AZERBAIJAN Law and Practice Contributed by: Ismail Askerov and Amil Jafarguliyev, MGB Law Offices
7. Foreign Investment/National Security 7.1 Applicable Regulator and Process Overview Azerbaijan does not operate a dedicated foreign investment or national security review regime. Instead, foreign investors are governed by the general frame - work applicable to all investors under the Law of the Republic of Azerbaijan “On Investment Activity”, which expressly provides that foreign investors are entitled to a national treatment regime. Accordingly, in comparable circumstances, foreign investors and their investments must be treated no less favourably than domestic investors and their investments. For - eign investors are also treated no less favourably than other foreign investors. This equal-treatment regime does not exclude the application of Azerbaijani laws aimed at protecting human life and health, the environment, public order, and state and economic security, provided such laws are applied without discrimination. These provisions empower the state to apply general protective meas - ures where necessary, without creating a separate FDI-specific review mechanism. Although there is no national security screening sys - tem targeting foreign investment, certain restrictions may arise under the Law of the Republic of Azerbai - jan “On Combatting the Legalization (Laundering) of Criminally Obtained Property and the Financing of Ter - rorism”. This law establishes limitations for legal enti - ties associated with high-risk jurisdictions. For exam - ple, subsidiaries or branches of financial institutions established, managed or operating in high-risk zones may be denied licences in Azerbaijan. Similarly, busi - ness relationships and financial transactions may be restricted for persons whose registration, residence or primary place of activity is located in such zones, or whose transactions are carried out through those regions. Outside the AML/CFT framework, there is no sepa - rate notification process, no pre-investment approval requirement and no national security review authority for foreign investment.
If the Authority identifies restrictions that can be cor - rected, it informs the applicant within three working days. Parties must implement remedies within: • 15 working days; or • 30 working days for complex measures. Remedies may relate to eliminating anti-competitive effects, preventing the creation of dominance, or cor - recting structural or behavioural issues identified by the Authority. 6.4 Antitrust/Competition Enforcement The Competition Authority does not evaluate or block foreign investment as such. Its mandate is limited to assessing transactions that meet merger control thresholds and their competition effects within Azer - baijan. Accordingly, the regime should be viewed as antitrust merger control, not FDI screening. The Authority may: • refuse a concentration; • approve it unconditionally; • approve with remedies; or • treat multiple transactions as a single notifiable concentration. If a notifiable concentration is implemented without prior clearance: • each participating undertaking bears individual liability; • administrative penalties may apply; • the transaction may be subject to unwinding or corrective measures; and • the Authority may impose structural or behavioural remedies. These consequences underscore that merger clear - ance is a mandatory pre-closing requirement for transactions meeting Article 27 thresholds.
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