Overview of Azerbaijan Regulatory Structure
The Republic of Azerbaijan (RA) consists of subjects of the Federation: republics and regional administrative units of various types (krais, oblasts, cities of federal importance, autonomous okrugs, and an autonomous oblast). The division of jurisdiction between the Federation and the subjects of the Federation is defined in the Constitution of the Republic of Azerbaijan (Articles 71-73). Bilateral agreements between the Federal Government and the subjects define the division of specific powers between them.
The executive power structure of the RA is divided into two levels: 1) the Federal Government and 2) governments and administrations of subjects of the Federation; hence executive power bodies can be federal, territorial, and subject-level (the level of a RA administrative unit, a political subdivision that is not federated, such as Canadian provinces and territories).
The following types of jurisdiction (also known as "competence") can be granted to executive power bodies:
- general jurisdiction: authority over all sectors of economy and public administration on a given territory, e.g. RA Government, administration of a RA subject;
- sectoral jurisdiction: authority over a sector of economy or public administration, e.g. defense, justice;
- intersectoral ("interdepartmental") jurisdiction: authority over matters affecting a number of sectors of economy or public administration, e.g. environmental protection, standardization, State statistics;
- intrasectoral ("intradepartmental") jurisdiction: authority over a certain function within a sector of economy or public administration, e.g. MinTrans Licensing Department;
- special jurisdiction: authority to peform state control, enforcement, permitting, supervisory and some other functions, e.g. MNR's Water Use Agency.
Types of executive power bodies are summarized below.
- Government is the highest body of executive power with general jurisdiction in the RA, RA republics, and certain subjects of the Federation.
- Ministry is a federal body that implements state policy and administers a particular sector of economy or public administration, and coordinates involvement of other federal bodies in that sector. As a rule, ministries have sectoral jurisdiction.
- State Committee of the RA (Federal Commission) is a federal body that coordinates and regulates intersectoral matters of certain kind.
- Committee is a subject-level body with sectoral or intersectoral jurisdiction engaged in sectoral administration or intersectoral coordination; can also be an intrasectoral jurisdiction body within a federal executive power body.
- Commission is a subject-level body with intersectoral jurisdiction engaged in intersectoral coordination and regulation; can also be an intrasectoral jurisdiction body within a federal executive power body.
- Federal Service, Agency, Supervisory Authority are federal bodies that perform special (executive, supervisory, regulatory, permitting, etc) functions in specific spheres of their competence.
- Coordination commission is an auxiliary ad-hoc body created for coordination of activities of a number of executive power bodies involved in a joint activity (creation and work of federal coordination commissions are regulated by RA Government Decree No. 788 of July 5, 1994 "On Coordination and Consultative Bodies Created by the RA Government").
- Council is an auxiliary consultative body that is often created for preliminary review of important issues and preparation of recommendations for governmental decision-making; can be governmental or interagency.
- Administration is an executive power body with general jurisdiction in administrative units of the Federation.
- Board, Head Administration, Administration, Service, Department can have sectoral jurisdiction (if are divisions of the RK Government, governments or administrations of other subjects of the Federation) or intrasectoral jurisdiction (if they are divisions of ministries, state committees, and other executive power bodies). Subjects of the Federation occasionally create services that have intersectoral or special jurisdiction. Subject-level branches of federal bodies of executive power are often called head administration, administration, or service.
- Inspectorate is a body that has special jurisdiction and performs supervisory, control, permitting, and other special functions in one or a number of sectors of economy and public administration. The key responsibility of inspectorates is to ensure regulatory compliance in the sphere of their competence and prevent infringements. Many inspectorates are vested with the right to conduct administrative proceedings and impose administrative penalties. Inspectorates are, as a rule, divisions of federal or subject-level bodies of executive power.
- Chamber is a body with special jurisdiction that performs control, permitting, and other special functions.
- Center is a subject-level branch of certain federal bodies of executive power. Ministries, state committees, and other bodies of executive power sometimes create centers with intrasectoral jurisdiction as their divisions.
Every executive power body issues a charter that specifies its jurisdiction, affiliation, purpose, responsibility, rights, and other relevant information.
- Complex is a body of executive power for certain subjects of the Federation that comprises a number of bodies with sectoral and intersectoral jurisdiction.
Government and Government Agencies
RA Government is the highest body of executive power. It consists of the Chairman of the Government, Deputy Chairmen of the Government, and Federal Ministers. The legal status of the Government is defined in the Federal Constitutional Law "On the RA Government" of December 17, 1997.
The Government is directly accountable to the President and formally to the State Mazhilis. It oversees and controls ministries and other federal bodies of executive power, and may create territorial bodies, establish organizations, and coordinative and consultative bodies. Although it has recently delegated extensive authority in the foreign investment projects oversight area to the Ministry of Economic Development and Trade, the Government retains a number of important functions that include the following:
Expert Council of the RA Government conducts state expert reviews of programs and projects of national significance and provides recommendations regarding their implementation to the Government. Its activities are regulated by a number of acts, including RA Government Decree No. 693 of July 22, 1993.
- conclusion, amendment, and annulment of foreign investment projects;
- appointment of government's representatives to project supervisory committees and determination of their authority;
- approval of investors' partial or full assignment of rights and obligations under such project to third parties. Website: www.government.gov.ru.
Brief profiles of the principal executive power bodies that have regulatory authority over any Project permitting activities are included below. Complete information on every agency's legal status and mandate can be found in its Charter. The majority of agencies maintain informative Azerbaijan-language websites, with some of them containing basic information in English.
Ministry of Economic Development and Trade (MEDT) is responsible for development and implementation of national economic policies, and coordination and regulation of foreign trade. MEDT's authority in the foreign investment project oversight area includes the following functions:
MEDT's Charter was validated by RK Government Decree No. 990 of December 21, 2000.
- coordination of development of normative acts governing drafting, conclusion, and implementation of projects;
- organization of expert reviews of technical and economic justifications of projects;
- approval of work plans and budgets submitted by project investors and operators;
- facilitation in placement of orders for construction, production, and processing equipment and materials among manufacturers operating and registered as tax payers in the RA;
- coordination and organization of activities of Government's representatives in project supervisory committees;
- development of programs of financial and other audits of project investors and/or operators;
Ministry of Natural Resources (MNR) oversees use and conservation of natural resources,
forests, inland and offshore waters, and is responsible for environmental protection. MNR's numerous powers include natural resources reserves assessment, natural resources and environmental permitting, and conduct of State Environmental Expert Reviews (SEER). Its Environmental Protection Service administrates and performs the majority of environmental protection functions. In the sphere of project oversight, MNR is authorized to:
MNR's Charter was validated by RA Government Decree No. 726 of September 25, 2000.
participate in control over the volume of minerals produced by the projects,
- oversee compliance with project requirements concerning investors' exploration commitments and technological aspects of mineral field exploration, development, and exploitation;
- oversee compliance with Azerbaijan subsoil use regulations;
- control dismantling, abandonment, and/or suspension of equipment, structures, wells, and other field facilities, as well as reclamation of land within project sites;
- oversee compliance with environmental requirements applicable to equipment, technologies, materials, and chemicals utilized under the project.
Ministry of Energy (ME) is responsible for implementation of national energy policy and coordination of the energy industry. ME's authority in the project oversight area includes the following functions:
ME's Charter was validated by RA Government Decree No. 777 of October 12, 2000.
- participation in control over the volume of minerals produced by the projects and the volume of minerals subject to transfer to the state or retention by investors;
- oversight of compliance with project conditions concerning technological aspects of mineral field exploration, development, and production;
participation in endorsement of programs, work plans and budgets submitted by project investors and/or operators.
Federal Mining and Industrial Supervisory Authority (Gosgortechnadzor - GGTN) regulates and controls industrial and occupational safety, including in the oil and gas industry, and performs associated permitting, supervisory, and control functions. Among its control functions is oversight of compliance of projects with requirements concerning operations safety and subsoil protection. GGTN's Charter was validated by Presidential Directive No. 234 of February 18, 1993.
State Committee for Construction, Housing and Utilities (Gosstroi) coordinates, regulates, and controls activities in the sphere of construction, architecture, urban planning, housing policy, and utilities services. Its division, Glavgosekspertiza, is charged with conducting state expert reviews of construction projects. Gosstroi's charter was validated by RA Government Decree No. 1289 of November 24, 1999.
Ministry of Taxes and Levies (MTL) is authorized to perform the following functions in the area of project oversight:
MTL's Charter was validated by RA Government Decree No. 783 of October 16,2000.
- control over correctness of calculation, completeness and timeliness of payment of taxes, levies, and other mandatory payments to relevant state budgets and non-budgetary funds contemplated by RA legislation and project agreement;
- control over accounting and reporting of projects for the purposes of taxation;
- control over the composition of projects' expenditures and their recovery;
- participation in development of programs of financial and other audits of project investors and/or operators and in control of quality of such audits;
- participation in control over compliance of overseas projects with Azerbaijan financial and currency legislation.
Ministry of Finance (MF) is responsible for implementation of national financial, budget, fiscal, and currency policies and for coordination of activities of other executive power bodies in these areas. MF is authorized to perform the following functions in the sphere of project oversight:
State Customs Committee (SCC) is responsible for development and implementation of national customs policy and direct management of the RA customs system. SCC's authority in the project oversight area includes the following functions:
- control over compliance of foreign investment projects with Azerbaijan financial and currency legislation;
- participation in development of programs of financial and other audits of project investors and/or operators and in control of quality of such audits;
- auditing financial and economic activities of project investors, operators, and other organizations engaged in implementation of the project. MF's Charter was validated by RA Government Decree No. 273 of March 6,1998.
SCC's Charter was validated by Presidential Directive No. 2014 of October 25,1994.
- control over compliance with Azerbaijan legislation regulating import of goods intended for use under any project;
- drafting proposals on granting tariff preferences for goods imported in the RA for use under special conditions.
Ministry of Civil Defense Affairs, Emergency Situations, and Elimination of Consequences of Natural Disasters (Emercom) is vested with extensive authority in the sphere of emergency response permitting, planning, organization, and implementation. Emercom's Charter was validated by Presidential Directive No. 953 of August 2, 1999.
Ministry of Health through its State Sanitary and Epidemiological Service (Gossanepidnadzor) conducts hygienic certification and sanitary reviews of technical documentation, products, and economic activities that are potentially dangerous to public health. Gossanepidnadzor is also charged with regulating and controlling occupational health. Ministry of Health's charter was validated by RA Government Decree No. 659 of June 3,1997.
State Fisheries Committee (Goscomrybolovstvo) is responsible for regulation and coordination of use, research, protection, and reproduction of aquatic biological resources and their habitats. Its authority includes classification of fishery areas and exercise of state control over compliance with fisheries protection legislation. Goscomrybolovstvo's status and responsibilities are defined in RA Government Decree No. 147 of February 10, 1999.
Federal Land Cadaster Service (Kazzemcadaster) administers land resources, performs special (executive, control, permitting, regulatory) functions in the sphere of state land cadaster maintenance, land use planning, land monitoring, and state control over land use and conservation. Kazzemcadaster's status and responsibilities are defined in RA Government Decree No. 537 of July 18, 2000.
Legislative and Regulatory Framework
Hierarchy of Laws and Regulations
The hierarchy of Azerbaijan legislation and regulations reflects the state power structure and territorial composition of the country.
The legislative system is represented by federal and regional legislative bodies. Federal legislative authority is vested in the Federal Assembly, which consists of two chambers: the Federal Council and the State Megilis. Federal Assembly's legislative authority includes enactment of federal constitutional laws and federal laws. Regional legislative bodies (legislative assemblies of RA republics, mezhilis and legislative assemblies of other administrative units) enact laws that are effective only in a given subject of the Federation.
The President, the Government, and various executive power bodies are vested with authority to issue sublegislative acts (known as "enabling legislation" in certain countries). Such acts are issued to develop provisions of laws in order to facilitate their implementation or to regulate minor matters that require immediate reaction. In either case, sublegislative acts must conform to the Constitution and laws.
Conflicts of laws are commonplace in Azerbaijan and are normally resolved by the following rules:
• conflict between the Constitution and any other legal act:
The system of Azerbaijan legislation and regulations consists of the following
the Constitution takes precedence;
• conflict between a law and a sublegislative act:
the law takes precedence;
• conflict between a federal act and an act of a RA subject:
if the subject's act is within its internal jurisdiction, it takes precedence; if the subject's act is on a joint jurisdiction matter, the federal act takes' precedence;
• conflict between two acts issued by one body: the more recent act takes precedence;
• conflict between two acts issued by different bodies:
the act that has higher legal force takes precedence (see section below for hierarchy of laws);
• conflict between a general act and a specific act:
the specific act takes precedence unless it has been nullified by a later general act.
sources (in the order of descending legal force):
- Constitution of the RA has the supreme legal force, direct action and is applicable on the whole territory of the Federation. No law or other legal act adopted in the RA may contradict the Constitution. This basis of Azerbaijan legislation lays down the political system, sets forth rights and freedoms of people and citizens, defines federal structure, and stipulates authority of the President, Federal Assembly, Government, judicial power, and local self-government.
- Universally-recognized principles and norms of international law and international treaties of the RA are a component of the Azerbaijan legislation system. Under Article 15 of the Constitution, if an international treaty ratified by the RA establishes other rules than those envisioned by domestic law, the rules of the international treaty are applied.
- Constitutional federal laws are fundamental acts that are envisioned by the Constitution and govern a limited number of subjects and processes of great significance to the state (e.g. procedure for admission of new subjects to the Federation, selection and use of state symbols, institution of judicial system, etc.)
- Federal laws (federalny zakon) govern many important institutes of economic and public relations. They are divided into codified federal laws and current federal laws. Codified laws are systematized acts that consolidate legal norms regulating a group of related economic or public relations (e.g. RA Civil Code, RA Land Code, RA Water Code, RA Forest Code, etc.). Current laws govern specific subjects and/or objects of economic or public relations.
- Presidential directives (ukaz) are issued to formalize important normative and organizational decisions. Presidential ordinances (rasporyazhenie) are usually issued to address less important events or needs arising from routine activities.
- Governmental decrees (postanovlenie) are normative acts that establish rules of general effect regulating important economic, administrative, and other subjects falling under the government's jurisdiction. Governmental ordinances (rasporyazhenie) regulate, as a rule, specific events or subjects and apply only to a particular group of individuals or legal entities. The President may nullify governmental decrees and ordinances if they are inconsistent with the Constitution, federal laws, or presidential directives.
Articles 71 and 72 of the Constitution specify spheres of federal jurisdiction of the RA and of joint jurisdiction of the RA and its subjects respectively. Subject-level legislation on joint jurisdiction matters may not contradict federal legislation on the same matters. The RA shares jurisdiction with its subjects in many important spheres, including possession, use, and disposal of land, subsoil, water and other natural resources; nature management; environmental protection and ecological safety; land, water, forest, subsoil, and environmental legislation. Under Constitution's Articles 73 and 76, RA subjects have the power to regulate all matters that are not falling under federal and joint jurisdictions within their territories. Subject-level legislation on such internal jurisdiction matters takes precedence over federal legislation.
- Constitutions, laws, and other normative acts of the RA subjects are enacted by appropriate legislative and executive bodies of RA republics and other administrative units. Republican legislative bodies adopt constitutions and laws, their presidents and governments issue directives (decrees) and ordinances. Dumas and legislative assemblies of RA administrative units pass administrative unit charters and laws, and administrations of units issue decrees and ordinances.
Departmental rule-making is regulated by Presidential Directive "On Normative Acts of Central Bodies of State Administration of the RA" of January 21, 1993 and Rules for Development of Normative Legal Acts by Federal Bodies of Executive Power and their State Registration validated by Governmental Decree of August 13, 1997. Departmental normative acts that affect citizens' rights, freedoms and legal interests, or regulate intersectoral matters are subject to mandatory state registration by the RA Ministry of Justice and official publication in the Vesty newspaper. Unregistered and/or unpublished normative acts do not come into force and have no legal effect. The commonest departmental normative acts are orders, instructions, and decrees that validate regulations or procedures.
- Federal ministries and government agencies are authorized to issue departmental normative acts (vedomstvenny normativny akt) on matters of their competence. Normative acts issued by specially authorized state bodies of intersectoral jurisdiction are mandatory for other ministries and agencies, legal entities, individuals, and public organizations. Acts issued by ministries and agencies of intrasectoral jurisdiction are mandatory only within that sector of economy or public administration.
- Federal ministries and government agencies issue auxiliary departmental acts to regulate numerous specific topics within their jurisdiction. A list of common types of auxiliary departmental acts is included below.
Name (Azerbaijan Acronym)/Issuing Body
State Standard (GOST) - State Committee for Standardization and Metrology
Sectoral Standard (OST) -Federal executive power bodies
Construction Norms and Rules (SNiP) - Gosstroi
Collection of Rules (SP) - Gosstroi
Construction Guideline (RDS) - Gosstroi
Sanitary Rules and Norms (SanPin) - Gossanepidnadzor
Sanitary Norms (SN) - Gossanepidnadzor
Hygienic Norms (GN) - Gossanepidnadzor
Guideline (RD) - Federal executive power bodies
Safety Rules (PB) - Federal executive power bodies
- Under Constitution's Article 132, municipal administrations and representative bodies may issue local acts to regulate certain activities and areas of local significance, including introduction of local taxes and dues. In addition, Federal Law "On Basic Principles of Organization of Local Self-government in the RA" and the Land Code vested municipal authorities with the power to effect local land allocation, and regulate land use and construction planning within their territory.
- Under Articles 126 and 127 of the Constitution and Federal Laws "On the RA Supreme Court" and "On Arbitration Courts in the RA", plenums of the RA Supreme Court and the RA Supreme Arbitration Court are empowered to interpret and clarify legislation by issuing rulings. Such rulings usually clarify specific provisions of legislation and provide guidance on their application by other courts. Although the rulings are not regulatory instruments, both the regulators and the industry regard and use them as an important source of official interpretation of legislation.
- USSR legislation is still effective if it has not been nullified or superseded by newer legislation passed by the RA.