The primary method for resolving commercial disputes in Armenia remains civil litigation within the state judicial system. The Armenian judicial hierarchy consists of courts of general jurisdiction and specialised courts, such as the Bankruptcy Court and the Anti-Corruption Court, which handle specific categories of commercial and state-related matters. These proceedings are governed by the Civil Procedure Code of the Republic of Armenia (the main legal act regulating civil procedural relations) as well as certain special laws – eg, the Law on Bankruptcy.

Commercial arbitration is a highly utilised alternative for domestic and international commercial disputes. It provides a private, expert-led mechanism for parties who wish to avoid the public nature of the state courts, and allows one to avoid the lengthy proceedings usually required in state courts. The legal framework for arbitration is modernised and based on the UNCITRAL Model Law on International Commercial Arbitration, allowing parties to resolve conflicts through ad hoc arrangements or permanent arbitral institutions.

Mediation in Armenia has undergone major reforms since 2022, transforming it into one of the core mechanisms of alternative dispute resolution (ADR), designed to facilitate amicable settlements through the assistance of a neutral third party. The Law on Mediation regulates the activities of licensed mediators and provides a structured environment for negotiation. Mediation can be initiated voluntarily by the parties or, in certain circumstances, mandated by the court or specific legislation. Currently, mediation in Armenia is mandatory in some family law disputes, aimed at reducing court backlog and encouraging collaborative resolution.

Litigation remains the default and most popular mechanism for dispute resolution due to the established nature of the court system and the direct enforceability of judicial acts. Most standard commercial disputes, including contract breaches and property issues, are filed in the courts of general jurisdiction. Specialised courts are popular for their technical expertise – for instance, the Bankruptcy Court has exclusive jurisdiction over insolvency proceedings, ensuring a focused approach to complex debt restructuring. In some instances, parties turn to the Bankruptcy Court to recover straightforward monetary debts as the legal security measures available within bankruptcy proceedings tend to be more effective than those offered by the courts of general jurisdiction.

Arbitration is chosen in both local and international commercial contracts and large-scale investment projects where parties prefer a neutral venue and the ability to select arbitrators with specific industry knowledge. The popularity of arbitration is supported by the judiciary’s “pro-arbitration” stance, where courts generally respect the finality of arbitral awards.

Mediation is gaining traction in family and labour law and is increasingly used for small-to-medium commercial claims. In some instances, such as disputes involving financial organisations, parties may be required to approach the Financial System Mediator before initiating litigation. This multi-tiered approach encourages settlement at the earliest possible stage.

A fundamental trend in Armenia is the digitalisation of the judiciary through the implementation of the Electronic System for Dispute Resolution. This system has transformed legal practice by allowing electronic filing of lawsuits, digital submission of evidence, and automated judicial notifications. For many legal entities and advocates, the use of this system is now mandatory, aiming to reduce delays and increase the transparency of the litigation process.

There is also a significant trend towards the strengthening of specialised courts. The expansion of the Anti-Corruption Court to handle civil cases involving the recovery of illicit assets demonstrates a move towards high-stakes, specialised adjudication. Similarly, the continuous modernisation of the Bankruptcy Court aims to improve the efficiency of insolvency proceedings and business rehabilitation.

Furthermore, the mainstreaming of ADR through mandatory mediation requirements in specific categories of cases is a key policy development. The State is actively promoting mediation to alleviate the heavy workload of the courts and to foster a culture of collaborative conflict resolution. This is coupled with the emergence of online mediation and digital ADR platforms to improve accessibility.

The general limitation period for bringing a civil claim in Armenia is three years, during which an individual may seek judicial protection for a violated right. This period applies to the majority of commercial claims unless a specific law provides for a different timeframe. The limitation period begins to run from the day the person knew or should have known about the violation of their right.

Shorter limitation periods apply to specific types of disputes. For example, claims related to contracts of carriage (freight) are subject to a one-year limitation period. In the context of employment law, specific deadlines are set for challenging individual legal acts or disciplinary actions. Additionally, claims for the recovery of damages for harm caused to life or health have no limitation period, although recovery for past periods is limited to three years prior to the filing of the lawsuit.

In certain cases – particularly those involving the application of the legal consequences of invalidity to voidable transactions – a prolonged limitation period of ten years is established. The running of the limitation period can be suspended under certain circumstances, such as the occurrence of an “uncontrollable force” or if a party initiates a formal mediation process. If a party misses a limitation period for a valid reason, the court may, upon a reasoned motion, restore the deadline to ensure access to justice. However, the expiry of the limitation period is a mandatory ground for the court to deny the claim if the opposing party invokes it as a defence before the trial concludes.

Armenia possesses a three-tiered judicial system composed of First Instance Courts, Courts of Appeal, and the Court of Cassation.

The First Instance Courts are the primary level of adjudication and include courts of general jurisdiction as well as specialised courts such as the Bankruptcy Court and the Anti-Corruption Court. These courts handle the factual investigation and initial legal determination of disputes.

Appellate review is conducted by the Civil Court of Appeal or the Anti-Corruption Court of Appeal, depending on the subject matter. The Court of Appeal reviews cases based on the existing record and can reverse or modify lower court decisions if there was a violation of substantive or procedural law. It generally does not hear new evidence unless a party proves that it was impossible to present it in the first instance.

The final level of review is the Court of Cassation, which consists of several specialised chambers, including a Civil Chamber and an Anti-Corruption Chamber. The Court of Cassation does not re-examine facts but focuses on the uniform application of the law and the correction of fundamental violations of human rights. Decisions of the Court of Cassation serve as important precedents for the entire judicial system.

Finally, the Constitutional Court occupies a unique place in Armenia’s judicial system, administering constitutional justice by ensuring the supremacy of the Constitution and reviewing the constitutionality of laws and other state acts.

Armenian law does not impose a general, mandatory pre-action protocol for all types of litigation, but it recognises the validity of contractual out-of-court settlement procedures. If a contract or a specific law requires parties to attempt a settlement (such as a formal claim or negotiation) before filing a lawsuit, the court will only accept the case after these steps have been completed. Failure to comply with these requirements typically results in the court returning the lawsuit to the plaintiff.

In the financial sector, specific pre-action requirements exist for disputes between consumers and financial institutions. Consumers may be required to submit their grievance to the Financial System Mediator, whose decisions can be binding or serve as a prerequisite for litigation. This is intended to resolve small-scale financial disputes efficiently without burdening the courts.

For labour disputes, although there is no universal pre-action requirement, the Labour Code encourages internal grievance mechanisms. In administrative and tax matters, a party may choose to pursue an administrative appeal before turning to the courts, though this is often optional. In all cases, the court must verify whether any mandatory pre-action steps were neglected during the initial screening of the lawsuit.

Civil litigation involves several distinct stages, beginning with the filing of the lawsuit. The court must decide whether to accept, return or reject the lawsuit within three to seven days of its receipt. Once accepted, the preliminary stage begins, during which the court clarifies the scope of the claims, identifies the necessary evidence, and determines the burden of proof for each party.

Following the preliminary phase, the court schedules the trial (investigation of evidence). During the trial, the court hears oral arguments, examines witnesses, reviews documents and evaluates expert opinions. All these actions are carried out within the scope of the claims defined at the preliminary stage. The court is committed to the principles of reasonable time and efficiency, though the duration of a trial can vary significantly based on the complexity of the case.

The final stage is the delivery of the verdict. The court must issue a reasoned judgment that addresses all factual and legal issues raised during the proceedings. A standard commercial case in the first instance typically lasts between six and 12 months, while the appeals process can add several more months to the final resolution.

The general rule in Armenia is that court proceedings are public, and any person has the right to attend hearings. Transparency is a constitutional principle aimed at ensuring judicial accountability and public trust. Furthermore, final judicial acts and some interim decisions are published on the official judicial portal (datalex.am), though certain personal or sensitive data may be redacted to protect privacy.

Confidentiality can be maintained through closed sessions if requested by a party or initiated by the court. Grounds for a closed hearing include the protection of private life, trade secrets, state security or the interests of minors. If a session is closed, only the parties, their representatives and necessary court personnel may attend, and all participants are warned against disclosing the information discussed.

Even in cases where the trial is closed, the final verdict must be announced publicly, although the court may choose to publish only the “operative part” (the final conclusion) to protect the underlying confidential information. Parties seeking confidentiality must provide a specific justification, as the court must balance the need for privacy against the public’s right to information.

Litigants in Armenia can seek interim relief (security of the claim) to ensure that a future judgment remains enforceable. Common types of interim relief include:

• freezing the defendant’s property or funds within the value of the claim price;
• prohibiting the defendant or third parties from performing specific actions related to the subject of the dispute;
• obliging the defendant or other persons to perform specific acts to prevent harm or preserve property;
• suspending the sale or realisation of property in cases where a lawsuit has been filed to remove an attachment from that property; and
• placing an attachment on property that belongs to the plaintiff but is currently in the possession of the defendant.

These measures are available if the applicant can demonstrate that failure to apply them would make the enforcement of a judgment impossible or significantly more difficult.

Applications for interim relief are typically reviewed without a hearing and often within one to three days of being filed. This speed is necessary to prevent the respondent from dissipating assets before the relief can take effect. The court has the power to grant relief ex parte, meaning the respondent is only notified after the order has been issued and sent for enforcement.

To protect the respondent against potential losses, the court may require the applicant to provide countersecurity. This involves depositing funds or providing a bank guarantee to compensate the respondent if the claim is ultimately found to be meritless and the interim relief caused damage. If the interim relief is granted before the lawsuit is officially filed (pre-action relief), the plaintiff must file the main claim within a short period (typically two weeks), or the relief will be automatically lifted.

The key types of final relief available in commercial litigation include monetary damages, specific performance and declaratory judgments. Monetary relief is the most frequent, and covers the payment of debts, compensation for losses and the collection of penalties. Courts also have the power to order a party to perform a specific obligation, such as delivering goods or transferring ownership of a property.

Declaratory relief involves the court formally recognising the existence or non-existence of a specific legal right or relationship. This is often used to clarify ownership status or the validity of a contract. Additionally, courts can invalidate transactions or legal acts issued by state or local government bodies that are found to be unlawful.

A final judgment becomes binding and enforceable once it enters into legal force, typically after the period for appeal has expired. If the judgment involves the payment of money or the transfer of property, the court issues a writ of execution, which is handled by the Compulsory Enforcement Service. The prevailing party is also entitled to the reimbursement of their litigation costs as part of the final relief.

Damages are assessed based on the principle of full compensation, which aims to restore the injured party to the position they would have been in had the breach not occurred. Under the Civil Code, damages consist of two components: actual damage (the expenses incurred and the loss or damage to property) and lost profits (the income the party would have received under normal circumstances).

The claimant bears the burden of proof to establish the extent of the damage and the direct causal link between the defendant’s breach and the loss. Armenian courts do not generally award punitive or exemplary damages; the focus remains strictly on compensatory outcomes. However, parties can agree in their contract on liquidated damages (penalties) for specific breaches, which the court will enforce unless they are found to be clearly disproportionate to the actual loss or if they exceed the maximum amount established by law.

In cases of non-pecuniary (moral) damage, such as injury to honour, dignity or business reputation, the court may award monetary compensation. The amount of such compensation is determined by the court based on factors such as the nature of the violation, the extent of the harm and the defendant’s degree of fault. For specific commercial violations, such as the unauthorised use of a trade mark or firm name, the law provides for specialised methods of calculating damages.       

Arbitration is a highly prevalent and respected method of dispute resolution in Armenia, particularly for international commercial transactions. It is widely used in sectors such as banking, energy, construction and telecommunications, where parties value the technical expertise of the arbitrators. Most modern commercial contracts between Armenian entities and foreign investors include a standard arbitration clause.

The use of arbitration is supported by the Law on Commercial Arbitration, which provides a modern framework that aligns Armenian practice with global standards. Domestic arbitration is also growing, as more local businesses recognise the benefits of a faster and more private alternative to the state court system. The Armenian judiciary consistently enforces the principle that valid arbitration agreements must be respected, directing parties away from litigation when a valid clause exists.

Armenian law imposes certain restrictions on which disputes can be referred to arbitration. Generally, disputes that involve public order, administrative law, or those reserved for the exclusive jurisdiction of the state courts cannot be arbitrated. Examples of non-arbitrable matters include certain family law issues (eg, child custody), inheritance disputes, and specific types of property rights that require state registration.

Furthermore, an arbitration agreement involving a consumer is subject to strict validity requirements. Such an agreement is only valid and binding if it was signed after the dispute arose, ensuring that consumers are not forced into arbitration through standard-form contracts signed at the beginning of a transaction. Any arbitral award that deals with non-arbitrable matters or violates Armenian public policy can be set aside by the state courts.

The key advantages of arbitration in Armenia include confidentiality, speed and the ability to choose expert arbitrators. Unlike the public state courts, arbitration proceedings are private, and the resulting awards are not published without the parties’ consent, which is critical for protecting sensitive commercial information. The process is also more flexible, allowing parties to agree on the rules of procedure, the language of the proceedings, and the location of hearings.

A significant procedural advantage is the direct enforcement of small claims. Under the Law on Commercial Arbitration, a permanent arbitral institution can send an award directly to the Compulsory Enforcement Service via an electronic message, bypassing the need for a court-issued writ of execution. This streamlined process is available if the seat of arbitration is Armenia, the parties are domestic citizens or legal entities, and the amount to be recovered does not exceed AMD5 million.

Arbitration also provides for the finality of decisions, as the grounds for setting aside an arbitral award are extremely narrow and limited to procedural errors. This prevents the multi-year, multi-tiered appeals process common in litigation. Additionally, the ability to select arbitrators with specific industry knowledge (eg, in construction or IT) ensures a more technically sound resolution of complex disputes compared to general jurisdiction judges.

However, parties often run into initial friction when a respondent challenges the validity of the arbitration agreement in state court, which can lead to a preliminary delay of several months before the arbitral tribunal can effectively proceed.

The primary disadvantages of arbitration are the higher initial costs compared to litigation. Parties are responsible for paying the fees of the arbitrators and the administrative costs of the arbitral institution, whereas state court fees (state duties) are often lower for large claims. Furthermore, because there is no full merits review on appeal, parties must accept the risk of an unfavourable decision even if they believe that the arbitrator made an error in interpreting the law or facts.

Another potential disadvantage is that arbitral tribunals lack the state’s coercive power to directly enforce their own orders. For example, if a party refuses to comply with an arbitrator’s order to produce evidence or maintain a certain status quo, the other party may still need to approach a state court for assistance for awards higher than AMD5 million. This can lead to additional time and legal costs if one party is determined to be uncooperative.

While the law provides for expedited judicial support for interim measures, in practice obtaining a state court order to freeze assets in support of an ongoing arbitration can still take two to four weeks due to court backlogs.

The most popular arbitral institutions in the country are the Arbitration and Mediation Center of Armenia and the Arbitration Institution at the Chamber of Commerce and Industry of the Republic of Armenia. These institutions provide a structured set of rules, a list of qualified arbitrators, and administrative support for both domestic and international cases. Many Armenian contracts also opt for prestigious international institutions, such as the International Chamber of Commerce (ICC) or the London Court of International Arbitration (LCIA), particularly in large-scale foreign investments.

Parties are also free to conduct ad hoc arbitration, where they create their own procedural rules for a specific case rather than using an institution. However, institutional arbitration is generally preferred for its predictability and the existence of “emergency arbitrator” provisions that can provide quick relief even before a full tribunal is formed.

Arbitral proceedings are generally significantly faster than litigation through three court tiers, typically lasting between six and 12 months. The specific timeline is largely determined by the complexity of the case and the procedural schedule agreed upon by the parties and the tribunal. Institutional rules often set clear deadlines for the submission of pleadings and the issuance of the final award.

The finality of the arbitral award is a major factor in reducing the overall time for dispute resolution. Since an award cannot be appealed on its merits, the time that would otherwise be spent in the Court of Appeal and the Court of Cassation is eliminated. Once the award is issued, the process for recognition and enforcement in the state courts is also designed to be expedited.

Arbitration in Armenia is regulated by the Law on Commercial Arbitration, which is closely modelled after the UNCITRAL Model Law on International Commercial Arbitration. This law provides a comprehensive and modern legal framework for both domestic and international arbitrations seated in Armenia. It covers everything from the formation of the arbitration agreement to the conduct of proceedings and the enforcement of awards.

In addition to national law, Armenia is a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). This treaty ensures that arbitral awards rendered in Armenia are enforceable in over 160 other countries, and conversely that foreign awards are recognised and enforced by Armenian courts. The Civil Procedure Code also contains specific chapters that co-ordinate the relationship between the state courts and arbitral tribunals.

State courts in Armenia have significant powers to support and facilitate the arbitration process. Key powers include the appointment of arbitrators when the parties cannot agree on a candidate or when the agreed-upon mechanism fails. Courts also have the authority to decide on challenges to an arbitrator’s independence or impartiality if the internal arbitration process does not resolve the issue.

Courts play a vital role in the taking of evidence. If a party or a third-party witness refuses to co-operate with an arbitral tribunal, the court can issue orders to compel the production of documents or the attendance of witnesses. Furthermore, courts can grant interim measures (such as asset freezes) in support of both domestic and international arbitrations, ensuring that the subject of the dispute is preserved while the tribunal is deliberating.       

Court intervention in arbitration is strictly limited by law to specific, enumerated instances. Armenian courts generally follow a “pro-arbitration” approach, meaning they will not interfere with the merits of an arbitrator’s decision or replace the tribunal’s judgment with their own. Intervention is only permitted for matters such as challenging an arbitrator, determining a tribunal’s jurisdiction, or setting aside an award on procedural grounds.

The grounds for setting aside an award are narrow and include things such as an invalid arbitration agreement, lack of proper notice to a party, or the award dealing with a dispute not covered by the agreement. A court may also intervene if the award violates Armenian public policy or if the subject matter is not legally capable of being settled by arbitration. Outside these specific grounds, the courts are prohibited from reviewing the arbitrator’s findings of fact or application of law.

Arbitral tribunals have broad authority to grant a wide range of relief, including monetary awards, injunctions and specific performance. A tribunal can order a party to pay a specific sum, deliver property or cease a particular activity. Tribunals also have the power to grant interim relief to preserve assets or evidence during the course of the proceedings.

There are no major restrictions on a tribunal’s power to grant interim relief, provided the measure is necessary and related to the subject of the dispute. However, unlike a court order, an arbitral interim measure is not directly enforceable by state bailiffs. If a party ignores the tribunal’s order, the prevailing party must seek judicial assistance to turn the tribunal’s order into an enforceable state court act.

Apart from arbitration, the primary formal ADR procedure in Armenia is mediation, which is governed by the Law on Mediation. Mediation is a process where an independent, neutral third party (the mediator) helps the parties negotiate a mutually acceptable settlement. Mediators do not impose a decision but facilitate communication and creative problem-solving. Negotiation remains the most common informal ADR method, often used as a first step before any formal process is initiated. ADR methods are typically used when parties agree to them in their contract.

While engaging in ADR is generally voluntary, certain categories of disputes require a mandatory mediation attempt before a party can file a lawsuit. For example, certain family law matters (such as alimony or child custody) and some health insurance-related disputes now have mandatory mediation components. The goal is to filter out cases that can be settled amicably, thereby reducing the burden on the state judiciary.

If a party fails to participate in mandatory mediation, the court may refuse to examine the claim or impose procedural sanctions. In voluntary ADR, the parties are free to withdraw from the process at any time without penalty. For commercial contracts, if a multi-tiered dispute resolution clause exists (requiring mediation before arbitration), the court or tribunal will typically stay the proceedings until the mediation requirement has been satisfied.

Engaging in ADR does not result in a waiver of a party’s right to litigate or arbitrate if the process fails to produce a settlement. If mediation is unsuccessful, the parties can proceed to court or arbitration as if the ADR process had not occurred. However, if a settlement is reached and formalised into a written agreement, it can be submitted to a court for approval.

Once a mediated settlement is approved by a court, it has the same legal force and effect as a final judgment. This means that it is binding on the parties and can be enforced through the Compulsory Enforcement Service if one side fails to comply with its terms. The courts strongly encourage the use of ADR and often stay litigation for several months to allow parties time to explore these alternatives.

ADR can take place at any time, including before a lawsuit is filed, during the preliminary stages of litigation, or even while an appeal is pending. Parties often initiate ADR early to avoid the costs and delays of a full trial. Judges are also authorised to suggest mediation to the parties during the preliminary hearing if they believe there is a high probability of settlement.

Significantly, engaging in a formal mediation process typically suspends the running of limitation periods. This protects the parties’ legal rights, ensuring that they do not lose the ability to file a lawsuit if the ADR process does not result in a settlement. This suspension is a key legal incentive for parties to engage in ADR in good faith.

Mediation and arbitration in Armenia are protected by a strict rule of confidentiality. Anything said, any admission made or any document prepared specifically for the mediation cannot be used as evidence in subsequent court or arbitration proceedings. Mediators are prohibited from acting as witnesses in the same case and cannot be compelled to disclose information from the mediation sessions.

There are only very limited exceptions to this confidentiality, such as when disclosure is necessary to prevent a crime or to protect the best interests of a child. This environment of absolute privacy is designed to allow parties to speak freely and explore settlement options without fear that their statements will be used against them if the negotiations fail.

Similarly, arbitral proceedings are confidential and closed by default under the Law on Commercial Arbitration. Unless otherwise agreed by the parties or required by law, no documents, evidence or statements made during the arbitration can be shared with third parties or state authorities. Disclosure is permitted only when it is necessary for state court proceedings related to the recognition, enforcement or setting-aside of an arbitral award. Furthermore, maintaining the confidentiality of all information regarding the arbitration is a core ethical principle for arbitrators.

The costs associated with mediation in Armenia primarily consist of the mediator’s fees and any administrative expenses related to the process. As a general rule, these costs are shared equally between the parties unless they agree to a different allocation in writing. In cases of mandatory mediation, the government sets fixed rates for the first two hours to ensure accessibility, though parties can mutually agree to higher rates. Furthermore, insolvent individuals who meet specific monthly income and property thresholds are exempt from paying fees for these initial two hours of mandatory mediation.

In arbitration, the final award must explicitly state the total amount of arbitral costs and how they are distributed among the parties. Litigants have the freedom to agree on a specific cost-sharing arrangement, but in the absence of such an agreement the tribunal has the authority to determine the allocation. For institutional arbitration, fees are typically determined by the institution’s predefined fee schedules, which often consider the value of the claim and the complexity of the dispute. Notably, if a party refuses to participate in court-ordered mediation without a valid reason, they may be penalised by being ordered to pay the entirety of the litigation costs, regardless of the trial’s final outcome.

Armenian courts have a positive and supportive attitude towards ADR. Judges are legally required to inform litigants about the possibility of mediation and to explain its benefits during the initial stages of a case. The court system views ADR not as a threat to its jurisdiction but as an essential tool for judicial efficiency.

Courts also facilitate ADR by staying proceedings and extending procedural deadlines to give mediation a chance to succeed. Furthermore, the streamlined process for judicially confirming mediated settlements ensures that the outcome of ADR is just as robust and enforceable as a court-issued verdict. This institutional support has been a major driver in the growth of the Armenian ADR market.

Legal fees in Armenia are generally not regulated by law and are determined by the private agreement between the advocate and the client. Lawyers are free to set their own rates, which can be based on hourly billing, fixed fees for specific tasks, or a combination of both. While there is no mandatory fee schedule, the Chamber of Advocates (Bar Association) may provide non-binding guidelines on typical market rates for various legal services.

In litigation, while parties can agree to any fee, the court will only order the losing party to pay “reasonable” attorney fees. When assessing what is reasonable, the court considers the complexity of the case, the amount of work performed, and local market standards. This means that if a client pays an exceptionally high fee to a premium law firm, they may only be able to recover a portion of that fee from the opposing side.

The state duty (litigation state fee) is a mandatory component of court costs and is distinct from advocate fees. The specific rates and procedures for charging state duties are regulated by the Law on State Duty. For monetary claims, the amount of the state duty is calculated based on the claim price (standard rates in Armenia are typically 3% of the claim price for monetary disputes in the first instance, 4% for appeal and 5% for the cassation appeal). In cases where a lawsuit contains both monetary and non-monetary requirements, the duty is calculated and collected for each claim separately. However, derivative claims that are unconditionally satisfied upon the success of a primary claim do not attract additional state duties.

Third-party funding, where an outside entity pays for a party’s legal costs in exchange for a share of the recovery, is not explicitly regulated in Armenia, but it is not prohibited. This is a relatively new concept in the Armenian market and is primarily seen in large-scale international arbitrations or complex commercial litigations. There are no specific legal barriers to such arrangements, provided they do not violate general principles of contract law or professional ethics.

The main legal concern with third-party funding is ensuring that it does not compromise the independence of the advocate or the client’s control over the strategy of the case. Currently, there is no requirement to disclose the existence of third-party funding to the court or the opposing party, although this is a topic of ongoing discussion within the legal community.

Contingency fee arrangements, where the lawyer’s fee is a percentage of the amount recovered, are available and widely used in Armenia. These arrangements are common in personal injury cases, debt collection and some commercial disputes where the client may lack the funds to pay hourly rates upfront. These agreements are governed by the general principle of freedom of contract.

However, advocates must ensure that their fees are ethical and not unconscionable. In some instances, the court may reduce a contingency fee award if it is found to be clearly excessive in relation to the work performed. Despite these potential limitations, the use of contingency fees is an important mechanism for ensuring access to justice for smaller businesses and individuals.

Insurance coverage for litigation and arbitration costs is available in the Armenian market but is not yet a standard commercial practice. Some specialised insurance products – often as part of professional liability or directors’ and officers’ (D&O) policies – may cover legal defence costs. “After-the-event” insurance, which is common in some European jurisdictions, is rare in Armenia.

The availability and terms of such insurance depend on the specific offerings of local and international insurers operating in the region. As the legal market matures and the costs of litigation increase, it is expected that more businesses will seek out legal expense insurance to manage their dispute-related financial risks.

The general rule in Armenian litigation is that the losing party pays the costs of the winning party. This includes both “court costs” (state duties paid to the government) and “litigation expenses” (attorney fees, expert fees and witness travel costs). If a party is only partially successful, the costs are typically distributed proportionally based on the degree of success.

State duties (court fees) are calculated as a percentage of the claim amount. For example, in the first instance, the state duty for a monetary claim is typically 3% of the amount sought. These fees must be paid at the time of filing, although the court can grant a deferral or reduction in cases of demonstrated financial hardship. These costs are ultimately shifted to the defendant if the plaintiff prevails.

When awarding costs, the court conducts an assessment of necessity and reasonableness. The prevailing party must provide documentation, such as invoices and payment receipts, to prove that the expenses were actually incurred. The court will not award costs that it deems unnecessary or that were incurred through the party’s own procedural misconduct or delay.

For attorney fees, the court has a high degree of discretion. It looks at the volume of work, the number of hearings attended, and the complexity of the legal issues. The court may also take into account the conduct of the parties, potentially reducing an award if a party unnecessarily complicated the proceedings. This assessment is intended to strike a balance between fair compensation and preventing the “loser pays” rule from becoming a barrier to justice.

Armenian courts provide a robust array of interim remedies designed to preserve the status quo and ensure that a future judgment can be executed. The most common measures include the attachment (freezing) of the defendant’s property or bank accounts, injunctions prohibiting the defendant from taking specific actions, and orders requiring the defendant to perform certain duties to prevent harm. The court has broad discretion to tailor the relief to the specific risks of the case.

These remedies are available in all types of commercial disputes, from simple debt collections to complex corporate and intellectual property cases. To obtain relief, the applicant must show that there is a reasonable risk that the enforcement of a judgment will otherwise be impossible or difficult. The court evaluates the “proportionality” of the requested measure, ensuring that it does not cause undue harm to the defendant’s legitimate business activities.

Armenian courts have the legal authority to grant interim relief in support of arbitration, even if the arbitration is being held outside Armenia. This power is critical because arbitral tribunals often cannot act quickly enough to prevent the dissipation of assets, and they lack the State’s power to issue binding freezing orders. The procedure for obtaining such relief is the same as in standard litigation.

Most interim relief in the mediation context is handled through the voluntary agreement of the parties rather than a court order. In addition, the Civil Procedure Code provides specific mechanisms that allow parties to secure their interests through preliminary interim measures even before a formal lawsuit is filed. This framework is particularly designed to incentivise the use of mediation in cases where it is a mandatory prerequisite for litigation, such as in certain family or insurance-related disputes. Any person has the right to apply to the court for preliminary interim measures to secure a claim they intend to bring in the future.

In standard applications for preliminary interim measures, the applicant is typically required to pay a sum into the court’s deposit account to cover potential damages the defendant might suffer if the claim is later found to be groundless (usually at least AMD500,000 for non-monetary claims). However, an applicant seeking preliminary interim relief in a case subject to mandatory mediation is exempt from providing this financial security deposit at the time of the application.

Applications for interim relief can be made at any stage of the dispute. Parties can seek “pre-action” relief before a lawsuit is even filed, which is useful when there is an urgent threat to assets. In such cases, the court will grant the relief on the condition that the main lawsuit is filed within 14 days. Failure to meet this deadline results in the immediate lifting of the interim measure.

Relief can also be requested simultaneously with the filing of the lawsuit or at any time during the trial if new information about the defendant’s financial situation emerges. Even after a verdict is issued but before it becomes final, a party can request interim measures to secure the execution of the judgment. The court’s goal is to provide a continuous shield against the frustration of justice throughout the entire legal process.

A party to the case against whom an interim relief has been applied may file a motion to request counter‑security (security in return) from the party who filed the motion for securing the claim, in order to compensate for potential damages they may incur. This is most frequently used when the plaintiff is a foreign entity with no assets in Armenia or a shell company with no significant capital. If the court grants the application, the plaintiff must deposit funds or provide a bank guarantee before the case can proceed.

This mechanism protects defendants from “frivolous” lawsuits where the plaintiff has nothing to lose. The court must balance this protection against the plaintiff’s right of access to justice, ensuring that security for costs is not used as a tool to prevent legitimate claimants from pursuing their rights. The amount of security is typically based on a reasonable estimate of the defendant’s likely legal fees and court costs.

Interim injunctions are granted when there is an urgent need to prevent irreparable harm or the destruction of evidence. These are often sought in intellectual property disputes, where a party needs to stop the sale of counterfeit goods, or in corporate disputes to prevent an unlawful shareholders’ meeting. The court will grant an injunction if the applicant can show a prima facie case (a likelihood of success on the merits) and that the “balance of convenience” favours the injunction.

In cases of extreme urgency, the court can issue an ex parte injunction without first hearing from the defendant. However, the defendant has the right to immediately challenge the injunction once they are notified, and the court will hold a hearing to decide whether to maintain, modify or lift the measure. This ensures that the rights of both parties are protected while addressing the need for rapid judicial action.

While Armenia does not have a “summary judgment” procedure identical to common law systems, it offers simplified and accelerated procedures for clear-cut cases. For example, if a claim is based on an undisputed written contract or involves a small monetary amount, the court can decide the case within a very short timeframe based solely on the written evidence. These cases are often handled without an oral hearing.

Additionally, the court has the power to reject a lawsuit at the outset if it is “manifestly unfounded” or if the plaintiff clearly lacks the right to sue. This serves as a filter to remove cases that have no legal merit before they consume the court’s resources. For debt collection where there is no genuine dispute, the “payment order” (writ) procedure allows a creditor to obtain an enforceable act in as little as two weeks if the debtor does not file a formal objection.

Armenia recognises group actions (class actions) as a specific procedural mechanism for handling multiple claims with common factual and legal issues. This allows a large number of claimants to have their cases resolved in a single proceeding, which is more efficient for the court and less expensive for the parties. Group actions are primarily used in consumer protection, environmental litigation and corporate disputes.

The Civil Procedure Code provides the detailed framework for these actions, specifying how the case is initiated, how the representative is chosen, and how the final judgment is applied to the group. The court plays an active role in managing the group, ensuring that all members are properly notified and that their interests are adequately protected throughout the litigation.

To bring a class action in Armenia, there must be a minimum of 20 claimants who share the same legal and factual grounds for their claims. The group must be represented by a single representative (or a small committee of up to five people), who manages the litigation on behalf of everyone. The representative can be one of the group members, a specialised non-governmental organisation (NGO) or a qualified advocate.

The representative must demonstrate to the court that they will fairly and adequately protect the interests of the group. Any member of the group has the right to “opt out” of the class action if they prefer to pursue their claim individually, but those who remain are bound by the court’s final decision. This requirement for a large, cohesive group ensures that the class action mechanism is reserved for cases with a significant social or commercial impact.

The relief available in class actions includes monetary damages, injunctions and declaratory judgments. In cases involving consumer harm, the court may order the defendant to compensate each member of the group for their individual losses. Damages are typically calculated based on the specific evidence provided for each member, though the court may establish a general formula for distribution if the losses are uniform.

In environmental or corporate cases, the relief often takes the form of an injunction requiring the defendant to stop a harmful activity or a declaratory judgment nullifying an unlawful corporate decision. The final judgment in a class action is binding on all members of the group who did not opt out, and it prevents them from bringing individual lawsuits on the same issue in the future.

Class actions and mass claims are not common in Armenian arbitration. While the Law on Commercial Arbitration is flexible, the existing institutional rules and the legal culture are focused on bilateral (two-party) disputes. For a mass claim to be arbitrated, the arbitration agreement would likely need to explicitly authorise such a procedure, which is rare in standard commercial contracts.

Furthermore, the privacy and confidentiality that are the hallmarks of arbitration are difficult to maintain when dozens or hundreds of claimants are involved. Most mass claims involving public interests, such as consumer protection or environmental harm, are considered better suited for the public state courts, where transparency and broad judicial oversight are guaranteed.

The most significant trend is the increasing use of group actions by NGOs and consumer rights groups. As the legal framework has become more settled, these organisations are more confident in using class actions to challenge the practices of large utility providers, banks and telecommunications companies. This has led to a greater awareness among the general public of their collective legal power.

There is also a growing trend towards environmental class actions, where local communities join to sue mining or industrial companies for pollution. These cases often involve complex scientific evidence and high stakes, and the class action mechanism is seen as the only viable way for individuals with limited resources to hold large corporations accountable. The government is also considering further legislative reforms to make it easier for groups of citizens to seek judicial relief.

Armenia does not have the extensive “discovery” process used in common law jurisdictions; instead, it utilises a system of mandatory disclosure. Parties are required to provide the evidence they intend to rely on to the court and to the other side during the preliminary stage of the case. There is a general duty of good faith, meaning parties should not hide relevant evidence.

If a party needs evidence that is in the possession of the opposing side or a third party, they can petition the court to order its production. The applicant must specify the evidence needed and explain why it is relevant to the case. If the court finds the request justified, it will issue a binding order for production, and failure to comply can result in fines or the court drawing “adverse inferences” against the non-complying party.

The Armenian legal framework protects various categories of information from disclosure through “law-protected secrets”. These privileges include:

• attorney-client privilege – absolute protection for all communications and documents exchanged between an advocate and their client in the course of professional service;
• mediation secrecy – statutory protection for all statements made, documents prepared and information disclosed during the mediation process;
• banking and insurance secrecy – strict prohibition against the disclosure of customer-specific financial data by banks, insurers or state officials, except under specific court orders;
• judicial privilege – a judge cannot be questioned as a witness regarding any case or proceeding in which they exercised their official powers;
• trade and service secrets – protection for commercial information that holds value due to its confidential nature, provided the owner has taken steps to maintain its secrecy; and
• notarial secrets – protection for the contents of a will and related notarial acts before the inheritance has been opened.

A party can request that certain evidence be kept confidential if it involves trade secrets, personal privacy or state interests. The court will review the evidence in a closed session to determine its sensitivity. If the court agrees that the information is confidential, it may limit its distribution to only the parties and their lawyers or require it to be kept in a secured portion of the case file.

There are limited exceptions where confidentiality must give way to the public interest, such as in the investigation of serious crimes or when the information is essential for protecting public health or safety. In commercial cases, the court often uses protective orders to allow the parties to share sensitive information while preventing its disclosure to competitors or the general public.

Witness evidence is a standard part of Armenian litigation, but it is primarily oral and conducted during the trial. While parties can submit written witness statements, these are usually treated as supporting documents, and the witness must typically appear in person (or via video link) to testify under oath. In Armenia, while there is no formal system of pretrial witness depositions conducted by legal counsel, a similar outcome can be achieved through the securing of evidence by a notary. Under the Law on Notariat, an interested party may petition a notary to ensure evidence – including the questioning of witnesses – if there are grounds to assume that providing such evidence later in court might become difficult or impossible. When performing this action, the notary is guided by the relevant provisions of the Civil Procedure Code. Such notarised statements and confirmed oral declarations have evidentiary power and can be submitted as valid evidence in subsequent court or law enforcement proceedings.

During the hearing, witnesses are subject to cross-examination by the opposing party and questioning by the judge. The court’s goal is to test the credibility and first-hand knowledge of the witness. Giving false testimony is a criminal offence, and witnesses are formally warned of this responsibility before they begin their testimony.

Expert evidence is often the deciding factor in complex commercial disputes involving technical, financial or scientific issues. Experts can be appointed by the court at the request of a party or on the court’s own initiative. While parties can also hire their own “specialists” to provide opinions, the court-appointed expert is expected to be independent and owes a primary duty to the court.

The court-appointed expert provides a written report, and the parties have the right to question the expert during the trial to clarify or challenge their findings. If the parties provide conflicting expert opinions, the court may appoint a second expert or a panel of experts to resolve the discrepancy. The cost of the expert is initially paid by the party requesting it but is ultimately shifted to the losing side as part of the final cost award.

Foreign judgments in Armenia are recognised and enforced based on international treaties or the principle of reciprocity. In the absence of a specific treaty, reciprocity is legally presumed unless proven otherwise. The judgment must be a final, effective act issued by a foreign judicial body, including court-approved settlements and criminal judgments regarding property damages.

To initiate enforcement, a party must apply to the Armenian court at the debtor’s place of residence or the location of their property. The application must be filed within three years from the date the foreign judgment entered into legal force under the laws of the originating state. The Armenian court does not review the merits of the case; instead, it verifies procedural compliance, such as whether the defendant was properly notified and whether the act contradicts Armenian public policy.

Grounds for refusing recognition include a lack of proper notice to the defendant, the foreign court lacking jurisdiction, or the judgment violating Armenian public policy. Once the judgment is recognised, the court issues a writ of execution, which is then handled by the Compulsory Enforcement Service just like a domestic judgment. The new enforcement framework, effective from 2026, prioritises electronic communication and grants enforcement officers broad powers, including the authority to act in the debtor’s name to sign documents or execute transactions if the debtor fails to comply.

In practice, the recognition process may be slowed by procedural friction regarding the validity of service in the originating jurisdiction, especially if the debtor was not present during the foreign proceedings.

Enforcement of arbitral awards is a two-step process. First, the prevailing party must apply to the state court for a writ of execution. For awards rendered in Armenia, the process is straightforward unless the award has been set aside. For foreign arbitral awards, Armenia is a party to the New York Convention, which provides a streamlined and internationally recognised process for enforcement.

Under the New York Convention, Armenian courts must recognise and enforce foreign awards unless the opposing party can prove one of the very limited grounds for refusal. These include an invalid arbitration agreement, a violation of due process, or the award exceeding the scope of the arbitrator’s authority. Applications for enforcement must be submitted to the court within three years of the award entering into force. The applicant must provide the original or a certified copy of both the award and the arbitration agreement, accompanied by a certified Armenian translation. The Armenian judiciary is generally pro-enforcement, viewing the efficiency of arbitral awards as essential for a healthy investment climate.

The length of enforcement proceedings varies but is generally designed to be expedited. The timeframe for the judicial recognition of foreign arbitral awards is generally two months. If the enforcement is vigorously contested (eg, through claims of lack of notice or public policy violations), the process can extend to six months or more. For domestic awards, the court typically issues a decision within 15 days if no hearing is required, though this may extend to two months if a hearing is necessary to clarify evidence. In litigation, a two-week waiting period usually applies after a judgment enters legal force before an enforcement application can be submitted, unless the act is subject to immediate execution.

Once the writ of execution is issued, the Compulsory Enforcement Service takes over, which involves the actual seizure of assets or garnishment of bank accounts. Under the Law on Enforcement, the Compulsory Enforcement Service is mandated to carry out actions within a “reasonable and most concise” timeframe. While specific durations depend on the complexity of asset tracing, the law now allows for streamlined electronic service through a “Personal Office” platform to reduce delays. The speed of this final step depends on the availability and liquidity of the defendant’s assets within Armenia. If the debtor fails to perform a non-monetary act, the court may also impose an “Astrente” (a recurring financial penalty) to incentivise swift compliance.

In practice, despite the statutory targets, contested recognition cases often stretch to six months as courts manage heavy workloads and the complexities of international notifications.

A party may resist the recognition and enforcement of a foreign judgment based on several procedural and substantive grounds:

• lack of due process – evidence that the defendant was not properly notified of the foreign proceedings or was deprived of the opportunity to participate;
• public policy conflict – the judgment or its enforcement would manifestly contradict the public policy of the Republic of Armenia;
• exclusive jurisdiction – the dispute falls under the exclusive jurisdiction of Armenian courts, such as matters involving Armenian real estate; and
• conflicting judgments – there is an existing Armenian judgment or a previously recognised foreign judgment on the same matter between the same parties.

Arbitral Awards

Grounds for resisting the enforcement of both domestic and foreign arbitral awards are strictly procedural and align with the New York Convention:

• party incapacity or invalidity – a party to the arbitration agreement was under some incapacity, or the agreement itself is invalid under the law;
• improper notice – the party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings;
• tribunal exceeding mandate – the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;
• improper tribunal composition – the composition of the tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
• non-arbitrability – the subject matter of the dispute is not capable of settlement by arbitration under the laws of Armenia; and
• public policy violation – the recognition or enforcement of the award would be contrary to the public policy of Armenia.

As of 2026, Armenia has no specific legislation that exclusively regulates the use of artificial intelligence (AI) in the legal field or in dispute resolution. Instead, AI applications are currently governed by general laws related to data protection, cybersecurity, the principles of a fair trial, and the professional ethics of advocates.

The Ministry of Justice and the Supreme Judicial Council are actively monitoring global trends, and are in the early stages of developing ethical guidelines and regulatory frameworks for AI. There is a strong emphasis on ensuring that any AI tools used in the judiciary do not compromise the independence of judges or the transparency of the legal process.

AI is already having a notable impact on the preparation phase of dispute resolution in Armenia. Many large law firms are using AI-driven tools for legal research, contract analysis and document review, which has significantly improved efficiency and reduced costs for clients.

Within the court system, the Electronic System is laying the groundwork for more advanced AI integration. However, the actual adjudication of cases remains strictly a human activity.

The future of AI in Armenian dispute resolution is expected to involve deeper integration into the judicial workflow. Despite these technological advancements, the Armenian legal system remains firmly committed to the principle of “human-in-the-loop” justice. The final decision-making authority will continue to rest with human judges and arbitrators, as the complexities of legal judgment, ethical considerations, and the protection of fundamental rights are viewed as uniquely human responsibilities. The legal community is focused on ensuring that AI remains a tool for empowerment rather than a replacement for human intellect and empathy in the pursuit of justice.