Arbitration in Armenia is governed by the Law on Commercial Arbitration (RA Law No. HO-55-N)(the “Armenian Arbitration Act“). The Armenian Arbitration Act provides a modern and coherent legal framework for both international and domestic arbitration, as well as for the enforcement of arbitration awards in Armenian courts. Largely based on the UNCITRAL Model law on Commercial Arbitration (the “UNCITRAL Model Law“), the Armenian Arbitration Act was adopted on 25 December 2006, with the most recent amendments passed in June 2015, bringing the Armenian Arbitration Act into compliance with the most recent changes to the UNCITRAL Model Law.
Arbitration Agreement: Arbitration in Armenia
Article 7.1 of the Armenian Arbitration Act defines an “arbitration agreement” as an agreement by the parties to submit to arbitration all existing or potential or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract, or in the form of a separate agreement.
The Armenian Arbitration Act further provides in Article 7.2 that an arbitration agreement must be in writing. The Arbitration agreement is deemed concluded in writing if it is contained in a document signed by the parties, or in an exchange of communications through sealed letters, telex, telegrams, electronic or other means of communication which provide a record of the agreement, or in an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by another (Armenian Arbitration Act, Article 7.2).
The Arbitrability of Disputes in Armenia
Arbitrability determines what type of dispute may be resolved by arbitration, rather than through domestic courts. In general, under Armenian law, all commercial disputes are arbitrable save for commercial and marital disputes regarding community property.
Furthermore, the parties cannot limit the right of customers of financial institutions to bring a claim before a State court for a dispute in connection with a contract with that institution, unless this is done after the dispute has already arisen (via a so-called post-dispute arbitration agreement or submission agreement ).
Constitution and Powers of the Arbitral Tribunal under the Armenian Arbitration Act
Article 10 of the Armenian Arbitration Act provides that the parties are free to agree upon the number of arbitrators. The only requirement is that it must be an odd number, in order to prevent deadlocks. The parties can also agree on the appointment procedure for arbitrators. If no such agreement exists, the procedure provided in Article 11.3 of the Armenian Arbitration Act applies automatically.
Article 11.1 of the Armenian Arbitration Act further provides that any competent physical person the age of 18 and above can be an arbitrator, unless a higher age is provided for by the agreement of the parties. The parties are free to agree upon any qualifications for an arbitrator, as well. The parties can also agree on a procedure for challenging an arbitrator, subject to the provisions of of Article 13.3. Absent such an agreement, Article 13 of the Armenian Arbitration Act provides that a party which intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or of any circumstance referred to in Article 12.2, send a written statement of the reasons for the challenge to the arbitral tribunal. A general rule is that the arbitral tribunal shall decide on the challenge, unless the challenged arbitrator withdraws from his office or the other party agrees to the challenge.
In case the challenge under any procedure agreed upon by the parties or under the procedure of Article 13.3 is not successful, the challenging party may request that the competent court decides on the challenge, as provided in Article 13.3. Application to the domestic court must be made within thirty days after the party has received notice of the decision rejecting the challenge.
The principle of competence-competence exists in Armenian law. This means the arbitral tribunal has the power to rule upon its own jurisdiction, including any objections with respect to the existence or validity of the underlying arbitration agreement, as explicitly provided in Article 16 of the Armenian Arbitration Act.
Arbitrators are also granted powers to order interim measures, as explicitly provided in Article 17 of the Armenian Arbitration Act, which states that the arbitral tribunal may, at the request of a party, grant such interim measures as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute. The arbitral tribunal may also require any party to provide appropriate security in connection with such measures for the purpose of preventing or compensating potential losses to be incurred to the other party through the application of interim measures.
Article 17.1 of the Armenian Arbitration Act further provides that interim measures may be ordered in the form of an interim award and that decisions of the arbitral tribunal can be recognized, enforced or rendered ineffective by the Court specified under Article 6 of the Arbitration Act.
Setting Aside and Enforcement of Arbitral Awards Pursuant to the Armenian Arbitration Act
Armenia is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), since 2007. Armenia made two declarations – first, that the convention only applies to the recognition and enforcement of awards made in another contracting State; second, that it only applies to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the laws of Armenia.
The procedure for the setting aside of arbitral awards, listed in Article 34 of the Armenian Arbitration Act, provides that an arbitral award may be set aside by the court specified in Article 6 of the Arbitration Act only if:
(1) the party making the application furnishes proof that:
(a) a party to the arbitration agreement referred to in Article 7 of this Law has been under some incapacity as per the law applicable thereto; or the arbitral agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the Republic of Armenia; or
(b) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(c) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not
submitted to arbitration may be set aside; or
(d) the composition of the arbitral tribunal or the arbitral procedure has not been in accordance with the arbitration agreement of the parties, unless such agreement conflicts with compulsory provisions of this Law from with the parties cannot derogate, or, failing such agreement, has not been in accordance with this Law; or
(2) the court finds that:
(a) the subject-matter of the dispute is not capable of settlement by arbitration under the law of the Republic of Armenia; or
(b) the award is in conflict with the public order of the Republic of Armenia.
The application for setting aside may not be made after three months have elapsed from the date on which the party making the application had received the award or, if a request has been made under Article 33 of the Armenian Arbitration Act Act (Correction and Interpretation of the Awards), after three months from the date on which that request has been disposed of by the arbitral tribunal.
Article 34 concerns the recognition and enforcement of arbitral awards, stating that the party relying on an award or applying for its enforcement shall supply the duly authenticated original award or a duly certified copy thereof, as well as the original arbitration agreement or a duly certified copy thereof. If the award or the agreement is not made in Armenian, the party must submit a certified translation of the award in Armenian.
The grounds for refusing recognition or enforcement of the arbitral award are listed in Article 36 of the Armenian Arbitration Act and are, essentially, the same as the grounds provided in Article V of the New York Convention.
Arbitration Institutions in Armenia
The most prominent arbitration institution in Armenia is the Arbitration Institution at the Chamber of Commerce and Industry of the Republic of Armenia (“RR CCI“), which was established in 2007 with the aim of promoting arbitration as a faster, more cost effective and impartial dispute resolution mechanism. The RR CCI has its own set of Arbitration Rules, the most recent version from 2019, which are available in the Armenian, Russian and English languages. Other prominent institutions, include Union Banks of Armenia, for arbitration disputes involving finance, Optimus Lex’ Arbitration Court , and ADR Partners, offering services to private businesses and individuals who want to solve their disputes by resorting to mediation and arbitration.
Investment Arbitration and Armenia
Armenia is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”) since 16 September 1992 and to the Energy Charter Treaty since 18 December 1997.
Overall, Armenia has signed 43 bilateral investment treaties. A list of these treaties is available on UNCTAD’s Investment Policy Hub Website. There are at least three publicly-known ICSID cases against Armenia, two of them pending and one of which was discontinued:
- Rasia FZE and Joseph K. Borkowski v. Republic of Armenia (ICSID Case No. ARB/18/28)
- Edmond Khudyan and Arin Capital & Investment Corp. v. Republic of Armenia (ICSID Case No. ARB/17/36)
- Global Gold Mining LLC v. Republic of Armenia (ICSID Case No. ARB/07/7) (the proceedings were discontinued)