GILS Construction and Infrastructure: Azerbaijan
AZERBAIJAN
1. What types of design and construction work require a license in your country?
In the Republic of Azerbaijan, the following types of design and construction works require obtaining a license:
- Engineering and survey works in buildings and structures for the construction of which a permit is required;
- Construction and installation works on buildings and structures, for the construction of which a permit is required;
- Designing of buildings and structures for the construction of which a permit is required and notification proceedings are applied.
All aforementioned forms of license are to be granted from the Ministry of Economy of the Republic of Azerbaijan. To obtain a license, the applicant company’s employees must meet specific educational and experience requirements, the applicant company shall develop safety and quality standards, possess required material and technical base.
2. Can legal entities registered in foreign countries obtain a license for design or construction?
According to the legislation of the Republic of Azerbaijan, a legal entity regardless of its legal form, a branch or representative office of a foreign legal entity or an individual entrepreneur may apply for a license to the licensing authority of the Republic of Azerbaijan.
The effective law of the Republic of Azerbaijan on licenses and permits applies to all legal (except for the sphere of financial markets) entities operating in the territory of the Republic of Azerbaijan, regardless of their legal form, branches and representative offices of foreign legal entities and individual entrepreneurs, as well as licensing and permitting bodies.
Issues relating to the recognition in Azerbaijan of licenses issued in foreign States are regulated by international agreements to which the Republic of Azerbaijan is a party.
3. Which foreign licenses and permits in the field of construction and design can be recognized in your country?
Foreign individuals or legal entities may engage in construction activities in the territory of the Azerbaijan Republic in accordance with the Urban Planning and Construction Code of the Republic of Azerbaijan, approved by the Law of the Republic of Azerbaijan #392-IVQ on 29 June, 2012.
Issues relating to the recognition in Azerbaijan of licenses issued in foreign States are regulated by international agreements to which the Republic of Azerbaijan is a party.
4. Is it necessary to register a legal entity in your country to carry out design or construction work?
The legislation of the Republic of Azerbaijan allows foreign legal entities to obtain a license only if the foreign company has a representative office or branch registered in Azerbaijan.
At present there is one international treaty regulating this issue: Agreement on mutual recognition of licences for construction activities issued by licensing authorities of the member states of the Commonwealth of Independent States, concluded in Moscow on 03 July 1997, approved by the Law of the Republic of Azerbaijan # 805-IQ on 08 February 2000.
5. What requirements are imposed on construction contracts and design and survey contracts, including when one of the parties is a non-resident of your country?
The Resolution of the Cabinet of Ministers of the Republic of Azerbaijan on Approval of Provisions on Contracting Contracts in Capital Construction #228 dated 7 June 1994, contains specific requirements for construction contracts, especially to the subject matter of a contract of the construction works, the amount of the contract, period of the works, the rules of payment, obligations of the parties, specific conditions of the execution of work under the contract, delivery and acceptance of works, conditions for quality control of works and materials, guarantees and warranties, sanctions in case of breach of contract, conditions for termination of works and breach of contract, dispute resolution procedure.
According to aforementioned Provisions, the construction contract shall contain a list of all documents and materials including additional agreements, annexes, blueprints, classifications, estimates, agreements protocols, tables, etc., which are considered as its constituent parts.
6. In what cases should construction contracts and design and survey contracts be concluded following a special procurement procedure?
The Law on Public Procurement #988-VIQ of 14 July 2023 establishes a special procedure for the conclusion of such contracts and applies to all procurement carried out by state bodies, extra-budgetary state funds, public legal entities, legal entities in which the controlling interest (shares) belongs to the state, and other state enterprises and organisations (departments) that purchase goods, services and works.
7. What are the features of hiring local and foreign personnel in the implementation of construction and design and survey activities?
In the Republic of Azerbaijan employment matters are regulated by the Labor Code of the Republic of Azerbaijan #618-IQ dated 1 February 1999, according to which the labor relations arise after the employment contract concluded between the employer and employee is entered into legal force by registering it in the e-gov.az system using electronic signature. The content of the employment contract must comply with the requirements of the Labor Code and provide for the salary no lower than the established minimum.
Foreign citizens wishing to temporarily reside on the territory of the Republic of Azerbaijan and be engaged in paid labor activities must obtain a temporary residence and a work permit.
Although, certain categories of foreign citizens are exempt from the work permit requirement. A work permit is issued for a period up to 1 year, or if the employment contract is concluded for less than 1 year, for that period. A temporary residence permit is issued for the period specified by the applicant in the application, given that it does not exceed the validity period of the work permit. The validity term of both the work and temporary residence permits can be further extended.
8. Is it possible to use foreign standard construction contracts?
The legislation of the Republic of Azerbaijan does not prohibit the using of foreign standard contracts in the construction field, however, it shall be noted that all requirements of the local legislation, including the Civil Code of the Republic of Azerbaijan, the Construction Code of the Republic of Azerbaijan and specific local by-laws and normative acts shall be followed.
9. Is it possible to use foreign law and foreign courts when concluding construction contracts and design and survey contracts?
In accordance with the Law of the Republic of Azerbaijan on International Private Law #889-IQ dated 6 June 2000, the law to be applied to civil legal relations with foreign elements may be determined by agreement of the parties. In this case, the rights and obligations of the parties, interpretation, performance, non-performance, termination of the contract, failure to perform its results in the correct order and invalidity are governed by the respective provisions of the foreign law. Parties of the contract also may choose the law, which is applicable to use both to the whole contract and to its parts. Given that in the case at hand one of the parties is a foreign entity, the parties may choose the law of another jurisdiction as the governing law for their contractual relationship. However, it should be noted that according to Article 4 of the above-mentioned Law, the provisions of the foreign law will not be enforceable in case if they contradict the Constitution of Republic of Azerbaijan and the acts adopted on referendum. According to the Civil Procedure Code of the Republic of Azerbaijan, approved by the Law of the Republic of the Azerbaijan #780-IQ dated 28 December 1999, the exclusive competence of the courts of the Republic of Azerbaijan includes cases on claims for the ownership right to immovable property, as well as on the transfer of this property for lease or pledge, if the property which is the subject of such claims is located in the territory of the Republic of Azerbaijan.
Author: Fidan Vahabova (Senior Associate)