AZERBAIJAN Law and Practice Contributed by: Ismail Askerov and Amil Jafarguliyev, MGB Law Offices
1. Legal System and Regulatory Framework 1.1 Legal System
Investment Activity Law (2022) The Law on Investment Activity (No 551-VIQ, 22 June 2022) constitutes the principal instrument govern - ing investment operations. It applies to all invest - ment activities carried out in Azerbaijan by both local and foreign investors (Article 3.1). The law sets out the overarching rights and guarantees for investors, including non-discrimination, protection of property rights, access to dispute-resolution mechanisms and freedom to repatriate profits. Article 6 establishes a suite of state support and promotion measures designed to encourage both domestic and foreign capital inflows. These include: • tax and state-payment incentives, applied through special regimes or investment promotion certifi - cates; • preferential financing, including concessional loans for qualifying projects; • special economic zones, industrial parks and other preferential regimes to host investment projects; • expansion of public–private partnership (PPP) mechanisms; • advisory and informational support via online investment platforms, including access to invest - ment project pipelines and potential local partners; and • additional state measures aimed at strengthening Azerbaijan’s overall investment climate. Law on Public–Private Partnership (2022) The Law on Public–Private Partnership (No 691-VIQ, 9 December 2022) regulates relations arising in the implementation of PPP projects. It covers infrastruc - ture development, public service delivery, and the creation and operation of facilities required for those services. The law governs the interactions between the state, the authorised state body, the public part - ner, private partners and bidders. PPP has become a key channel for attracting foreign investors to large- scale infrastructure, utilities, healthcare and transport projects. Law on the Use of Renewable Energy Sources in Electricity Production (2021) The Law on Renewable Energy (No 339-VIQ, 31 May 2021) provides a comprehensive framework aimed
Azerbaijan operates a civil law system grounded in codified legislation, with the Constitution serving as the supreme legal act. The Civil Code is the principal source governing private law relations, company law, contracts, property, secured transactions and com - mercial activities. Sectoral laws (the Law on Securi - ties Market, Law on Licences and Permits, Law on Banks, etc) complement the Code and provide the regulatory infrastructure for businesses operating in the jurisdiction. The judiciary comprises courts of general jurisdic - tion, specialised courts (including those for com - mercial disputes), appellate courts and the Supreme Court as the highest appellate instance as a cassation instance. Judicial review of normative acts is vested in the Constitutional Court. Administrative bodies – most notably the Ministry of Economy, State Tax Service, State Service for Antimonopoly and Consumer Mar - ket Control (the “Competition Authority”) and Central Bank of Azerbaijan – play an active role in supervising compliance in their respective spheres. For foreign investors, the system offers an adequate legal environment with investment protections embed - ded directly in primary legislation, equal treatment of local and foreign investors, and access to courts and commercial arbitration. Azerbaijan is a contracting state to key multilateral treaties, including the New York Convention on Recognition and Enforcement of Arbitral Awards (1948), enabling the enforceability of foreign arbitral decisions. 1.2 Regulatory Framework for FDI Azerbaijan does not maintain a standalone FDI screen - ing regime and does not require foreign investors to undergo a national security type or foreign ownership review as a condition for market entry. Instead, for - eign investment operates within a general investment framework built around several core statutes that apply equally to domestic and international investors.
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