The so-called “Common state” peace plan (official name: On the Principles of Comprehensive Settlement of the Nagorno-Karabakh Armed Conflict), which was proposed by the OSCE Minsk Group Co-Chairs to the region to the parties on November 7, 1998, provided for the creation of a common state between Azerbaijan and Nagorno-Karabakh. The proposal specifically referred to the agreements on the status of Nagorno-Karabakh, the status of the Lachin corridor, Shusha and the former Shaumyan district of Azerbaijan, and to a cessation of the armed conflict between the parties. The proposal was conferring upon Nagorno-Karabakh a status of a state or territorial entity in the form of a Republic within the internationally accepted borders of Azerbaijan. It indicated that Nagorno-Karabakh constitutes a common state with Azerbaijan and establishes a Joint Committee, including representatives of the presidents, prime ministers, and chairmen of the parliaments. Under the terms of the proposal, Nagorno-Karabakh would have its own constitution, flag, seal and anthem, and would be entitled to establish direct relations with any state and regional and international organization in the fields of economics, science, culture, sports, and humanitarian affairs. Nagorno-Karabakh would form its own legislative, executive, and judicial institutions, as well as its National Guard and police, and the laws, regulations and executive decisions of Azerbaijan would be effective in Nagorno-Karabakh only if they did not contravene its constitution and laws. Under the peace proposal, neither Azerbaijan nor Nagorno-Karabakh had a right to change the common state provision unilaterally. The proposal also entitled Nagorno-Karabakh to participate in the execution of Azerbaijani foreign policy, if this was related to its interests, and to include its experts in the Azerbaijani delegation to any negotiations that related to Nagorno-Karabakh’s interests.
The idea of a common state is believed to have been introduced by Russian Foreign Minister Yevgeni Primakov and his Armenian counterpart, Vartan Oskanian, who proposed a vaguely-defined common state between Azerbaijan and Nagorno-Karabakh without specifying what kind of hierarchical relations – horizontal (equal relations between the parties) or vertical (subordination of NK to Azerbaijan) – would be applicable. Armenia and the Nagorno-Karabakh leadership endorsed the proposal as a basis for the peace negotiations. However, Azerbaijan strongly rejected it, claiming that it violated its sovereignty, territorial integrity, and the principles agreed upon at the OSCE summit in Lisbon in December 1996, which were rejected only by Armenia. Azerbaijan maintained that the Minsk Group adopted the Russian idea, which was designed to favor Armenia and reward Nagorno-Karabakh with complete secession from Azerbaijan. Acceptance of the proposal would mean ratification of the existing de facto independence of Nagorno-Karabakh, and Baku saw “the common state principle as an attempt to legalize in a diplomatic manner what has been achieved by force”. Thus, once again, the peace proposal of the Minsk Group failed, this time with the objection by Azerbaijan, because it represented a transition to full independence for Nagorno-Karabakh and ignored the territorial integrity of Azerbaijan that was defined by OSCE at its Lisbon summit in 1996.
 OSCE Minsk Group Co-chairmanship, “On the Principles of Comprehensive Settlement of the Nagorno-Karabakh Armed Conflict” (Common state), November, 1998.
 Laitin, David D., and Grigor Suny, Ronald, “Armenia and Azerbaijan: Thinking a way out of Karabakh”, Middle East Policy, Vol. 7, No. 1, 1999, p. 168.
 Jacoby, Volker, “The Role of the OSCE: An Assessment of International Mediation Efforts”, Accord: An International Review of Peace Initiative, Issue 17, 2005, p. 32.
 Miller, Nicholas W., “Nagorno Karabakh: A War without Peace”, in Eichensehr, Kristen and Reisman, W. Michael (ed.), Stopping Wars and Making Peace: Studies in International Intervention (Martinus Nijhoff Publishers, 2009), p. 69.
 Wirminghaus, Rainer Freitag, “State-building and Solving Conflicts in the South Caucasus”, in Debiel, Tobias and Klein, Axel (eds.), Fragile Peace: State Failure, Violence and Development in Crisis Regions (Zed Books Ltd, 2002), p. 104.