The head of the organization “Young Barristers”, Archil Kaikatsishvili has won one of the most difficult legal disputes in the construction industry. According to the Batumi City Court Civil Cases Panel February 19, 2021 decision, the claim was partially satisfied, and the construction company, the partnership and nine members of the partnership got an obligation to pay the equivalent of 215,220 USD in GEL, out of the equivalent of 338,250 USD requested in GEL. The organization, due to the reputational risk, deliberately doesn’t name the parties of the process.
By the case materials it is established, that the plaintiff’s goal was to build a multi-storey living residence in Batumi City. According to the Partner’s decision, a partnership was founded, which founders, together with the plaintiff company, were members of it. The individual’s contributions to the partnership were their properties, and the contribution of the plaintiff company was the obligation: to reimburse the expenses which were necessary to make project documentation of the residential building (including the permission to construct), to build the multi-storey residential house with its own resources and to deal with all the topic linked to the organizational-technical and financial issues, as well as, the transfer of compensation.
On, May 20, 2013, the plaintiff company, due to the financial problems, made an agreement with the partnership to exit the contract. During that time, the company had already fulfilled its obligations under the joint venture agreement. In particular, the obligation to meet the needs of the residents, where 123,050 USD was spent, and the obligation to make the architectural-construction project – in total of 215,220 USD. The organization had already obtained the construction permission from the Batumi City Hall, as well. After the exit, another company continued the construction work, but, there was no restitution, which is a process accompanying the withdrawal from the contract. The amount of money spent by the plaintiff company was a disputed 338,250 USD.
The difficulty of the presented dispute was the record written in the expiration agreement between the plaintiff company and the partnership – “The parties have no financial, property or any other kind of claims, against the agreement and/or with each other”. According to the same agreement, “when a member leaves the partnership, he/she will be refunded by already paid contributions, minus the expenses, which were necessary for the registration of the exit. The partnership is entitled not to return the paid contribution back to the former member, if that exposes threat to the normal operation of the partnership. The period of delay shall not exceed one calendar year from the date of the exit. Payment can be done partially.”
The plaintiff company was establishing, that “they have no financial claims” shouldn’t be equated with a waiver of a claim under a joint venture agreement. Based on that record, the company only emphasized that it had no additional claims against the party other than the claim, arising from the joint venture agreement and the law. The fact, that the company would get the right to make such a claim one year later was directly mentioned in the 2018 agreement between the parties. Therefore, the party raised the issue before the court, to share its own reasoning that the both contracts should be revised. Probably, the court found the circumstance reasonable, that the company had the right to request the restitution not from May 20, 2013, but from May 20, 2014. The lawsuit was filed in court on October 24, 2016 and the plaintiff filed the lawsuit within the statute of limitations, 3 years and filed it in court 7 months and approximately, 1 week before the expiration date. The case went through three instances of common courts and was returned to the proceedings for reconsideration.
- According to the Batumi City Court 26 February 2018 Decision, the claim wasn’t satisfied due to the statute of limitations, which was appealed;
- According to the Kutaisi Appeal Court 19 February 2019 Decision, the appeal was partially upheld, and the case was returned to the Batumi City Court for the reconsideration, which was appealed by the opposing party in cassation;
- According to the Supreme Court of Georgia 06 December 2019 Decision, the cassation appeal wasn’t shared and the Kutaisi Appeal Court 19/02/19 decision remained unchanged.
Therefore, according to the reports of the Georgian common courts about the factual and legal circumstances of the dispute, under the new legal proceedings, the Batumi City Court, chaired by Judge Salikh Shainidze, made a decision in favor of the plaintiff company and shared the request in part. The same court, on October 16, 2020, also shared the plaintiff company’s motion to apply a measure of securing the claim against the opposing party’s property – a prohibition to sell and mortgage the property. In general, the court applied the security measure on the 1421.55 m2 of the residential and commercial premises.
