ARMENIA Law and Practice Contributed by: Mesrop Manukyan, Maria Petrosyan, Grigor Grigoryan and Anahit Sargsyan, MB Legal
tutional support has been a major driver in the growth of the Armenian ADR market.
litigations. There are no specific legal barriers to such arrangements, provided they do not violate general principles of contract law or professional ethics. The main legal concern with third-party funding is ensuring that it does not compromise the independ- ence of the advocate or the client’s control over the strategy of the case. Currently, there is no requirement to disclose the existence of third-party funding to the court or the opposing party, although this is a topic of ongoing discussion within the legal community. 5.3 Contingency Fee Arrangement Contingency fee arrangements, where the lawyer’s fee is a percentage of the amount recovered, are available and widely used in Armenia. These arrangements are common in personal injury cases, debt collection and some commercial disputes where the client may lack the funds to pay hourly rates upfront. These agree- ments are governed by the general principle of free- dom of contract. However, advocates must ensure that their fees are ethical and not unconscionable. In some instances, the court may reduce a contingency fee award if it is found to be clearly excessive in relation to the work performed. Despite these potential limitations, the use of contingency fees is an important mechanism for ensuring access to justice for smaller businesses and individuals. 5.4 Insurance Insurance coverage for litigation and arbitration costs is available in the Armenian market but is not yet a standard commercial practice. Some specialised insurance products – often as part of professional lia- bility or directors’ and officers’ (D&O) policies – may cover legal defence costs. “After-the-event” insur- ance, which is common in some European jurisdic- tions, is rare in Armenia. The availability and terms of such insurance depend on the specific offerings of local and international insurers operating in the region. As the legal market matures and the costs of litigation increase, it is expected that more businesses will seek out legal expense insur- ance to manage their dispute-related financial risks.
5. Costs, Fees and Funding 5.1 Legal Fees
Legal fees in Armenia are generally not regulated by law and are determined by the private agreement between the advocate and the client. Lawyers are free to set their own rates, which can be based on hourly billing, fixed fees for specific tasks, or a combination of both. While there is no mandatory fee schedule, the Chamber of Advocates (Bar Association) may pro- vide non-binding guidelines on typical market rates for various legal services. In litigation, while parties can agree to any fee, the court will only order the losing party to pay “reason- able” attorney fees. When assessing what is reasona- ble, the court considers the complexity of the case, the amount of work performed, and local market stand- ards. This means that if a client pays an exceptionally high fee to a premium law firm, they may only be able to recover a portion of that fee from the opposing side. The state duty (litigation state fee) is a mandatory com- ponent of court costs and is distinct from advocate fees. The specific rates and procedures for charging state duties are regulated by the Law on State Duty. For monetary claims, the amount of the state duty is calculated based on the claim price (standard rates in Armenia are typically 3% of the claim price for mon- etary disputes in the first instance, 4% for appeal and 5% for the cassation appeal). In cases where a lawsuit contains both monetary and non-monetary require- ments, the duty is calculated and collected for each claim separately. However, derivative claims that are unconditionally satisfied upon the success of a pri- mary claim do not attract additional state duties. 5.2 Third-Party Funding Third-party funding, where an outside entity pays for a party’s legal costs in exchange for a share of the recovery, is not explicitly regulated in Armenia, but it is not prohibited. This is a relatively new concept in the Armenian market and is primarily seen in large- scale international arbitrations or complex commercial
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