International arbitration in the former Soviet Republic of Uzbekistan may be becoming a more trusted alternative to court litigation, with recently proposed changes in form of a draft international commercial arbitration law. Changing the arbitration law is the first and most important step towards Uzbekistan opening up to foreign investments and local arbitral institutions becoming more international and user friendly to foreign companies.
Uzbekistan acceded the New York Convention in 1996. In 2006, the government passed the National Arbitration law, available online in Russian, which is the widely spoken “lingua franca” of the Uzbek Republic. However, the Arbitration Law 2006 is quite different and not recognized by the UN Secretariat as being based on the UNCITRAL Model law.
For instance, its scope of application is limited only to domestic awards (Article 1 of the Arbitration Law), courts have significant powers to interfere in the arbitration procedure, the choice of applicable law is limited to Uzbek law (Article 10 of the Arbitration Law) and arbitrators can only be Uzbek nationals. If the parties fail to appoint an ad hoc tribunal, the arbitration terminates immediately and the dispute shall be referred to the State Courts (Article 15 of the Uzbek Arbitration Law).
Concerning arbitral institutions in Uzbekistan, in May 2006 the Chamber of Commerce and Industry of the Russian Federation and the Chamber of Commerce and Industry of the Republic of Uzbekistan signed an Agreement on Cooperation in the Domain of International Commercial Arbitration. However, as Uzbekistan did not have its own arbitration center at the time, the agreement was limited to assisting each other with the organization of ad hoc arbitrations, exchanges of information, the organization of joint seminars and conferences and visits by each Party’s experts to study and examine the activities of arbitration centers.
It was only in 2011, some four years later, that Uzbekistan opened its first arbitration center, the International Commercial Arbitration Court established under the Chamber of Commerce and Industry of the Republic of Uzbekistan. This must be distinguished from the “Arbitration Courts” which also operate under the Chamber of Commerce and Industry. Arbitration Courts operate in accordance with the laws of the Republic of Uzbekistan “The Law on the Chamber of Commerce and Industry of the Republic of Uzbekistan” and the “Law on Arbitration Courts” and have their own rules and regulations. Arbitration Courts are commercial courts that can hear disputes involving individuals as well as companies, excluding matters which under Uzbek law are considered as non-arbitrable (cases involving family, labour, employment and administrative disputes).
Despite the International Arbitration Courts being referred to as “international”, the Arbitration Law is designed for local arbitrations only- the applicable law is only Uzbek law and the arbitrator must be a citizen of Uzbekistan. Hopefully, this is about to change with the new draft law proposing a mixed panel of arbitrators composed of both foreign and Uzbek nationals.
Regarding remedies against awards, while the State Courts of Uzbekistan still have very wide powers, there is no appeal to the decision and the only remedy is annulment of the decision before competent State courts if a party proves there has been a violation of the procedural rules of arbitration.
Concerning the enforcement of international arbitration awards, Uzbekistan signed and ratified the New York Convention in 1996. The Supreme Economic Court also passed a decree “On Court Practice of Enforcement of Decisions and Arbitral Awards of the Foreign Courts (Arbitrations)” on 26 March 1998, which further provides for the enforcement of foreign arbitral awards if the conditions specified in the applicable international treaty are met.
Uzbekistan is a party to several investment treaties with foreign countries (including the United Kingdom, South Korea and Turkey) that contain dispute resolution clauses. Uzbekistan also signed the ICSID Convention on 17 March 1994 and deposited instruments of ratification on 26 July 1995, with effect from 25 August 1995, making it possible for certain disputes with the Republic of Uzbekistan to be referred to arbitration under ICSID auspices. Currently, there are four pending cases against Uzbekistan at the ICSID. Four more have been concluded, two in favour of the State.