2024 Azerbaijan Arbitration Days
THE AUTHORS:
Narmin Abdulova, Legal Counsel at ROXCEL
Laman Sadigli, Legal Counsel at Azerbaijan Coca-Cola Bottlers
The Azerbaijan Arbitration Days (AzAd), organised by the Azerbaijan Arbitration Association and held in Baku on 25 and 26 April 2024, emerged as an important event, particularly notable following the implementation of a new Law on Arbitration (“the New Law”) earlier this year. This legislative step forward contributes to the future of dispute resolution in the region.
Building on the success of its inaugural edition in Paris last year, the 2024 edition of the AzAD was the first international arbitration conference in the country, attracting over 400 participants, including 60 speakers from various jurisdictions.
With nine panel sessions, the event covered a wide variety of trending topics spanning from the discussions on Azerbaijan’s New Law to sector-specific issues like renewables, construction, and pricing disputes in the gas and electricity sectors.
This Article briefly discusses the key takeaways from the panels held during the event.
The event kicked off with a welcome speech by Professor Kamalia Mehtiyeva, Chair of the Azerbaijan Arbitration Association. She highlighted that the conference is a significant step for the arbitration community in Azerbaijan and the region. Her opening address paved the way for two productive days of discussions among legal professionals, including the representative of the UNCITRAL, Azerbaijani judges, advocates and in-house counsels.
After that, Dr. Inam Karimov, the Chairman of the Supreme Court of Azerbaijan, emphasised that judicial and legal reforms have always been a focal point for the government in Azerbaijan. The adoption of the New Law is part of broader judicial reforms, marking a crucial advancement in developing arbitration as an alternative method of dispute resolution and promoting the country as an arbitration-friendly jurisdiction. He also stressed the importance and willingness of state courts to assist at various stages of the arbitral process.
Mr. Mammad Musayev, the President of the National Confederation of Entrepreneurs Organizations of Azerbaijan, also welcomed the international arbitration conference in Baku and the development of arbitration as a business-friendly dispute resolution mechanism, particularly adapted to the needs of the business community.
Finally, the AzAD opening continued with an outstanding keynote address by Alexis Mourre on climate change considerations in investment arbitration. Quoting former French president Jacques Chirac’s warning, “our house is burning and we are looking elsewhere,” Mr Mourre urged the necessity to tackle climate change in international adjudication and highlighted the critical role of state commitment in meeting the carbon emission reduction goals set by the Paris Agreement. Referring to several investment cases including Rockhopper v. Italy, Methanex 2005, Mr. Mourre pointed out the tension between a state’s duty to protect its environment and its treaty-bound obligation to protect foreign investments. Mr. Mourre concluded by urging the international arbitration community to actively contribute to the global fight against climate change and seek sustainable solutions for the future.
The first panel of the event started with a discussion on Azerbaijan’s New Law, which is based on the 2006 edition of the UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Model Law”), and the influence of the UNCITRAL Model Law in the region. Moderated by James E. Hogan, the panel featured Jae Sung Lee, Samir Mahmudov, Nick Gvinadze, Araz Poladov, Diana Bayzakova and Natalia Alenkina. Considerable attention was given to the contribution of the UNCITRAL Model Law, which provides a harmonised framework, ensuring consistency and predictability. The discussion also revealed the challenges and discrepancies in implementing UNCITRAL Principles in other countries of the region. The panel concluded by highlighting the ongoing role of UNCITRAL in supporting countries’ development of a strong arbitration culture.
The event continued with a presentation by Ema Potočnik from Vienna International Arbitral Centre (VIAC). Ms. Ema Potočnik highlighted VIAC’s role in shaping dispute resolution in Eastern Europe, including its work with Azerbaijan. She also explained that VIAC’s dispute resolution services offer flexibility and cost-effectiveness to ensure efficient and high-quality decision-making.
The second panel, moderated by Kamil Valiyev, addressed a crucial issue of our decade: development, trends and international dispute resolution in the renewable energy sector with panellists Mahnaz Malik, Antolín Fernández Antuña, and Kamran Huseynov. “Transitioning from the country of fire to be more of a wind” represents the idea behind this panel discussion and how arbitration can assist in this process. The panel highlighted Azerbaijan’s proactive stance on environmental protection and energy transition, particularly with its Law “On the Use of Renewable Energy Sources in the Production of Electricity” adopted in 2021. The panel also addressed the complexities of balancing state and investor interests, citing examples from Spanish cases, mainly Charanne v. Spain and PV Investors v. Spain. The discussion centred on the importance of clear communication and well-defined agreements between states and investors in the renewable energy sector.
Further, Raed Fathallah, moderator of the panel on “Building the Silk Way – Construction Projects in the Region”, opened the discussion by pointing out Azerbaijan’s strategic role to be a driving force in the revival of the Silk Road through major construction projects, including the Digital Silk Way project. During the panel discussion, speakers Malik Ramazanzade, Akin Volkan Arikan, Dr. Habib Al Mulla, Nazli Ahmadova, and Shamaral Maichiev acknowledged the environmental impact of the large-scale construction projects along the Silk Road and presented the “Green Silk Road” initiative, exemplified by the UAE’s 2GW solar plant project, as a potential model for sustainability. The session ended with a proposal to establish a regional arbitration centre in Baku, emphasising its strategic location as a transit hub connecting Asia and Europe, and its potential to host such an institution.
Finally, the fourth panel for Day 1 focused on “Arbitrating Gas/LNG and Electricity Pricing Disputes” moderated by Ilija Mitrev Penushliski, with Anthony Way, Aykhan Asadov, Değer Boden, Fariz Shirinov, and Phillip Solomon as speakers. The panel discussion centred on the intricate regulation of energy and electricity prices and the influence of the current political landscape. Also, the impact of the ongoing conflict between Russia and Ukraine on the European gas and LNG market took centre stage, shedding light on the skyrocketing number of pricing and non-performance disputes. Furthermore, price volatility in the electricity sector necessitates risk assessment at different levels before concluding transactions. Fariz Shirinov from the Azerbaijan Energy Regulatory Agency explained the State’s regulatory perspective and its internal dispute resolution mechanism for market players to resolve conflicts swiftly in comparison with judicial institutions.
The second day of the event opened with a welcome speech by Dr. Nizami Safarov, a member of the Parliament of the Republic of Azerbaijan. While acknowledging the challenges in establishing independent judicial systems, Mr. Safarov expressed optimism about the progress being made in the country. Indeed, and as a matter of example, the Presidential Decree from April 3, 2019 introduced reforms to strengthen judicial independence and to establish alternative dispute resolution mechanisms, signifying a move towards improved institutional frameworks.
The panel moderated by Marina Weiss, with the participation of Jae Sung Lee, Prof. Hugo Barbier, Simon Batifort, and Toghrul Guluzada covered the emerging trends in the resolution of investment disputes. Key issues brought to attention included the multiplication of disputes in different fora due to the corporate veil, balancing the state’s right to regulate with investors’ legitimate expectations and the proper use of the discounted cash flow method in damage calculation according to international law principles. Experts talked about the states’’ attempts to protect their right to regulate through various carve-out clauses and the increasing criticism of the DCF method with the idea that “the bilateral investment treaties are not insurance policies against bad business”.
The conference continued with an engaging presentation titled “Life Ahead of You” by Mansur Samadov, representing the Baku State University Law School Student Academic Society. Samadov’s presentation provided an overview of the Society’s activities, academic initiatives and contributions to alternative dispute resolution education in Azerbaijan.
The conference continued with the panel on “Efficiency of Arbitration: Provisional Measures, Enforcement, Asset Recovery and Financing of Litigation” under the moderation of Sarah Monnerville Smith. The panel composed of Paul Key KC, Dr. Azar Aliyev, Jurriaan Braat and Nevena Ivanova analysed different stages of arbitration proceedings, focusing on challenges impeding efficient dispute resolution. The influence of global political events on award enforcement was also discussed in light of the recent changes to Russian arbitration legislation related to enforcing arbitral awards issued in “unfriendly states”. Finally, the panel emphasised the essential role of asset tracing in enforcing and recognising the arbitral awards.
Another panel was devoted to upstream disputes in the extractive sector. The panel featured Nurlan Mustafayev, Doğan Eymirlioglu, Zhanna Temirbayeva and was moderated by Kathrin Khamsi. The applicable law clause of Azeri-Chirag-Guneshli PSA in light of Frontera v. SOCAR case was among the discussed topics. Also, the maintenance of the grid connection, equipment failures, and financial projections were identified as the key reasons for the disputes in the renewable energy sector. Speakers also drew attention to the increasing use of model clauses, preference for institutional arbitration, and growing reliance on local arbitral institutions instead of international arbitration centres as the current trends in the region.
Under the moderation of Professor Kamalia Mehdiyeva, the panel on “Innovation and Leadership” featured women leaders including Nata Ghibradze, Mahnaz Malik, Dr. Candan Yasan Tepetaş, Natavan Mammadova and Anna Guillard Sazhko. The panellists covered how leadership styles can foster innovation, the importance of diversity and inclusion within leadership, and the challenges faced by women practitioners. The discussion also highlighted the value of mentorship and collaboration between experienced professionals and young voices.
The final panel moderated by Konstantin Christie, and bringing together Feruza Bobokulova, David Dellar, Serhat Aldemir and Gökhan Önder, was dedicated to “Engineering, Procurement and Construction Disputes”. The panel highlighted the unique nature and the comprehensive lifecycle of EPC projects. The speakers agreed on the importance of design consideration to minimise the possibility of a dispute in the future. The panel brought to attention a preference for arbitration due to its flexibility, handling of multifaceted engineering issues by experienced arbitrators and the direct examination of witnesses. The effective use of Dispute Avoidance and Adjudication Boards (DAABs) mechanism in FIDIC contracts was highlighted in resolving conflicts before they escalate to arbitration or litigation.
To sum up, the very successful Azerbaijan Arbitration Days 2024 stimulated unique international and regional arbitration dialogues by connecting professionals from the global community and promised to promote Azerbaijan as a hub for international arbitration. It was pivotal in demonstrating Azerbaijan’s involvement in significant potential projects, highlighting the country’s active participation in the international arena. The enthusiasm expressed by the local practitioners during the event indicates that both the local market and the government are prepared to take the necessary steps to achieve the development of arbitration. Moreover, the discussions led by the field experts revealed that, due to its historical background and geographical location, Azerbaijan has the potential to turn into a regional dispute resolution hub.
ABOUT THE AUTHORS
Narmin Abdulova an experienced legal professional with a passion for international arbitration, currently works as a Legal Counsel at the International Paper company, ROXCEL. She holds an LL.M. degree in International Business Law from Central European University. As part of her arbitration practice, she worked as a trainee lawyer in the Dispute Resolution Department at Baker McKenzie Austria and the Vienna International Arbitral Centre.
Laman Sadigli is a driven young Azerbaijani lawyer currently serving as Legal Counsel at Azerbaijan Coca-Cola Bottlers. She is also actively preparing for her local qualification examination. Laman brings a strong academic foundation to her practice, having earned an LL.M. degree in International Dispute Resolution from Humboldt University of Berlin, complimenting her prior LL.B. from Baku State University. She has previous experience at top-tier legal service providers in Azerbaijan, including KPMG Azerbaijan.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
