Armenia wins international arbitration case against Sanitek over Yerevan waste crisis

By Elen Muradyan

Armenia has won an international arbitration case brought by Lebanese waste management company Sanitek, after a tribunal rejected all claims against the Armenian government related to the collapse of garbage collection services in Yerevan.

In a statement issued on Tuesday, the Office of the Representative of Armenia on International Legal Matters said that a tribunal of the International Center for Settlement of Investment Disputes (ICSID) ruled entirely in Armenia's favor on May 22.

Sanitek and its owners had sought around $36 mn in compensation, claiming Armenia violated a bilateral investment protection agreement between Armenia and Lebanon after authorities terminated the company’s contracts in Yerevan.

Sanitek had been responsible for waste collection and sanitation services in the Armenian capital. The contracts were terminated by Yerevan municipality after authorities accused the company of failing to properly fulfill its obligations, triggering a garbage collection crisis across the city.

The crisis emerged during a politically turbulent period following Armenia’s 2018 Velvet Revolution. After longtime Republican Party mayor Taron Margaryan was removed from office, snap municipal elections in Yerevan brought to power Hayk Marutyan, a member of Prime Minister Nikol Pashinyan’s revolutionary team. The new city administration sharply criticized Sanitek’s performance as overflowing garbage bins and waste accumulation became a major public issue in the capital.

Sanitek initiated arbitration proceedings against Armenia in March 2021. The company argued that the Armenian authorities acted against it for political reasons following the change of government in 2018, rather than on contractual grounds.

According to the Armenian government, the ICSID tribunal unanimously rejected those arguments. The tribunal found that Sanitek had failed to provide adequate waste collection and street cleaning services despite receiving payment under its contracts.

The ruling stressed that inadequate sanitation services pose a risk to public health and concluded that Armenia’s decision to terminate the contracts was reasonable and justified.

The tribunal also stated that if the authorities had failed to take measures to replace Sanitek and restore services, the state could have been seen as neglecting its obligations toward the public.

Armenia welcomed the decision, saying the ruling reaffirmed that a state’s reasonable exercise of its contractual rights and obligations toward citizens does not constitute an internationally wrongful act.