In recent years, Armenia’s legal framework for the protection and promotion of investments has been significantly strengthened, aiming to ensure legal security for both local and foreign investors. The investor is one of the driving forces of the economy, and the state undertakes to provide them with a predictable, fair, and stable legal environment.
In this article, LSA Law Firm presents the fundamental rights of investors and the state guarantees for investment protection, based on the legislation of the Republic of Armenia and its international obligations.
The Legal Basis of Investments in Armenia
In Armenia, the rights of investors and state guarantees are defined by several legal acts, including:
- The Law of the Republic of Armenia “On Foreign Investments”,
- The Constitution of the Republic of Armenia,
- Government decisions of the Republic of Armenia,
- And international investment agreements signed by Armenia (for example, membership in the World Bank’s International Centre for Settlement of Investment Disputes (ICSID)).
According to the draft Law “On Investments,” an investment is defined as any property value invested in any sector of the economy for the purpose of generating profit or ensuring economic benefit.
Fundamental Rights of Investors
The legislation of the Republic of Armenia guarantees a number of fundamental rights to investors, regardless of their nationality or the country of origin of their investment. These include:
- Right to Property Inviolability
The state cannot expropriate or confiscate an investor’s property without a legal basis and fair compensation. This principle derives from both the Constitution of the Republic of Armenia and international agreements.
- Fair and Equal Treatment
Foreign investors in Armenia are granted the same conditions as local investors. The law prohibits any form of discrimination based on the investor’s citizenship or origin.
- Freedom of Investment and Profit Repatriation
Investors have the right to freely transfer their investment income (such as profit, dividends, interest, license fees, etc.) abroad in foreign currency, without disproportionate restrictions.
- Guarantees of Legal Stability
Changes in legislation cannot have retroactive effect or negatively impact existing investments. This provision ensures that investors operate within a predictable legal environment.
- Right to Free Competition and a Fair Business Environment
The state is obligated to monitor and prevent monopolistic or anti-competitive behavior, ensuring equal market access for all investors.
State Guarantees for Investment Protection
According to the Government of the Republic of Armenia and international agreements, investor protection is reinforced through several state mechanisms:
- Elimination of Artificial Obstacles
State authorities are prohibited from restricting or hindering an investor’s activities through actions or inaction without a lawful basis.
- Fair Compensation in Case of Expropriation
If, under exceptional circumstances, the state is compelled to expropriate an investor’s property for public interest purposes, it is obligated to provide full compensation corresponding to the property’s market value.
- Dispute Resolution at the International Level
Armenia is a member of several international conventions, including the International Centre for Settlement of Investment Disputes (ICSID). This means that a foreign investor may protect their rights not only in the courts of Armenia but also through international arbitration.
- State Agency for Investment Promotion and Guarantee
The Government of Armenia also implements an investment promotion policy through Invest Armenia or other relevant state institutions, which work to improve the investment climate and support investors.
International Obligations and Bilateral Agreements
Armenia has signed more than 40 Bilateral Investment Treaties (BITs) with various countries, including France, Germany, Russia, China, and others. These agreements incorporate international standards for investment protection, such as:
- the obligation of fair and equitable treatment,
- compensation in case of nationalization,
- guarantees for free movement of capital, and
- the right to international arbitration.
These provisions are also outlined in the document “International Investment Protection Agreements” published by the Ministry of Foreign Affairs of Armenia (mfa.am, 35_am.pdf).
The Importance of Legal Consultation
Legal advice plays a decisive role when making an investment. It is essential not only to understand the economic value of the investment but also to:
- assess potential legal risks,
- study land, tax, and customs legislation as well as licensing requirements, and
- ensure the investor’s interests are protected through proper contractual arrangements.
LSA Law Firm provides investors with comprehensive support — from drafting investment agreements to representing their interests in international arbitration — ensuring the full protection of the investor’s rights and interests.
Armenia is shaping a favorable and secure environment for investments, where the law guarantees the inviolability of investors’ rights and property. However, in practice, the full realization of these rights requires the assistance of an experienced legal expert who can navigate the complexities of legislation effectively.
The LSA legal team is ready to assist investors by providing reliable partnership and legal protection at every stage of their investment journey.
