Draft of the new law "On Investments" developed by the Ministry of Economy of Armenia has been published

YEREVAN, May 13. /ARKA/. The draft law of the Republic of Armenia "On Investments" developed by the Ministry of Economy has been published on the e-draft.am regulatory acts platform. 

It is noted that the purpose of the new law (which will replace the outdated 1994 Law "On Foreign Investments") is to promote economic growth in the Republic of Armenia, attract foreign and local investments, as well as improve a predictable, favorable, competitive and protected legal environment for investments. 

"The investment policy of the Republic of Armenia is aimed at ensuring certainty and predictability of legal regulation, accountability of policy and administration of state bodies and officials, ensuring fair, non-discriminatory and equal application of legislation, judicial protection and administration in relation to investors, supporting sustainable and inclusive economic development," the draft says. 

The justification notes that the purpose of the project is to consolidate simple, transparent and predictable legal frameworks, brought into line with the current requirements of investment relations to ensure the protection of investors' rights, freedom and stimulation of investments for both local and foreign investors. The adoption of the project will create a clear and predictable legal investment environment, which will give Armenia the opportunity to improve its international investment rating and competitiveness, investment attractiveness, and will also contribute to sustainable and inclusive economic growth. 

Currently, the implementation of investment policy is based on outdated and partially applicable regulations, in particular, on the Law on Foreign Investments of 1994, which does not provide comprehensive regulation that meets the modern requirements of the investment process. The current system does not guarantee the predictability of the regimes applied to investments, the proportionality of incentive measures, transparency and stability. There is also an imperfection in the institutional structure of investment policy, which leads to the fact that state support for investment programs is incomplete and non-systemic. 

In particular, when developing the Law on Investments, the experience of a number of countries was studied, including Georgia, Estonia, Lithuania, Kazakhstan, Bulgaria, Serbia, Bosnia and Herzegovina, Austria, Hungary, Finland, Iceland, Spain and China. Of the 13 countries considered, 9 have a law on investments (including foreign ones), and only in three of them (Serbia, Lithuania, Georgia) does the law apply to both domestic and foreign investments. Moreover, even in these cases, the scope of regulation varies significantly depending on the country. 

In Armenia, the functions of stimulating and supporting investments are performed by the Investment Support Fund "Enterprise Armenia", but it was not created on the basis of a regulatory legal act. 

The draft law establishes guarantees for the protection of investments and investors, taking into account modern internationally recognized standards. In particular, the draft law provides for:

• A guarantee of non-discrimination, which includes two well-known components:

- National Treatment (NT)

- Most Favoured Nation (MFN).

• A guarantee of protection against expropriation. At the same time, the draft defines the concept of indirect expropriation, clearly prohibits it, and also establishes criteria under which direct expropriation may take place. Within the framework of this guarantee, taking into account the specific features of financial markets and organizations, it is proposed for the first time to establish that the nationalization of financial organizations within the framework of resolution actions is regulated by law.

• Guarantees of legal and physical security, transparency and stability of the legal environment for investments. For example, the draft establishes that investments enjoying guarantees provided by law will remain protected by these guarantees for five years after changes are made to the scope of the guarantees or their cancellation.

• Guarantees related to the free movement and conversion of capital and property, land ownership and other property rights, hiring of workers, dispute resolution mechanisms, etc.

• Types of investment incentives (benefits), their objectives, nature, legal grounds and application mechanisms. 

The draft law also defines the institutional structure in the field of investment: the powers of the RA government in this area (necessary delegating norms), the powers of the authorized body, and also establishes the legal status of the Investment Support Center. 

At the drafting stage, the provisions of international investment agreements, best practices of investment legislation of the United Nations Conference on Trade and Development (UNCTAD), as well as recommendations of international financial organizations were taken into account.-0-