GILS Dispute Resolution: Armenia (2025)

ARMENIA

Khoren Nasibyan, Nune Hayrapetyan, Meri Artashesyan

CASE №1:

Our department has represented the Client, one of the largest construction companies in the region that is a local branch of an international constructing company, in a major litigation against Ardshinbank CSJC (ASHIB), one of the biggest commercial banks in the Republic of Armenia. The matter involves four bank guarantees totalling USD 1 219 429 and EUR 3 645 874 issued by the Ardshinbank CSJC in 2019 to guarantee the obligations of the Client’s subcontractor for one year. When the subcontractor failed to meet its obligations, Ardshinbank CSJC refused to make payments for various reasons, including an allegedly pre-existing court order and the expiration of the term. The Client filed a court claim against the bank in April 2022. Throughout 2022-2023, our team participated in trial preparation and successfully amended the pleadings by joining a new party into the action. The case has finally passed the pretrial preparation phase and has gone to trial in March 2024. In January 2025, the court issued a final and favorable verdict in favor of our Client, fully upholding the claim and ordering Ardshinbank CJSC to fulfill its obligations under the guarantees. This outcome is considered a major legal victory, not only because of the substantial sums involved, but also due to the complex and precedent-setting legal issues at stake. At the heart of the matter was the principle of the independence of bank guarantees from the underlying contractual obligations, an area previously lacking legal clarity in Armenia. The court's decision is now expected to serve as a landmark precedent in Armenian commercial and banking law, bringing much-needed legal certainty to the treatment and enforcement of bank guarantees in future disputes.

CASE №2:

Sinohydro Corporation, a global engineering and construction company operating in Armenia, was subjected to an administrative sanction by the State Revenue Committee (SRC) of the Republic of Armenia. The Committee imposed a substantial fine of approximately USD 5 million, alleging that the company had issued false tax documents in the course of its operations.Our team, disputing the legality and substantiation of the SRC’s decision, filed a claim with the RA Administrative Court, seeking to annul the administrative act. Despite presenting detailed legal and factual arguments challenging the SRC’s position, the Administrative Court rejected Sinohydro’s claim, effectively upholding the SRC’s decision and the imposed penalty. Following the unfavorable ruling, we pursued an appeal before the RA Administrative Court of Appeal. In a significant legal victory, the Court of Appeal overturned the Administrative Court’s judgment. The appellate court fully amended the decision, concluding that the SRC's administrative act was unlawful and unsubstantiated, and thus released Sinohydro from the obligation to pay any amount to the state. Despite the Appellate court’s comprehensive judgment, the State Revenue Committee filed a cassation appeal with the RA Cassation Court, seeking to reinstate the original fine. After thorough examination, the Cassation Court rejected the SRC’s appeal, effectively upholding the decision of the Court of Appeal. This final ruling confirmed the complete exoneration of Sinohydro Corporation from the alleged tax liability. This multi-stage litigation resulted in a landmark legal success for Sinohydro Corporation. The case highlights the importance of rigorous legal defense in complex tax disputes and reinforces the role of appellate review in ensuring fairness and legality in administrative proceedings. The final ruling by the RA Cassation Court brings closure to the case, affirming that the claims against Sinohydro were unfounded and that the company is not liable for the USD 5 million fine initially imposed.