Member News

Post date: Friday, 17 July, 2015 - 15:34
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Global law firm Denton’s ­– a TEAS member company – has published the ninth edition of its invaluable guide to doing business in Azerbaijan. Entitled Succeeding in Azerbaijan, it is based on the collective knowledge and experience gained during the many years that the Baku branch has advised clients in Azerbaijan.

The Denton’s guide highlights some of the principal issues of interest to those currently in, or wishing to enter, this market. It serves as a good, practical introduction to the legal and business environment in the country. This edition was officially launched on 1 June 2015 at the Denton’s Baku annual client breakfast briefing held during the Caspian International Oil and Gas Exhibition. To download the full guide in pdf format, go to http://bit.ly/dentons2015

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Post date: Friday, 17 July, 2015 - 15:30
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The Baku branch of global law firm Denton’s – a TEAS member company – has issued a client alert related to recent amendments to the Azerbaijani Civil Code, which became effective on 24 May 2015. These specify new regulations for related party transactions, which now encompass all Azerbaijani legal entities.

Previously, similar regulations existed only for issuers of investment securities (company shares and bonds) and banks. The new rules are applicable to any transaction or series of related transactions between a legal entity and a related party with respect to such legal entity. To read the full client alert, go to http://bit.ly/dentonsrelatedparty.

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Post date: Friday, 10 July, 2015 - 10:27
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A client alert from the global law firm Dentons – a TEAS member

One consequence of this move was that loans granted by local banks to local customers in foreign currency became more expensive, because the Azerbaijani Manat (AZN) currency was weakened by 25 per cent. This raised a question of whether foreign currency-denominated loans between Azerbaijani residents were even constitutional. Article 19, paragraph III of the Azerbaijani Constitution prohibits using any monetary unit as a means for payment on the territory of the Republic of Azerbaijan, other than the AZN. At the same time, Article 439.1 of the Azerbaijani Civil Code, the cornerstone of commercial law in the country, states that monetary obligations must be denominated in AZN, except where one of the parties to a transaction is a foreign person or entity.

So the first issue presented before the Constitutional Court was whether foreign currency-denominated loans were constitutional in light of the prohibition in the Constitution against using any currency other than AZN as a means of payment and the first sentence of Article 439.1 of the Azerbaijani Civil Code (“monetary obligations must be denominated in AZN”). Here, the Court essentially ruled that the wording in question does not apply to obligations arising out of loan agreements because, in lending transactions, money is used not as a means of payment, but rather as something that is borrowed and must be returned.

The second issue was whether the second sentence of Article 439.1 of the Azerbaijani Civil Code (“if one of the parties is a foreign physical person or legal entity, the parties, if it is not prohibited by law, may specify monetary obligations in foreign currency”) was unconstitutional. The Court interpreted this provision as providing only the right to indicate the obligation in foreign currency in certain circumstances and not the right to make payment in such currency, which means that it is not unconstitutional, because the Constitution only prohibits using foreign currency as a means of payment.

As the Court addressed the constitutionality of Article 439.1 of the Civil Code, it necessarily also addressed the constitutionality of Article 439.2, which set forth the mechanism for the repayment of foreign currency denominated loans. Namely, it stated that if a foreign currency-denominated obligation must be performed in Azerbaijan, it must be paid in AZN, except where it is agreed that the payment should be made in foreign currency. It went on to state that, if the payment is to be made in AZN, the amount to be paid must be recalculated at the rate effective at the place and time of payment. The court ruled that payments under foreign currency-denominated loans (both principal and interest) must be made in the currency agreed by the parties. Alternatively, where the parties have failed to include such a term into the agreement, the loan may be repaid in AZN at the exchange rate prevailing at the place and time of payment.

A full version of the Constitutional Court Decision may be accessed at www.constcourt.gov.az/decisions/330

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Post date: Friday, 10 July, 2015 - 10:22
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Dentons, the global law firm, has advised Petronas, the Malaysian oil and gas giant, on its acquisition of the 15.5 per cent Statoil stake in the Azerbaijani Shah Deniz gas field production-sharing agreement, including associated pipelines. The deal was completed in April 2015.

Shah Deniz is one of the largest gas projects in the world, paving the way for Caspian gas to be delivered directly to European markets for the first time through the Southern Energy corridor into Italy, thereby providing diversity of supply for Europe.

This major transaction was completed in a short time period due to Petronas’ focused in-house legal and commercial teams. The deal represents one of Petronas’ largest acquisition deals.

The Dentons team was led by Humphrey Douglas, Energy Partner; Nigel Webber, Corporate Partner; and James Hogan, Partner, Azerbaijan. Senior Associates included Joseph Altendorf, Helen Bowdren and Ophelia Abdullayeva.

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Post date: Friday, 19 June, 2015 - 10:54
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A client alert from the global law firm Denton’s – a TEAS member

One consequence of this move was that loans granted by local banks to local customers in foreign currency became more expensive, because the Azerbaijani Manat (AZN) currency was weakened by 25 per cent. This raised a question of whether foreign currency-denominated loans between Azerbaijani residents were even constitutional. Article 19, paragraph III of the Azerbaijani Constitution prohibits using any monetary unit as a means for payment on the territory of the Republic of Azerbaijan, other than the AZN. At the same time, Article 439.1 of the Azerbaijani Civil Code, the cornerstone of commercial law in the country, states that monetary obligations must be denominated in AZN, except where one of the parties to a transaction is a foreign person or entity.

So the first issue presented before the Constitutional Court was whether foreign currency-denominated loans were constitutional in light of the prohibition in the Constitution against using any currency other than AZN as a means of payment and the first sentence of Article 439.1 of the Azerbaijani Civil Code (“monetary obligations must be denominated in AZN”). Here, the Court essentially ruled that the wording in question does not apply to obligations arising out of loan agreements because, in lending transactions, money is used not as a means of payment, but rather as something that is borrowed and must be returned.

The second issue was whether the second sentence of Article 439.1 of the Azerbaijani Civil Code (“if one of the parties is a foreign physical person or legal entity, the parties, if it is not prohibited by law, may specify monetary obligations in foreign currency”) was unconstitutional. The Court interpreted this provision as providing only the right to indicate the obligation in foreign currency in certain circumstances and not the right to make payment in such currency, which means that it is not unconstitutional, because the Constitution only prohibits using foreign currency as a means of payment.

As the Court addressed the constitutionality of Article 439.1 of the Civil Code, it necessarily also addressed the constitutionality of Article 439.2, which set forth the mechanism for the repayment of foreign currency denominated loans. Namely, it stated that if a foreign currency-denominated obligation must be performed in Azerbaijan, it must be paid in AZN, except where it is agreed that the payment should be made in foreign currency. It went on to state that, if the payment is to be made in AZN, the amount to be paid must be recalculated at the rate effective at the place and time of payment. The court ruled that payments under foreign currency-denominated loans (both principal and interest) must be made in the currency agreed by the parties. Alternatively, where the parties have failed to include such a term into the agreement, the loan may be repaid in AZN at the exchange rate prevailing at the place and time of payment.

A full version of the Constitutional Court Decision may be accessed at www.constcourt.gov.az/decisions/330

Link: view
Post date: Friday, 19 June, 2015 - 10:39
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Dentons, the global law firm, has advised Petronas, the Malaysian oil and gas giant, on its acquisition of the 15.5 per cent Statoil stake in the Azerbaijani Shah Deniz gas field production-sharing agreement, including associated pipelines. The deal was completed in April 2015.

Shah Deniz is one of the largest gas projects in the world, paving the way for Caspian gas to be delivered directly to European markets for the first time through the Southern Energy corridor into Italy, thereby providing diversity of supply for Europe.

This major transaction was completed in a short time period due to Petronas’ focused in-house legal and commercial teams. The deal represents one of Petronas’ largest acquisition deals.

The Dentons team was led by Humphrey Douglas, Energy Partner; Nigel Webber, Corporate Partner; and James Hogan, Partner, Azerbaijan. Senior Associates included Joseph Altendorf, Helen Bowdren and Ophelia Abdullayeva.

Link: view

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