Within the Azerbaijani legal system, international arbitration has gained increasing practical significance, particularly in disputes arising from cross-border commercial relationships. In practice, international arbitration is predominantly selected in agreements concluded between foreign and domestic parties, whereby the parties agree to submit disputes arising out of or in connection with such agreements to an international arbitral tribunal.

The growing significance of international arbitration is also reflected by the increasing number of applications submitted to competent courts for the recognition and enforcement of foreign arbitral awards. One of the key factors contributing to this trend is the comparatively streamlined and predictable framework governing the recognition and enforcement of foreign arbitral awards. Subject to the absence of any grounds for refusing recognition and enforcement, this framework significantly enhances the attractiveness of international arbitration as a dispute resolution mechanism.

By contrast, in contractual relationships involving exclusively domestic parties, disputes are generally referred to the courts of the local jurisdiction rather than to international arbitration. As a result, the resolution of disputes between local counterparties remains predominantly within the competence of the national courts.

In recent years, a notable increase has been observed in the use of international arbitration across a number of sectors. Such growth has been particularly evident in the oil and gas industry, international trade, and the construction of renewable energy projects. In practice, parties frequently incorporate arbitration clauses into production sharing agreements, supply and distribution contracts, as well as engineering, procurement and construction (EPC) contracts relating to wind and solar energy facilities.

Among these sectors, the most significant level of arbitral activity can be observed in the field of international trade. While the oil and gas and renewable energy sectors remain relatively limited in scope due to their strategic importance and the involvement of a narrower range of market participants, the commercial sector encompasses a substantially broader spectrum of stakeholders and transactions. Consequently, disputes arising from commercial relationships are more frequently referred to international arbitration.

Furthermore, foreign parties often prefer international arbitration over national courts, largely due to Azerbaijan’s arbitration-friendly framework for the recognition and enforcement of foreign arbitral awards.

For cross-border disputes involving Azerbaijani parties, the ICC International Court of Arbitration, the London Court of International Arbitration (LCIA), and the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) are the arbitral institutions most frequently chosen. The ultimate selection depends on the parties’ agreement and the particular characteristics of the underlying transaction.

Since foreign arbitral awards are, in principle, enforceable in Azerbaijan irrespective of the country in which they were rendered, the preference for institutions such as the ICC, LCIA and SCC is driven primarily by commercial and procedural considerations rather than concerns over the enforceability of the resulting award.

In this context, it is noteworthy that Azerbaijan has recently witnessed the establishment of its first domestic arbitral institution, the Baku Arbitration Centre. The Centre was registered in 2024 and officially inaugurated in 2025, marking an important milestone in the development of institutional arbitration in Azerbaijan. The establishment of the Centre represents a significant development in the country’s arbitration landscape and reflects the growing interest in arbitration as an alternative dispute resolution mechanism.

Under Azerbaijani law, the role of local courts in arbitral proceedings primarily concerns the recognition and enforcement of foreign arbitral awards, as well as the exercise of certain supervisory and supportive powers in relation to arbitration proceedings.

Applications for the recognition and enforcement of foreign arbitral awards fall within the jurisdiction of the Supreme Court of the Republic of Azerbaijan.

The supervisory and assistance functions of the courts encompass a number of matters arising in connection with arbitral proceedings. In relation to domestic arbitrations, such functions are exercised by the commercial courts located within the territory of the Republic of Azerbaijan, whereas in relation to international arbitrations they fall within the competence of the Baku Commercial Court. These include, among others:

• the granting of interim measures;
• the appointment of arbitrators;
• challenges to arbitrators; and
• assistance with the taking of evidence.

The legislative framework governing arbitration in Azerbaijan has also undergone significant development in recent years. The first national legislation regulating arbitration was adopted in 1999. Subsequently, it has been repealed and the Law on Arbitration, No 1077-VIQ (the “Law on Arbitration”) was adopted on 26 December 2023.

The Law on Arbitration was largely drafted on the basis of the UNCITRAL Model Law on International Commercial Arbitration of 1985 (the “UNCITRAL Model Law”). It may be observed that the Law on Arbitration does not materially depart from the UNCITRAL Model Law and both instruments exhibit a considerable degree of similarity in their structure and substantive provisions.

As noted previously (see 2.1 Governing Law), the Law on Arbitration is a relatively recent legislative enactment. Accordingly, no amendments have been introduced since its adoption.

It should, however, be noted that the adoption of the Law on Arbitration was accompanied by corresponding amendments to the Civil Procedure Code of Azerbaijan, dated 28 December 1999 (the “Civil Procedure Code”). In particular, the provisions governing the recognition and enforcement of foreign arbitral awards were revised and brought into conformity with the relevant provisions of the Law on Arbitration; the Civil Procedure Code was supplemented with new provisions regulating the exercise of judicial assistance and supervisory functions in relation to arbitration. These amendments were introduced with the aim of ensuring consistency and coherence between the procedural framework and the provisions of the Law on Arbitration.

A further key element of the arbitration regime relates to the regulation of arbitration agreements. Article 16 of the Law on Arbitration contains comprehensive provisions governing arbitration agreements, which corresponds to Option I of Article 7 of the UNCITRAL Model Law. In accordance with those provisions, an arbitration agreement must be concluded in writing and may take the form of either an arbitration clause incorporated into a contract or a separate agreement. Irrespective of the form in which it is concluded, an arbitration agreement shall be deemed to satisfy the written form requirement provided that its content is recorded in any form.

The requirement that an arbitration agreement be in writing is also deemed to be fulfilled where:

• the agreement is contained in an electronic communication, provided that the information is accessible for subsequent reference;
• one party alleges the existence of an arbitration agreement in an exchange of the statement of claim and the statement of defence, and the other party does not deny its existence; or
• a contract refers to a document containing an arbitration clause, provided that such reference has the effect of incorporating the arbitration clause into the contract.

In addition, where any ambiguity arises in the interpretation of an arbitration agreement, such ambiguity shall be resolved in favour of the validity and existence of the arbitration agreement.

The effectiveness of an arbitration agreement ultimately depends on whether the subject matter of the dispute is capable of settlement by arbitration. Accordingly, Azerbaijani legislation identifies disputes that are non-arbitrable under the Law on Arbitration and those that fall within the exclusive jurisdiction of the national courts pursuant to the Civil Procedure Code.

The Law on Arbitration sets out an exhaustive list of disputes that are non-arbitrable. These include:

• criminal matters and administrative offence proceedings;
• disputes arising out of administrative and other public law relationships;
• family law disputes;
• matters concerning the legal status of individuals;
• employment disputes;
• disputes in the field of environmental protection;
• inheritance matters;
• disputes relating to the establishment and registration of intellectual property rights;
• disputes relating to competition law and the protection of consumer rights, as well as disputes arising in connection with consumer credits;
• disputes relating to ownership and other rights in rem over immovable property located within the territory of the Republic of Azerbaijan;
• bankruptcy and insolvency issues;
• cases relating to claims for the liquidation of a legal entity or the annulment of its decisions (where the legal entity has its legal address (place of establishment) in the Republic of Azerbaijan);
• disputes involving individuals, except where such disputes arise out of their entrepreneurial activities;
• cases relating to claims against carriers arising from contracts of carriage; and
• disputes relating to the lease of immovable property situated within the territory of the Republic of Azerbaijan.

A limited exception to this general rule is established. In particular, the last two categories of disputes identified above may be resolved by a domestic arbitral tribunal.

The Civil Procedure Code provides that the following matters fall within the exclusive jurisdiction of the courts of the Republic of Azerbaijan:

• cases concerning property rights over immovable property, as well as claims related to the lease or pledge of such property, if the property in question is located within the territory of the Republic of Azerbaijan;
• cases concerning the recognition of the authenticity or lack of authenticity of a legal entity, as well as claims regarding the dissolution of a legal entity or the annulment of its decisions, if the legal entity has a registered address (place of business) in the Republic of Azerbaijan;
• cases concerning the recognition of the validity of patents, trade marks or other rights, if the registration of such rights or the filing of applications for their registration took place in the Republic of Azerbaijan;
• cases where an enforcement order issued in the course of judicial proceedings has been requested or carried out in the Republic of Azerbaijan;
• cases involving claims against carriers arising from carriage (transportation) contracts; and
• cases concerning the dissolution of marriage between citizens of the Republic of Azerbaijan and foreign nationals or stateless persons, provided that both spouses have their place of residence in the Republic of Azerbaijan.

In substance, the matters falling within the exclusive jurisdiction of the national courts largely correspond to those that are not capable of settlement by arbitration. It should, however, be noted that the relevant provisions of the Civil Procedure Code were enacted prior to the adoption of the Law on Arbitration.

Under the Law on Arbitration, where court proceedings are commenced in respect of a matter covered by an arbitration agreement, the court is required to refer the parties to arbitration, provided that a party raises an objection before the examination of the merits and the arbitration agreement is not manifestly invalid, inoperative or incapable of being performed. In the absence of such an objection, the court shall proceed to determine the dispute on its merits, unless the party demonstrates that it was prevented, for reasons beyond its control, from raising the objection at an earlier stage.

A corresponding provision is also contained in the Civil Procedure Code. It likewise requires the court to leave the claim without examination where the parties have concluded a valid arbitration agreement and a timely objection to court proceedings is raised by either party. An objection submitted at a later stage of the proceedings may also be admitted, provided that the party concerned establishes that it was unable to raise the objection before the examination of the merits for reasons beyond its control.

The Law on Arbitration also governs the effect of an arbitration clause incorporated into a contract. Under the Law, the arbitral tribunal is empowered to rule on its own jurisdiction, including any objections concerning the existence or validity of the arbitration agreement. For this purpose, an arbitration clause forming part of a contract is treated as an agreement independent of the other contractual provisions. Accordingly, a finding that the underlying contract is invalid does not, ipso jure, render the arbitration clause invalid. This approach is fully consistent with Article 16 of the UNCITRAL Model Law, which likewise recognises the validity and independence of arbitration clauses.

The Law on Arbitration grants the parties broad discretion to determine both the number of arbitrators and the procedure for their appointment, while the statutory rules apply only in the absence of an agreement between the parties. With regard to the composition of the tribunal, the parties are free to determine the number of arbitrators, provided that it is an odd number. Failing such determination, the arbitral tribunal shall consist of three arbitrators.

The parties may also agree to entrust the appointment of arbitrators to a third party. In such circumstances, an application to the national courts for the appointment of arbitrators may not be made.

Notwithstanding the broad autonomy afforded to the parties, the Law on Arbitration also establishes default rules governing the appointment of arbitrators where the parties have not agreed otherwise.

In a sole-arbitrator arbitration, where the parties fail to agree on the appointment of the arbitrator, the appointment shall be made by the commercial courts upon the application of either party.

In an arbitration with three arbitrators, each party appoints one arbitrator, and the two appointed arbitrators jointly appoint the third arbitrator. Where a party fails to appoint an arbitrator within 30 days of receiving the other party’s request, or where the two appointed arbitrators fail to agree on the appointment of the third arbitrator within 30 days of their appointment, the necessary appointment shall, upon the application of either party, be made by the commercial courts.

As noted in 4.2 Default Procedures, the commercial courts may intervene in the appointment of arbitrators in certain circumstances. In addition to those situations, the Law on Arbitration permits a party to apply to the commercial courts for the necessary measures where the parties have agreed on a particular appointment procedure, unless the parties’ agreement provides otherwise. Such intervention is available where:

• one of the parties fails to comply with the agreed appointment procedure;
• the parties, or two arbitrators, are unable to reach the agreement required under that procedure; or
• a third party entrusted with functions under the agreed procedure fails to perform those functions.

Accordingly, judicial intervention in the agreed appointment procedure is available only where the parties have not established an alternative mechanism for addressing such situations.

As a general rule, an arbitrator is required to disclose any circumstances likely to give rise to justifiable doubts as to their impartiality or independence. This duty of disclosure continues throughout the arbitral proceedings, and any such circumstances arising after the appointment must be disclosed to the parties without undue delay, unless they have already been informed thereof.

An arbitrator may be challenged only where circumstances exist that give rise to justifiable doubts as to their impartiality or independence, or where the arbitrator does not possess the qualifications agreed upon by the parties. In addition, a party may challenge an arbitrator whom it has appointed, or in whose appointment it has participated, only on the basis of circumstances that became known to that party after the appointment was made.

Where the parties have not agreed on a procedure for challenging an arbitrator, the Law on Arbitration establishes a default mechanism. A party intending to challenge an arbitrator must submit a written statement of the grounds for the challenge to the arbitral tribunal within 15 days of the constitution of the tribunal or of becoming aware of the circumstances giving rise to the challenge. Unless the challenged arbitrator withdraws or the other party agrees to the challenge, the arbitral tribunal shall decide the matter.

Where a challenge is unsuccessful under either the procedure agreed by the parties or the default procedure established by the Law on Arbitration, the challenging party may apply to the commercial courts within 30 days of receiving the decision rejecting the challenge. The court’s decision is final and is not subject to appeal.

The submission of such an application does not prevent the arbitral proceedings from continuing, and the arbitral tribunal may proceed with the arbitration and render an award while the application is pending before the court. However, where the parties have agreed that the arbitration shall be administered by a permanent arbitral institution, recourse to the commercial courts is excluded unless otherwise provided by the rules of that institution.

As noted in 4.4 Challenge and Removal of Arbitrators, the Law on Arbitration imposes a continuing duty on arbitrators to disclose any circumstances that are likely to give rise to justifiable doubts as to their impartiality or independence. This obligation is not limited to the period prior to the appointment of an arbitrator but continues throughout the arbitral proceedings. Accordingly, where such circumstances arise, or become known to the arbitrator after the appointment, they must be disclosed to the parties without undue delay.

In addition to the statutory disclosure requirements, the Baku Arbitration Centre has established internal procedures designed to verify the impartiality and independence of prospective arbitrators. As a matter of practice, this assessment is ordinarily carried out through a disclosure questionnaire submitted to the prospective arbitrator in connection with their appointment. The information provided enables the Centre and the parties to identify any actual or potential conflicts of interest before the arbitral tribunal is constituted, thereby contributing to the integrity and transparency of the arbitral process.

Furthermore, the Law on Arbitration sets out the qualifications that arbitrators must meet in domestic arbitration proceedings. Any natural person may serve as an arbitrator who:

• is independent of the parties;
• has no interest in the outcome of the dispute;
• has consented to act as an arbitrator;
• has attained the age of 25;
• possesses a higher education degree; and
• has at least three years of professional experience in their field of expertise.

Where the dispute is decided by a sole arbitrator, that arbitrator must also possess a higher legal education. In arbitrations conducted by a panel of arbitrators, the presiding arbitrator must have a higher legal education, unless otherwise agreed by the parties. In addition, the arbitration agreement or the rules of a permanent arbitral institution may prescribe further qualifications for arbitrators.

The Law on Arbitration also specifies the categories of persons who are ineligible to serve as arbitrators. These include:

• members of the Parliament of the Republic of Azerbaijan and the Supreme Assembly (an organisation similar to parliament) of the Nakhchivan Autonomous Republic;
• civil servants;
• military personnel;
• members and employees of municipalities;
• employees of public legal entities;
• judges of the Republic of Azerbaijan;
• persons declared by a court to lack or have limited dispositive capacity;
• persons with an outstanding or unexpunged criminal conviction;
• military personnel transferred to the reserve during the preceding three years on grounds of professional misconduct or deprivation of military rank by a court judgment or disciplinary sanction;
• persons dismissed from law enforcement authorities;
• persons whose judicial office, public service (including special types of public service), employment in other state authorities, advocacy or notarial activities have been terminated as a disciplinary measure; and
• persons who have been removed from membership of the mediation council.

In addition to the qualifications applicable to arbitrators, it is also important to note that the Law on Arbitration incorporates the principle of competence-competence. Accordingly, the arbitral tribunal is empowered to rule on its own jurisdiction, including any objections concerning the existence or validity of the arbitration agreement. The arbitral tribunal may determine such objections either as a preliminary issue or in the arbitral award deciding the dispute on the merits.

Where the arbitral tribunal rules on its jurisdiction as a preliminary issue, either party may, within 30 days of receiving notice of that decision, apply to the commercial courts for a determination of the matter. A decision of the commercial courts finding that the arbitral tribunal lacks jurisdiction may be appealed to the appellate court, whose decision is final and not subject to further appeal.

The submission of such an application does not prevent the arbitral tribunal from continuing the arbitral proceedings or rendering an arbitral award pending the court’s determination. However, where the parties have agreed that the arbitration shall be administered by a permanent arbitral institution, recourse to the courts is excluded unless the rules of that institution provide otherwise.

Given that the Law on Arbitration is a relatively recent legislative enactment and judicial practice concerning this issue is still in its early stages of development, it is not yet possible to reach a definitive conclusion as to whether the national courts will adopt an active or a restrained approach in exercising their powers under the Law on Arbitration.

An objection to the arbitral tribunal’s jurisdiction must be raised no later than the submission of the statement of defence. The appointment of an arbitrator, or participation in the appointment process, does not preclude a party from raising such an objection.

An objection that the arbitral tribunal has exceeded the scope of its jurisdiction must be raised without delay after the matter alleged to fall outside the tribunal’s jurisdiction is introduced during the arbitral proceedings. Nevertheless, the arbitral tribunal may admit a late objection where it considers the delay to be justified.

The standard of judicial review applicable to questions of jurisdiction and admissibility has not yet been established in Azerbaijani judicial practice. As discussed in 5.2 Circumstances for Court Intervention, judicial practice concerning the review of an arbitral tribunal’s decision on jurisdiction remains at a very early stage of development. Consequently, it is not yet possible to determine whether the national courts will adopt a deferential approach to jurisdictional and admissibility determinations made by arbitral tribunals or apply a more intensive standard of review.

Nevertheless, judicial review should not be understood as permitting the courts to determine such issues afresh in place of the arbitral tribunal. Accordingly, while the precise scope and intensity of judicial review remain uncertain, it cannot be equated with an unrestricted de novo determination of questions of jurisdiction or admissibility.

Pursuant to Article 17 of the Law on Arbitration, where a claim is brought before a national court in respect of a matter that is the subject of an arbitration agreement, and before the examination of the merits either party objects to the resolution of the dispute by the court, the court shall leave the claim without examination and refer the parties to arbitration, provided that the arbitration agreement is not manifestly invalid, has not manifestly ceased to have effect, and there are no circumstances rendering its performance impossible.

Where no such objection is raised before the examination of the merits, the court shall examine the dispute on its merits. A party that has not raised such an objection may do so during the court proceedings only if it proves that it was not possible, for reasons beyond its control, to raise the objection before the examination of the merits.

A similar provision is also reflected in the Civil Procedure Code. Thus, pursuant to Article 259.0.5 of the Civil Procedure Code, where the parties have concluded, in accordance with the law, an arbitration agreement providing for the resolution of the relevant dispute by an arbitral tribunal, and either party raises an objection to the resolution of the dispute by the court before the examination of the merits, or such objection is raised during the court proceedings, provided that the party substantiates that it was not possible – for reasons beyond its control – to raise the objection before the examination of the merits, the court shall leave the claim without examination.

In practice, the courts follow these provisions. If a party objects before the merits are examined, or later with justified reasons, and the arbitration agreement is not manifestly invalid, ineffective or incapable of performance, the claim is left without examination and the parties are referred to arbitration. Otherwise, the court proceeds to examine the dispute on its merits.

With regard to the arbitral tribunal’s jurisdiction over third parties, it should be noted that, under the applicable legal framework, all commercial disputes, as well as any disputes in respect of which the parties are entitled to dispose of the subject matter of the dispute and which do not affect the rights or legitimate interests of third parties, may be resolved by arbitration, with the exception of disputes that are not capable of settlement by arbitration (as discussed in 3.2 Arbitrability).

As follows from the above-mentioned, only disputes that do not affect the rights or legitimate interests of third parties may be referred to arbitration. Accordingly, where a third party is not a party to the arbitration agreement, it cannot be concluded that the arbitral tribunal’s jurisdiction automatically extends to such third party.

The Law on Arbitration contains provisions governing interim measures. Unless otherwise agreed by the parties, the arbitral tribunal may, upon the request of a party, order the granting of interim measures. With respect to the legal effect of decisions on interim measures, it should be noted that, irrespective of the country in which such a decision is rendered, a decision of an arbitral tribunal granting interim measures is recognised as binding and enforced upon an application to the Baku Appeal Court, provided that no grounds exist under Azerbaijani legislation for refusing its recognition or enforcement and unless otherwise decided by the arbitral tribunal.

The Law on Arbitration provides for the following interim measures:

• maintaining or restoring the status quo pending the resolution of the dispute;
• taking measures to prevent current or imminent harm, including harm to the arbitral proceedings, or refraining from actions likely to cause such harm;
• preserving assets necessary for the enforcement of the final arbitral award; and
• preserving evidence that may be relevant and material to the resolution of the dispute.

The Law on Arbitration entitles the parties to apply to the competent court for interim measures either before the commencement of the arbitral proceedings or during the course of the arbitration. The court is empowered to grant such measures where the statutory requirements are satisfied.

Upon the application of a party, the competent commercial court may also order interim measures in support of arbitral proceedings. This power is not limited to arbitrations seated in Azerbaijan. Regardless of whether the place of arbitration is located within or outside the territory of the Republic of Azerbaijan, the commercial courts retain the powers conferred upon them by the Civil Procedure Code in relation to the granting of interim measures.

The jurisdiction of the national courts in this respect stems from their assistance functions in support of arbitration under the Civil Procedure Code. Accordingly, the granting of interim measures constitutes one of the forms of judicial assistance available in arbitral proceedings. Where the seat of arbitration has not been determined or is located outside the Republic of Azerbaijan, the relevant application shall be submitted to the Baku Commercial Court.

Under the Civil Procedure Code, the court may, upon the application of a party to an arbitration dispute, order interim measures where the actions or omissions of the opposing party may render the protection or restoration of the applicant’s rights impossible or substantially more difficult.

The types of interim measures available under the Civil Procedure Code include:

• attachment of property belonging to a party to the arbitration dispute that is in the possession of that party or other persons; and
• prohibiting a party to the arbitration dispute from carrying out specified acts.

In addition, an application for interim measures may be submitted either before the commencement of the arbitral proceedings or during the arbitration. It should also be noted that, although the concept of an emergency arbitrator is well established in international arbitration practice, it has not been expressly incorporated into Azerbaijani legislation.

Nevertheless, the Arbitration Rules of the Baku Arbitration Centre regulate the appointment of an emergency arbitrator and the applicable emergency arbitration procedure. This mechanism, however, is not expressly regulated under the Law on Arbitration or the Civil Procedure Code.

Under the Law on Arbitration, the arbitral tribunal may require the party requesting interim measures to provide appropriate security in connection with such measures. Similarly, the Civil Procedure Code provides that, where an application for interim measures is submitted before the commencement of the arbitral proceedings or during the arbitration, the court may require the applicant to provide suitable security. Such security may, at the court’s discretion, take the form of a bank guarantee or the deposit of a specified sum into the notary’s deposit account. Failure to provide the required security constitutes grounds for refusing the application for interim measures.

In addition to security for interim measures, the provision of security for arbitration costs may also be required. Unless otherwise provided in the arbitration agreement or agreed by the parties, the allocation of arbitration costs is governed by the Law on Arbitration. In this regard, the arbitral tribunal may require the parties to provide security for arbitration fees and other arbitration costs. Where such security is not provided, the arbitral tribunal may terminate the arbitral proceedings. A more detailed discussion of arbitration costs is provided in 10.3 Recovering Interest and Legal Costs.

Matters relating to arbitration are primarily governed by the Law on Arbitration. Chapter 5 of the Law is devoted to the conduct of arbitral proceedings. It contains provisions governing, inter alia:

• the equal treatment of the parties;
• the determination of procedural rules;
• representation and succession in the proceedings;
• the language of the proceedings;
• statements of claim and defence;
• oral hearings and written proceedings;
• the appointment of experts by the arbitral tribunal; and
• other procedural matters.

With respect to the conduct of arbitral proceedings, it should be noted that the relevant provisions have been drafted in accordance with the UNCITRAL Model Law, and Azerbaijani legislation does not establish any specific procedural requirements in this regard.

The principal departures from the UNCITRAL Model Law relate to representation in arbitral proceedings, succession in arbitral proceedings, and the recording of arbitral hearings. With regard to representation, the Law provides that the parties are entitled to be represented by an advocate or another representative at any stage of the arbitral proceedings.

Furthermore, as part of the accreditation process, it is also assessed whether the permanent arbitral institution has arbitration rules compliant with the Law on Arbitration.

As regards succession, unless otherwise agreed by the parties, a legal successor becomes a party to the arbitration agreement. Likewise, unless the parties have agreed otherwise, the death of a natural person, the reorganisation of a legal entity, or any other change of persons in the underlying substantive legal relationship does not result in the termination of the arbitration agreement or the replacement of the arbitrator or arbitrators already appointed.

Although Azerbaijani legislation sets out the requirements applicable to arbitrators, it does not establish any specific powers or obligations applicable exclusively to arbitrators within the framework of arbitral proceedings. Rather, such powers are primarily conferred upon the arbitral tribunal. These include, among others, the power to:

• rule on its own jurisdiction;
• order interim measures;
• determine the admissibility, relevance, materiality and weight of evidence;
• determine the seat of arbitration; and
• allocate arbitration costs, unless otherwise provided in the arbitration agreement or agreed by the parties.

The Law on Arbitration provides that the parties are entitled to be represented by an advocate or another representative at any stage of the arbitral proceedings.

The Law on Arbitration, however, does not define the terms “advocate” or “representative”. In this respect, the relevant provisions of Azerbaijani legislation should be taken into account. Under the Civil Procedure Code, only advocates (ie, attorneys) whose authority has been duly confirmed in accordance with national legislation may act as lawyers in civil proceedings.

Pursuant to the Law “On Advocates and Advocacy”, only Azerbaijani citizens who satisfy the statutory qualification requirements, have successfully completed the qualification examination and mandatory training, and have been admitted to the Azerbaijani Bar Association may practise as advocates. Persons who are not members of the Bar Association are not entitled to engage in advocacy activities or to use the title “advocate” or any translations thereof into another language.

With regard to foreign lawyers, legal assistance by them is limited only to the provision of advice and opinions concerning the laws of the state of which the foreign lawyer is a national or the application of the rules of international law. Their participation in court proceedings concerning civil, criminal, administrative, commercial and administrative offence matters is permitted only on the basis of reciprocity and in accordance with the international treaties to which the Republic of Azerbaijan is a party.

As regards representation, the Civil Procedure Code further provides that a legal entity may be represented before the courts by its duly authorised officers, employees whose principal place of employment is that legal entity, or advocates. The representative’s authority must be evidenced by a duly executed power of attorney issued in accordance with the applicable legal requirements.

Against this background, it may reasonably be concluded that the terms “advocate” and “representative” used in the Law on Arbitration should be interpreted in accordance with the corresponding concepts under Azerbaijani legislation. Accordingly, where a party to an arbitration seated in Azerbaijan wishes to be represented by foreign legal counsel, the preferable approach is for such person to appear as a “representative” rather than as an “advocate”. It should also be noted that Azerbaijani legislation does not prescribe any specific qualification requirements for persons acting as representatives of legal entities.

As arbitration remains a relatively new dispute resolution mechanism in Azerbaijan, there is still very limited practice regarding the manner in which arbitral tribunals exercise their powers in relation to the taking of evidence. The Law on Arbitration stipulates that an arbitral tribunal, or the parties with the tribunal’s consent, may apply to the commercial courts for assistance in obtaining evidence. Once such an application is submitted, the court reviews it and issues an appropriate decision within the scope of its statutory authority and in line with the relevant procedural rules.

The Civil Procedure Code likewise recognises the taking of evidence as one of the forms of judicial assistance available in support of arbitration. Applications submitted for this purpose are examined in accordance with the general rules governing the taking of evidence under the Civil Procedure Code. Under those rules, the responsibility for securing evidence rests with the court.

Evidence may be secured by, in particular:

• examining witnesses;
• appointing experts;
• requesting documentary evidence; and
• inspecting documentary or physical evidence.

The parties to the arbitral proceedings, or the arbitral tribunal where the application has been made by the tribunal itself, must be notified of the time and place at which the application will be considered. Their absence, however, does not prevent the court from determining the application. Following its examination, the court issues a ruling specifying the manner in which the evidence is to be secured. The records of the relevant procedural acts, together with all materials obtained during the taking of evidence, are subsequently transmitted to the arbitral tribunal, while the parties or, where appropriate, the arbitral tribunal are notified accordingly.

The rules of evidence are largely a matter for the arbitral tribunal. Unless the parties have agreed on the procedural rules governing the arbitration, the tribunal is free to conduct the proceedings in the manner it considers appropriate, subject to the requirements of the Law on Arbitration. This procedural discretion extends to determining the admissibility, relevance, materiality and evidentiary weight of the evidence presented by the parties.

Unlike the national courts, arbitral tribunals do not possess coercive powers in relation to the taking of evidence. Where a witness is summoned by a national court, attendance is mandatory, and an unjustified failure to appear may result in legal consequences, including the imposition of a fine. As a measure of last resort, the witness may be brought before the court by force to appear before the court. No comparable powers are vested in arbitral tribunals.

The Law on Arbitration does not address the issue of confidentiality. In practice, this gap is addressed by the Arbitration Rules of the Baku Arbitration Centre, which establish confidentiality as the default position, subject to any agreement of the parties to the contrary.

The duty of confidentiality extends to the parties and their representatives, witnesses, experts, third-party funders, members of the arbitral tribunal and emergency arbitrators, any person appointed by the arbitral tribunal (including the tribunal secretary), as well as the Baku Arbitration Centre itself. It covers the existence of the arbitration, all pleadings, evidence, submissions, correspondence exchanged in the course of the proceedings, and any award, decision or order rendered by the arbitral tribunal, except where disclosure is required or necessary:

• to protect or pursue a legal right or claim;
• to enforce or challenge an award in legal proceedings before a state court; or
• pursuant to an order by the arbitral tribunal on application by a party with proper notice to the parties.

The Law on Arbitration prescribes a number of formal requirements applicable to arbitral awards. An award must be made in writing and signed by the arbitrator or arbitrators. Where the arbitral tribunal consists of more than one arbitrator, the signatures of the majority of the tribunal are sufficient, provided that the reason for any omitted signature is stated in the award. If an arbitrator refuses to sign the award or delivers a dissenting opinion, this must also be recorded in the award, and the dissenting opinion is appended to the arbitration file.

As a general rule, an arbitral award must contain the reasons upon which it is based. An exception applies where the parties have agreed that no reasons are to be given or where the award records the terms of a settlement reached by the parties.

The award must also indicate the date on which it was rendered and the place of arbitration, the latter being deemed to be the place where the award was made. Unless otherwise provided by the arbitration agreement or the Law on Arbitration, an arbitral award becomes legally binding on the date it is rendered.

The Arbitration Rules of the Baku Arbitration Centre also establish specific time limits for the preparation of arbitral awards. Within 30 days of the submission of the final oral or written submission directed by the arbitral tribunal, the tribunal is required to notify both the parties and the Secretariat of the Baku Arbitration Centre of the estimated timeframe within which it expects to submit its draft award. Unless the Arbitration Commission determines otherwise, the arbitral tribunal must submit the draft award to the Secretariat no later than 90 days from the date of the final oral or written submission in the proceedings to which the award relates.

No specific restrictions are imposed under Azerbaijani arbitration legislation on the types of remedies that may be awarded by an arbitral tribunal.

Unless otherwise provided in the arbitration agreement or agreed by the parties, the allocation of such costs is subject to the following rules:

• the arbitral tribunal may determine the amount of the arbitration fees and other arbitration costs, decide the manner in which they are to be allocated, and apportion the tribunal’s costs between the parties;
• the arbitral tribunal may order one party to reimburse the other party for all or part of the costs incurred; and
• the arbitral tribunal may require the parties to provide security for arbitration fees and other arbitration costs and, where such security is not provided, may terminate the arbitral proceedings.

In addition, where one party is unable to provide the required security, the other party may provide such security in full. A decision by the arbitral tribunal that it lacks jurisdiction does not affect its authority to render an award allocating the arbitration costs already incurred.

A domestic arbitral award may be set aside by the commercial courts, in whole or in part, where any of the following grounds exists.

• Where the applying party submits the following evidence:
1. one of the parties to the arbitration agreement lacked legal capacity at the time of the conclusion of the agreement under the law applicable to that party, or the arbitration agreement is invalid under the law to which the parties have subjected it or, failing any indication thereon, under the laws of the Republic of Azerbaijan;
2. the party making the application was not duly notified of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present its objections and evidence;
3. the award deals with a dispute not contemplated by or not falling within the terms of the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement or the claims submitted – provided that, if the decisions on matters covered by the arbitration agreement or the claims submitted can be separated from those on matters not so covered, only the parts of the award containing decisions on matters not covered by the arbitration agreement or the claims submitted may be set aside; or
4. the composition of the arbitral tribunal or the arbitral proceedings was not in accordance with the agreement of the parties or, failing such agreement, with the Law on Arbitration.
• Where the court determines that:
1. the subject-matter of the dispute is not capable of settlement by arbitration under the laws of the Republic of Azerbaijan; or
2. the arbitral award is contrary to the Constitution of the Republic of Azerbaijan or to the public policy – ie, the imperative, universal and special public significance principles that constitute the foundation of the political, economic and legal structure of the Republic of Azerbaijan.

Unless otherwise agreed by the parties, an application for setting aside an arbitral award must be filed within three months from the date on which the applicant received the award. Where an application has been made for the interpretation or correction of the award, or for the issuance of an additional award, the three-month period runs from the date on which the arbitral tribunal renders its decision on that application.

These time limits do not apply where the arbitral award was procured through fraud or corruption, or where the award resulted from the intentional submission of false witness testimony, a knowingly false expert opinion, the falsification of documents, physical evidence or other evidentiary materials, or criminal conduct committed by the parties, other participants in the proceedings, or the arbitrators.

The scope of appeal against an arbitral award cannot be expanded or restricted by agreement between the parties.

The court may not review the merits of the arbitral tribunal’s decision when determining an application to set aside an arbitral award.

Azerbaijan has acceded to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards without reservations by the Law of the Republic of Azerbaijan “On Accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards” dated 9 November 1999, No 734-IQ.

With respect to domestic arbitral awards, as noted in 10.1 Legal Requirements, unless otherwise provided by the arbitration agreement or the Law on Arbitration, an arbitral award becomes legally binding on the date it is rendered. Such awards constitute enforcement documents under Azerbaijani law, and writs of execution issued on their basis must be submitted for enforcement within one month of their issuance. Enforcement is carried out by enforcement officers in accordance with the Law on Enforcement.

In relation to foreign arbitral awards, it should be noted that, irrespective of the country in which it was rendered, a foreign arbitral award is binding and may be enforced upon a written application to the competent court. A party seeking recognition or enforcement of an arbitral award must submit the original award or a notarised copy thereof or, where the arbitration was administered by a permanent arbitral institution, a copy certified by that institution. The applicant must also submit the original arbitration agreement or a notarised copy thereof or, where this is not possible, any document evidencing the existence of the arbitration agreement. Where the arbitral award or arbitration agreement is in a foreign language, a notarised Azerbaijani translation of those documents must also be provided.

Recognition or enforcement of a foreign arbitral award may, irrespective of the country in which it was rendered, be refused in whole or in part where the party against whom the award is invoked produces evidence that the award has not become binding on the parties or has been set aside or its enforcement suspended by a court of the country in which, or under the law of which, the award was made.

Where an application for the setting-aside of the arbitral award has been submitted to a court of the country in which, or under the law of which, the award was made, the court before which recognition or enforcement is sought may, if it considers it appropriate, adjourn its decision. At the request of the party seeking recognition or enforcement, the court may also order the opposing party to provide appropriate security.

As regards the immunity of the state or state authorities from the enforcement of arbitral awards, Azerbaijani legislation does not contain any specific provisions recognising or regulating such immunity.

As mentioned in 1.1 Prevalence of Arbitration, Azerbaijani courts generally adopt a pro-enforcement approach towards the recognition and enforcement of foreign arbitral awards. An exception arises where grounds exist for refusing the recognition or enforcement of a foreign arbitral award, in whole or in part. Those grounds are set out below.

• Where the party against whom the award has been rendered submits the following evidence to the court examining the application for recognition or enforcement:
1. one of the parties to the arbitration agreement was, under the law applicable to that party, under some incapacity at the time of concluding the arbitration agreement, or the arbitration agreement is invalid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country in which the arbitral award was rendered;
2. the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case;
3. the arbitral award deals with a dispute not contemplated by, or not falling within the terms of, the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement or the claims submitted to arbitration (provided that, where the decisions on matters submitted to arbitration can be separated from those on matters not so submitted, the part of the award containing decisions on matters falling within the scope of the arbitration agreement or the claims submitted to arbitration may be recognised and enforced);
4. the composition of the arbitral tribunal or the conduct of the arbitral proceedings was not in accordance with the agreement of the parties or, in the absence of such agreement, with the law of the place where the arbitration was conducted; or
5. the arbitral award has not yet become binding on the parties, or has been set aside or its enforcement suspended by a court of the country in which, or under the law of which, the award was rendered.
• Where the court determines that:
1. the subject matter of the dispute is not capable of settlement by arbitration under the laws of the Republic of Azerbaijan; or
2. the recognition or enforcement of the arbitral award would be contrary to the Constitution or the public policy of the Republic of Azerbaijan.

The Law on Arbitration defines the concept of public policy as the imperative, universal and special public significance principles that constitute the foundation of the political, economic and legal structure of Azerbaijan.

The Supreme Court of the Republic of Azerbaijan has also provided guidance on the interpretation of the public policy exception in its Ruling No 10-2(102)-14/2025, dated 8 August 2025. According to the Court, the concept of public policy must be interpreted narrowly. In reaching this conclusion, the Court relied on the approach adopted by courts in other jurisdictions when interpreting the public policy exception in the context of the recognition and enforcement of arbitral awards.

The Supreme Court emphasised that the public policy exception is exceptional in nature and should be invoked only in limited circumstances. It further held that the arguments advanced by the respondent effectively invited the court to review the arbitral award on its merits, a power that the court does not possess in recognition and enforcement proceedings. Accordingly, recognition or enforcement will be refused only where the arbitral award is contrary to the fundamental legal principles forming the basis of the political, economic and legal order of the Republic of Azerbaijan, rather than merely being inconsistent with a provision of Azerbaijani law.

Neither class arbitration nor group arbitration is specifically regulated under Azerbaijani arbitration legislation. Nevertheless, from a theoretical perspective, multiple parties may pursue claims relating to the same subject matter within a single arbitral proceeding.

Azerbaijani legislation does not establish any specific ethical rules applicable exclusively to arbitrators or counsel participating in arbitral proceedings. The only relevant instrument is the Regulation on the Rules of Professional Conduct for Advocates, adopted by the General Assembly (Conference) of the Azerbaijani Bar Association. However, that Regulation applies only to members of the Azerbaijani Bar Association. Accordingly, persons acting as representatives in arbitral proceedings who are not members of the Bar Association are not subject to its provisions.

The Law on Arbitration does not regulate third-party funding or impose any restrictions on its use.

The consolidation of arbitral proceedings is not regulated by the Law on Arbitration. However, the Arbitration Rules of the Baku Arbitration Centre provide for the consolidation of proceedings, subject to certain conditions. Consolidation may be ordered where:

• all parties have agreed to the consolidation;
• all of the claims in the arbitrations arise out of, or in connection with, the same parties and the same legal relationship or relationships; or
• the claims in the arbitrations arise out of or in connection with contracts consisting of a principal contract and one or more ancillary contracts, or the same transaction or series of transactions, provided that the arbitration agreements are compatible.

Given that Azerbaijani legislation permits arbitration only in respect of disputes that do not affect the rights or legitimate interests of third parties, arbitral awards cannot have binding effect on third parties. Consequently, Azerbaijani courts would not treat foreign third parties as being bound by such awards.