Pashinian pledged to “quickly” nationalize the Electric Networks of Armenia (ENA) company on June 18 hours after its principal owner, billionaire Samvel Karapetian, was arrested following his strong criticism of the premier’s campaign against the Armenian Apostolic Church. The Armenian parliament approved on July 2 a bill allowing the government to “temporarily” take over ENA’s management before nationalizing the company or changing its owner.
Karapetian’s Tashir Group launched arbitration proceedings in Stockholm later in July as the government began enforcing the controversial law. The conglomerate based in Moscow is seeking as much as $500 million in compensation for what it sees as an illegal “expropriation” of its biggest asset in Armenia. Tashir has dismissed government allegations that it has mismanaged the electricity distribution network, saying that they are part of Pashinian’s politically motivated crackdown on Karapetian.
In an interim win for Karapetian, the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) ordered the government late last month to refrain from confiscating ENA from Tashir, changing ENA’s top management or revoking its parent company’s operating license pending a verdict in the case. The government essentially defied the injunction, refusing to reverse its decisions to replace the top company executives with members of Pashinian’s Civil Contract party and other government loyalists.
Following a weekly meeting in Yerevan on Thursday, Pashinian’s cabinet announced that it has hired Arnold & Porter, a U.S. law firm specializing in international arbitration proceedings, to represent it during the Stockholm tribunal’s consideration of the ENA case. The firm will be paid $3.2 million for that purpose, it said.
Infrastructures Minister Davit Khudatian expressed confidence last week that the government will win the arbitration battle. Some Armenian legal experts insisted, however, that the arbitration body is far more likely to rule in Tashir’s favor. They said Yerevan’s failure to comply with its recent injunction increased the likelihood of such an outcome.
The hefty compensation sought by Tashir is equivalent to 5.5 percent of the government’s overall budgetary spending projected for this year.
Critics view ENA’s seizure as a serious blow to Armenia’s business reputation. They say it will scare away major foreign investors who have already shown little interest in the South Caucasus nation during Pashinian’s seven-year rule.
Tashir claims to have invested at least $700 million in ENA and sharply cut its losses since buying the utility from Russia’s RAO UES energy giant in 2015. The acquisition followed street protests in Yerevan against a UES attempt to raise electricity prices in Armenia. Tashir has kept the prices unchanged.
Karapetian, who has mainly lived in Russia since the early 1990s, was initially prosecuted for allegedly calling for a violent overthrow of Pashinian’s government. He was also charged with tax evasion, fraud and money laundering after pledging to fight for regime change in Armenia and set up a new opposition group for that purpose. He denies the accusations.