We Solve law firm congratulates all of us on the one of the most important holidays in Armenia –RA Constitution Day. The RA Constitution was adopted on July 5, 1995 through a referendum, and then it was amended twice in 2005 and 2015. The best tribute of this symbolic day will be to raise awareness about the Constitution. Considering the fact that We Solve law firm provides services in the field of business, we have decided to present to you the constitutional regulations on business.

The Constitution has the highest legal force, to which all laws and and other legal acts adopted on the basis of them must comply.

The 2015 amendments of the Constitution established that the basis of the RA economic order is the social market economy, which is based on private property, freedom of economic activity, free economic competition and through the state policy is aimed at general economic welfare and social justice.

 

And, eventually, what is the social market economy?

In economics, from the point of view of the state's involvement in the economy, three main models are distinguished:

1. free market economy,

2. social market economy and

3. a market economy model with the dominance of the state role.

The social market economy as a model is in the middle of the doctrines of the free market economy and the market economy with the dominant role of the state. In the case of a free market economy, the intervention of the state in market relations is reduced to the minimum level, on the contrary, in the case of a market economy with the dominant role of the state, it is the state that decides what products and how much should be produced. Such economies are also known as planned economies, and in them the right to engage in entrepreneurship, the right to free choice of work and the right to private property are restricted. In such systems, free market competition cannot function, which in turn provides a setback in ensuring the rights and interests of consumers.

In the case of a social market economy, the state's intervention in market relations is done only to ensure free competition, to create equal opportunities for all, and to ensure freedom of economic activity. In the case of this model, the state does not plan the economy, does not specify the products to be produced or their quantity, but through its incentive policy, it can encourage the production, sale, or performance of certain types of products or services and works.

The goal of the social market economy is to create such an economy that will increase the economic well-being of the society, with which it will be possible to ensure the rights of a person to choose a job, engage in entrepreneurship, and have private property. The state seeks to achieve the welfare of society through the protection of private property, freedom of economic activity and protection of free competition. Through its active policy, the state is obliged to direct market relations to development, in which free competition, protection of consumer rights and interests, equality of all and free economic activity will be ensured.

Social market economy is based on the main elements of free market economy, but in the case of free market economy, the role of the state is limited to the protection of the market supply-demand principle. Meanwhile, in the social market economy, the state is obliged to ensure the welfare of the society with an active policy.

The social market economy is based on private property, freedom of economic activity, free economic competition.

 

Private property

Unlike planned economies and socialist social systems, all forms of property, including private property, are equally recognized and protected in RA. Ownership implies the totality of powers of management, possession and use of the property owned by him. And private property is the ownership right of any physical or legal person to any property. No one can be deprived of property, except by court order in the cases established by law.

 

Free economic activity

Everyone has the right to engage in economic, including entrepreneurial, activities. The conditions and procedure for exercising this right are defined by law.

The concept of entrepreneurial activity is explained in Article 2 of the Civil Code of the Republic of Armenia, according to which the activity carried out by a person independently, at his own risk, the main purpose of which is to make a profit from using property, selling products, performing works or providing services is considered entrepreneurial. A person should decide for himself what activity he should engage in, which activity is more profitable, or which activity has less risk.

The content of this right also includes the freedom to enter into transactions and contracts.

 

Free economic competition

Limitation of competition, possible types of monopoly and their permissible sizes can be defined only by law for the purpose of protecting public interests.

Abuse of monopoly or dominant market position, unfair competition and anti-competitive agreements are prohibited.

The purpose of these constitutional norms is to protect and encourage the freedom of economic activity, free economic competition, to provide the necessary environment for fair competition, to contribute to the development of entrepreneurship and the protection of consumer interests in the Republic of Armenia.

The best defense of freedom of entrepreneurial activity is to create an environment of free and fair economic competition. Everyone should have equal rights to do business, and the exercise of that right should not be artificially hindered by unscrupulous or illegal actions of other market participants.

The common goal of all these legal regulations is to create foundations for the development of state policies that increase economic well-being and ensure social justice.

 

In conclusion, the basis of the economic order in RA is the social market economy, which is based on private property, free economic activity and free economic competition. The positive obligation of the state is to ensure the protection of the mentioned three rights with such a policy that will increase economic well-being and ensure social justice.

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