Yearly Archives: 2021

Since their publication in 1999 the three FIDIC contract forms, or, as also named, Books, have become not just well known and respected in international infrastructure contracting in all its many guises, but a major force for international cooperation and understanding.

The second editions of the three main FIDIC construction contracts were formally introduced at the London users’ conference in December 2017. The new Red, Yellow and Silver Books had long been anticipated and represented the first update to the three main forms since 1999.

FIDIC forms have U.K. origins and important features of the forms reflect English or common law concepts. FIDIC contracts have, however, been used successfully whatever the governing law and a feature of the contracts historically, as well as the 2017 editions, has been to ensure as far as possible that the general conditions are neutral with respect to the particular governing law chosen by the parties.

Clause 1.4 of the Yellow Book, as well as the Red Book, entitles that The Contract shall be governed by the law of the country (or other jurisdiction) stated in the Contract Data (if not stated, the law of the Country), excluding any conflict of law rules.

Under Armenian regulations, construction and design works, as a rule, are carried out on the basis of a construction contractor agreement, the regulation of which is mainly provided for by Chapter 37 of the Civil Code of the Republic of Armenia, and in many cases, regulations are flexible at the discretion of the parties.

For example, a feature of the Yellow Book in both editions is that, like the Red Book forms, it seeks to strike a fair balance of risk between Contractor and Employer. The Contract allocates risk by striking a balance between the need to protect the Employer from the time and cost consequences of physical conditions which an experienced Contractor ought to have foreseen, and the need to protect responsible contractors from the time and cost consequences of conditions which they cannot reasonably have been expected to foresee at tender stage.

Under Article 739 of the Civil Code of the Republic of Armenia, the distribution of risk between the parties is carried out as follows:

The risk of accidental loss of or accidental damage to the construction facility that is the subject matter of the construction contractor agreement shall be borne by the contractor before acceptance thereof by the customer.

However, risk allocation regulations are mainly dispositive, which entitles parties to choose the relevant scenario, in this case, using both of Contract forms as needed.

It is also worth noting that, despite traditional dispute resolution methods (national courts), the Armenian legislation recognizes the ability of alternative dispute resolution methods.

Օրենսդիրն իրավունքի սուբյեկտներին սուբյեկտիվ իրավունքներ վերապահելուց զատ, կանխորոշում է նաև այդ իրավունքների իրականացման սահմանները։ Եթե իրավունքի սուբյեկտը խախտում է օրենքով նախատեսված սահմանափակումները, ապա թույլ է տալիս իրավունքի չարաշահում։

Իրավունքի տեսությունը իրավունքի չարաշահումը բնորոշում է որպես թույլատրելի ընդհանուր վարքագծի շրջանակներում իրավունքներն իրականացնելիս իրավազոր անձի կողմից անթույլատրելի ձևերի օգտագործմամբ կատարվող իրավախախտման առանձնահատուկ տեսակ և այն պայմանականորեն դասակարգում է երկու հիմնական խմբի․

• Իրավունքի չարաշահում, որը կատարվում է այլ անձանց վնաս պատճառելու ուղղակի մտադրությամբ (շիկանա)․
• Իրավունքի չարաշահում, առանց այլ անձանց վնաս պատճառելու մտադրության, բայց օբյեկտիվորեն նրանց վնաս պատճառող․

Իրավունքի չարաշահումն արձանագրվում է, երբ առկա է, որպես կանոն, հետևյալ պայմանների համակցությունը.

• Անձը պետք է ունենա համապատասխան սուբյեկտիվ իրավունքը,

• Իրավունքի չարաշահումը տեղի է ունենում սուբյեկտիվ իրավունքի իրացման ընթացքում. անձն առերևույթ գործում է իրավական կարգադրագրերին համապատասխան,

• Անձի առերևույթ իրավաչափ գործողությունները հանգեցնում են պետության, հանրության կամ այլ անձանց օրինական շահերի խախտմանը, իսկ անձը ձգտում է հասնել իր համար ցանկալի արդյունքին կամ նպատակին,

• Իրավունքի չարաշահումը կամային գործընթաց է, այսինքն, անձը գիտակցում է, որ ինքն իր սուբյեկտիվ իրավունքը չարաշահում է, հետևաբար՝ պետք է կանխատեսի, որ կարող է վնաս պատճառել պետության, հանրության կամ այլ անձանց օրինական շահերին:

ՀՀ իրավական համակարգում իրավունքի չարաշահման արգելքը ամրագրվել է, ի թիվս այլնի, նաև ՀՀ քաղաքացիական օրենսգրքում (այսուհետ նաև՝ Օրենսգիրք)։

Մասնավորապես՝

Օրենսգրքի 12-րդ հոդվածը սահմանում է․

• Քաղաքացիների և իրավաբանական անձանց այն գործողությունները, որոնք իրականացվում են բացառապես այլ անձի վնաս պատճառելու մտադրությամբ, ինչպես նաև իրավունքն այլ ձևով չարաշահելը չի թույլատրվում:
• Մրցակցության սահմանափակման նպատակներով քաղաքացիական իրավունքներն օգտագործել, ինչպես նաև շուկայում գերիշխող դրությունը չարաշահել չի թույլատրվում:
• Նույն հոդվածի 1-ին կետով նախատեսված պահանջները չպահպանելու դեպքում դատարանը կամ արբիտրաժային տրիբունալը կարող է մերժել անձին նրան պատկանող իրավունքի պաշտպանության հարցում:

Վերոգրյալից հետևում է, որ արգելվում են ինչպես բացառապես այլ անձի վնաս պատճառելու մտադրությամբ իրականացված գործողությունները (շիկանա), այնպես էլ իրավունքն այլ ձևով չարաշահելը․

Ընդգծված ուշադրության է արժանացել մրցակցության սահմանափակման նպատակներով քաղաքացիական իրավունքների օգտագործման, ինչպես նաև շուկայում գերիշխող դիրքը չարաշահելու արգելքը․

Որպես իրավունքի չարաշահման իրավական հետևանք՝ սահմանվել է վեճը լուծող մարմնի կողմից սուբյեկտիվ իրավունքի պաշտպանության մերժման հնարավորությունը։ Իրավունքի չարաշահման դիտանկյունից օրենքի խախտմամբ ձեռք բերված կամ ձևականորեն օրենքի պահպանմամբ, սակայն իրավունքի նպատակային նշանակությանը հակառակ գործելու մտադրությամբ, այսինքն` իրավունքի չարաշահմամբ ձեռք բերված սուբյեկտիվ իրավունքը ենթակա չէ պաշտպանության։

Հարկ է նաև նշել, որ ՀՀ սահմանադրական դատարանը 2021թ․ հոկտեմբերի 12-ին թիվ ՍԴՈ-1613 որոշմամբ արձանագրել է, որ օրենքում «իրավունքի չարաշահում» հասկացության և հատկանիշների բացահայտված չլինելն ինքնին չի կարող գնահատվել իբրև խնդրահարույց իրավական որոշակիության տեսանկյունից (տե´ս ՀՀ սահմանադրական դատարանի 12 հոկտեմբերի 2021 թվականի թիվ  ՍԴՈ-1613)։

Confidential information is a basic business requirement. It plays an important role in those areas of business when talking about high technologies, scientific developments, in the field of IT. Such information is essential to protect business vitality, competitive advantage, industry leadership, and ultimately market share. How to keep relevant information secret? The best way to keep something confidential is not to disclose it. However, there are multiple instances in which parties may need to share business secrecy. One common way to disclose and at the same time protect relevant information is through the Non-Disclosure Agreement, which is sometimes also referred to as a Confidentiality Agreement or just NDA.

UK

In the UK, even absent a clear agreement, the manner of dealings can contribute significantly to creating an equitable duty of confidence. This model does not apply in a similar way in other jurisdictions; so, in that regard, the UK is more favorable to a disclosure than other jurisdictions. However, in relation to implied duties to act in good faith, the UK is significantly out of step and disclosures will generally be better off in other jurisdictions, particularly in continental Europe.

It should be noted that terms may be implied; that is, they are deemed to exist without being specified or written down. Implied terms fall into two categories:

1. • Those that are implied by law; and
   • Those that are implied by the conditions of a certain case.

USA

Information establishing a trade secret is commonly protected under US common law by the Uniform Trade Secrets Act and the duty of good faith is a well-known legal standard. Under the US law, trade secrets are a sub-category of NDAs since trade secrets are widely defined as any formula, product, design, or data not publicly known and which confers to its owner an economic and competitive advantage.

In California, Delaware and New York states, implied duties of good faith and fair dealing arise only once parties have entered into a contract. In practice, a duty implied at that stage is unlikely in most cases to do more than reinforce express obligations of confidentiality included in the contract. In the USA (as well as in UK), while discussing discloser’s preferred remedy, the courts will consider the “balance of hardships” (“balance of convenience” in the UK) by analyzing the merits of the claim and comparing the hardship suffered by the breaching party if an injunction is granted, to the hardship to the party seeking the injunction if it is not granted.

EU

In the EU region, the rules and regulations originate mainly from EC Directive 2016/943 of May 2016 and, accessorily from the Data Protection Directive (95/46/EC). Under article 3(1) of the EU Trade Secret Directive 2016/943, trade secrets are said to have been lawfully obtained whenever this acquisition has resulted from “observation, study, disassembly or testing of a product or object (…) that is lawfully in the possession of the acquirer of the information”. However, under article 4(1) of the same Directive, trade secret is misappropriated whenever there is a breach of a confidentiality agreement or of a contractual duty to limit the use of the trade secret.

France, Italy and Germany

Fixed compensation clauses are more common and may be referred to as a penalty. However, to be enforceable, the required compensation amount must be reasonable. If it is not, it may be reduced or increased by the court if manifestly excessive or insufficient or, under German law, held to be void for violation of public policy. If the discloser can prove a loss in excess of the stated amount, the excess may be recoverable.

Spain

parties usually provide for a penalty which serves as punitive damages (either in lieu of, or in addition to, the actual loss suffered) to avoid the burden of proving the actual loss. In some cases, this may be expressed as indemnification in lieu of damages. However, even here, the courts may reduce punitive damages if they consider them to be disproportionate.

Armenia

In Armenia, there is no directly expressed legal opportunity for non-disclosure agreements. However, NDAs can be drafted under the principle of freedom of contract. Also, it should be noted that, when including provisions in employment contracts, special attitude must be taken, in order not to violate guaranteed rights of employees. Nonetheless, regardless of the NDA, in Armenia confidential business information is protected by legislation. According to the article 141 of the civil code of RA, information is an official, commercial or bank secret when it has an actual or potential commercial value by virtue of it being unknown to third persons, there is no free access thereto on legal basis, and the holder of the information takes measures for the protection of its confidentiality. The persons having illegally obtained information that constitutes official, commercial or bank secret shall be obliged to compensate for the damages caused. Such obligation shall be imposed also on parties to a contract having disclosed and/or used official, commercial or bank secret in violation of a civil law or employment contract.

The structure of business models of many companies, (those which engaged in the implementation of long-term investment projects, service) are such when at the initial stage of activity companies face conditions of negative capital before receiving so-called deferred profits. In this situation many countries have adopted different approaches regarding the protection of creditors․

In the United States, corporate law provides maximum flexibility to the owners of the company, and creditors protect their interests by contract, while in Europe, the main purpose of corporate law is to protect creditors. 

One of the instruments of protection creditors by law is the rule of legal capital and its aftereffect rule recapitalize or liquidate (ROL), which means if the value of net assets falls below the minimum amount of the authorized capital, the company must be liquidated or recapitalized.        

In Armenia, generally, there is no established minimum amount of the authorized capital for companies. However, if the value of net assets is negative some consequences can be expected:

• • In the case of limited liability companies (LLC) if the value of net assets is negative the company is subject to liquidation.
  • In the case of joint stock companies (JSC), negative net asset value is admissible under certain conditions.

If the value of the company’s net assets is negative, or if the minimum amount of the authorized capital is established, the value of the company’s net assets is less than the established amount then:

• • The executive body of the company is obliged to submit to the Board of directors a request to convene an extraordinary meeting of shareholders,
  • An extraordinary meeting decides whether liquidate or continue the activities of the company,
  • A decision on continuing operations may be made if the board or the executive body has submitted a written opinion on the expediency and justification of continuing the company’s activities taking as a basis:     
•  
  • • • the directions of the company’s activities,       
      • scope of the company’s activities,       
      • its features,       
      • activity programs and other circumstances.

If such a decision is not taken, the company is subject to liquidation․

It is also should be noted, that according to the balance sheet insolvency rules, the debtor is insolvent where the liabilities of the debtor in two thousand times or more, the amount of the minimum wage established by law, exceeds the value of the debtor’s assets. Accordingly, in Armenia, the top limit of permissible negative equity is two million Armenian drams (approx. 4,170 USD).

However, some experts have suggested that legal capital rules are an ineffective and unnecessary form of creditor protection in developed economies, since the rules themselves are incapable of delivering the desired protection, and other strategies are available to provide what is necessary.

                 

Overview

The Republic of Armenia Law on Combating Money Laundering and Terrorism Financing (hereinafter referred to as the “Law”) sets forth the requirements for financial and other institutions in relation to the prevention of money laundering and terrorism financing. Under the Law several categories of institutions, including payment and settlement organizations and other financial institutions have an obligation to develop and implement anti-money laundering and terrorism financing strategies (including KYC procedures) and submit respective reports to the competent authority – the Central Bank.

Payment and settlement organizations shall undertake measures for identifying and assessing potential and existing AML risks (including most importantly a KYC procedure) and shall have efficient policies for managing and mitigating of the discovered risks, control mechanisms and procedures.

High-risk and otherwise regulated transactions. As a reporting entity, a payment and settlement organization shall report to the Central Bank on the transactions and / or business relationships subject to reporting and on all suspicious transactions (with the high-risk transactions mentioned in your inquiry potentially falling under either of those categories).

Transactions subject to reporting are non-cash transactions above the threshold of 20 million Armenian drams (approximately USD 41,650), as well as transaction with cash above the threshold of 5 million Armenian drams (approximately USD 12,250).

According to the Law, a transaction or business relationship is presumed suspicious when there are sufficient grounds to suspect that the asset has proceeded from crime or is linked to terrorism or terrorism financing, or where the transaction involves politically exposed persons or their relatives / affiliates from high risk countries (as determined by the CBA), as well as transactions with unusually high prices or otherwise unusual terms, when the economic or other lawful rationale behind it are not clear. Additionally, according to CBA regulations the following shall be criteria of high risk (which may, but does not necessarily imply that are also suspicious): transaction involves entities or arrangements that are personal asset-holding vehicles, or involves companies that have nominee shareholders or shares in bearer form, relates to businesses and business relationships that are cash-intensive, involves companies that have unusual or excessively complex ownership structure, transaction involve private banking activities, transactions are non-face-to-face business transactions or relationships.

KYC. Within the scope of the KYC procedure, the payment and settlement organization shall identify and verify the customer and the beneficiary (the individual on whose behalf or on whose benefit the customer acts and / or who actually controls the customer or the person on whose behalf or in whose benefit the transaction or business relationship is being carried out). It is generally required to identify the customer in-person, unless the payment to the customer will be made via another financial institution, in which case it is assumed that the latter will perform the in-person identification.

Outsourcing of KYC. Currently Armenian law does not allow to outsource KYC procedures to third parties. There is a possibility for allowing such outsourcing, but it is contingent on CBA regulations, and such regulations are not in place.