The Code of Administrative Offences has been approved in accordance with the law of Azerbaijan Republic dated 29 December 2015. The mentioned new code imposes some limitations on entrepreneurs and there are some huge risks that they shall be aware of.
For Instance, the clause 430.4 of the mentioned code imposes a penalty for importers that unable to import their goods in return of paid advance payment to exporters / forwarder. The penalty is up to 30 (thirty) percent of the total contract amount which is a huge risk for big transactions.
Although the mentioned code does not mean any mandatory time frame for imported goods, the Central Bank of Azerbaijan enforces residents and non-residents to import their goods within 270 days from the date of advance payment or receive the made payment back within the mentioned time according to instructions accepted with its relevant decree dated 28 November 2016.
In such cases banks reports your case to the Chamber of Financial Supervision incorporated with the decree of the president of Azerbaijan Republic in 2016. Chamber files a claim against you before the court respectively. In theory courts shall take into account the fact whether the importer have an intention to import the mentioned goods or not. For instance, we believe an evidence which proves the import of goods shall exempt the complainant from the penalty. But in practice if the time frame of 270 days has been passed, courts automatically impose penalty to importers.
We find such import limitations problematic; thus such provisions contradict with the Constitution of Azerbaijan Republic. Such restrictions are against the free entrepreneurship rights given by the constitution. On the other hand there is no timeframe for the import in accordance with the Code of Administrative Offences and decree of Azerbaijani Central Bank shall not be considered as normative deed.
Notwithstanding anything mentioned above, it shall be noted that entrepreneurs shall be careful while importing goods from overseas and when making an advance payment.
How to overcome such restrictions?
1) Make sure the specifications of the goods allows them to be produced and imported within 270 days;
2) When taking into account 270 days time frame, keep a room for force majeure events or delays by exporters;
3) Instead of advance payment you may hold such money in escrow account. In such event the restrictions will not be applied to your case.
This article was prepared as a general information by the attorneys of Baku Attorneys & Consultants (BAC), Azerbaijani law firm. BAC is a full service law firm based in Baku and it has a strong team of highly experienced attorneys and consultants, specialized in rendering various expert services to foreign and local clients in Azerbaijan. Please, feel free to reach us via www.batco.az to further discuss your case.