for the loss, damage, destruction or devaluation of the pledged item shall take the place of the pledged item, unless otherwise provided for by agreement of the parties.

3. In the cases provided for in paragraph 2 of this article, the pledger may purchase, with the sum received by him/her, an item substituting for the lost, damaged, destroyed or devalued item and the purchased item shall take the place of the pledged item.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 4323 of 9 March 2011 – website, 22.3.2011

 

Article 265 – Legal consequences of processing a pledged item and/or merging it with another movable thing

1. A pledge shall not be terminated if a pledged item is processed and/or merged with another movable thing in such a way that restoring it to the original condition is impossible or involves considerable expense, unless otherwise provided by agreement of the parties. If ownership is transferred as a result of processing a pledged item and/or merging it with another movable thing, the procedure under Article 196 of this Code shall apply.

2. In the cases provided for in paragraph 1 of this article, the pledgee’s prior consent shall be required to process a pledged item and/or merge it with another movable thing, unless otherwise provided by agreement of the parties.

3. In the cases provided for in this article, the priority of claims arising from a pledge shall be determined by the time of creation of the pledge which existed before the pledged item was processed and/or merged with another movable thing.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 4323 of 9 March 2011 – website, 22.3.2011

 

Article 266 – Making a transaction on pledged items

1. The parties may agree that the pledger will not transfer or re-pledge the pledged item until the pledge is terminated.

2. If the pledger defaults on his/her obligation under paragraph 1 of this article, the pledgee may immediately satisfy his/her claim.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 267 – Re-pledging pledged items and priority of pledges

1. The same property may be re-pledged several times. The priority of pledges shall be determined according to the time of their submission for registration.

2. If a pledged item is future property and the pledger purchases such property, the pledge created under the previous owner shall prevail over the pledge created under the new owner irrespective of the date of their creation.

3. Where so provided for in Articles 568, 586, 596, 634, 685 and 796 of this Code, the pledgee shall have priority in satisfying his/her claim at the expense of the pledged item over all other pledgees.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

 

Article 268 – Protecting the rights of a pledgee

If the exercise of a pledgee’s rights is interrupted, the pledgee may exercise the same rights that the owner does.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 269 – Transfer of a pledge to a new creditor

1. By transferring a claim to another person, the pledge shall also be transferred to such person (new creditor).

2. A pledge shall be terminated if the new creditor does not request, within a reasonable time after the assignment of a claim secured with possessory pledge, the transfer of the pledged item to him/her or to a person authorised by him/her or the registration of the pledge.

3. Each third party whose legal status may be worsened by the sale of the pledged item may satisfy the pledgee’s claim and thereby acquire his/her rights against the pledger or a possible third party debtor.

4. A pledge may not be transferred to another person without transfer of the relevant claim. If during the transfer of a claim the pledge is not transferred, the pledge shall be terminated.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 270 – Termination of a pledge due to cancellation of a claim

A pledge shall be terminated upon cancellation of the claim for the security of which it exists.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 271 – Termination of a pledge due to perishing of pledged items

A pledge shall be terminated if the pledged item physically ceases to exist.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 272 Termination of a pledge due to its waiver

1. A registered pledge shall be terminated if the pledgee waives the pledge by way of registration.

2. A possessory pledge shall be terminated if possession reverts to the pledger or the pledgee waives the pledge.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 273 – Termination of a pledge due to transfer of pledged items to a pledgee (consolidation)

A pledge shall be terminated if the pledged item is transferred into the ownership of the pledgee.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 274 – Transfer of pledged items

1. If the pledged item is transferred, the pledged property shall also be transferred to the buyer, except as provided for in paragraphs 3 and 4 of this article.

2. If the pledged item is transferred in the case of registered pledge, the pledger and the buyer shall be jointly liable to register the buyer as a pledger with the Public Registry and for vehicles and auxiliary equipment of agricultural machines defined by Article 53(1) of the Law of Georgia on Road Traffic, the pledger and the buyer shall be jointly liable to register the buyer as a pledger with the Service Agency. If the pledger and the buyer fail to meet the above requirement, they shall be jointly and severally liable for any damages caused by the non-performance of the requirements.

3. If the pledger transfers the pledged item in the case of a possessory pledge, the pledge shall be terminated and the buyer shall acquire non-encumbered property if the pledgee or the person authorised by him/her transfers the possession of the pledged item to the buyer.

4. If the pledger transfers the pledged item during the course of ordinary business activity, the buyer shall acquire non-encumbered property irrespective of whether or not the buyer had knowledge of the pledge. This rule shall not apply if the buyer and the pledger acted in bad faith.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 4310 of 29 December 2006 – LHG I, No 2, 4.1.2007, Art. 35

Law of Georgia No 1833 of 24 December 2013 – website, 3.1.2014

 

Article 275 – Pledgee’s obligation upon termination of a pledge

1. If a pledge is terminated, the pledgee shall return the pledged item that is in his/her possession to the pledger.

2. If a registered pledge is terminated, the pledger may demand that the pledgee immediately register the termination of the pledge with the Public Registry. If the registered pledge on vehicles and auxiliary equipment of agricultural machines defined by Article 53(1) of the Law of Georgia on Road Traffic is terminated the pledgee shall immediately register the termination of the pledge with the Service Agency. If the pledger does not demand an immediate registration of the termination of the pledge, the pledgee shall apply, within five business days after termination of the pledge, to the Service Agency for registration of termination of the pledge. If this obligation is not fulfilled, the pledger may claim damages from the pledgee.

3. The pledger may also demand the registration of the termination of a pledge. In that case, the application for registration of the termination of the pledge shall be accompanied by a written document issued by the pledgee that confirms termination of the pledge.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 4310 of 29 December 2006 – LHG I, No 2, 4.1.2007, Art. 35

Law of Georgia No 1833 of 24 December 2013 – website, 3.1.2014

 

Article 276 – Satisfaction of a pledgee

1. The pledgee shall be satisfied by selling the pledged item or transferring the pledged item to the pledgee to satisfy his/her claim, unless otherwise provided by law.

2. A claim shall be deemed to have been satisfied even if the proceeds from the sale of the pledged item are not enough to cover the claim secured by pledge or the value of the pledged item does not fully cover the amount of the claim, unless otherwise provided by agreement of the parties.

3. If a creditor/loan holder is not an entity subject to the supervision of the National Bank of Georgia, a claim proceeding from a loan/credit agreement granted to a natural person (including to an individual entrepreneur) shall be considered satisfied even in the case when the amount received as a result of selling a pledged item (items) or a pledged item (items) and a mortgaged immovable thing (things) is not sufficient to cover the claim secured by a pledge or a pledge and a mortgage, or the price of a pledged item (items) or the price of a pledged item (items) and a mortgaged immovable thing (things) does not fully cover the amount of the claim. No other agreement between the parties shall be allowed. The National Bank of Georgia may establish for entities subject to its supervision a procedure different from the one provided for in this paragraph and/or an additional procedure.

Law of Georgia No 5127 of 29 June 2007 – LHG I, No 27, 17.7.2007, Art. 260

Law of Georgia No 3315 of 21 July 2018 – website, 7.8.2018

 

Article 277 – (Deleted)

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 5127 of 29 June 2007 – LHG I, No 27, 17.7.2007, Art. 260

 

Article 278 – Right to demand the sale of pledged items and transfer of pledged items to a pledgee

The pledgee may demand that the pledged item be sold or transferred to him/her if the debtor does not fulfil or improperly fulfils the claim secured by the pledge.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 5127 of 29 June 2007 – LHG I, No 27, 17.7.2007, Art. 260

 

Article 279 – Right to sell pledged items repeatedly

1. If a pledged item has been re-pledged several times, any pledgee may demand its sale upon the maturity of the claim.

2. A pledgee whose pledge ranks before the right of a selling pledgee may give the lower ranking pledgee, within two weeks after the date of receipt of a written notice of sale from the lower ranking pledgee, a notice that:

a) he/she exercises the right to sell the pledged item as provided for in paragraph 1 of this article. In such case, the lower ranking pledgee cannot make the sale and the obligation to make the sale shall rest with the higher ranking pledgee;

b) he/she agrees to the sale of the pledged item by the lower ranking pledgee provided that his/her claim is satisfied on a priority basis from the proceeds of the sale;

3. In the cases of a sale under paragraph 2 of this article, the proceeds of the sale shall go towards satisfying the higher ranking pledgee’s claim before the lower ranking pledgee’s claim.

4. If the higher ranking pledgee does not exercise the rights under paragraph 2 of this article, the pledged item shall remain encumbered with the rights of the pledgees whose pledges precede the right of the selling pledgee.

5. The selling pledgee and the buyer shall register the buyer as a pledger with the Public Registry or, if so provided by law, with the Service Agency. If selling pledgee and the buyer default on this obligation, they shall be jointly liable for any damages resulting from such default.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 4310 of 29 December 2006 – LHG I, No 2, 4.1.2007, Art. 35

 

Article 280 – Distribution of sales proceeds

1. The proceeds from the sale of a pledged item shall first cover the expense of the sale and then satisfy the selling pledgee’s claim.

2. The pledgee selling an item that has been re-pledged several times shall deposit the sum remaining after the payment of the sale expenses and satisfaction of his/her claim with a notary to ensure the satisfaction of the claims of the subsequent pledgees. The claim of each subsequent pledgee shall be satisfied after the claim of the previous pledgee has been satisfied in full.

3. The sum remaining after all the claims secured by the pledge have been satisfied in full shall be given to the pledger if there are no subsequent pledgees.

4. The selling pledgee shall be liable before the other pledgees for damages caused by the non-fulfilment of the obligation under paragraph 2 of this article.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 281 – Transferring pledged items to the pledgee entitled to sell

1. The pledgee entitled to demand that a pledged item be sold or transferred to him/her may demand that the pledged item be transferred to his/her possession. The pledgee’s demand for transfer of the pledged item to his/her possession shall be satisfied immediately.

2. If satisfaction of the claim depends on the performance of a certain legal act, then the pledgee may demand that the pledger perform the act. If the pledger does not fulfil the pledgee’s demand within two weeks, the pledgee may perform the act in relation to third persons on behalf of the pledger.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 1541 of 17 July 2009 – LHG I, No 21, 3.8.2009, Art. 124

 

Article 2811 – Transferring a pledged vehicle and/or auxiliary equipment of agricultural machines to a pledgee

1. The pledgee may demand, without applying to a court, by presenting the certificate of pledge to an enforcement agency, to enforce the transfer into his/her possession of a pledged vehicle and/or the pledged auxiliary equipment of an agricultural machine defined by Article 53(1) of the Law of Georgia on Road Traffic.

2. An enforcement agency shall transfer the pledged vehicle and/or the pledged auxiliary equipment of an agricultural machine defined by Article 53(1) of the Law of Georgia on Road Traffic to the pledgee according to the procedures laid down by the Law of Georgia on Enforcement Proceedings.

3. If different pledgees present a certificate of pledge to an enforcement agency requesting the transfer to their possession of the same vehicle and/or the same auxiliary equipment of an agricultural machine defined by Article 53(1) of the Law of Georgia on Road Traffic, the pledged item shall be assigned to the pledgee with a pre-emptive right to satisfaction of the claim secured by the pledge.

4. Appealing a certificate of pledge shall not suspend its enforcement.

5. The pledgee who received possession of a vehicle and/or auxiliary equipment of an agricultural machine defined by Article 53(1) of the Law of Georgia on Road Traffic shall sell it or register title according to the procedures laid down by the legislation of Georgia.

6. The expenses relating to the enforced transfer of the vehicle and/or auxiliary equipment of an agricultural machine defined by Article 53(1) of the Law of Georgia on Road Traffic to the pledgee’s possession shall be borne by the debtor.

7. The liability for the legitimacy of submitting the certificate of pledge to the enforcement agency shall rest with the pledgee.

Law of Georgia No 1541 of 17 July 2009 – LHG I, No 21, 3.8.2009, Art. 124

Law of Georgia No 1833 of 24 December 2013 – website, 3.1.2014

 

Article 282 – Obligation to give notice of possible sale of pledged items

1. A pledgee shall give the pledger and other pledgees written notice of possible sale of the pledged item two weeks before the sale.

2. (Deleted).

3. The sale may be made even without any prior notice to the pledger and other pledgees if:

a) there is a real risk that the market or stock price of the pledged item will fall;

b) the pledged item is perishable.

4. The pledgee forfeits the right to sell the pledged item if a secured claim is satisfied at any time between the dates of service of the notice referred to in paragraph 1 of this article and sale of the pledged item.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 4310 of 29 December 2006 – LHG I, No 2, 4.1.2007, Art. 35

Law of Georgia No 4744 of 11 May 2007 – LHG I, No 18, 22.5.2007, Art. 158

 

Article 283 – Sale of pledged items

1. A pledgee may directly sell a pledged item if there is agreement between the pledgee and the pledger about it. When the pledged item is sold directly by the pledgee by direct sale, the pledgee shall sell the pledged item at a fair and reasonable price taking into account the pledger’s, other pledgees’ and his/her interests. In the case of failure to fulfil this obligation the pledgee shall be liable for damages caused to the pledger and other pledgees.

2. If the pledged item has a stock or market price, the pledgee may entrust the sale of the pledged item to a special trade agency.

3. If a pledged claim is sold with the debtor’s performance in favour of the pledgee, the pledgee shall present to the pledger a report on the debtor’s performance in favour of the pledgee.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 284 – Agreement of the parties on other procedures of sale

1. The pledgee and the pledger may indicate in a written agreement that the pledged item may be assigned to the pledgee or sold based on a writ of execution issued by a notary. In such case, the agreement between the parties shall be notarised.

2. The pledgee and the pledger may also agree on procedures of sale different from those given in this chapter. In such case, the pledged item shall be sold at a reasonable and fair price in the pledger’s and other pledgees’ interests

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

Law of Georgia No 3879 of 8 December 2006 – LHG I, No 48, 22.12.2006, Art. 321

 

Article 285 – Effects of the sale of pledged items

1. The sale of a pledged item shall result in the transfer of unencumbered ownership to the buyer, except as provided for in Article 279(4).

2. If the pledgee unlawfully sells the pledged item, the buyer shall acquire ownership if he/she is in good faith in relation to that fact.

Law of Georgia No 1826 of 30 June 2005 – LHG I, No 41, 19.7.2005, Art. 284

 

Article 2851 – Report on the sale of pledged items