Azerbaijan amends investment law to regulate strategic assets

On February 24, 2026, President Ilham Aliyev of Azerbaijan signed into law amendments to Article 13 of the Law "On Investment Activity," introducing significant changes to the regulation of investments deemed of strategic importance.

Key Provisions of the Amendments

The amendments grant the Azerbaijani state the authority to acquire investments of strategic importance without the investor's consent under exceptional circumstances. Specifically, this can occur when such investments are determined to harm the interests of the Azerbaijani state and people or contradict national interests. Importantly, the law stipulates that such acquisitions will not be considered discriminatory, thereby aligning with international practices regarding state intervention for national security purposes.

Compensation Mechanism

A notable change introduced by the amendments concerns the compensation mechanism for investors. Previously, compensation was determined in accordance with the Law "On the Acquisition of Lands for State Needs." Under the new provisions, compensation will be calculated based on the procedure outlined in the investment agreement. In cases where such a procedure is not specified, compensation will be determined based on the fair market value of the investment.

Parliamentary Discussion and Expert Opinions

During parliamentary discussions, some members expressed concerns about the potential impact of the amendments on the investment environment. They highlighted that broad concepts such as "national interests" and "strategic importance" could create legal uncertainty and increase the risk of state intervention, potentially deterring investors.

In response, Azer Amiraslanov, Chair of the Economic Policy, Industry, and Entrepreneurship Committee, noted that similar provisions had existed in legislation since 1992 and had not hindered foreign investment. He emphasized that expropriation carried out within the framework of legislation and subject to fair compensation is not regarded in international practice as a violation of investor rights.

These amendments aim to clarify the legal mechanisms available to the state for safeguarding national and economic security interests while ensuring the protection of property rights and guaranteeing fair compensation in cases provided for by law.