The judicial power to reduce penalties in Georgian civil law

• Natia Rekhviashvili

Judicial discretion in reducing contractual penalties is a fundamental mechanism for maintaining fairness and contractual equilibrium under the Civil Code of Georgia. Articles 417–420 of the Civil Code regulate the penalty institute, which serves as an additional tool for ensuring the fulfillment of obligations. While penalties are designed to protect the creditor’s interests by sanctioning the debtor for non-performance or improper performance, the absence of strict statutory criteria for determining when a penalty becomes “disproportionately high” grants courts significant discretionary power. This discretion allows judges to evaluate each case individually, taking into account principles of proportionality, fairness, and the unique circumstances of the contractual relationship. This paper explores the scope and application of judicial discretion in reducing excessively high penalties.

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