The dispute concerned the partial annulment of a partners’ resolution and the recognition of ownership of a participation interest in a limited liability company (LLC), related to the gratuitous transfer of company shares.
Factual Background
N.N. (hereinafter — the Claimant), as the owner of 50% of the shares in LLC “Bakhtioni” (hereinafter — the Company), transferred 50% of the Company’s shares free of charge to N.T. (hereinafter — the Defendant).
By the same resolution:
- G.A., acting as the Company’s director and owner of the remaining 50% share,
- also transferred his shares to the Defendant free of charge,
- resigned from the position of director, and
- consented to the Defendant’s appointment as director of the Company.
Claimant’s Position
The Claimant argued that the transfer of his 50% share was preceded by threats and blackmail allegedly exercised by the Defendant and individuals close to him.
According to the Claimant:
- the decision was made under coercion;
- it did not reflect his true will;
- therefore, the gratuitous transfer should be declared invalid as a transaction concluded under duress.
Defendant’s Position
The Defendant maintained that:
- both the Claimant and G.A. voluntarily transferred their shares;
- the agreement was gratuitous because they failed to fulfill their obligations toward the Company;
- the Defendant proposed a free-of-charge transfer of shares, which both parties accepted of their own free will;
- no coercion, threats, or unlawful pressure took place.
In this case, the Defendant was represented by attorney Ani Lomidze of Nemsitsveridze Law Firm, who provided comprehensive legal defense and substantiated the Defendant’s position before the court.
Decision of the Court of First Instance
The City Court dismissed the claim as unsubstantiated, noting that:
- the statement of claim did not contain specific factual allegations sufficient to establish coercion;
- it was impossible to determine: when the alleged threats began or ended,
- against whom and by whom they were exercised,
- or whether they were physical or psychological in nature;
consequently, the court could not assess compliance with the statutory time limits for contesting the transaction.
Decision of the Court of Appeal
The Claimant appealed the decision. The Court of Appeal held that:
- the Claimant failed to prove the existence of coercion,
- coercion constituted the core legal basis of the claim,
- in the absence of proof, the claim was unfounded.
The appellate court upheld the decision of the City Court in full.
Supreme Court Review
The appellate decision was further appealed to the Supreme Court of Georgia, which declared the cassation appeal inadmissible and left it without consideration.
Legal Significance of the Case
This case demonstrates that:
- annulment of partners’ resolutions requires clear, specific, and proven factual grounds;
- general allegations of coercion are insufficient to invalidate corporate transactions;
- courts strictly assess the burden of proof in corporate disputes;
- effective legal representation plays a decisive role in protecting corporate rights.
