19 April 2024

Investing Across Borders: Azerbaijan, Republic Of

Bureau 28a


Bureau 28a offers expertise in all areas of Azerbaijani law relevant to businesses, governments, not-for-profits, and individuals. We advise those from outside entering, already in, interested in, or exiting the market; assist those from Azerbaijan investing outside; and help bringing to those on the ground here best practices worldwide.
Investing across Borders™ is a series of Bureau 28a publications intended to address two audiences at a time: those investing (or interested in investing) into a jurisdiction and out of it.
Azerbaijan International Law
To print this article, all you need is to be registered or login on

Investing across Borders" is a series of Bureau 28a publications intended to address two audiences at a time: those investing (or interested in investing) into a jurisdiction and out of it. Naturally, the first publication in the series is Investing across Borders: Azerbaijan, Republic of. The publication and information in it do not, and are not intended to, constitute legal or other advice.

Publications of this sort have been prepared before, however, with the rise of local investments, in this case, from Azerbaijan, it is the first time that a single publication addresses both foreign and local investors. The cross-border nature of this publication matches the profile of our Firm.

Our Firm offers expertise in all areas of Azerbaijani law relevant to businesses, governments, not-for-profits, and individuals with interests here in the cross-border and domestic contexts alike.

Our proposition lies primarily in the cross-border:

  • we aim at giving best local law and practice advice to those from outside entering, already in, interested in, or exiting the market;
  • we assist those from Azerbaijan investing outside; and
  • we help bringing to those on the ground here best practices worldwide.

Our lawyers have been accumulating experience along the path the Republic has been evolving in the past three decades from a newly independent jurisdiction opening to the world to an accomplished self-reliant investor and a host in its own rights.

We have helped new entrants into the Azerbaijani oil and gas production and transportation as well as infrastructure markets, assisted local corporates with first acquisitions and investment projects outside Azerbaijan, represented local institutions aspired to live up to the best international standards, and continue to be on the cutting edge of legal advisory.

We advise in various transactions, most notably, corporate acquisitions(mergers and acquisitions, M&A) and reorganizations, advise on all areas of Azerbaijani law, including employment and labor laws, contract law (drafting, implementation, and enforcement, including remedies), migration, intellectual property (IP), antimonopoly, and tax and customs laws.

Our lawyers are experienced in all major industries operating here, energy, including renewable, banking and finance, and telecommunications to name a few, and are familiar with the issues under commercial agreements and practices applicable within each.


Azerbaijan is a republic that regained its independence from the USSR in 1991. Prior to that, the country had a brief period of independence as a republic from 1918 to 1920.

The country is located between the 39th and 41st parallels north and the 45th and 50th (or 51st, including the Azerbaijani sector of the Caspian Sea) meridians east. It shares borders with the Caspian Sea to the east, Iran to the south, Armenia and Turkiye to the west, and Georgia and Russia to the north. Its total land area is 86,600 square kilometers.

Azerbaijan's capital, Baku, the largest city on the Caspian Sea, has developed under the influence of Zoroastrian, Sasanian, Arabic, Persian, Sirvani, Ottoman, and Russian cultures, forming a rich cultural continuity. Much of what Azerbaijan is today is a shared heritage with the peoples, nations, and states that have been a part of its geography.


During different periods of time, influence over what is today's territory of Azerbaijan has been changing dramatically. Factors contributing to it are Azerbaijan's geographical location and rich natural resources. Throughout the history, the country, its people, and culture were dominating larger states and formations, such as the Safavid state, or were influenced by larger formations, such as the Ottoman and Russian Empires.

The first country formations on the territory of Azerbaijan (1,000 BC) belonged to Manna, Skit, Scythe, Iskim, as well as powerful Atropatene kingdom and Caucasian Albania. Arabian rule in the 7th century AD, succeeding that of Iranian Sassanid Empire in the 3rd century AD, introduced Islam to the local population, which simplified the creation of common language, traditions, values, and beliefs, and greatly bonded its followers. The establishment of five independent, though allied states, Sacids, Sirvansahs, and Saddadids, on Azerbaijani land was the next vital step for the country.

The period from late 15th to early 16th century bears a huge significance not only for Azerbaijan, but for the entire world history since these were the glory days of establishment of a strong Safavid state and dynasty. The founder of this dynasty, Ismail I, also known as Sah Ismayil I, managed to unify the territories that extended into the entire or partial territories of today's Azerbaijan, Iran, Armenia, Iraq, Afghanistan, Pakistan, Turkmenistan, Turkiye, India, and Russia. Sah Abbas, Abbas I, or Abbas the Great is considered the greatest ruler of the Safavid dynasty reigning from 1588 to 1629.

Another prominent figure in the history of what is today's Azerbaijan is Nadir Sah Afsar, the founder as of 1736 of the Afsarid dynasty and state. Soon after Nadir Sah's death, the state collapsed splitting into several khanates and sultanates. This led to the cessation in the early 19th century of today's Azerbaijan to the Russian state.

With the collapse of the tsarist Russia and help from the Ottomans, Azerbaijanis established in 1918 the Azerbaijan Democratic Republic, also known as ADR. However, its existence did not last long; in 1920, Azerbaijan was effectively annexed to the Union of Soviet Socialist Republics and remained its part until 1991, before USSR's total disintegration. Azerbaijan declared reinstatement of independence on 30 August 1991 and passed the Constitutional Bill of State Independence on 18 October1991.

During last years of USSR's existence, a conflict over Daglig Qarabag (Nagorno-Karabakh) region of Azerbaijan broke out exacerbating the relationship between Armenia and Azerbaijan. Following the 44-day liberation movement by Azerbaijan in 2020 resulting in restoring its sovereignty over the region, negotiations for a definite peace accord are underway.


Located in the southern part of the Caucasian region in Eurasia, Azerbaijan occupies a total land territory of 86,600 square kilometers. To the east, Azerbaijan is bounded by the Caspian Sea, and this natural border has facilitated the development of Baku harbor as a center of the oil and related industries in the area; Baku is the largest city on the Caspian Sea and of the Caucasus.

Azerbaijan shares land borders with Russia and Georgia to the north, Iran to the south, and Armenia to the southwest and west. The Naxcivan Autonomous Republic, isolated from the rest of the country by Armenian land, borders Turkiye to the northwest.

Roughly half of Azerbaijan's territory is mountainous. The Greater and Lesser Caucasus ranges to the northeast and west, along with the Talis (Talysh) Mountains to the southeast, encircle the country with elevated areas.

Although there are more than 8,000 rivers in Azerbaijan, only 24 of them are long enough to be considered (with the Kur River being the longest). All the rivers, without exception, flow into the same destination – the Caspian Sea.

Despite being a relatively small country, Azerbaijan exhibits nine out of the eleven climate patterns from the Koppen climate classification. This extensive variety creates opportunities for the development of the agricultural sector.


Azerbaijan has a population of over 10 million, ranking 90thon the list of the world's most populous countries. The population density for the region is 120 people per square kilometer, although it is significantly higher in the largest city and capital, Baku, where it reaches 1,056 people per square kilometer. Baku is home to 2,270,030 citizens, while the next-largest Azerbaijani cities, Sumqayit and Ganca, have populations of 426,020 and 333,324 people, respectively.

Approximately half of the Azerbaijani population, or 55.2percent, resides in urban areas, leading to an evenly distributed population across the territory.

Azerbaijan has a relatively young demographic profile, with65 percent of citizens falling between the ages of 15 and 54.In contrast, senior citizens make up only 19 percent of the total population.

Regarding ethnic composition, based on the 2009 census, Azerbaijani Turks account for over 91 percent of the population. However, Azerbaijan boasts ethnic diversity, as the remaining proportion of the population is composed of various ethnic groups, including Lezgin, Armenian, Russian, Talis, Avar, and others.



Since the dissolution of the Soviet Union in 1991, the Azerbaijani government has been dedicated to eradicating old economic paradigms and implementing economic reforms. Azerbaijan is now a member of international institutions such as the International Monetary Fund, World Bank, Asian Development Bank, European Bank for Reconstruction and Development, which has facilitated its integration into the global economy.

Previously, Azerbaijan's economy heavily relied on oil and gas, but there has been a recent shift towards the more intensive development of the non-oil sector. This transition is expected to create more job opportunities, improve living conditions in rural regions, provide better prospects for private businesses, and reduce poverty.

Gross Domestic Product

As of 2021, the GDP is reported by the State Statistics Committee at AZN92,857.7 billion (USD54,622.2billion),1 representing 0.02 percent of the world economy.2 Over a 32-year period, from 1990 to 2022, the average value of Azerbaijan's GDP was USD25.31 billion. The GDP, according to the World Bank, peaked at USD75.24billion in 2014 and hit its lowest point at USD3.05 billion in 1995.

Sectors of Economy

The Azerbaijani economy relies on industry, agriculture, and services, particularly tourism.

Agriculture: Although agriculture constitutes only around five percent of Azerbaijan's GDP, it employs 1,809,000 people or36.3 percent of the workforce. Of the total territory of Azerbaijan, 55.2 percent are agricultural land (of which 27.9percent are haymaking and pastures and 28.2 percent is other land); 17.15 percent of the total territory is irrigated. 50.8percent of the agricultural production are livestock and the remaining 49.2 percent are crops; major crops are vegetables, cereal, fruits and berries, and potatoes.3

Industries: Manufacturing accounts as of 2022 for 51.1percent of the GDP employing 741,800 people or 14.87percent of the workforce. Apart from hydrocarbon reserves, Azerbaijan is rich in natural minerals and metals such as gold, silver, copper, and more. Also, Azerbaijan is developing large renewable power projects.

Services (Tourism): Azerbaijan attracts tourists from around the world and the tourism industry has experienced significant growth in the number of visitors and overnight stays peaking2,863,500 in 2019. Tourist accommodation and public catering accounted for 1.6 percent of the GDP for 2022. Touristic hotspots like Sahdag Ski Resort adhere to world-class standards of services and products.

Business Environment

As of late 1990's and early 2000's, Azerbaijan has been topping the foreign direct investment (FDI) per capita rankings among the Commonwealth of Independent States (CIS)countries. Since then, Azerbaijan ranks consistently high as a reformist country and for ease of doing business. While, for2021, the FDI flow was reported negative, for 2022, it is reported at USD6,275,850,000.

To read this article in full, please click here.


1. The number (nominal GDP) for 2022 is reportedat AZN133.8 billion (≈USD79 billion,



Originally published October 2023

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More