Azerbaijan (2022)

Legislation in Azerbaijan on land acquisition and resettlement consists of the Constitution of the Republic of Azerbaijan, the Land Code, the Civil Code, the Law on Land Acquisition for State Needs, and other legal acts. Under this legislation, informal land use is not recognised, and the written agreements produced by farmers have no legal validity. For the purpose of the LRP and later gap analysis with Lender standards, a summary of land-related legislation has been included although none of the processes that relate to changing legally-valid Land Lease Agreements are applicable, as the written agreements presented by farmers have no basis in law.

The Constitution (1995) recognises a citizens’ right to own, use, and dispose of property. It also recognises under Article 13 three type of property ownership in Azerbaijan: government, municipal and private. The Constitution guarantees that no one will be dispossessed of their property without their consent or a decision by the court of law, and that the acquisition of private property for state needs will only be allowed after payment of fair compensation (this is defined in another legal instrument) to the owner has been made (Article 29).

Article 101 of the Land Code (1999) states that compensation for any damage caused by the acquisition of land, the temporary use of land, limits on the rights of owners, users and lessees, or any deterioration in the quality of soil, should be fully paid to landowners or users. Costs should also be paid. All disputes relating to land-related compensation can be considered in a court in accordance with a procedure established by the Land Code. Articles 110 and 111 covers the illegal use of land and stipulates that any damage caused by illegal occupation must be paid by the land user.

The Civil Code, Articles 246, 247, 248 and 249 includes provisions for the acquisition of land for state needs, which is applicable to the Project. The Code states that the relevant Executive Agency should; a) send official notifications to all affected persons about the future land acquisition process; b) pay compensation to affected persons within 90 days after the land transaction agreement is made; c) assist relocated people (this involves practical assistance measures to relocate); and d) pay compensation for affected assets. To the extent possible, compensation is calculated using the market rates and, if it is not possible to identify market rates, replacement cost is instead used. The Civil Code states that an affected person can select one, or more, different types of compensation depending upon their eligibility.

The Flat Code states that the acquisition of residential lands and residential buildings on land should be acquired under the provisions of the Land Acquisition Law. The Land Acquisition Law (LAL) (“Acquisition of Lands for State Needs" of 20 April 2010) specifically address matters related to involuntary resettlement, including the process and institutional arrangement for land acquisition, compensation and valuation, consultation requirements, entitlements of various categories of displaced persons and the availability of a grievance mechanism. The law considers various categories of displaced persons, including those without state registration, tenants, informal long-term users of land, and persons who have no legal rights on the land that they live in. The law entitles persons who have no legal rights on the land to resettlement assistance and compensation for their non-land assets. It includes the provision of compensation for loss of business and income, transition allowance, and transportation support, and compensation for loss of assets based on replacement cost. The law requires a census to be undertaken during an inventory of assets that are to be acquired.

The law “Acquisition of Lands for State Needs” also requires a public meeting to be held to discuss issues associated with the land acquisition process. Details of the grievance mechanism which is available under “On the procedure for considering appeals of citizens” (2015, № 1308- IVQ) should be provided during this meeting. Under the law “Acquisition of Lands for State Needs”, where leased state or municipal land is to be used for state needs, the rent to be paid by the lessee will be reconsidered taking into account the reduction of the leased land area.

The law also requires the following:

Information to be provided to inform then of the legal rights of resettlement under national legislation;
Advising them on real and possible resettlement alternatives, discussing choices with them; and
Providing resettlement assistance.

As stated above, none of these legal requirements apply as the law does not recognise informal land users and lease agreements held by farmers are not legally valid. Article 66 of Expropriation Law, 2010 provides for an additional 5-10% to be added to the compensation value of residential houses, if they have been living there for 5 years or more.

The Law on Land Lease (1998) (Article 16) states that when an area of leased land is acquired for state needs, another land plot having a same size and a same quality must be provided to lessee. Any losses incurred during the process of changing areas will be paid in accordance with the Land Code.

The Law on valuation states that a valuation of real estate is mandatory where land is required for state needs, and the results of the valuation are to be reflected in a Valuation Report.

The Decree of the President on additional activities regarding to implementation of the Law on "Acquisition of Lands for State Needs" of 20 April 2010 stipulates additional provisions for the implementation of the Land Acquisition Law. It also assigns government agencies to act as the Executive Agency under the Civil Code.

The Decree of the President No. 506-3 dated 7 December 2007 requires the provision of 20% additional compensation to the calculated market price of any acquired property.

The Cabinet of Ministers Resolution No. 42 (15 March 2000) outlines procedures for the acquisition of land through compensation from legal landowners which could be: (i) land-forland or (ii) compensation based on market prices.

The Cabinet of Ministers' Resolution No.45 24 February 2012 stipulates guidelines for preparation of resettlement plan, as well as an example content of a resettlement plan and provides general resettlement guideline. A Resettlement Plan is only required when the total of displaced persons reaches 200, or more.

The law “Acquisition of Lands for State Needs” also requires the Resettlement Plan to include: • Financial and practical assistance during relocation;

A place of residence, living space, agricultural land or non-residential area for carrying out entrepreneurial activities, which is at least equal to the conditions of the place of departure of the persons affected by the acquisition;
If required, material and other assistance, the amount and (or) amount of which is determined taking into account the duration of the transition period required to restore the means of subsistence and living standards after the transfer; and
Training and other assistance to restore livelihoods and living standards after resettlement, if required.

The Cabinet of Ministers' Resolution (No. 55 21 April 2011) reflects guidelines and criteria to be used to select a specialist who prepares a resettlement plan.

Compensation Valuation Methods in Azerbaijan Under the Law on Valuation Activity (1998), land compensation prices must be based on the applicable market rate2 . In case the applicable market price cannot be determined then replacement cost is used. These rates are determined by an Independent Appraiser hired by the Valuation Commission established by a decree of the Cabinet of Ministers. If both market and replacement price are available, then the higher value is used. The market price of land is the average of three highest land transaction prices, which were sold and bought in the same area for recent three months. The replacement price of land is calculated including expenses that reflect the need for improvements to be made to enrich productivity, provide basic facilities, and cover all applicable land registration costs. Compensation is payable for loss of annual crops and is determined by the Valuation Commission. The value reflects the productivity of crops and the average price of produce based upon the rates issued by the district Department of Statistics.

Perennial crops (trees, shrubs and vines) growing on private yards and orchards are valued on a per tree or per shrub basis by applying a standard formula that reflects their market value.

Compensation for immovable assets cover assets such as fences, walls, animal enclosures, small irrigation channels, drains, wells, hand pumps, artesian bores, water pumps, hay sheds, animal shelters and roads. These items must be valued at full replacement cost by the Independent Appraiser.

Compensation for temporary land acquisition should be made based on the market rate of the land.

Upon the completion of works, the land must be restored to its pre-project condition and returned to the owner/user with compensation for the following:

The loss of annual crop production;
The loss of income from the potential for a reduction in crop yield to occur for a total of three years;

Land market value is determined using the mean value of the three highest recorded land sales in past 3 months from the census date. “Article 58: Market Value” of Law of the Republic of Azerbaijan on the Acquisition of Lands for State Needs, April 2010. 3 The replacement price is determined based in ‘Article 59: Replacement Price’ of Law of the Republic of Azerbaijan on the Acquisition of Lands for State Needs, April 2010. This replacement price includes expenses to construct a building or area of land in same area, and the same size and production potential, and includes the applicable land registration fee, the loss of any trees or perennial crops; the loss of grazing land; and the loss of any immovable assets and land attachments.