Philosophical and Legal Understanding of the Category of "Good Faith" and Its Impact on International Business

Plato defined the good as an Idea in the realm of absolute essences, while Aristotle linked it to man's innate ability to choose the true good. In medieval philosophy, the good was often identified with God (Augustine, Thomas Aquinas), whereas Russian religious thought (N.A. Berdyaev, I.A. Ilyin) emphasized the inseparable connection between the good, truth, and beauty. In German classical philosophy, I. Kant proposed the categorical imperative as a universal moral law, where good faith acts as a manifestation of the autonomy of will and internal duty.

From an anthropological perspective, the phenomenon of good faith is examined through the lens of concepts such as personality, the agent of action, freedom, and responsibility. A person acting in good faith is seen not merely as a bearer of external norms, but as an integrated individual possessing self-identity and capable of transcendence—going beyond the boundaries of one's own "Self" for the sake of higher values.

Key aspects of the philosophical understanding of good faith include:

1. Ethical core — a spiritual and moral quality of the individual, expressed in truthfulness, honesty, and responsibility. It is based on the pursuit of good rather than the fear of punishment.
2. Historical and legal roots: the concept originates in Roman law (bona fides — good faith). There, it denoted a person’s conviction in the lawfulness of their conduct and stood in contrast to deceit and rigid formalism. Courts of "good faith" took into account the true intentions of the parties rather than merely the letter of the law.
3. Interdisciplinary status: the category is dual in nature. It is ethical in essence, yet widely applied in law to establish the boundaries of permissible conduct and to evaluate the actions of legal actors.

In jurisprudence, good faith is one of the key categories, particularly in civil law. It serves as a fundamental principle that ensures a balance of interests among participants in legal relations and shapes the legal culture of society. In its most general form, the essence of the legal category is that good faith is the subjective state of a person (conviction) wherein they believe their actions to be lawful, unaware of any circumstances that could impugn this lawfulness.

Unlike philosophical "good conscience," legal good faith focuses on the subject's actual awareness of the legality or illegality of their actions in a specific situation. This principle is enshrined in Russian and international legislation: The presumption of good faith (under Clause 5 of Article 10 of the Civil Code of the Russian Federation) presumes the good faith of participants in civil legal relations and the reasonableness of their actions unless proven otherwise.

The concept of good faith is evaluative. The court determines the presence or absence of good faith based on the specific circumstances of the case and the evidence presented. As a rule, it assesses the behavior expected of any participant in civil commerce: honesty, transparency, and consideration for the rights and legitimate interests of the other party.

The application of the concept of "good faith" in international business is characterized by two conceptual approaches:

1. Subjective approach — based on the person's actual knowledge or ignorance of legal defects in their action (for instance, a buyer did not know and could not have known that the seller had no right to sell the property).
2. Objective approach — evaluates the person's conduct against the standard of an "average" participant in commerce, irrespective of their personal convictions. An action is considered to be in good faith if it meets the criteria of honesty and prudence generally accepted in society.

The principle of good faith in international business permeates virtually all branches of law and carries direct legal consequences, reflected in:

• Protection of a bona fide purchaser. An owner has the right to reclaim their property from someone who acquired it from a person unauthorized to dispose of it. However, the law protects a bona fide purchaser who did not know and could not have known about the illegality of the transaction.
• Differential liability. The legal consequences for bona fide and bad-faith possessors of property differ: upon loss of possession pursuant to an owner's claim, a bona fide possessor is required to return only those revenues obtained after learning of the unlawfulness of their possession, whereas a bad-faith possessor must return all gains acquired over the entire period.
• Corporate and tax law. The category is used to assess the actions of company directors (absence of conflicts of interest) and taxpayers (the presumption of taxpayer good faith). Abuse of rights is invariably regarded as a manifestation of bad faith.

Author: PhD in Economics, Associate Professor at the Department of World Economy and International Finance, Financial University under the Government of the Russian Federation, Valeriy Valeryevich Smirnov.