Lawyer: Armenia has to comply with ENA arbitration ruling or face legal consequences

Armenia’s government is mischaracterizing the recent ruling issued by the Arbitration Institute of the Stockholm Chamber of Commerce regarding the nationalization of the Electric Networks of Armenia (ENA), lawyer Ara Ghazaryan told Panorama.am on Thursday.

Commenting on the government's official response, Ghazaryan stressed that the ruling does not address the merits of the dispute itself, but merely imposes preliminary protective measures, a common practice in such legal proceedings.

“This ruling does not delve into the legitimacy or purpose of the government's actions. Those are matters for the substantive phase of the trial,” said Ghazaryan, who has extensive experience representing cases in international courts. “The government is attempting to engage with the core issue of the dispute prematurely, when this decision is not about it at all.”

As a member of the United Nations and a state that has recognized the jurisdiction of the Stockholm Chamber of Commerce Arbitration Institute, Armenia is legally bound to comply with the tribunal’s ruling, he stressed.

According to Ghazaryan, the government's reaction exposes certain subjective tendencies within the state apparatus.

He clarified that such interim measures are standard and always explicitly state they are made “without prejudging the outcome of the main proceedings.” The real assessment on the legality of the nationalization, the presence of public interest and the proportionality of state actions will come later.

Ghazaryan also raised the possibility of further legal avenues, including an application to the European Court of Human Rights (ECHR), particularly by ENA shareholders. He noted a precedent in the Yukos case, where claims were simultaneously handled by both arbitration tribunals and the ECHR without procedural conflict.

The lawyer warned that failure to comply with the tribunal’s ruling could seriously damage Armenia’s international reputation and expose it to significant financial penalties.

“This legal claim already has solid ground, as the government’s actions appear arbitrary in several respects. That’s a legal assessment,” Ghazaryan said. “Non-compliance with the court’s decision could lead to a decisive loss in the arbitration proceedings, potentially triggering substantial compensation claims and harming the country’s image.”

He emphasized that overcoming the negative impact of non-compliance would require enormous diplomatic efforts and long time. “The ruling will become a lasting reference point, signaling that a state-led expropriation took place, something typically associated with socialist regimes.”

When asked whether Armenia might attempt to manipulate the legal process or reject the ruling outright, Ghazaryan acknowledged that while the country is technically sovereign and could refuse to comply, such a move would come at a steep cost.

“Yes, Armenia could wave it off and say it doesn’t recognize the ruling. But the fact that this court issued a decision means it has jurisdiction, which Armenia agreed to when it joined the UN and accepted the court’s framework,” he explained. “There is no real dispute over jurisdiction. Non-compliance would severely impact Armenia’s credibility and could result in a large financial settlement, considering the size of the enterprise involved.”

Meanwhile, Ghazaryan did not rule out the possibility of a negotiated settlement. “In many arbitration cases, parties end up reaching an agreement during the proceedings,” he said. “Given the political circumstances, Armenia might eventually propose a settlement. The terms remain unclear, but there is still room to maneuver.”