The Fiduciary Duty of Loyalty
Author : Giorgi Mukbaniani 23/10/2026
The fiduciary duty of loyalty constitutes one of the fundamental principles of contemporary corporate law and serves as the primary legal mechanism for identifying and regulating directors' conflicts of interest. Despite its central role in English-American corporate law, the conceptual structure of fiduciary duty of loyalty has undergone significant refinement following the publication of the American Law Institute's Restatement of the Law, 2022, Corporate Governance. This Article examines the contemporary understanding of the duty of loyalty and evaluates its significance for the interpretation of Georgian corporate law.
The research employs doctrinal legal analysis supported by content analysis, comparative and historical methodologies. It analyses legislation and judicial decisions relating to directors' fiduciary duties, conflicts of interest, the Business Judgment Rule and corporate governance in the United States, Continental Europe and in the Georgian legal system.
The Article argues that the Restatement does not create a new fiduciary obligation but rather systematizes existing judicial doctrine into a coherent analytical framework centered upon the duty of loyalty. It further establishes that good faith forms an integral subsidiary element of the duty of loyalty and that the Business Judgment Rule should be understood primarily as a standard of judicial review rather than merely as a component of the duty of care. Comparative analysis also reveals that Georgian corporate law regulates numerous features of fiduciary loyalty, although these features remain fragmented across different statutory provisions.
The American Law Institute's Restatement of the Law, 2022, provides a persuasive comparative framework for the systematization of fiduciary duties and contributes to greater doctrinal coherence, legal certainty and consistency in judicial decision-making processes.
Keywords: Fiduciary duties, Duty of loyalty, Business judgment rule, Conflict of interest, Georgian corporate Law.
Article DOI: https://doi.org/10.55367/HPZM9446