Walnort deprived of right to acquire 75% stake in ZCMC due to unlawful conduct, lawyer says

Walnort Finance Ltd. (Walnort) has filed a complaint with the International Centre for Settlement of Investment Disputes (ICSID), accusing the Armenian government of unlawfully interfering in the internal corporate affairs of the Zangezur Copper Molybdenum Combine (ZCMC), one of Armenia’s largest industrial assets.

Walnort has described in full detail how Armenia’s actions violated its obligations under the Cyprus-Armenia BIT. Armenia has failed to accord Walnort’s investment fair and equitable treatment through its orchestrated campaign to take ZCMC, its harassment and intimidation of ZCMC, its shareholders and its employees, its abuse of its regulatory authority, and its pressure on the courts, which has resulted in a denial of due process to Walnort’s Armenian subsidiaries.

According to international law expert Aram Orbelyan, managing partner at Concern Dialog law firm, the company claims that through unlawful conduct, the Armenian government deprived it of the right to acquire 75% of ZCMC’s shares, which would have given it control of the company and entitled it to substantial dividends.

Walnort is seeking compensation estimated at $1.5 billion, a figure that could rise to $2-3 billion, depending on data the company says it has been denied access to as a shareholder.

Orbelyan told a program on Wednesday that the dispute dates back to 2020–2021, when the Armenian government publicly stated that ZCMC should be “returned to the people”, promising to do so “with a hammer”. He emphasized that under unclear circumstances, Walnort, one of ZCMC’s two shareholders, faced obstacles as the state began to intervene directly in the company’s affairs.

The lawyer said that ZCMC’s management sold a large block of shares to another company, which then donated 15% of the shares to the state. A subsequent exit by another shareholder raised the government’s stake to about 22%.

Before the sale, Walnort had already filed a lawsuit seeking to enforce its right to purchase the shares, Orbelyan said. However, he added that through judicial manipulation, including illegal injunctions, latenight court decisions and regulatory fast-tracking, a 60% stake in ZCMC was secretly sold to Industrial Company, which quickly “donated” 15% to the Armenian government.

“The illegal conduct deprived Walnort of its right to acquire a 75% stake in ZCMC, which would have ensured both management control and significant dividends,” Orbelyan said.

Walnort has also been deprived of the economic enjoyment of its original 12.5% shareholding, which has effectively been taken from it through baseless, indefinite freezing orders, in violation of the Cyprus-Armenia BIT’s prohibition on unlawful expropriation.