CIVIL CODE OF THE REPUBLIC OF ARMENIA Adopted by the National Assembly on 5 May 1998 FIRST SECTION GENERAL PROVISIONS CHAPTER 1 CIVIL LEGISLATION AND OTHER LEGAL ACTS CONTAINING NORMS OF CIVIL LAW Article 1. Relations regulated by civil legislation and by other legal acts containing norms of civil law 1. The civil legislation of the Republic of Armenia consists of this Code and other laws containing norms of civil law. Norms of civil law contained in other laws must comply with this Code. 2. Civil legislation, as well as the decrees of the President of the Republic of Armenia and the decisions of the Government of the Republic of Armenia containing norms of civil law (hereinafter referred to as “other legal acts”) shall determine the legal status of participants in civil circulation, the grounds for arising and the procedure for the exercise of the right of ownership and other property rights, exclusive rights to the results of intellectual activity (intellectual property), shall regulate contractual and other obligations as well as other property relations and personal non-property relations related thereto. Participants in relations regulated by civil legislation and other legal acts shall be deemed to be natural persons — the citizens of the Republic of Armenia, citizens of foreign states, stateless persons (hereinafter referred to as “citizens”) — and legal persons, as well as the Republic of Armenia and the communities (Article 128). Rules prescribed by the civil legislation and other legal acts shall apply to the relations with the participation of foreign legal persons, unless otherwise provided for by law. 3. Civil legislation and other legal acts shall regulate the relations among persons exercising entrepreneurial activity or those with the participation thereof. 4. Family, labour relations, relations pertaining to the use of natural resources and protection of the environment shall be regulated by civil legislation and other legal acts, unless otherwise provided for by family, labour, land, nature conservation and other special legislation. 5. Relations pertaining to the exercise and protection of inalienable human rights and freedoms and other intangible assets shall be regulated by civil legislation and other legal acts, unless otherwise arises from the essence of these relations. 6. Civil legislation and other legal acts shall not apply to property relations, including tax, financial and administrative relations, based on administrative or other authoritative subordination of one party over another, unless otherwise provided for by the legislation. 2 Article 2. Entrepreneurial activity Entrepreneurial activity shall be considered the independent activity of a person conducted at own risk, the basic purpose of which is to gain profit from the use of property, sales of goods, performance of works, or provision of services. Article 3. Principles of civil legislation 1. Civil legislation is based on the principles of equality, autonomy of will, and property autonomy of the participants of relations regulated thereby, inviolability of ownership, freedom of contract, impermissibility of arbitrary interference by anyone in private affairs, necessity of unhindered exercise of civil rights, ensuring the reinstatement of violated rights, judicial protection thereof. 2. Citizens and legal persons shall acquire and exercise civil rights upon their will and to their benefit. They shall be free in the establishment of their rights and responsibilities on the basis of a contract, in determining any condition of the contract not contradicting with the legislation. Civil rights may be restricted only by law, where it is necessary for the purposes of protection of state and public security, public order, health and morals of the public, rights and freedoms, honour and good reputation of others. 3. Goods, services and financial means shall move freely in the entire territory of the Republic of Armenia. Restrictions on movement of goods and services may be introduced in accordance with law where those are necessary for ensuring the safety of people, protection of life and health, preservation of nature and of cultural values. 3 Article 4. Other legal acts 1. In accordance with Article 78 of the Constitution of the Republic of Armenia, the relations stipulated in Article 1 of this Code may — within the term prescribed by the National Assembly of the Republic of Armenia — be regulated also by the decisions of the Government of the Republic of Armenia that have the force of law. 2. On the basis of this Code and other laws and for the execution thereof, the President of the Republic of Armenia shall have the right to adopt decrees containing norms of civil law. 3. On the basis of this Code and other laws, of the decrees of the President of the Republic of Armenia and for the execution thereof, the Government of the Republic of Armenia shall have the right to adopt decisions containing norms of civil law. 4. In case a decree of the President of the Republic of Armenia, a decision of the Government of the Republic of Armenia contradicts this Code or other law, this Code or the respective law shall apply. 5. The operation and application of norms of civil law contained in the decrees of the President of the Republic of Armenia and the decisions of the Government of the Republic of Armenia shall be determined by the rules of this Chapter. 6. Ministries and other bodies of executive power, as well as local self-government bodies may issue acts containing norms of civil law only in the cases and to the extent provided for by this Code, other laws and legal acts. Article 5. Operation of civil legislation and other legal acts in time 1. Acts of civil legislation and other legal acts shall not have retroactive effect and shall apply to relations having arisen after the entry into force thereof. 4 The operation of law shall extend to the relations having arisen before the entry into force thereof only in the cases where it is directly provided for by law. 2. With respect to the relations having arisen before the entry into force of an act of civil legislation or other legal act, it shall apply to the rights and responsibilities having arisen after the entry into force thereof. Relations of parties to a contract concluded before the entry into force of an act of civil legislation or other legal act shall be regulated in accordance with Article 438 of this Code. Article 6. Civil legislation, other legal acts and international treaties 1. International treaties of the Republic of Armenia shall apply directly to the relations mentioned in Article 1 of this Code, except for the cases when it follows from the international treaty that promulgation of a domestic act is required for the application thereof. 2. Where an international treaty of the Republic of Armenia prescribes norms other than those provided for by the civil legislation and other legal acts, the norms of the international treaty shall apply. Article 7. Customary business practices 1. Customary business practice shall be the rule of conduct developed and widely applied in any area of entrepreneurial activity, not provided for by the legislation, regardless of the fact of being fixed in any document. 2. Customary business practices contradicting the mandatory provisions of legislation or contract shall not be applied. 5 Article 8. Interpretation of civil law norms Civil law norms must be interpreted in accordance with the literal sense of the words and expressions contained therein. In case of different interpretations of the words and expressions used in the text of civil law norms, preference shall be given to the interpretation complying with the principles of civil legislation as stated in point 1 of Article 3 of this Code. Article 9. Application of civil law norms by analogy 1. In the cases where relations provided for in Article 1 of this Code are not directly regulated by law or upon agreement of the parties and there is no customary business practice applicable thereto, the norms of civil legislation regulating similar relations (analogy of statute) shall be applied to such relations, unless it contradicts the essence thereof. 2. In case of impossibility to use analogy of statute, the rights and responsibilities of parties shall be determined on the basis of principles of civil legislation (analogy of law). 3. Application by analogy of norms restricting civil rights and prescribing liability shall not be permitted. 6 CHAPTER 2 ARISING OF CIVIL RIGHTS AND RESPONSIBILITIES EXERCISE OF CIVIL RIGHTS Article 10. Grounds for arising of civil rights and responsibilities 1. Civil rights and responsibilities shall arise from the grounds provided for by law and other legal acts, as well as from the actions of citizens and legal persons which, despite not being provided for by law or other legal acts, give rise to civil rights and responsibilities by virtue of principles of civil legislation. In accordance therewith, civil rights and responsibilities shall arise: (1) from contracts and other transactions provided for by law, as well as from the contracts and transactions which, despite not being provided for by law, do not contradict thereto; (2) from the acts of state and local self-government bodies that are provided for by law as grounds for the arising of civil rights and responsibilities; (3) from a judicial act prescribing civil rights and responsibilities; (4) as a result of obtaining property on the grounds permitted by law; (5) as a result of creating works of science, literature, art, of inventions and other results of intellectual activity; (6) as a consequence of causing damage to another person; (7) as a result of unjust enrichment; (8) as a result of other actions of citizens and legal persons; 7 (9) as a result of events with respect to which the law or other legal act envisages generation of civil law consequences.