ARMENIA Law and Practice Contributed by: Mesrop Manukyan, Maria Petrosyan, Grigor Grigoryan and Anahit Sargsyan, MB Legal
court based on factors such as the nature of the vio- lation, the extent of the harm and the defendant’s degree of fault. For specific commercial violations, such as the unauthorised use of a trade mark or firm name, the law provides for specialised methods of calculating damages.
matters or violates Armenian public policy can be set aside by the state courts. 3.3 Advantages of Arbitration The key advantages of arbitration in Armenia include confidentiality, speed and the ability to choose expert arbitrators. Unlike the public state courts, arbitration proceedings are private, and the resulting awards are not published without the parties’ consent, which is critical for protecting sensitive commercial informa- tion. The process is also more flexible, allowing parties to agree on the rules of procedure, the language of the proceedings, and the location of hearings. A significant procedural advantage is the direct enforcement of small claims. Under the Law on Com- mercial Arbitration, a permanent arbitral institution can send an award directly to the Compulsory Enforce- ment Service via an electronic message, bypassing the need for a court-issued writ of execution. This streamlined process is available if the seat of arbitra- tion is Armenia, the parties are domestic citizens or legal entities, and the amount to be recovered does not exceed AMD5 million. Arbitration also provides for the finality of decisions, as the grounds for setting aside an arbitral award are extremely narrow and limited to procedural errors. This prevents the multi-year, multi-tiered appeals process common in litigation. Additionally, the ability to select arbitrators with specific industry knowledge (eg, in construction or IT) ensures a more technically sound resolution of complex disputes compared to general jurisdiction judges. However, parties often run into initial friction when a respondent challenges the validity of the arbitration agreement in state court, which can lead to a pre- liminary delay of several months before the arbitral tribunal can effectively proceed. 3.4 Disadvantages of Arbitration The primary disadvantages of arbitration are the higher initial costs compared to litigation. Parties are responsible for paying the fees of the arbitrators and the administrative costs of the arbitral institution, whereas state court fees (state duties) are often lower for large claims. Furthermore, because there is no full
3. Arbitration 3.1 Prevalence
Arbitration is a highly prevalent and respected method of dispute resolution in Armenia, particularly for inter- national commercial transactions. It is widely used in sectors such as banking, energy, construction and tel- ecommunications, where parties value the technical expertise of the arbitrators. Most modern commer- cial contracts between Armenian entities and foreign investors include a standard arbitration clause. The use of arbitration is supported by the Law on Commercial Arbitration, which provides a modern framework that aligns Armenian practice with global standards. Domestic arbitration is also growing, as more local businesses recognise the benefits of a faster and more private alternative to the state court system. The Armenian judiciary consistently enforces the principle that valid arbitration agreements must be respected, directing parties away from litigation when a valid clause exists. 3.2 Restrictions on Use of Arbitration Armenian law imposes certain restrictions on which disputes can be referred to arbitration. Generally, disputes that involve public order, administrative law, or those reserved for the exclusive jurisdiction of the state courts cannot be arbitrated. Examples of non- arbitrable matters include certain family law issues (eg, child custody), inheritance disputes, and specific types of property rights that require state registration. Furthermore, an arbitration agreement involving a consumer is subject to strict validity requirements. Such an agreement is only valid and binding if it was signed after the dispute arose, ensuring that consum- ers are not forced into arbitration through standard- form contracts signed at the beginning of a transac- tion. Any arbitral award that deals with non-arbitrable
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