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On the 20th of April, 2007, Fatullayev was arrested in the court hall after a ruling by the Yasamal District Court on the lawsuit of Refugee/IDP Rights Defense Committee chairperson Tatyana Chaladze. After his arrest, a criminal case was opened against Fatullayev in the National Security Ministry Chief Investigative Office regarding an article published in Realniy Azerbaijan newspaper. According to the Ministry of Foreign Affairs, the article caused foreign citizens and representatives of international organizations to be concerned for their safety. He was convicted under articles 214.1 (threatening terror), 283.2.2 (incitement of ethnic/national, social or religious hatred abusing authority) of the Criminal Code and was sentenced to a pre-trial detention. Fatullayev was then convicted under 213.2.2 (tax evasion). Fatullayev was sentenced to 8.5 years in prison on the 30th of October, 2007 and was fined 242,522 AZN under the decision of the Grave Crimes Court.
On the 29th of December, 2009, 0.223 grams of heroin was found on Fatullayev in Prison #12.
A criminal case was opened against Fatullayev in the Garadag District Investigative Department. On the 6th of July, 2010, Fatullayev was found guilty under article 234.1 (Illegal purchase or storage without a purpose of selling of narcotics or psychotropic substances in an amount exceeding the necessary limit for personal consumption) of the Criminal Code and his sentence of two years and six months in prison began on the same date. Fatullayev and his lawyer believe that this incident was a set-up in order for the court to avoid complying with the decision of the European Court of Human Rights (ECHR) regarding the journalist's release.
On the 22nd of April, 2010, the ECHR issued a decision that Fatullayev should be released immediately, and that the Azerbaijani government should pay 27,822 EUR to Fatullayev in compensation. The Azerbaijani government filed an appeal with the Grand Chamber of the ECHR regarding this decision. Fatullayev is recognized as a prisoner of conscience by local and international organizations.
Fatullayev established and was the editor-in-chief of both Realniy Azerbaijan and the Gundelik Azerbaijan newspapers. First published in 2005, Realniy Azerbaijan ran as a weekly newspaper, whereas Gundelik Azerbaijan was published daily. The newspapers ceased their activity after Fatullayev's arrest in 2007.