Açıqlama:

In light of the recent amendments in legislation it may be concluded that the legislator is seeking to establish robust regulatory framework for capital markets. Despite remaining lack of regulation, the derivative transactions are being concluded in Azerbaijani market. Such agreements are concluded with Azerbaijani counterparties or with foreign counterparties. This tendency raises certain questions pertaining not only to legislation directly governing such transactions but also leads to a thought what kind of protection apart from contractual protection is offered to foreign counterparties of derivative transactions. The Article seeks to identify whether over-the-counter (“OTC”) derivative transactions in particular, may fall under category of foreign investment, what are the threats for foreign investors entering into OTC transactions and what kind of protection are they offered should there be lack of protection envisaged by a given Bilateral Investment Treaty. For addressing the issues raised above, the Article offers two perspectives: protection offered by international agreements (namely Bilateral Investment Treaties) and arbitration or protection offered by national legislation of the Republic of Azerbaijan. Speaking of first perspective, the Article analyzes tendencies in drafting of Bilateral Investment Treaties, in particular definition of investment provided in Bilateral Investment Treaties. In addition, applicable court practices, namely rulings of International Centre for Settlement of Investment Disputes are also being analyzed. Speaking of second perspective, the Article refers to applicable legislation of the Republic of Azerbaijan in order to identify whether the rights of a foreign counterparty to OTC derivative transaction may qualify as foreign investment and enjoy respective level of protection.