ENVIRONMENT FOR OUR BUSINESS IN AZERBAIJAN NOT DEVELOPED AS YET

 

Caspian Energy (CE): Mr. Baghirov, what was the reason to start this kind of law firm in Azerbaijan? What areas do the services of BM International cover? What successes did the firm achieve during its activity period?  

Jamal Baghirov, Senior Partner, BM International Law Firm:  BM International was the first private law firm that came to existence after declaration of independence in Azerbaijan. The firm started its activity in March 1993. During the Soviet Union law services were mainly provided by state law offices. There was only a state Bar in Azerbaijan. After declaration of independence and breakaway from old principles of operation and adoption of new progressive laws, there was an immense necessity in new private companies offering legal services as a primary type of their activity. BM International was the first law firm in Azerbaijan. The emerging local business faced an urgent need in qualified legal support for their activity. Basic laws on property, on entrepreneurship, on banking activity were adopted at that time. They were certainly different from the previously existing Soviet laws. At this early stage Azerbaijan was a primary attention centre for foreign investors and we started offering our services to them. The laws on protection of foreign investments and on investment activity that also appeared at the same time were the core laws we were following. It was a very difficult period in our activity as the old Soviet codes such as Civil, on Civil Procedure and others were still in force, whereas requirements to capital investments were new. However, fortunately, by 2002 Azerbaijan had almost changed its legislative base. New Tax, Civil, Customs codes have been adopted.

During the period of its activity our firm succeeded in gaining trust of customers due to qualified work and high professionalism of employees. The firm is quite successful in local Azerbaijani market. The vast list of our clients includes both transnational corporations and private entrepreneurs.

 

CE: Are you happy with the current legislative basis in Azerbaijan?

Jamal Baghirov: I would not say it is perfect. In some aspects it is behind the legislations of other developed countries and even Russia. For example, I would like emphasize on the Tax Code. It was adopted in 2000, however after each final session of the Parliament it is supplemented by new changes and amendments. The number of modifications varies from 80 to 160. It proves that our legislation is still imperfect. The same can be said about other codes and laws. I believe these changes pursue the goal to improve the existing legislative basis. Modifications made to the approved laws rarely occur in western countries. Generally speaking, I would prefer to have even imperfect, but to certain extent contemporary legislation. Therefore, I am happy with the appearance of new laws and other legal acts that are good to rely upon.

 

CE: Do local entrepreneurs apply for your services? Do they understand the necessity to work with law firms?

Jamal Baghirov: With few exceptions local businessmen, as a rule, consider unnecessary to consult with law firms. By reasons unknown to me, it is not generally accepted in Azerbaijan to apply to lawyers while preparing documents or concluding agreements. Businessmen request lawyer's assistance only when they face serious problems with respect to concluded contracts and it is very difficult to effectively resolve the troubled client's problems at that stage. However, I cannot remember any case when a foreign investor arriving in Azerbaijan with a certain project would start working without consulting with a law firm since legal protection is a primary task for him. As a rule, this process is as following. For instance, our firm has a huge experience in rendering services in corporate financing and nowadays acts as a legal intermediary between foreign creditors and Azerbaijani Government. When Dutch ABN AMRO bank was about to grant a credit to ‘Azerbaijan Hava Yollary' (AZAL) State Concern of Azerbaijan to purchase new aircrafts, it applied to the British law firm, which in its own turn contacted us to get a relevant legal opinion on Azeri law. The Export-Investment bank of the Czech Republic did the same, while extending a credit on financing the construction of a motorway running from Baku towards the north to the Russian border. At first, the draft loan agreement was submitted to the Cabinet of Ministers, the Ministry of Finance and Transport and even the Parliament of Azerbaijan for consideration. These good examples prove that foreign businessmen do nothing without retaining a law firm.

Time and experience will teach our businessmen to consult with law firms before undertaking any serious steps. Administrative measures are not helpful in this respect. Azerbaijan entrepreneur has to reach the level when he will not be able to make any step without a lawyer. I believe that such time is coming soon. Therefore, I think that the ground for our business has not been ploughed yet. I can see good perspectives in Azerbaijan.

 

CE: Does Azerbaijan legislation allow presence of foreign law firms in local market? How strong is competition in the field?

Jamal Baghirov: When entrepreneurship was emerging in Azerbaijan, we were alone in the local market. Later, we felt competition and faced some difficulties in this regard. Azerbaijan legislation allows foreign law firms to set up their branch offices here. BM International established mutually beneficial cooperation with some of them and takes part in various projects. At the moment, there are some local firms with qualified specialists. On the other hand, competition creates a healthy market and establishes stimulus for qualified and professional services. In conditions of strong competition BM International continues to keep its leading positions in Azerbaijan.

Legal services field like others has its own problems and difficulties, which, first of all concern bureaucratic arbitrariness and corruption among officials, protectionism. In our practice we experienced some obstacles by some officials who set up their own law firms that "get" business offers without having any experience due to the administrative resources of their bosses. In today's conditions it is not surprising that BM International can easily lose a tender in Azerbaijan to any newly established law firm that is being supported by officials from the Ministry of Economic Development who took this business into their hands. However, in overseas tenders our firm is out of competition due to the fair and transparent approach to opportunities and lawyers of BM International that does not use dirty and black methods in its work. As a result, our firm has practically no clients in Azerbaijan. Our permanent clients in Azerbaijan are: AzEurotel JV, one of the largest Telecommunications companies, commercial bank Nikoil, financial corporation Uralsib, Lukoil Oil Company. Our reputation and the quality of rendered services enable foreign companies willing to set up business in Azerbaijan to work basically with us.

 

CE: What projects in Azerbaijan were implemented with direct legal participation of BM International?

Jamal Baghirov: We took part in implementation of a number of projects in Azerbaijan. I would like to dwell on the consulting provided to Azerbaijan Government in the tender on transfer into the management of energy-distribution networks of Baku, Sumgayit and other regions of the country to foreign companies.  We consulted the European Bank for Reconstruction and Development (EBRD) when the latter was extending a loan in the amount of $53 million to Azerbaijan Government for reconstruction of Yenikend hydropower station. Later we took part in the project on extension of a credit intended for continuation of construction of a motorway from Baku to the west towards Azerbaijan-Georgian frontier. The loan in the amount of $300 million was granted by the Tokyo branch of BNP Paribas (France).  

At the moment we are working on the project of purchasing six motor airbuses for AZAL State Concern. These airbuses will be used for short distance flights. We fruitfully cooperate with ABN AMRO (Netherlands) so as to implement the extension of a credit under this project. We also work on extension of a loan to be granted to support the aluminum industry of Azerbaijan.

 

CE: What international contracts was BM International awarded? In which overseas contracts did the firm take part?

Jamal Baghirov: The firm has been constantly expanding relations with many leading international law firms and is capable to offer legal services almost anywhere around the world. BM International is a regional partner of Chadbourne & Parke LLP, the distinguished American law firm. The firm keeps on developing and strengthening its international partnership relations. The EBRD, the World Bank, BNP Paribas (France), ABN AMRO (Netherlands), Soсiete Generale bank (French), Citibank (Great Britain) and others are among the active partners of the firm. We implemented a huge number of major projects in association with these companies.

In this regard, I would like to mention about our participation in the tender on selection of law firms that will provide legal services within the framework of Kazakhstan-Azerbaijan transport corridor project.  As it is known, the agreement on joining of Kazakhstan to the Baku-Tbilisi-Ceyhan pipeline system has been already signed. This project is beneficial for both Kazakhstan and Azerbaijan, which will get additional benefits from transit. Our firm, in cooperation with a distinguished international law firm Denton Wilde Sapte (Great Britain), has won the tender carried out in Paris by the implementing party of the Kashagan oilfield. Our firm has become a consultant of Total (France), the project's operator. This is a large-scale project from the point of view of both finances and the scope of implemented operations. The follow-up works include construction of terminals, ports and offshore piers in two segments of the Caspian coast. The total cost of the project is evaluated over $4 billion. In the future we will be able to offer consulting services to the winners of the tender on construction of Aktau-Baku underwater pipeline.

All merits and trust gained through our work were reflected in the highly authoritative European and international legal guides ‘Chambers Global' and ‘Legal 500'. The guides, which cover top European and international law firms, BM International is regarded as the only Azerbaijan entity that meets requirements of leading western law firms.

 

CE: How do you resolve HR issues? Is it difficult to find a professional lawyer?

Jamal Baghirov: The lawyers of our firm consult customers on all matters of Azerbaijan legislation and they have unrivalled experience in assisting foreign investors in implementation of projects in Azerbaijan. The range of our services includes consulting of corporate customers along with legal assistance in the field of banking law, finances, privatization, energy and natural resources, telecommunications, aviation, insurance, real estate, intellectual property, labour law and private legal matters. The firm offering such wide scope of services might possess competent and high-professional personnel. I do agree with a famous expression that success depends upon personnel. I have always known that without young competent lawyers I would not be so successful. Almost all employees of BM International have got degrees from western universities, new mentality and vision. Our lawyers took training in major European and international law firms and are fluent in a number of foreign languages. Very often our employees are offered job from other major and rich companies, and this proves the level of their professionalism and competence.