Investment issues

Armenia is a developing country with a fast growing economy. As such, it shares all the advantages and shortcomings of new and developing market economies. The main issues in the country are bureaucracy and not fully functioning Institutions. Another major obstacle is closed borders with some of its neighbours that distort its trading capacity.

However, the Government makes successful efforts to mitigate above mentioned problems both at home and internationally. As a result of these actions Armenia has been consistently ranked higher than most of its neighbours in Ease of Doing Business rankings (45th).

There are four mechanisms provided by Armenia to protect investors:
1. investment legislation;
2. investment contracts;
3. bilateral investment treaties; and
4. multilateral investment treaties.

For many years investment contracts between investors and host states (or state entities) often involve substantial investment of capital. Investors seek reassurance that the contractual protections on the basis of which they have invested will remain in place for the life of their investment. In order to achieve this, investment contracts often contain stabilisation clauses (freezing clauses, intangibility clauses, economic equilibrium clauses, allocation of burden clauses, and hybrid clauses).
There are hundreds BITs and MIT's in force, in total, where one contracting party is Armenia. Although there is no standard form for BITs, many contain broadly similar protections.
BITs and MITs generally contain similar investor protections. The most common protections found in these
instruments are:
- protection from expropriation without compensation
- MFN provisions
- NTP
- fair and equitable treatment;
- full protection and security; and
- free transfer of investment and returns.

The principal mechanism for resolving investment disputes is via the International Centre for the Settlement
of Investment Disputes ("ICSID"). ICSID was established under the 1965 ICSID Convention (also known as
the Washington Convention). The ICSID Convention entered into force for Armenia on October 16, 1992.