By Karine Kalantarian
A senior government representative claimed on Saturday that Armenian courts have ultimate power to settle the dispute over the ArmenTel operator whose Greek owner has threatened to take the government to an international court. ArmenTel’s chief executive, Giorgos Vassilakis, indicated last week that the Hellenic Telecommunications Organization (OTE) has no other option but to file a suit to the London Court of International Arbitration to avoid losing its lucrative monopoly in Armenia’s telecom market. The 15-year exclusive rights were one of the most important provisions of ArmenTel’s $200 million sale to OTE in 1998.
The Armenian government moved on September 4 to unilaterally revoke the monopoly, accusing the company of “arbitrary and abusive conduct” that has stifled development of telecom services in Armenia. The move came at the end of public hearings moderated by the head of the State Commission on Securities, Eduard Muradian. He is widely expected to back the government’s case in a non-binding ruling within the next two weeks.
According to the government’s top attorney, Vahe Yacoubian, a decision to give ArmenTel a new operating license could be made as early as this month. He said OTE can challenge it at the London court, but must be prepared for a final litigation in Armenia.
“The decision of that [international] arbiter can be disputed at an Armenian court,” Yacoubian told RFE/RL. “It will have final say.”
The existing license allows the government to sanction ArmenTel if the latter fails to meet its contractual obligations. OTE will likely argue that the exclusive rights were part of ArmenTel’s takeover price and can not be revoked without an adequate financial compensation. But Yacoubian countered that the takeover agreement “has nothing to do with this process.”
“The license was part of the agreement,” he said. “The agreement does not state in any way that it takes precedence over the license.”
Armenian courts rarely rule against the state and would almost certainly back the government on the issue. OTE executives have not yet publicly reacted to the latest twist in the dispute. They have previously expressed a desire to sell OTE’s 90 percent stake in ArmenTel to another foreign investor.
Nor is it clear whether the conflicting parties will attempt to reach a compromise settlement.