Parties Opt to Settle in ArmenTel Case

YEREVAN (RFE/RL)–A court in Yerevan on Tuesday deferred proceedings into the government’s lawsuit against the Greek owner of Armenia’s telephone network and its former US shareholder to give the litigants a chance to settle the $17 million case by themselves. The three parties were given until September 20 to try to overcome a tax dispute related to the ArmenTel monopoly’s sell-off in early 1998 to Greece’s state-controlled firm OTE.

The Armenian government claims that the US-registered Trans-World Telecom (TWT)–which had a 49 percent stake in ArmenTel–has failed to pay some $8 million profit tax on proceeds from the sale of its shares to OTE. The sum has since risen to $17 million and includes fines imposed by Yerevan on TWT for its refusal to pay up. The American company–for its part–points to a provision in the 1998 deal whereby "Buyer [OTE] shall pay any Tax–stamp duties–registration duties and/or any further transfer taxes or other costs–related to the transfer of the Stake in this Agreement."

Although the government’s lawsuit was brought in early June against both TWT and OTE–the Americans appear to be its main target. James Mulkeen of the California-based law firm Manatt–Phelps & Phillips–which represents the Armenian government’s interests–told the court that "substantial progress has been made in [settlement] negotiations with OTE." The Armenian side wants to start similar talks with TWT–Mulkeen said. The judge presiding over the session approved a petition to adjourn the proceedings after it was backed by the two other sides.

In March 1998–OTE paid $142,5 million to buy a 90 percent in ArmenTel–which was then a joint venture between the government and TWT. The deal marked the biggest yet sell-off of an Armenian company.

Asked about Yerevan’s posture during the upcoming settlement negotiations–Vahe Yacoubian–another lawyer from Manatt–Phelps & Phillips–indicated that the authorities may settle for a repayment of the $8 million base sum and renounce other claims. But the possibility of a compromise deal looked problematic when TWT’s Krikorian said the US firm can only agree to "give up damages caused to TWT by the Armenian government." Krikorian referred to last year’s freezing of the Greek company’s paymen’s to TWT of some $70 million for the purchase of the latter’s ArmenTel shares.

The move was apparently taken under pressure from Yerevan. TWT last February filed a lawsuit to the Arbitration Court of the International Chamber of Commerce in London which has since been examining it.

During the previous court session on July 26–Krikorian argued that under the terms of ArmenTel’s takeover by OTE only the international court in London can consider disputes related to the deal. But the Armenian judge dismissed his argumen’s–backing the government side’s claim that "tax relationships" in Armenia are regulated by Armenian law only.

Krikorian also said if the court proceedings resume in the event of the talks’ failure–he will demand that the judge summon a large group of former and present government officials–including President Robert Kocharian–as witnesses. Kocharian served as prime minister and the country’s acting president when the ArmenTel deal was sealed in March 1998.

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