2023 Investment Climate Statements: Armenia

Policies Towards Foreign Direct Investment

The government of Armenia officially welcomes foreign investment. The Ministry of Economy is the main government body responsible for the development of investment policy in Armenia. Armenia has achieved respectable rankings on some global indices measuring the country’s business climate. Armenia’s investment and trade policy is relatively open; foreign companies are entitled by law to the same treatment as Armenian companies. Armenia has strong human capital and a well-educated population, particularly in the science, technology, engineering, and mathematics fields, leading to significant investment in the high-tech and information technology sectors. Many international companies have established branches or subsidiaries in Armenia to take advantage of the country’s pool of qualified specialists and position within the Eurasian Economic Union (EAEU). Dozens of U.S. high-tech companies relocated from Russia to Armenia following the 2022 invasion of Ukraine, increasing Armenia’s high-tech labor force from around 20,000 to more than 30,000. However, many businesses have identified challenges with Armenia’s investment climate in terms of the country’s small market (with a population of less than three million), limited consumer buying power, relative geographic isolation due to closed borders with Turkey and Azerbaijan, and concerns related to weaknesses in the rule of law.

Following a peaceful change in power in 2018, Armenia’s government launched a high-profile anti-corruption campaign. The fight against corruption needs to be institutionalized in the long term, especially in critical areas such as the judiciary, tax and customs operations, health, education, military, and law enforcement sectors. Foreign investors remain concerned about the rule of law, equal treatment, and ethical conduct by government officials. U.S companies have reported that the investment climate is tainted by a failure to enforce intellectual property rights. There have been concerns regarding the lack of an independent and strong judiciary, which undermines the government’s assurances of equal treatment and transparency and reduces access to effective recourse in instances of investment or commercial disputes. Representatives of U.S. entities have raised concerns about the quality of stakeholder consultation by the government with the private sector and government responsiveness in addressing concerns among the business community.

The Armenian National Interests Fund (ANIF) and Investment Support Center (Enterprise Armenia) are responsible for attracting and facilitating foreign direct investment.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are generally very few restrictions on foreign ownership or control of commercial enterprises. There are some restrictions on foreign ownership within the media and commercial aviation sectors. Local incorporation is required to obtain a license for the provision of auditing services.

The Armenian government does not maintain investment screening mechanisms in general, and for foreign direct investment, in particular. Government approval is required to take advantage of certain tax and customs privileges, and foreign investors are subject to the same requirements as domestic investors where regulatory approvals may be involved.

An Armenian ecological NGO recently published an article claiming that many mines in Armenia do not have corporate social responsibility obligations, which are required by law. However, it was unclear from the article if the mines in question were still actively operating.

In 2019, the U.N. Conference on Trade and Development (UNCTAD) published its first investment policy review for Armenia. The World Trade Organization (WTO) published a Trade Policy Review for Armenia in 2018.

Business Facilitation

Companies can register electronically here . This single window service was launched in 2011 and allows individual entrepreneurs and companies to complete name reservation, business registration, and tax identification processes all at once. The application can be completed in one day. An electronic signature is needed in order to be able to register online. Foreign citizens can obtain an e-signature and more detailed information from the e-signature portal . In 2019, the government launched an e-regulations platform that provides a step-by-step guide for business and investment procedures. The platform is available at https://armenia.eregulations.org/  . According to the latest estimates, it takes four days to complete the company registration process in Armenia.

Outward Investment

The Armenian government does not restrict domestic investors from investing abroad.

Transparency of the Regulatory System

The Armenian government increasingly makes efforts to uses transparent policies and laws to foster competition. Some contacts have reported that over the last few years the Armenian government has pursued a more consistent execution of these laws and policies in an effort to improve market competition and remove informal barriers to market entry, especially for small- and medium-sized enterprises. Armenia’s legislation on the protection of competition has been improved with clarifications regarding key concepts. There have been some procedural improvements for delivering conclusions and notifications of potential anti-competitive behavior via electronic means. However, companies regard the efforts of the Competition Protection Commission alone as insufficient to ensure a level playing field. They indicate that improvements in other state institutions and authorities that support competition, like the courts, tax and customs, public procurement, and law enforcement, are necessary. Numerous studies observe a continuing lack of contestability in local markets, many of which are dominated by a few incumbents. Banking supervision is relatively well developed and largely consistent with the Basel Core Principles. The Central Bank of Armenia (CBA) is the primary regulator of the financial sector and exercises oversight over banking, securities, insurance, and pensions. Armenia has adopted IFRS as the accounting standard for enterprises. Data on Armenia’s public finances and debt obligations are broadly transparent, and the Ministry of Finance publishes periodic reports that are available online.

Safety and health requirements, many of them holdovers from the Soviet period, generally do not impede investment activities. Nevertheless, investors consider bureaucratic procedures to be sometimes burdensome, and discretionary decisions by individual officials may present opportunities for petty corruption. Proposed legislation is available for the public to view here . Registered users can submit feedback and see a summary of comments on draft legislation. However, the time period devoted to public comments is often regarded as insufficient to solicit substantive feedback. The results of consultations have not been reported by the government in the past. The government maintains other portals, including http://www.e-gov.am  and http://www.arlis.am , that make legislation and regulations available to the public. The governmental https://aipo.am/en/  portal is a comprehensive platform for a range of services related to registering intellectual property The government does not require environmental and social disclosures to help investors and consumers distinguish between high- and low-quality investments. Some regulations that affect Armenia, including standards and customs, are developed within the Eurasian Economic Commission, the executive body for the EAEU.

International Regulatory Considerations

Armenia is a member of the EAEU and adheres to relevant technical regulations. Armenia’s entry into CEPA will lead it to pursue harmonization efforts with the EU on a range of laws, regulations, and policies relevant to economic affairs. Armenia is also a member of the WTO, and the Armenian government notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade. Armenia is a signatory to the Trade Facilitation Agreement and has already sent category “A”, “B,” and “C” notifications to the WTO.

Legal System and Judicial Independence

Armenia has a hybrid legal system that includes elements of both civil and common law. The laws regarding commercial and contractual matters are currently set forth in the civil code. Thus, because Armenia lacks a commercial court, all disputes involving contracts, ownership of property, or other commercial matters are resolved by litigants in courts of general jurisdiction, which handle both civil and criminal cases. Judges that handle civil matters may be overwhelmed by the volume of cases before them and are frequently seen by the public as corrupt. Per legislative changes in 2022, two separate criminal and civil courts will operate in the city of Yerevan. Despite the ability of courts to use the precedential authority of the Court of Cassation and the European Court of Human Rights, many judges who specialize in civil cases do not do so, increasing the unpredictability of court decisions in the eyes of investors.

Businesses tend to perceive that many Armenian courts suffer from low levels of efficiency, independence, and professionalism, which drives a need to strengthen the judiciary. Very often in proceedings when additional forensic expertise is requested, the court may suspend a case until the forensic opinion is received, a process that can take several months. Businesses have noted that many judges at courts of general jurisdiction may be reluctant to make decisions without getting advice from higher court judges. Thus, the public opinion is that decisions may be influenced by factors other than the law and merits of individual cases. In general, the government honors judgments from both arbitration proceedings and Armenian national courts.
Due to the nature and complexity of commercial and contractual issues and the caseload of judges who specialize in civil cases, many matters involving investment or commercial disputes take months or years to work their way through the courts. In addition, businesses have complained of the inefficiencies and institutional corruption of the courts. Even though the Armenian constitution provides investors the tools to enforce awards and their property rights, investors claim that there is little predictability in what a court may do.

Laws and Regulations on Foreign Direct Investment

Basic legal provisions covering foreign investment are specified in the 1994 Law on Foreign Investment. Foreign companies are entitled by law to the same treatment as Armenian companies. A Law on Public-Private Partnership (PPP), adopted in 2019, establishes a framework for the government to attract investment for projects focused on infrastructure. In 2021, the Law on PPP has been amended to introduce clear criteria for PPP project selection by the Government, as well as enabled investors to apply to the government with PPP project proposals. In July 2022, the government adopted regulations to define the procedures and regulate other practical aspects of implementation of PPP projects.

Enterprise Armenia  is Armenia’s national authority for investment and export promotion. It provides information to foreign investors on Armenia’s business climate, investment opportunities, and legislation; supports investor visits; and serves as a liaison for government institutions.

Competition and Antitrust Laws

Competition Protection Commission reviews transactions for competition-related concerns. Relevant laws, regulations, commission decisions, and more information can be found on Competition Protection Commission’s website . Concentrations, including mergers, acquisitions of shares or assets, amalgamations, and incorporations, are subject to ex ante control by Competition Protection Commission in accordance with the law. Whenever a concentration gives rise to concerns about harm to competition, including the creation or strengthening of a dominant position, Competition Protection Commission can prohibit such a transaction or impose certain remedies. Armenia’s Law on Protection of Economic Competition has been amended several times in recent years to bring Armenia’s competition framework into alignment with EAEU and CEPA requirements. Correspondingly, Competition Protection Commission obtained new capabilities, including gaining direct access to government databases, to more independently investigate anti-competitive behavior in collaboration with Armenia’s investigative bodies. Competition Protection Commission also started issuing advisory opinions to businesses on market concentration risks prior to a planned transaction or activity. During 2022, the Commission launched a new interactive platform to submit and track applications, upgraded its e-filing system, and created a publicly available state aid register to monitor government subsidies and identify distortive state aid. Competition Protection Commission’s decisions can be challenged in Armenia’s courts.

Expropriation and Compensation

Under Armenian law, foreign investment cannot be confiscated or expropriated except in extreme cases of natural or state emergency upon obtaining an order from a domestic court. According to the Armenian constitution, equivalent compensation is owed prior to expropriation.

Dispute Settlement

ICSID Convention and New York Convention

Armenia is party to the ICSID Convention (Washington Convention) and Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).
Under Article 5 of the Armenian Constitution, international treaties ratified by Armenia take precedence over domestic law.

Investor-State Dispute Settlement

According to the Law on Foreign Investment, all disputes that arise between a foreign investor and Armenia must be settled in Armenian courts. A Law on Commercial Arbitration, enacted in 2007, provides a wider range of options for resolving commercial disputes. The U.S.-Armenia BIT provides that in the event of a dispute involving a U.S. investor and the state, the investor may take the case to international arbitration. As of March 2023, two investment disputes brought against Armenia under the U.S.-Armenia BIT were pending with the International Center for Settlement of Investment Disputes.

International Commercial Arbitration and Foreign Courts

Commercial disputes may be brought before an Armenian or any other competent court, as provided by law or in accordance with party agreements. Commercial disputes are heard in courts of general jurisdiction. Specialized administrative courts adjudicate cases brought against state entities. Decisions of general jurisdiction and administrative courts may be appealed first to the Civil Court of Appeal and Administrative Court of Appeal, then to the Civil and Administrative Chamber of the Court of Cassation.

The Law on Arbitration Courts and Arbitration Procedures provides rules governing the settlement of disputes by arbitration. In accordance with the New York Convention and Article 5 of the Armenian Constitution, domestic courts must recognize foreign arbitral awards in cases of conflict between national laws and international treaties ratified by Armenia. Armenia intends to develop an alternative dispute resolution (ADR) mechanism that will include mediation and arbitration. ADR could be used not only in commercial matters, including those involving mobile property and secured transactions, but also in cases involving family and labor disputes. While ADR options are available to those who seek alternatives to litigation, they currently are not widely used or trusted.

Bankruptcy Regulations

According to the Law on Bankruptcy adopted in 2006, creditors and equity and contract holders (including foreign entities) have the right to participate and defend their interests in bankruptcy cases. Armenia decided with the passage of a new Judicial Code in 2018 to adopt a new, specialized bankruptcy court, which began operations in 2019. Creditors have the right to access all materials relevant to cases, submit claims to court, participate in meetings of creditors, and nominate candidates to administer cases. Monetary judgments are usually made in local currency. The Armenian Criminal Code defines penalties for false and deliberate bankruptcy, concealment of property or other assets of the bankrupt party, or other illegal activities during the bankruptcy process. UNCTAD observes that Armenia’s framework for bankruptcy procedures needs improvement, adding that insolvency cases are expensive and almost always result in liquidation. Armenia amended its bankruptcy law in December 2019 to reduce the cost of bankruptcy proceedings. In addition, premiums have been set for bankruptcy managers for submitting financial recovery plans, as well as for the recovery of a bankrupt person, with the aim of raising rates of financial recovery. In 2020, the debt threshold to launch bankruptcy proceedings was raised to grant companies a greater ability to pay off debts rather than having their assets frozen.

Investment Incentives

Armenia offers incentives for exporters (e.g., no export duty, VAT refund on goods and services exported) and foreign investors (e.g., income tax holidays, the ability to carry forward losses indefinitely, VAT deferral, and exemptions from customs duties for investment projects). Starting in 2018, the Armenian government began exempting imports of capital investment-related goods from VAT payments at the border. In 2015, the Armenian government began exempting from customs duties investment-related imports of equipment and raw materials from non-EAEU member countries. VAT and customs duties exemptions are implemented by government decisions made on a case-by-case basis. Also, in accordance with the Law on Foreign NUMPAGESInvestment, several ad hoc incentives may be negotiated on a case-by-case basis for investments that are targeted at certain sectors of the economy or are of strategic interest. The government is focusing on its economy modernization program, under which it is prioritizing equipment procurement and attracting foreign private sector labor by offering lower lease rates and providing income tax incentives. The Law on Licensing was amended in 2021 to simplify the licensing requirements for foreign companies to engage in 13 types of business activities in Armenia, including security/encashment and postal services, railroad and taxi services, urban development and engineering, and technical supervision of construction.

Foreign Trade Zones/Free Ports/Trade Facilitation

In 2011, Armenia adopted a Law on Free Economic Zones (FEZ), amended in 2018, and developed several key regulations to attract foreign investments into FEZs: exemptions from VAT, profit tax, customs duties, and property tax. The Alliance FEZ was opened in 2013 to focus on high-tech industries, including information and communication technologies, electronics, pharmaceuticals and biotechnology, architecture and engineering, industrial design, and alternative energy. In 2014, the government expanded operations in the Alliance FEZ to include industrial production. In 2015, the Meridian FEZ, focused on jewelry production, watchmaking, and diamond cutting, opened in Yerevan. The Meghri FEZ, located on Armenia’s border with Iran, opened in 2017. Еcos FEZ, located in Hrazdan, opened in late 2018 and is focused on the high-tech and information technology sectors. Armenia has signaled an interest in developing logistics hubs, including one in Gyumri, to facilitate goods trade.

Performance and Data Localization Requirements

There are no performance requirements for investment in terms of mandating local employment. The processes for obtaining visas, residence, or work permits are straightforward. There are no government-imposed conditions on permission to invest.

Armenia does not follow any policy that would force foreign investors to use domestic content in goods and technology. There are no requirements for foreign information technology providers to turn over source code or provide keys for encryption. There are no requirements to store data within the country.

Real Property

Armenian law protects secured interests in property, both personal and real. Armenian law provides a basic framework for secured lending, collateral, and pledges and provides a mechanism to support modern lending practices and title registration. According to Armenia’s constitution, foreign citizens are prohibited from owning land, though they may take out long-term leases.

Intellectual Property Rights

Armenia is not included in USTR’s Special 301 Report or Notorious Markets List.

Armenia has a strong legislative and regulatory framework to protect intellectual property rights (IPR). Domestic legislation, including the 2006 Law on Copyright and Related Rights, provides for the protection of copyright with respect to literary, scientific, and artistic works (including computer programs and databases), patents and other rights of invention, industrial design, know-how, trade secrets, trademarks, and service marks. The Intellectual Property Agency (IPA) in the Ministry of Economy is responsible for granting patents and overseeing other IPR-related matters. The collective management organization ARMAUTHOR manages authors’ economic rights. Trademarks and patents require state registration by the IPA, but copyright does not. There is no special trade secret law in Armenia, but the protection of trade secrets is covered by Armenia’s Civil Code. Formal registration is straightforward and clear, the database consisting of registered IPR is public, and applications to register IPR are published online for two months for comment by third parties. Armenia’s legislation has been harmonized with the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In 2005, Armenia created an IPR Enforcement Unit in the Organized Crime Department of the Armenian Police, which acts only based on complaints from right holders and does not exercise ex-officio powers.

Despite the existence of relevant legislation and executive government structures, the concept of IPR remains unrecognized by a large part of the local population. The onus for IPR complaints rests with the offended party. Law enforcement assert that the majority of cases are settled through out-of-court proceedings. While the Armenian government has made some progress on IPR issues, strengthening enforcement mechanisms remains necessary. UNCTAD reports that low awareness and poor monitoring of IPR violations harm the business climate.

A new Law on Copyright has been drafted and submitted for the government’s approval at the time of this writing. It includes provisions from new international agreements (Marrakesh and Beijing Treaties). A new Law on Patents and Law on Industrial Design entered into force in July 2021. The new Law on Patents strengthens the requirement for substantive examination before rights registration and introduces the concept of a short-term patent. The new Law on Industrial Design includes some procedural changes, including publishing applications for industrial designs and objects during the state registration process.

For additional information about national laws and points of contact at local IP offices, please WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

The banking system in Armenia is sound and well-regulated, but the financial sector is not highly developed, according to investors. Banking sector assets account for over 80 percent of total financial sector assets. Financial intermediation tends to be poor. Nearly all banks require collateral located in Armenia, and large collateral requirements often prevent potential borrowers from entering the market. U.S. businesses have noted that this creates a significant barrier for small- and medium-sized enterprises and start-up companies.

The Armenian government welcomes foreign portfolio investment and there is a supporting system and legal framework in place. Armenia’s securities market is not well developed and has only minimal trading activity through the Armenia Securities Exchange, though efforts to grow capital markets are underway. Liquidity sufficient for the entry and exit of sizeable positions is often difficult to achieve due to the small size of the Armenian market. Armenia adheres to its IMF Article VIII commitments by refraining from restrictions on payments and transfers for current international transactions. Credit is allocated on market terms and foreign investors are able to access credit locally. Armenian commercial banks reported difficulties with some financial transactions having a Russia nexus due to international financial sanctions imposed on Russia in 2022.

Money and Banking System

Since 2020, the banking sector has withstood the twin shocks created by COVID-19 and the Nagorno-Karabakh conflict. Indicators of financial soundness, including capital adequacy and non-performing loan ratios, have remained broadly strong. The sector is well capitalized and liquid. Non-performing loans remained low at about three percent. Dollarization remains high for deposits and lending. Eighteen commercial banks operate in Armenia. In 2022, commercial banks’ profits doubled over the previous year as a result of increased services and fees for the tens of thousands of Russians, Ukrainians, and Belarusians who relocated to Armenia as a result of Russia’s war against Ukraine Total bank assets in Armenia at the end of 2022 were nearly $21 billion; Armenia’s 2022 GDP was approximately $19.5 billion. Overall, Armenia’s banking sector is viewed by international financial institutions (IFIs) as relatively healthy.

The minimum capital requirement for banks is 30 billion AMD (around $75 million). There are no restrictions on foreigners to open bank accounts. Residents and foreign nationals can hold foreign currency accounts and import, export, and exchange foreign currency relatively freely in accordance with the Law on Currency Regulation and Currency Control. Foreign banks may establish a subsidiary, branch, or representative office, and subsidiaries of foreign banks are allowed to provide the same types of services as domestically owned banks.

The CBA is responsible for the regulation and supervision of the financial sector. The authority and responsibilities of the CBA are established under the Law on the Central Bank of Armenia. Numerous other articles of legislation and supporting regulations provide for financial sector oversight and supervision.

Foreign Exchange and Remittances

Foreign Exchange

Armenia has no limitations on the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, or management or technical service fees. Most banks can transfer funds internationally within two to four days. Armenia maintains the Armenian dram as a freely convertible currency under a managed float. The AMD/USD exchange rate has been generally stable in recent years. However, the dram experienced a significant appreciation against the dollar following Russia’s further invasion of Ukraine in 2022 and the resulting flow of immigrants and capital into Armenia.

According to the Law on Currency Regulation and Currency Control, prices for all goods and services, property, and wages must be set in AMD. There are exceptions in the law, however, for transactions between resident and non-resident businesses and for certain transactions involving goods traded at world market prices. The law requires that interest on foreign currency accounts be calculated in that currency but paid in AMD.

Remittance Policies

Armenia imposes no limitations on the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, lease payments, private foreign debt, or management or technical service fees.

Sovereign Wealth Funds

In October 2022, the Armenian National Interest Fund (ANIF) became an associate member of the International Forum of Sovereign Wealth Funds (IFSWF). ANIF is a state-owned enterprise established to co-invest along with top global investors and industrial partners in large projects in Armenia. ANIF is a fund to attract / promote investments in Armenia through public-private partnership projects rather than a venue to invest government’s excess earnings from natural resources in the country and abroad.

Privatization Program

Most of Armenia’s SOEs were privatized in the 1990s and early 2000s. Many of the privatization processes for Armenia’s large assets were reported to be neither competitive nor transparent, and political considerations in some instances prevailed over fair tender processes. The most recent law on privatization, the fifth, is the Law on the 2017-2020 Program for State Property Privatization, which lists 48 entities for privatization. The   State Property Management Committee  oversees the management of the state’s shares in entities slated for privatization. Details of the privatization program are available on the Committee’s website .

Additional Resources

Department of State

• Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/)
• Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/)
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/)
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ( https://www.state.gov/u-s-national-contact-point-for-the-oecd-guidelines-for-multinational-enterprises/)
• Xinjiang Supply Chain Business Advisory ( https://www.state.gov/xinjiang-supply-chain-business-advisory/)

Department of the Treasury

• OFAC Recent Actions ( https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions )

Department of Labor

• Findings on the Worst Forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings  )
• List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods )
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab )
• Comply Chain ( https://www.dol.gov/ilab/complychain/ )

Climate Issues

Armenia recently started mainstreaming and integrating climate change considerations into its national and sectoral development policies. In May 2021 the government approved the National Action Program of Adaptation to Climate Change and the List of Measures on the monitoring of biodiversity and ecosystems. Armenia’s Nationally Determined Contributions (NDC) for 2021-2030 under the Paris Agreement was adopted in April 2021 and submitted to the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat in May 2021. It sets the new unconditional mitigation target of a 40 percent reduction below 1990 emission levels, to be achieved by 2030. A draft Long-Term Low Emission and Development strategy (LEDS) for Armenia was developed within the framework of the EU4Climate project and published  in February 2023. The government recently prolonged VAT exemption for the import of electric vehicles through 2024. The government also passed legislation that allows for free parking of electric vehicles in Yerevan.

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

Anti-Corruption Committee (ACC)
13A Vagharsh Vagharshyan Street Yerevan, Armenia
+374 11 900 002
press@investigatory.am 

Contact at a “watchdog” organization: Sona Ayvazyan Executive Director
Transparency International
Anti-Corruption Center 12 Saryan Street Yerevan, Armenia
+374 10 569 589
sona@transparency.am 

Following 2021 parliamentary elections that international monitors assessed as upholding fundamental rights and freedoms, the Armenian government’s commitment to eradicating corruption continues. The government has reiterated is commitment to policy action and systemic change and pressed forward with legislative actions to establish investigative, prosecutorial and judicial anti-corruption institutions, though civil society remains dissatisfied with the pace of reform. The government is in the process of drafting a new 2023-2026 anti-corruption strategy and action plan. The previous anti-corruption strategy established a new anti-corruption institutional framework with separate entities tasked with preventive, investigative, and prosecutorial functions as well as the Specialized Anti-Corruption Court. Established in 2019, the Corruption Prevention Commission (CPC) is the main entity responsible for preventing corruption and building integrity across government and society. In June 2022, CPC adopted its first ever official code of conduct for civil servants and continued to make progress in the areas of asset declaration and integrity checks, including nominees for anticorruption judges and Anti-Corruption Committee investigators. However, the CPC has not yet fulfilled its mandates for oversight of political party finance, adopting guidelines for corruption risk assessments, and establishing a system for reporting gifts. The Anti-Corruption Committee, as an investigative body, was established in September 2021 to lead pre-trial criminal proceedings on alleged corruption crimes by carrying out both investigative and operative intelligence activities. The amendments to the Judicial Code on establishing the Specialized Anti-Corruption Court (SACC) were adopted on April 14, 2021, thus marking the completion of the creation of the government’s new institutional framework to fight corruption. The SACC is the first instance court, and the judges specialized in anti-corruption cases will sit at the Criminal Court of Appeals and the Anti-Corruption Chamber of the Cassation Court. As a follow-up to the passage of the Law “On Civil Forfeiture of Illegal Assets,” the department dealing with cases of civil forfeiture of illegal assets was established in September 2020 within the General Prosecutor’s Office.
Overall, civil society actors are becoming more critical of the effectiveness and pace of the government’s anti-corruption measures.
Corruption remains an obstacle to U.S. investment in Armenia, particularly as it relates to critical areas such as the justice system and concerns related to the rule of law, enforcement of existing legislation and regulations, and equal treatment. Investors claim that the health, education, military, corrections, and law enforcement sectors lack transparency in procurement and have in the past used selective enforcement to elicit bribes. Judges who specialize in civil cases are still widely perceived by the public to be corrupt and under the influence of former authorities. The effectiveness and independence of newly formed anti-corruption institutions remains to be seen. Some individuals have voiced concerns around whether certain judicial representatives and law enforcement leaders have been selected objectively. This includes some judicial appointments and dismissals that were met with wide criticism by the civil society. The potential for politically motivated, outside influence on these anti-corruption institutions, as well as law enforcement bodies and prosecutorial services, also remains a concern.

Transparency International released its Corruption Perception Index (CPI) 2022, ranking Armenia 63rd among 180 countries.  According to the report, Armenia’s CPI score in 2022 declined compared to 2021 (score of 46).  Armenia’s rating is higher than the CPI global average of 43, indicating Armenia’s public sector was perceived by experts and businesspeople to be less corrupt than the global average.  In his December 2021 Summit for Democracy speech, Prime Minister Pashinyan noted Armenia aims to rise from a score of 49 to 60 in CPI by 2026.

Various laws prohibit the participation of civil and municipal servants, as well as local government elected officials such as mayors and councilors, in commercial activities. However, powerful officials at the national, district, and local levels often acquire direct, partial, or indirect control over private firms. Such control is often exercised through a hidden partner or majority ownership of fully private parent companies. This involvement can occur through close relatives and friends. According to foreign investors, these practices reinforce protectionism, hinder competition, and undermine the image of the government as a facilitator of private sector growth. Because of the historically strong interconnectedness of the political and economic spheres, Armenia has often struggled to introduce legislation to encourage strict ethical codes of conduct and the prevention of bribery in business transactions. In 2016, Armenia adopted legislation on criminal penalties for illicit enrichment and noncompliance or fraud in filing declarations.

Armenia is a member of the UN Convention against Corruption. While not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Armenia is a member of the OECD Anti-Corruption Network for Eastern Europe and Central Asia and has signed the Istanbul Action Plan. Armenia is also a member of the global Open Government Partnership initiative and a member of the Extractive Industries Transparency Initiative.

No specific law exists to protect NGOs dealing with anti-corruption investigations.