fbpx

The Judicial System is not Conducive for Business Development

Interview with Georgy Khachatryan, co-founder of “Avenue Consulting Group” LLC

 

– Mr. Khachatryan, the economic development is conditioned by the existence of a well-established and independent judicial system. How do you assess the situation in Armenia in this regard?

– The judicial system, of course, is very important. Particularly, when investors decide to invest in a given country, they consider several factors: The first is the ease of doing business and establishing a company, that is, the administration, registration and related, secondly, the investor considers the tax and customs regimes, and the third is the predictability of the judicial system. Of course, every businessman imagines that one day will he have to defend his rights in the court. That is why it is important for the investor to know how effective the judicial system is and to have a predictable judicial system. By “predictable judicial system,” we  understand the timeline of the trial, and to the extent that a well-developed judicial system that exemplifies the case law and that a person knows that there is a precedent in this situation and, accordingly, , it is possible to predict what will be the solution to the dispute, if it goes to the court. The judicial system is a tool and means not only to protect the legitimate activities of individuals or legal entities, but also to protect the unlawful actions of public administration and local self-governance bodies. Consequently, in any case, having a productive predictable judicial system in the country, even if, for example, the tax authority imposes a non-legitimate tax liability, you are convinced that through the court you can achieve justice.

– How much does the current judicial system contribute to business development?

– We have 2 problems, the first one is technical, it concerns the time of the investigation. In order to regulate private-state relations in the Republic of Armenia, we appeal to the administrative court, but according to the statistics, the time limit for the administrative investigation is so long that in most cases the business pays the money instead of appealing the tax act, especially without having to predict the possible outcome: People prefer to pay more than a year after the court of first instance, allegedly losing. In other words, the terms of the case study in the Administrative Court are damaging to business. Let’s hope that the increase of the composition of the administrative court will contribute to the solution of this problem. The second is content, the RA judicial system is not predictable. We have judicial acts that in some cases contradict the case law, so we cannot say today that we have a system that does not promote but tries to keep the balance at least to ensure that the right is effective. To be justified, yes, reforms are being made, attempts are made to make the system more efficient, but at the moment there is no definite system that is acceptable.

– In the event of such a situation, businessmen frequently apply to the courts, what statistics are there, the number of cases has increased or decreased?

– The number of cases has increased. If we take 10 years, we have had a problem as a result of our mentality, that instead of judicial protection, they were trying to solve issues internally. Today, of course, we have an increase in court cases.

– Are the verdicts more in favor of the state bodies or the private sector?

 

– If we consider the statistics of the same administrative court, there are many cases when the dispute is solved in favor of business. In this regard, we do not have negative statistics, but we have a problem that protracted the trial so much that it becomes useless to business because the effective remedy is not just the final judgment, but also the quickest to do so: The reasonable investigation of the case is also essential for the protection of human rights.

– There has been a sharp decline in investment in Armenia over the past two years, especially in foreign investment. What role does the judiciary play in this?

– The judicial system is not the only culprit in the decline in investments. But if we take the role of a purely judicial system, we all know that several major disputes with the participation of foreign investors have not been settled in favor of investors, and it causes mistrust to other investors. I will not analyze the extent to which a strict judicial act has been made, it is another issue, the problem is that we have a public perception issue related to the judicial system today. Even when the verdict is correct, effective and objective, we do not have the mechanism to bring it to the public. The losing side is so negative that it affects the overall and system impact and shapes a negative attitude towards other users of the judicial system. And if we look at the actions of several investors, they have a great deal of influence, which affects the investors who have the potential to invest in the economy. We had an incident when a foreign investor has been considering the possibility of his participation in a concrete project, and asked for a legal assessment from a foreign investor. That is to say, I have learned that this was a case, please tell your opinion, how correct the dispute is. We, of course, have said that the final judicial act is the decision of the Court of Cassation, which has a precedent, but the investor is always interested in looking at how this or that issue is resolved. This is a very important factor that affects the decision of investors. We also have a case when the investor just asks, how long can a contractual dispute be resolved, and when we present it, it says that the mechanism is ineffective in us because it is long and expensive.

– How do you evaluate the liquidation of the Economic Court and the extent to which the Arbitral Tribunal complements the gap?

– The liquidation of the Economic Court was an effective and correct step because the administrative court was created instead of the peculiarities of its powers that it was eligible to settle disputes between state bodies and the private sector, and the remaining cases that had previously been examined by the Economic Court were transferred to the courts of general jurisdiction. I believe that the Administrative Court today has the opportunity to carry out more effective activities on these issues. As for the arbitration, today we have to state that we have no arbitrage in Armenia. We have an Arbitral Tribunal adjunct to the Union of Banks, we have an Arbitral Tribunal adjunct to the Chamber of Commerce and Industry, but has not yet reached the level where the dispute is settled arbitrage. In previous years, many attempts have been made to incite the arbitrage, and now they are encouraged to encourage extrajudicial settlement of the dispute. The development of the arbitral tribunal was incorporated in 2012-16. In the strategic plan of the judiciary, there was also the previous one, but we still do not have serious achievements.

Source:  168.am

The Judicial System is not Conducive for Business Development

Interview with Georgy Khachatryan, co-founder of “Avenue Consulting Group” LLC

 

– Mr. Khachatryan, the economic development is conditioned by the existence of a well-established and independent judicial system. How do you assess the situation in Armenia in this regard?

– The judicial system, of course, is very important. Particularly, when investors decide to invest in a given country, they consider several factors: The first is the ease of doing business and establishing a company, that is, the administration, registration and related, secondly, the investor considers the tax and customs regimes, and the third is the predictability of the judicial system. Of course, every businessman imagines that one day will he have to defend his rights in the court. That is why it is important for the investor to know how effective the judicial system is and to have a predictable judicial system. By “predictable judicial system,” we  understand the timeline of the trial, and to the extent that a well-developed judicial system that exemplifies the case law and that a person knows that there is a precedent in this situation and, accordingly, , it is possible to predict what will be the solution to the dispute, if it goes to the court. The judicial system is a tool and means not only to protect the legitimate activities of individuals or legal entities, but also to protect the unlawful actions of public administration and local self-governance bodies. Consequently, in any case, having a productive predictable judicial system in the country, even if, for example, the tax authority imposes a non-legitimate tax liability, you are convinced that through the court you can achieve justice.

– How much does the current judicial system contribute to business development?

– We have 2 problems, the first one is technical, it concerns the time of the investigation. In order to regulate private-state relations in the Republic of Armenia, we appeal to the administrative court, but according to the statistics, the time limit for the administrative investigation is so long that in most cases the business pays the money instead of appealing the tax act, especially without having to predict the possible outcome: People prefer to pay more than a year after the court of first instance, allegedly losing. In other words, the terms of the case study in the Administrative Court are damaging to business. Let’s hope that the increase of the composition of the administrative court will contribute to the solution of this problem. The second is content, the RA judicial system is not predictable. We have judicial acts that in some cases contradict the case law, so we cannot say today that we have a system that does not promote but tries to keep the balance at least to ensure that the right is effective. To be justified, yes, reforms are being made, attempts are made to make the system more efficient, but at the moment there is no definite system that is acceptable.

– In the event of such a situation, businessmen frequently apply to the courts, what statistics are there, the number of cases has increased or decreased?

– The number of cases has increased. If we take 10 years, we have had a problem as a result of our mentality, that instead of judicial protection, they were trying to solve issues internally. Today, of course, we have an increase in court cases.

– Are the verdicts more in favor of the state bodies or the private sector?

 

– If we consider the statistics of the same administrative court, there are many cases when the dispute is solved in favor of business. In this regard, we do not have negative statistics, but we have a problem that protracted the trial so much that it becomes useless to business because the effective remedy is not just the final judgment, but also the quickest to do so: The reasonable investigation of the case is also essential for the protection of human rights.

– There has been a sharp decline in investment in Armenia over the past two years, especially in foreign investment. What role does the judiciary play in this?

– The judicial system is not the only culprit in the decline in investments. But if we take the role of a purely judicial system, we all know that several major disputes with the participation of foreign investors have not been settled in favor of investors, and it causes mistrust to other investors. I will not analyze the extent to which a strict judicial act has been made, it is another issue, the problem is that we have a public perception issue related to the judicial system today. Even when the verdict is correct, effective and objective, we do not have the mechanism to bring it to the public. The losing side is so negative that it affects the overall and system impact and shapes a negative attitude towards other users of the judicial system. And if we look at the actions of several investors, they have a great deal of influence, which affects the investors who have the potential to invest in the economy. We had an incident when a foreign investor has been considering the possibility of his participation in a concrete project, and asked for a legal assessment from a foreign investor. That is to say, I have learned that this was a case, please tell your opinion, how correct the dispute is. We, of course, have said that the final judicial act is the decision of the Court of Cassation, which has a precedent, but the investor is always interested in looking at how this or that issue is resolved. This is a very important factor that affects the decision of investors. We also have a case when the investor just asks, how long can a contractual dispute be resolved, and when we present it, it says that the mechanism is ineffective in us because it is long and expensive.

– How do you evaluate the liquidation of the Economic Court and the extent to which the Arbitral Tribunal complements the gap?

– The liquidation of the Economic Court was an effective and correct step because the administrative court was created instead of the peculiarities of its powers that it was eligible to settle disputes between state bodies and the private sector, and the remaining cases that had previously been examined by the Economic Court were transferred to the courts of general jurisdiction. I believe that the Administrative Court today has the opportunity to carry out more effective activities on these issues. As for the arbitration, today we have to state that we have no arbitrage in Armenia. We have an Arbitral Tribunal adjunct to the Union of Banks, we have an Arbitral Tribunal adjunct to the Chamber of Commerce and Industry, but has not yet reached the level where the dispute is settled arbitrage. In previous years, many attempts have been made to incite the arbitrage, and now they are encouraged to encourage extrajudicial settlement of the dispute. The development of the arbitral tribunal was incorporated in 2012-16. In the strategic plan of the judiciary, there was also the previous one, but we still do not have serious achievements.

Source:  168.am