Default Judgment After Service at the Registered Address

Service. Service on a legal entity is ordinarily effected at its registered legal address, and receipt by an employee at that address creates a presumption of valid service. B's public-registry address was in Rustavi, and the court used that address. B's internal move without updating the registry or notifying A is B's own omission. Actual non-receipt caused by that omission does not make service invalid. The employee's signature supports the presumption of delivery. B may rebut the presumption only with concrete evidence that the person was not authorised to receive process or that the address was not the registered address. A bare denial is insufficient.

Jurisdiction. The general rule is that a legal entity may be sued at its registered seat, which would point to Rustavi. However, the contract expressly names Tbilisi City Court. Under the Civil Procedure Code, parties may agree on a court for a contractual dispute unless the law reserves exclusive jurisdiction. A simple debt claim is not subject to exclusive jurisdiction. If the clause is clear and was accepted by both parties, Tbilisi City Court has jurisdiction. If the clause were only a contractual address for notices, it would not be a prorogation clause; but the facts say the contract names the court. B's jurisdictional objection should therefore fail, and in any event it should have been raised before defending on the merits. The default court should still verify jurisdiction on the record, but the clause supports Tbilisi.

Setting aside the default judgment. B must normally show three things: a timely application, a valid excuse for non-appearance, and a prima facie defence on the merits. B's claim that it never received the claim is weak because service was made at the registered address and signed for by an employee. Failure to update the registry or arrange forwarding is not a valid excuse. If national law requires security for the application, B's failure to pay may also affect the request, but security is not a substitute for a valid excuse. The court should not set aside the judgment merely because B disputes the debt; B must show that it has a defence with prospects of success.

Penalty. A daily rate of 0.1% equals 36.5% per year. Under the Civil Code, a court may reduce a contractual penalty if it is clearly disproportionate to the creditor's actual loss. The court should compare the penalty with A's proven loss, the duration of delay, B's conduct, and the parties' bargaining position. A high annual rate is not automatically excessive, especially in commercial contracts, but if A's actual loss is limited to financing costs, the court may reduce the penalty to a reasonable amount. The penalty issue does not by itself excuse B's non-appearance. If the default judgment is not set aside, B may still challenge the amount through available appellate or enforcement remedies.

B should consider an appeal against the default judgment, if national law permits appeal rather than only a set-aside application, and should seek suspension of enforcement to prevent irreversible harm while the appeal is pending. The appeal must be filed within the statutory deadline, which runs from notification of the judgment or from the refusal of the set-aside application, depending on the procedure used. B cannot use an appeal to raise arguments that should have been raised earlier without explaining the default. The appellate court will review the service record, the jurisdiction clause, and the penalty. If B seeks suspension, it must show a likelihood of success and irreparable harm; the court may require security. B should also correct its registry address immediately, because continuing service defects will otherwise recur.