By Harut Sassounian
This article analyzes the consequences of the decision of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) regarding the Armenian government’s nationalization of the privately owned Electric Networks of Armenia.
I recalled the axiom: “Armenians do not need enemies; they are their own worst enemies” after witnessing Prime Minister Nikol Pashinyan inflict immense damage not only on Armenia’s security and territorial integrity but also on its economy.
The latest financial fiasco began on June 17, when prominent businessman Samvel Karapetyan, a dual Armenian-Russian citizen, criticized the Armenian government for waging an anti-church campaign, saying that he would interfere “in his own way” to put an end to the controversy. Overreacting to Karapetyan’s words, the Prime Minister unleashed his dictatorial powers — despite his claimed allegiance to democracy — and ordered Karapetyan’s arrest and pretrial detention.
Pashinyan then ordered the nationalization of the Electric Networks of Armenia (ENA) in which Karapetyan and his partners had invested $700 million when they purchased it in 2015.
Pashinyan’s actions have several negative repercussions for Armenia:
— He violated Armenia’s laws by interfering in the judicial system, which falls outside his jurisdiction.
— On June 18, he urged his parliamentary majority to pass legislation enabling the expropriation of ENA.
— On Pashinyan’s instructions, the police entered Karapetyan’s Yerevan home seizing unspecified items. However, a judge ruled that the search was illegal.
— He directed the arrest of several ENA executives on fabricated charges and the detention of a Karapetyan family member.
— On July 18, he appointed an inexperienced individual as ENA’s interim manager, risking serious financial losses, disruptions to electricity supply, and higher fees for consumers.
— The Karapetyans (Samvel, Eteri, Sarkis, and Karen) and their Cypriot partner, Liormand Holdings Limited, referred their dispute to the SCC — as previously had been agreed with the Armenian government. However, Pashinyan is now ignoring that agreement.
— The SCC’s Emergency Arbitrator issued the following interim decisions on July 22:
“ORDERS the Respondent [Armenian government] to refrain from enforcing the Expropriation Laws (i.e. Law of the Republic of Armenia On Amendments to the Law ‘On Energy’ and Law of the Republic of Armenia On Amendments to the Law ‘On Public Services Regulatory Authority’) and taking any of the following further steps aimed at expropriating ENA:
• Changing members of ENA’s management bodies;
• Amending ENA’s articles of association;
• Appointing an interim manager (administrator) for ENA or, if appointed, empowering him to act as ENA’s executive body;
• Revoking ENA’s licenses;
• Announcing and organizing auctions on selling ENA’s shares;
• Seizing or disposing of ENA’s assets;
• Otherwise limiting ENA’s usual business operations.”
— Even though the Emergency Award is binding, ENA’s owners will ask the SCC for a final determination within 30 days. Should Armenia lose the final arbitration and confirm the expropriation, the government will have to pay ENA’s owners nearly one billion dollars — an obligation Armenia’s Justice Minister has said the government will honor. Unfortunately, Armenian taxpayers — not Pashinyan — will foot the bill.
— Furthermore, Armenia’s Justice Minister, contrary to the SCC decision, incorrectly asserted that the government need not comply with the arbitration’s ban on changing ENA’s management, claiming it “falls outside the scope” of the SCC ruling!
— The government then declared that the arbitration decision would be valid only if an Armenian court endorsed it — an assertion that defies its prior agreement that the tribunal’s award is final and binding. Trust in Armenian courts is eroded when judges carry out Pashinyan’s orders.
— Pashinyan’s campaign against Karapetyan stems not from economic concerns but from a political vendetta. Karapetyan, who is now forming an anti-Pashinyan political movement from prison, has seen his approval ratings surge ahead of the June 2026 parliamentary elections.
— As a result of Pashinyan’s illegal and reckless actions, no foreign company will risk investing in Armenia, knowing that the government can nationalize his assets and ignore arbitration awards. Because the ENA has a Cypriot partner, its expropriation violates the Cyprus-Armenia Bilateral Treaty on Encouraging and Protecting Investments (BIT) which will strain Armenia’s relations with the government of Cyprus.
If the Armenian government fails to comply with the SCC’s final Award, Armenia’s foreign assets could be frozen.
In addition to deterring new investors, Armenia cannot afford to lose billions of dollars in these pending arbitration cases:
— Walnort Finance Limited, a Cypriot company, is seeking from Armenia $1.2 billion in damages over a mining dispute.
— Sanitek, a Lebanese company, is seeking $25 million, alleging that Armenia violated its investment rights in waste management.
— UAE’s Air Arabia claims that the Armenian government mismanaged its multi-million-dollar investment.
— Former shareholders of Lydian International Limited, headquartered in the United States, are reportedly seeking up to $2 billion in compensation over significant financial losses in gold mining.
The Armenian government cannot continue operating in such a fiscally reckless and unlawful manner. There are seasoned experts among Diaspora Armenians who stand ready to offer strategic advice and guidance. All Armenia’s leaders need to do is ask and listen.
