An Armenian Customer Has Stopped Paying: Is Recovery Worth Pursuing, and What Will It Cost?

Filing an ordinary money claim in Armenia costs 3% of the sum claimed in state duty, between AMD 6,000 and AMD 25,000,000, and Armenian firms advertise contingency collection at 10 to 15 percent of what they recover on debts above roughly USD 5,500. Whether that spend is sensible turns on the debtor’s ability to pay and on whether your paperwork proves the obligation, and both are answerable before you commit money. This is the reverse of the State Revenue Committee collecting unpaid tax from a taxpayer, which runs on its own administrative track.

Is this debt worth pursuing?

Start with solvency, because it caps everything that follows. Armenia’s involuntary bankruptcy test gives a usable marker: undisputed obligations above 2,000 times the minimum-wage calculation base, which stands at AMD 1,000, so AMD 2,000,000 (about USD 5,500), unpaid for 90 consecutive days (Bankruptcy Law HO-51-N Art. 3; calculation base under HO-66-N Art. 3). A debtor past that line is already exposed to a creditor petition. A debtor past it with several suppliers probably isn’t going to pay you in full. A company extract from the state register shows the current director, the share capital and any liquidation entry, and our Armenian business registration page sets out what the register holds.

State duty scales with the claim, so the cost of losing scales with it too. First instance takes 3% of the claim value, an appeal 4% of the disputed amount and a cassation appeal 5%, so a claim fought through both appeal stages carries 12% of the sum in duty before any advocate’s fee. Costs follow the result in proportion: the court apportions them according to how much of the claim succeeds (CPC Art. 109(1)), so winning half your claim recovers roughly half your costs. CPC Art. 107(4) separately caps what the losing side pays towards a contractual advocate fee, so the fee you agree with your lawyer is recoverable only up to that limit.

Documentation strength then decides the route. A debt the customer has never disputed in writing can go through the court’s payment-order procedure for AMD 1,500. A debt the customer contests on quality, delivery or set-off goes to ordinary adversarial litigation at the 3% duty, with an open timetable.

Fee structures available to you

Contingency arrangements are permitted in principle for licensed Armenian advocates. Advocacy Law Art. 6(1)-(3) allows remuneration to be fixed by written agreement, and the Court of Cassation has upheld a fee conditional on actual recovery in principle (ԵԿԴ/4708/02/17, 4 March 2022; see also ԵԸՆԴ/0976/02/13, 28 November 2014). The Chamber of Advocates Code of Conduct of 24 December 2022 requires a written engagement and full fee disclosure, and prohibits guaranteeing a court-dependent outcome (Arts. 3.1.3 to 3.1.4, 3.3.1 to 3.3.3, 3.1.10). No statutory ceiling on the percentage has been identified.

Published market terms give you a benchmark. iLex advertises debt collection at 10 to 15 percent of sums above USD 5,500 on a no-recovery-no-fee basis, at a higher percentage below that threshold. Concern Dialog operates a collection line called Delex on a contingency basis, with the client paying state duty and direct costs upfront; its stated client base is high-volume creditors such as banks, telecoms and retailers.

What documents and facts you need before you start

Armenian procedure sets no closed list of documents for a debt claim. You must plead and prove that the obligation was formed, on what terms, that you performed, and that payment did not follow (Civil Code Arts. 10, 13, 521; CPC Arts. 9, 121-122). The Court of Cassation has held that the absence of a document headed “contract” does not defeat the claim, and that a mutually validated electronic tax invoice can establish a supply relationship on its own (ԵՇԴ/0724/02/17, 17 September 2018). Electronic invoicing through the State Revenue Committee system has been mandatory since 2016, so an SRC invoice your customer validated is evidence you may already hold; our Armenian tax page sets out the invoicing rules.

Civil Code Art. 62(3) puts the burden of proving payment on the debtor, which shifts the practical weight of your file onto proof of the obligation. Art. 298(3) requires written form for foreign economic transactions, so an oral variation of a cross-border supply contract is hard to rely on.

Every foreign-language filing and exhibit must be translated into Armenian, and an untranslated document is not considered (CPC Arts. 16(2), 74(4)). Whether each translation must additionally be notarised, and each foreign exhibit apostilled or consularly legalised, is not a settled matter. The procedural text does not resolve it and practice varies between judges, so the same bundle can be accepted in one courtroom and questioned in another. Plan on the stricter requirement: notarised translations, and apostilled or consularly legalised originals, above all for the power of attorney and the corporate authority documents, which carry the highest risk of refusal.

A foreign company sues in its own name. No Armenian registration, branch or representative office is required (CPC Art. 428(1)-(2)), and foreign-creditor status does not change which court hears the case (CPC Art. 2). You will need proof of the company’s legal existence, proof of the signatory’s authority, and a written authority for the advocate who files (CPC Arts. 48-56). Venue defaults to the debtor’s registered location (CPC Art. 21(1)), with the place of performance (Art. 22(3)) and the location of a branch or representative office (Art. 22(8)) as alternatives. Read the contract’s dispute clause first: the parties may fix venue by written agreement (Art. 23(1)), and a clause nobody has looked at since signature may already have chosen a forum or an arbitral tribunal.

Check the limitation date before anything else. A contractual debt claim runs for three years (Civil Code Arts. 331-333). Where the contract fixed a payment date, the period starts when that date passes; where payment falls due on demand, it starts when the right to demand arises, after any grace period (Art. 337). Filing suit interrupts the period, and so does the debtor’s acknowledgment of the debt, which restarts the three years and discards the time already elapsed (Art. 340). A demand letter you sent is not an acknowledgment by the debtor. Separate limitation rules apply to transport, insurance, banking and negotiable-instrument claims, so confirm the category of the obligation.

Negotiation and settlement before going to court

A pre-suit demand is not a general precondition to filing in Armenia. It becomes mandatory where a statute or the contract itself requires an out-of-court step, and where that applies, suit may follow 30 calendar days after the step unless the contract sets its own period (CPC Art. 3(1), (3)). What happens to a claim filed in breach of a contractual demand clause, whether it is returned, stayed or heard, is not confirmed in the current text, so treat such a clause as binding and send the letter.

Parties may settle at any stage, use a licensed conciliator, or refer the dispute to arbitration (CPC Arts. 12(3), 19). A settlement approved in court becomes an enforceable judicial act (CPC Arts. 184, 288-291), and the Court of Cassation has confirmed that a settlement can be approved at any stage of proceedings (VD/4811/05/09). A settlement signed outside court binds as an ordinary contract under Civil Code Arts. 3(2) and 10, and it carries no enforcement power of its own, so a debtor who defaults on the settlement leaves you needing a judgment or an arbitral award before a bailiff will act. Where settlement is the likely outcome, run the payment-order route first: an order that enters into force is itself an enforceable act, and the AMD 1,500 duty is recoverable as a court cost.

Filing a claim and what happens in court

Armenia has no separate commercial or economic court for a business-to-business debt claim. Ordinary claims go to the Courts of First Instance of general jurisdiction, with the Yerevan City Court of First Instance handling civil cases in the capital; appeals run to the Civil Court of Appeal and then to the Civil Chamber of the Court of Cassation (CPC Arts. 1, 18). References to an Economic Court in older material are superseded. The Bankruptcy Court comes in only where the debt is pursued inside bankruptcy proceedings.

The payment-order route

For a debt the customer has not disputed, CPC Arts. 307-314 provide a documents-only procedure. The claim must be definite in amount, with no unperformed counter-obligation on your side, and cases falling to notaries are excluded. If the debtor files no objection, the order becomes enforceable after a statutory two-week period. Duty on the application is AMD 1,500 (about USD 4).

The ordinary claim

A contested debt proceeds adversarially, each side carrying its own evidence (CPC Art. 13), in hearings conducted in Armenian with translation of every foreign document. No reliable published figure exists for how long an Armenian commercial debt case takes from filing to judgment, contested or uncontested, so budget for the duty and the fee and leave the date open. Where the debt is denominated in euros or dollars, the claim value for duty purposes is converted at the Central Bank average rate for the day before filing (Law on State Duty Art. 9(5)). An application for interim measures, to freeze an account or register a restriction against property before judgment, carries a duty of AMD 15,000 (about USD 41) and can be filed together with the claim.

What the court charges

Law on State Duty Arts. 8 and 9. USD equivalents at the Central Bank of Armenia official rate of 363.44 to the dollar on 22 September 2026; the dram figure is the operative one.

Enforcement: getting paid after you win

A judgment does not collect itself. Enforcement is carried out by the Compulsory Enforcement Service, known in Armenia as DAHK, under the Law on Enforcement Proceedings (HO-179-N), in force since 1 January 2026, together with the Law on Compulsory Enforcement Service (HO-40-N). Proceedings already running under the previous law did not all transfer on that date: Art. 123(4)-(6) of HO-179-N preserves the earlier regime for specified older cases, which matters for any enforcement file opened before 2026.

Where the debtor’s assets are held jointly, a property co-owned with a spouse for example, recovery runs through partition and garnishment of the debtor’s share under Civil Code Art. 200(2), a route the Court of Cassation has addressed directly (ED/3-1928(VD)/07). Bank accounts are the fastest target once an enforcement file is open, and our Armenian banking page explains how accounts and transfers are structured. Which asset-search tools a judgment creditor may use, and whether each requires a separate court order, has not been verified for this article.

Creditor-initiated bankruptcy

A creditor may petition to have a debtor company declared bankrupt where undisputed obligations exceed AMD 2,000,000, being 2,000 times the AMD 1,000 calculation base, and have gone unpaid for 90 consecutive days (Bankruptcy Law HO-51-N Art. 3). The Bankruptcy Court hears the petition before a single judge (Art. 4). A temporary administrator assesses the debtor’s position, and on a declaration of bankruptcy a moratorium freezes monetary claims, stays enforcement and stops interest accruing.

Claims are then paid in statutory order: administrative expenses of the proceedings, claims arising after the declaration, twelve months of employment claims, life and health damage claims, and general unsecured claims last (Art. 82). Secured creditors take from their collateral outside that order, which is why an unsecured trade creditor seldom recovers in full. The administrator may challenge pre-bankruptcy transfers that prejudiced creditors (Art. 54). The Court of Cassation has confirmed that proceedings terminate once the search for assets is exhausted (ED/0264/04/18), and that a creditor who acquired the claim by assignment has standing to participate (EED/0053/04/14).

The debtor’s director must file for bankruptcy within two months of discovering grounds for insolvency (Art. 5). Liability for missing that deadline is subsidiary and reaches only obligations that arose after the deadline passed (Art. 7(1)), so the director’s exposure attaches to debts incurred while the company was already insolvent. No official statistics are published on how long an Armenian bankruptcy runs from petition to closure.

Where the counterparty is an individual, a separate test applies: HO-263-N, effective 12 July 2026, introduced a 30-day default rule and its own adjudication and enforcement conditions for individual debtors (Art. 3(2.1)). The AMD 2,000,000 and 90-day figures above are the company test. A new Bankruptcy Code (HO-252-N, adopted 18 June 2026) has been enacted, and Art. 369(1)-(2) postpones its commencement until one year after official publication, so HO-51-N governs any petition filed today.

Frequently asked questions

What to do next

1. Date the default. Find the day payment fell due under the contract and count three years forward (Civil Code Art. 337). If that date is near, everything else waits.
2. Pull the evidence of the obligation: the contract or the validated SRC invoice, proof of delivery or acceptance, and any written acknowledgment of the balance.
3. Read the dispute clause for a mandatory demand step, an agreed venue, or an arbitration clause.
4. Check the debtor’s register entry, and whether undisputed debts above AMD 2,000,000 have stood unpaid for 90 days, which opens the bankruptcy petition as leverage.
5. Choose the route: a payment order at AMD 1,500 where the debt has never been disputed, an ordinary claim at 3% where it has, and interim measures at AMD 15,000 where the assets are liquid.

Last updated: 22 September 2026