Young Barristers” on the Case of “Liderfood”

The organization “Young Barristers” publishes the results of the monitoring and legal conclusion on the decisions made by the common courts of Georgia on the case of company “Liderfood”, legally assess the default judgment of Tbilisi City Court of June 17, 2019, the same court’s 26 July 2019 decision on upholding the default judgment, Tbilisi Court of Appeals’ 31 January 2020 decision on upholding the default judgment and as a result of a joint examination of case materials, evidence, explanations of the parties, it responds to the two legal circumstances relevant to the case: Whether the director of the company has indeed received the claim, which documents confirm or exclude the facts of submitting them, does the court have the necessary legal justification in order to make default judgment, at which point it should be examined if the claim presented in the complaint is legally justified or not.

According to the “Young Barristers”, A) the fact of handing-in the lawsuit by the director of the company is really controversial and there is no indisputable evidence, which would unequivocally confirm that the lawsuit has been handed-in, since the fact that the disputed party has handed the letters are definitely recorded, but not directly the lawsuit and the materials attached to it and B) the default judgment of the court, that decision was made without substantive consideration of the case, the credibility of the facts mentioned in the complaint, haven’t been checked, it wasn’t checked, whether the claim justified the legal grounds of it. Therefore, the organization opts for substantively considering the case and realizing the adversarial principle, which, on the hand, is based on the practice of the Supreme Court of Georgia, and on the European Court of Human Rights, and, on the other hand, based on the high credibility of the court in the business-disputed, which won't impede the stability of civil development and with the real implementation of the burden of proof, all the parties involved in the process, will be given equal opportunity to justify their claims.

The organization “Young Barristers”, based on the studied material, notes out, that it acquainted with the courier’s visit to the enterprise on May 22, 2019, however, objectively, on the basis of reasonable judgment, it is really difficult to say, that court-branded envelope can be seen in the footage. Its fact, that the courier has handed in a lot of letters towards the opposing party (the organization fully shares the position, that the legal address is correctly determined and the manager was entitled to receive the letters) and there is no concrete evidence, which confirms that the received letters are the complaint and attached materials. That issue is problematic within the scope of the conclusions made by the court of two instances. The court links the fact of delivering the complaint to the fact of handing in the letters on the legal address, but, the organization believes, neither in-depth research can provide an answer to the question, whether the party had really delivered the complaint and linked materials. Even if it happened, which must be assessed by the Supreme Court of Georgia, the organization believes, that there was no factual and legal circumstance to make default judgment and the court had to continue the proceedings.

According to “Young Barristers”, in order for the court to make default judgment, its needed to have claims legally justified. Based on the lawsuit, it was requested to terminate the contract of sale of March 21, 2018, withdrawal from the contract and the transfer of the ownership of the 50% stake of the enterprise, and noted out that, the current owner of the company was blackmailing the former owner of the company (the defendant to the plaintiff) before concluding the contract and based on that, 50% stake of the company was concessed, and the money wasn’t paid. But the court didn’t assess if the circumstances presented in the lawsuit legally justified the claims or not. The default ruling was linked to the will to withdraw from the contract, but the organization focuses on two circumstances – A. There is no direct or indirect evidence, which would confirm the fact of coercing before concluding the contract, the party didn’t overcome the burden of proof, concerning the accuracy and truth of registering the 100% share in the register and B. it was unclear, , while registering the lawsuit, in what kind of contractual relationship did the parties have, how enforceable the claims become if the legal-obligation relationship between the parties was terminated after March 21, 2019. Therefore, the organization notes out, that in such circumstances, the court didn’t properly assess the evidence with a standard, required by Article 105 of the Code of Civil Procedure of Georgia. Moreover, there was no full and objective justification of this evidence, there were no unequivocal conclusions about the relevant circumstances presented, therefore, the legal basis to make default judgment wasn’t presented. In case, if the circumstances set out in the lawsuit didn’t legally justify the claim, the court, in accordance with the law, must continue to substantively review the case.

The organization believes, that in the case of correct legal qualification, the Supreme Court of Georgia should consider the case essentially, in order to check, if the circumstances referred to in the claim provide a legal justification for the claim and if the decisions taken by the lower instance, in this respect, are legally substantiated. It is important, that the parties have the opportunity to overcome the burden of proof in the real adversarial situation, as the dispute, on the one hand, concerns the business company, which is current and functional for the stability of civil development and, on the other hand, to establish the right of ownership over the shares of the enterprise.

In this case, it is important to assess the motivation of the court and the legal interest of the parties in the process of legally resolving the dispute. This is more important, when the plaintiff, at the beginning of the process, states, that the possibility of ending the dispute by agreement is real. Therefore, the Supreme Court should answer the question – whether the equality of one of the party is substantially violated if the default judgement will remain in force; If the possibility of exercising the right to a fair trial is directly precluded, if neither party, so far, hasn’t been given the opportunity to exercise its own burden of proof.

For example, in the case of Gakharia v. Georgia, the European Court of Human Rights explained, that the principle of equality of arms, which is one of the widest concepts of a fair trial, demands from each party to have a reasonable opportunity to present its position, in a manner, which won’t put him in a significantly unfavorable position with the respect to its opposing side. In another case, Bartaya v. Georgia, the European Court of Human Rights explained, that the matter of declaration of a person, the form of the proceedings – with or without a court hearing – and the legal representation are interconnected and it should be analyzed in the context of the fair trial guaranteed by Article 6 of the European Convention.

According to “Young Barristers”, on the case of „Liderfood”, concerning the dispute between the present and former owners of the company, there is high public interests, which servers to publicly check and control the legality of the default judgment made by the courts in the multimillion-dollar dispute. The organization, for this purpose, has requested the parties to fully give access to the case materials. In general, one of the forms of selective justice is the use of the institute default judgment, and in the presented case, it is the decision for entering a default judgment, makes the case publicly interested. The organization hasn’t discussed the content of the dispute and therefore, hasn’t made any assessment of it, as this is the subject of Georgian Judiciary System and, based on the adversarial principle, it's up to the burden of proof. Whoever in that case is the right side, it will be determined, based on the real competition.

To note out: The organization made a public statement on 3 June 2020, to study the case of “Liderfood”. The organization’s law group called the research: “Business and Court”. The results of the monitoring have been presented to the society by the head of the organization: Archil Kaikatsishvili, workgroup members, barristers: Nika Menognishvili and Berdia Jajanidze. The document is published on the official website of the organization and it will be given to the Georgian Judiciary System, the Public Defender of Georgia, Business-Ombudsman, the representatives of the EU, USA Embassy to Georgia, the public and private institutions.