Armenia to provide compensation if electricity grid is nationalized, justice minister says

By Elen Muradyan

Armenia’s Justice Minister Srbuhi Galyan has assured that if the Electricity Networks of Armenia (ENA) is nationalized, compensation to current owner Samvel Karapetyan will be mandatory under Armenian law.

“If it comes to nationalization or state appropriation, or to the transfer of ownership based on a declaration of public interest, it will undoubtedly be subject to compensation,” Galyan told CivilNet in an interview, underscoring that Armenian legislation does not permit property seizure without financial redress.

Galyan emphasized that even in the most heated political circumstances, no Armenian official has suggested avoiding compensation. “Not once, even amid sharp political statements, has there been any claim that compensation will not be paid,” she said.

The remarks come amid an escalating legal and political dispute between the Armenian government and Karapetyan, the Russian-Armenian billionaire and owner of ENA, who is currently in pre-trial detention. His lawyers have filed an international arbitration claim at the Stockholm Chamber of Commerce, arguing the state’s actions violate Armenia’s legal obligations and investment protections.

Galyan stated that the emergency arbitration ruling in favor of Karapetyan is not automatically enforceable under Armenian law. Citing the New York Convention, she explained that Armenian courts may refuse to recognize or enforce a foreign arbitral award if it is found to be contrary to public order. “This is a matter of applying the law,” she said. “If the ruling violates or undermines public order, it may serve as a basis to deny enforcement.”

However, legal expert Taron Simonyan criticized this reasoning, calling the “public order” argument a weak legal basis for refusing enforcement. “Armenian law does allow courts to reject enforcement of an arbitral ruling if it contradicts public order,” Simonyan told CivilNet, “but in international legal practice, this threshold is extremely high.”

“To justify such a refusal, the court would need to creatively define what sort of public order the state is trying to protect,” he said. “In practice, this is usually limited to extraordinary cases involving public morality or national security—not commercial disputes over electricity infrastructure.”

Simonyan argued that the government had other domestic legal tools at its disposal to address ENA’s alleged mismanagement or risks of blackouts, such as launching an investigation through the Public Services Regulatory Commission or initiating a financial audit. “If you find legal violations, begin an administrative process,” he said. “If instead you make political statements and accusations, then what you’re doing is purely political—and discriminatory.”

While the arbitration ruling temporarily blocks ENA’s nationalization, Galyan explained that it only applies as an interim measure. “It’s different from a final award,” she said. If the ruling is not followed voluntarily, the opposing party may request domestic courts to enforce it—but enforcement can still be refused on convention-based grounds.

At the same time, Galyan stressed that the current legal steps taken by the government do not amount to full nationalization. “What I can emphasize is that the legal instruments applied thus far do not constitute nationalization—at least not at this stage,” she said.

The Civil Code and Constitution of Armenia, she added, have long allowed for nationalization and expropriation, but only in return for appropriate compensation. “The Constitution allows for limiting property rights, and the Civil Code permits nationalization. However, such restrictions must be compensatory,” she said.

Context: ENA nationalization amid broader crackdown

Galyan’s remarks come at a politically sensitive moment, as the government moves to assume control over ENA following Karapetyan’s arrest in June on charges of calling for regime change. The arrest came shortly after the businessman expressed support for the Armenian Apostolic Church in its standoff with Prime Minister Nikol Pashinyan, who has demanded the resignation of Catholicos Karekin II.

Within days of Karapetyan’s detention, lawmakers passed legislation granting the government powers to install new management at ENA without a court ruling. Pashinyan later announced the state would take over the utility to prevent what he described as a looming energy collapse, citing blackouts across the country.

Opposition lawmakers and legal experts argue that the move violates due process and could trigger costly international arbitration proceedings under the Armenia-Cyprus bilateral investment treaty, since a 30% stake in ENA is held by a Cyprus-based company reportedly linked to Karapetyan.

Justice Minister Galyan downplayed those risks, insisting the government’s actions are consistent with legal norms and public interest. Prime Minister Pashinyan has suggested that ENA could ultimately be run by a third-party operator rather than the state itself, citing examples like Veolia's management of Armenia’s water infrastructure.

Karapetyan’s legal team has vowed to continue fighting both in domestic courts and international forums, warning that the state’s actions amount to politically motivated expropriation.