American-Armenian entrepreneur James Tufenkian has sued the Armenian government over a long-standing real estate dispute that has prevented a company he owns from breaking ground to build a new hotel in Yerevan.

Tufenkian Trans Caucasus LLC acquired the property at 32 Pavstots Buzand St. in 2000. The government, two years later, decided to designate the site as “public domain” land that was included in the Hin Yerevan (Old Yerevan) project.

Construction of the controversial project, approved in 2005, only began in 2017. It remains unfinished.

Tufenkian, known as a purveyor of high-quality artisan rugs, has built several hotels in Armenia as part of his Tufenkian Heritage Hotels chain. He also founded the Tufenkian Foundation that provides aid to poor families in Armenia,

Tufenkian, Developer Disagree on Sale Price

In response to Hetq’s inquiry, the Yerevan Municipality noted that EMC, the company implementing the land sales, was recognized as the purchaser of the territory by the Armenian government. According to its 2014 decision, Old City CJSC would build the Old Yerevan project. 

The long-stalled project seeks to “reconstruct” the architectural appearance of the Armenian capital of the late 19th - early 20th centuries given that little if anything remains on the site.  

EMC plays more of an intermediary role. After acquiring the land, it is transferred to Old City CJSC, owned by Vartan Sirmakes. Sirmakes, born in Istanbul, is Armenia’s former Honorary Consul in Marseille, the co-founder of the Swiss watch brand Frank Muller, and a major shareholder of ArmSwissBank and ArtsakhBank.

Tufenkian Trans Caucasus lawyer Mikael Danielyan told Hetq that the company was and is ready, to hand over the property to the developer if reasonable compensation is paid.

However, until 2022, the developer did not initiate any negotiation process to alienate the property, which prompted Tufenkian to begin legal proceedings.

"We have come to realize that this process has no end. I addition, we have seen signs that this process can only end if our rights are grossly violated. In other words, we agree that the property will be taken from us at a price significantly lower than its real value, even though, according to the law, the property must be purchased from us at a price 15% higher than the market value,” Danielyan tells Hetq. 

In February 2023, Tufenkian Trans Caucasus filed a lawsuit at the Yerevan City Court of First Instance against the Republic of Armenia (represented by the Ministry of Finance), requesting confirmation that its fundamental rights were violated. The company also seeks AMD two million as compensation for non-pecuniary damage caused by the violation of the company’s fundamental right to the property on Pavstots Buzand St. and for related mental suffering

Danielyan admits that the company has sued not for the money but for Armenia’s courts to either confirm or reject the violation of its property rights. These verdicts will decide whether Tufenkian takes the case to the European Court of Human Rights.

The court, on March 25 this year, rejected the lawsuit, prompting the company to seek redress at the Court of Appeals. The case is currently pending.

Tufenkian Trans Caucasus also appealed to the Administrative Court, challenging the government’s November 24, 2022 decision to extend the implementation period of the Old Yerevan project for another year, until 2023. In this court case, the legality of the extension of the term itself is being challenged, since, according to the lawyer, it is not substantiated.

Following three unsuccessful court proceedings, Tufenkian Trans Caucasus  appealed to Armenia’s Constitutional Court in April 2025, challenging the law “On Alienation of Property for the Purpose of Ensuring the Overriding Interest of Society”, as well as the government’s decisions in 2018 and 2022, by which the terms were extended.

The Constitutional Court has accepted the company's application and has scheduled a written hearing for July 8, 2026. To clarify the case, it was necessary to obtain justifications and some documents from the government, which is why the case has been suspended to this day.

Danielyan familiarized himself with the materials of the Constitutional Court case, revealing that the court had set a deadline of September 15, 2025. The government submitted some explanations within the specified period and the court must now review the materials and resume the case.

Danielyan tells Hetq that the Constitutional Court demanded that the government provide all the materials of the case, as well as answer two questions. First, what is the reason for not taking measures for twenty or more years and for not providing reasonable and adequate compensation? Second, it asked the government to present its position on the extent to which it is legitimate to recognize multiple preferential interests for the same property and the same project.

On the first issue, the government and the Yerevan Municipality, which is also involved in this case, have sent material to show that they have taken certain steps, correspondence, etc., noting that there were numerous problems that prevented a resolution of the case. The government has not addressed the second issue.

“We are trying to vacate our property in the Constitutional Court, that is, there are two alternatives for us: either we go all the way and receive compensation acceptable to us, or we take steps so that our property is vacated,” notes Danielyan.

The lawyer assumes that funds were allocated for the Old Yerevan project at the time, which did not serve the stated purpose and that today, the investor does not want to allocate any more money since promises made at the time remain unfulfilled.  and today they are not being fulfilled. He thus concludes that the investor is forced to artificially delay the process, trying to sell the property as cheaply as possible.

No Methodology to Assess Real Estate Market Values

Tufenkian Trans Caucasus LLC also raised questions about compensation mechanisms during the Constitutional Court’s review of the case. 

Although compensation, according to the law, must be equivalent: market price, plus 15%, plus all taxes, there are no mechanisms in the law for the formation of the market price. 

The absence of these mechanisms, perhaps, led to the fact that Tufenkian Trans Caucasus and thirty other property owners did not sell their real estate to the developer. In response to our letter, the Yerevan Municipality reported that thirty-one properties in the area have not yet been sold, prompting numerous lawsuits.

32 Pavstots Buzand St. (Yerevan)

The site in downtown Yerevan owned by Tufenkian measures ​​693 square meters.

Danielyan rules out the possibility that it will be assessed at a value lower than US$ 4,000 per square meter. In 2019, the company ordered an appraisal from the licensed Expert Otsenka LLC. It valued the property at AMD 834 million. (approximately $2.188 million at today’s foreign exchange rate). Adding a 15% surcharge and taxes, the compensation value becomes AMD 1.350 billion.

In April 2023, the company, however, received a written offer from developer EMC to sell the property for AMD 642 million (including a 15% surcharge and taxes). That is, more than half the price quoted by Expert Otsenka. The National Center for Evaluation and Expertise (NCEE) LLC conducted the EMC appraisal.

Danielyan has no doubt that the second appraisal was way off the mark and should have raised red flags for law enforcement agencies. The lawyer adds that NCEE hasn’t submitted its appraisal to the country’s Cadastre Committee as required by the law. 

Tufenkian Trans Caucasus LLC in June 2024, again applied to an independent appraiser. This time the 32 Pavstots Buzand site was assessed at AMD 952 million   without taxes and AMD 1.550 billion including 15% surcharge and taxes. Thus, Tufenkian Trans Caucasus couldn’t, in good faith, accept EMC’s offer.

 Danielyan notes that there is no unified approach in the cases of the sale and compensation of buildings included in the Old Yerevan project. The amounts of compensation vary greatly, depending on who they were able to negotiate with.

The lawyer tells Hetq that EMC, the Old Yerevan project developer, has countersued Tufenkian Trans Caucasus and other property holders who have rejected their compensation offers. He says EMC wants to resolve the entire matter via the courts. 

Of the twenty-one buildings included in the Old Yerevan project, only three have been built to date. Levon Vardanyan, chief architect of the Old Yerevan project, points to the reluctance of landowners to sell their properties as the main reason for the project’s construction delays. Vardanyan accuses them of demanding astronomical compensation amounts.

Old City CJSC representative Hayk Davtyan told Hetq that Tufenkian's company valued its property as a functioning complex, which is why the valuations differ.

(Hetq will address the implementation of the Old Yerevan project and the reasons for its delay in an upcoming article.)

PHOTO: Armenian PM Nikol Pashinyan and James Tufenkian meet in Yerevan in March 2019. Pashinyan’s office, in a press release covering the meeting, writes that, “The Prime Minister welcomed James Tufenkian’s activities in Armenia and Artsakh, noting that the Tufenkian Foundation-supported projects are of great importance both for Armenia and Artsakh.”