International Arbitration 2021 - Arbitration & Dispute Resolution

Law and Practice

1. General

1.1 Prevalence of Arbitration

Arbitration is becoming more and more popular in Uzbekistan as an alternative to litigation. With the adoption of the Arbitration Law in 2006, the number of arbitration tribunals established in Uzbekistan reached nearly 300 in 2021. One of the most active is a network of arbitration courts under Chamber of Commerce and Industry of Uzbekistan (CCI).

The CCI confirms that more than 20,000 cases were heard by all CCI arbitration courts across Uzbekistan in 2019–21.

The main trend of arbitration in Uzbekistan in 2018–21 is a move towards international commercial arbitration. As part of this trend, an international arbitration court was established under the CCI which currently accepts cases under Uzbekistan law. CCI reports show that nearly 90 cases have already been heard in 2020–21.

Previous arbitration law allowed cases to be accepted and heard only under Uzbekistan law and, therefore, a special law on international commercial arbitration has been enacted in 2021 to allow cases under foreign law to be accepted and heard. The law is based on the UNCITRAL Model Law.

1.2 Impact of COVID-19

The spread of the COVID-19 pandemic negatively impacted the number of arbitration filings. The vast majority of arbitration courts ceased activities, with only a few remaining active and accepting cases either without inviting the parties to attend arbitration hearings or preferring to conduct hearings through online platforms. Despite a significant slowdown during the pandemic, all arbitration courts under the CCI accepted and reviewed 5,911 cases in 2020 and have already reviewed nearly 4,330 cases during the first six months of 2021. The filing rate in 2020–21 seems to have stabilised and is now rapidly increasing.

1.3 Key Industries

Observations of arbitration trends by practitioners suggest that the construction, infrastructure, banking and trading sectors have been very active in making use of international arbitration in recent years. Based on active reforms and development of projects, it is also possible to identify energy, automobiles and telecommunications as industries subject to growth in terms of involvement in international arbitration.

We have not noticed a significant decrease in arbitration cases as a result of the COVID-19 pandemic in any specific industries. On the contrary, we saw an increase in arbitration cases in various professional services and wholesale trading industries.

1.4 Arbitral Institutions

The most experienced and reputable international arbitration venue in Uzbekistan is an International Arbitration Court under the CCI. The fact that the CCI comprises prominent practitioners and former state judges as well as the overall strong reputation of arbitration courts under the CCI allow this court to enjoy trust and popularity in the country. No decision of the International Arbitration Court under the CCI has been annulled so far, and the level of annulment of arbitration courts under the CCI in all regions of Uzbekistan is close to zero.

The Tashkent International Arbitration Centre under the CCI is also gaining significant popularity after enactment of the Law on International Commercial Arbitration in Uzbekistan.

As observers have been informed, the CCI is planning to unite the International Arbitration Court and the Tashkent International Arbitration Centre to form the largest and most reputable arbitration venue in the Central Asian region.

1.5 National Courts

At the time of writing, the International Arbitration Court and the Tashkent International Arbitration Centre are the only known arbitration venues competent to accept and hear international arbitration cases governed by foreign law.

2. Governing Legislation

2.1 Governing Law

International arbitration is regulated by the Law on International Arbitration enacted in February 2021. It was drafted based on the UNCITRAL Model Law and there are no significant inconsistencies with the Model Law. It should be noted that the Parliament of Uzbekistan also enacted the Arbitration Law in 2006; however, this Law enables local arbitration courts to accept and hear cases only under Uzbekistan law.

2.2 Changes to National Law

There have not been many significant changes to the Arbitration Law 2006. A new provision to the Law, enacted in 2019, was the introduction of mediation procedures under which the parties to a dispute are allowed to suspend an arbitration hearing to enter a mediation procedure at any time before an arbitration award has been made.

3. The Arbitration Agreement

3.1 Enforceability

In order for an arbitration agreement to be enforceable, it must be made in writing or by use of electronic means and signed/approved by all parties to a potential dispute. Arbitration agreements can be made in the form of an arbitration clause or a separate agreement.

The agreement should clearly identify as its subject matter anything it covers. Arbitration agreements should also clearly identify an arbitration court competent to accept and hear the case.

Arbitration agreements cannot be signed by public authorities but can be signed by business entities established by public authorities in respect of commercial relations.

3.2 Arbitrability

In accordance with the Arbitration Law 2006, any dispute arising from civil relations, including economic disputes between business entities, can be referred to arbitration. By civil relations the Law means contractual relations between individuals and legal entities.

The Law establishes that the disputes arising from the following relations cannot be arbitrated:

administrative relations (disputes with public authorities);
family relations;
employment relations; and
relations where litigation is a statutory obligation ‒ these include insolvency cases, criminal and administrative liability cases, certain intellectual property cases and others.

Based on arbitration practice it is noted that arbitration courts do also refuse to accept cases if there is no duly signed arbitration agreement or the arbitration agreement is restricted to particular issues only or the competence of a particular arbitration court cannot be identified.

3.3 National Courts' Approach

The approach of the national courts of Uzbekistan in respect of enforcement of arbitration agreements is primarily pro-enforcement. As a rule, national courts do enforce arbitration awards.

In accordance with the national law, courts do not have competence to analyse a case on its merits but merely inspect compliance with procedural requirements. Provided that an arbitration court and arbitrators have been duly registered, all procedural requirements have been fulfilled and an arbitration agreement is in place, there are no grounds for national courts to refuse enforcement. After the national court has issued a writ of execution, and if the debtor refrains from executing the award, mandatory enforcement is performed by the Bureau for Mandatory Enforcement under the General Prosecutor's Office.

3.4 Validity

The Arbitration Law 2006 establishes that arbitration agreements made in the form of arbitration clauses are separable. Any conclusion of the court regarding an underlying contract being invalid does not, by virtue of Article 24 of the Arbitration Law 2006, mean, or lead to, the invalidity of an arbitration clause. Therefore, any duly approved arbitration clause shall survive any invalidation of the underlying contract, even if it is made by court.

Nevertheless, it is always recommendable to make arbitration agreements in the form of separate agreements in order to reduce any legal risks.

4. The Arbitral Tribunal

4.1 Limits on Selection

In permanent arbitration tribunals, an arbitration board is formed from the list of arbitrators registered with that particular arbitration tribunal. The parties to a dispute are free to choose their arbitrator. Arbitrators acting independently must have a higher legal education. On an arbitration board, an arbitrator acting as a chairperson must have a higher legal education.

The following persons cannot act as arbitrators in Uzbekistan:

persons under the age of 25;
persons who cannot ensure unbiased resolution of a dispute, who are directly or indirectly interested in the resolution of a dispute;
persons who have been announced by courts as having no or limited legal capacity;
persons having an outstanding criminal conviction or a non-served decision of a criminal court;
any person forbidden by court or by law to act as arbitrator, judge, advocate, investigator, prosecutor or other category of law enforcement agent; and
any person who due to his or her position as determined by law cannot act as arbitrator.

As a general rule, if an arbitration agreement is silent on the procedure for the appointment of an arbitration board, then such a dispute shall be heard by three arbitrators and each party shall appoint its own arbitrator within 15 days. Those two arbitrators then choose a third arbitrator who shall act as chairperson.

In ad hoc arbitration tribunals, a party to a dispute has to choose its arbitrator within 15 days from receiving notice. If an arbitrator is not chosen, or the two arbitrators chosen by the parties do not appoint a third arbitrator, the dispute shall be taken to a national court.

4.2 Default Procedures

If parties fail to select arbitrators within established timeframes, then:

in permanent arbitration courts, selections shall be made by the chairperson of the respective court; and
in ad hoc arbitration courts, the dispute shall be taken to national courts.

The law does not have any separate specific regulations applicable to multiparty arbitrations. Standard procedures shall apply.

4.3 Court Intervention

An arbitration court can intervene only if the parties have failed to choose their respective arbitrators within 15 days from receiving notice, or if the parties have explicitly decided, in their arbitration agreement, to grant arbitration court power to selected arbitrators on behalf of the parties. In the latter case, the chairperson of the respective arbitration agreement shall appoint arbitrators.

An arbitration court may also intervene if the internal regulations of the court allow such an intervention, but only in the following cases:

one of the arbitrators has been removed; or
one of the arbitrators cannot continue to act as an arbitrator for any reason.

4.4 Challenge and Removal of Arbitrators

The Arbitration Law 2006 allows for the removal of a disputed arbitrator by any party if such disputed arbitrator:

does not have a higher legal education (applicable for sole arbitrators);
is a person under the age of 25;
is a person who cannot ensure unbiased resolution of a dispute, who is directly or indirectly interested in the resolution of a dispute;
is a person who has been announced by courts as having no or limited legal capacity;
is a person having an outstanding criminal conviction or a non-served decision of a criminal court;
is a person forbidden by court or by law to act as arbitrator, judge, advocate, investigator, prosecutor or other category of law enforcement agent; or
is a person who due to his or her position as determined by law cannot act as arbitrator.

4.5 Arbitrator Requirements

If an arbitrator has a conflict of interest in respect of any parties to a dispute, or any other ground for removal, this arbitrator has to inform both parties to the dispute. Both parties are entitled to remove this arbitrator at their own discretion. If the parties were informed prior to the appointment of this arbitrator and did not exercise their right of removal, then after commencement of arbitration hearings this right can no longer be exercised.

If these facts became known to the arbitrator after commencement of arbitration hearings, this arbitrator has to inform both parties immediately. Both parties to the dispute are entitled to remove this arbitrator at their own discretion.

5. Jurisdiction

5.1 Matters Excluded from Arbitration

The Arbitration Law 2006 establishes that disputes arising from the following relations cannot be arbitrated:

administrative relations (disputes with public authorities);
family relations;
employment relations; and
relations where litigation is a statutory obligation, including insolvency cases, criminal and administrative liability cases, certain intellectual property cases and others.

5.2 Challenges to Jurisdiction

Article 24 of the Arbitration Law 2006 provides for the competence-competence principle as part of domestic legislation. If any of the parties to a dispute challenges the competence of an arbitration court, the arbitration court should accept the filing and review and analyse this matter. Upon review of this filing, the arbitration court makes a decision on its competence by means of issuing a resolution.

If the arbitration court decides that it does not have competence then the case cannot be heard on its merits by that arbitration court.

5.3 Circumstances for Court Intervention

The Arbitration Law 2006 binds arbitration courts to address issues of jurisdiction themselves. Each arbitration court reviews the issue of jurisdiction from the moment of receiving a lawsuit and issues a resolution on acceptance of the case if the court decides it has jurisdiction to hear. This resolution is sent to both parties and, depending on the arbitration agreement, the court may also invite the parties to nominate their arbitrators or approve the date of first hearing.

The issue of jurisdiction may also act a ground for annulment of an arbitration award. If one of the parties does not agree with jurisdiction of the court it may address a national court of Uzbekistan to annul the award. It is noted that there has not been a large number of cases in Uzbekistan based on jurisdiction matters.

5.4 Timing of Challenge

Article 43 of the Arbitration Law 2006 establishes that resolutions issued by arbitration courts cannot be challenged.

In accordance with Articles 28 and 223 of the Economic Procedural Code, jurisdiction may be challenged in national courts only after the arbitration court has issued an award.

5.5 Standard of Judicial Review for Jurisdiction/Admissibility

In accordance with Articles 46-47 of the Arbitration Law 2006 and Article 226 of the Economic Procedural Code of Uzbekistan, national courts cannot review a case on its merits and may only review the overall procedural compliance of arbitration hearings.

5.6 Breach of Arbitration Agreement

Depending on the situation, the wording of an arbitration agreement and the subject of the breach, a claim for breach of an arbitration agreement can be remedied through the competent arbitration tribunal on the grounds of its internal regulations and arbitration rules or in the economic courts of Uzbekistan.

Any challenge to an arbitration award must be made by means of filing a lawsuit with a respective economic court of Uzbekistan. The procedure for filing is established by the Economic Procedural Code and represents a standard judicial process. All national courts are obliged to accept and review this filing.

Reviews of arbitration awards are made only to identify inconsistencies with compliance with the procedural requirements for commencing and holding an arbitration process. National courts do not analyse cases by their merits. If the national court does not identify any breach of procedural requirements, it will refuse to annul the arbitration award.

5.7 Third Parties

Uzbekistan law does not allow arbitration courts to assume jurisdiction over individuals or entities that are neither party to an arbitration agreement nor signatory to a contract containing an arbitration agreement. Arbitration courts may have jurisdiction exclusively over individuals and entities who are parties to such an arbitration agreement.

6. Preliminary and Interim Relief

6.1 Types of Relief

Arbitration courts in Uzbekistan are not allowed to award preliminary or interim relief. However, Article 32 of the Arbitration Law 2006 entitles a party to an arbitration proceeding to apply to the respective national court for interim relief.

Interim relief can be applied for if the party believes non-application of interim relief will lead to inability or restricted ability to enforce the arbitration award. An application for interim relief must be reviewed and decided upon by a national court within one working day after it has been filed.

6.2 Role of Courts

All applications relating to the issuance of awards for preliminary or interim relief are filed to, and reviewed by, national courts only. National courts can issue decisions to grant the following types of interim relief only in respect of disputes heard in domestic arbitration courts:

arresting property and money owned by the defendant;
forbidding the defendant to take certain actions;
forbidding third persons to take certain actions in respect of a disputed object;
suspension of executing writs of execution or execution of decisions which can be made on a direct basis;
suspension of sale of property;
binding the defendant to take certain actions in respect of a disputed property (security or other); and
transferring a disputed property to a third person.

It should be noted that the concept of emergency arbitrators does not exist under Uzbekistan law.

6.3 Security for Costs

In accordance with Article 94 of the Economic Procedural Code, if national courts decide to apply interim relief the defendant can request and national courts can bind claimants to provide security for potential compensation of damages for the defendant.

7. Procedure

7.1 Governing Rules

Procedural rules for permanent arbitration courts are approved by the respective courts themselves and the law provides quite a wide level of discretion to regulate procedural issues internally.

In ad hoc arbitration courts, procedural rules are decided between the parties.

7.2 Procedural Steps

The Arbitration Law 2006 does not impose any mandatory procedural steps to commence arbitration proceedings in Uzbekistan.

The following steps are implied by law:

the arbitration court and arbitrators are duly registered;
the arbitration agreement is duly executed in written or electronic version;
the filing is made by the claimant;
the arbitrators are chosen by the parties or as per the agreed procedure;
all parties are duly notified of the hearing day and venue; and
the arbitration award is made and sent to both parties in writing.

7.3 Powers and Duties of Arbitrators

The Arbitration Law 2006 does not list any specific powers or duties for arbitrators. Nevertheless, based on general provisions of law, arbitrators are obliged to:

comply with the qualification requirements;
inform the parties of any conflict of interest or existence of any other ground invalidating them to act as an arbitrator;
act impartially and professionally;
ensure all notifications are sent to all parties in due course;
make decisions under Uzbekistan law;
make a fair and lawful arbitration award; and
sign the arbitration award within ten days after a decision has been announced to the parties.

7.4 Legal Representatives

There are no special qualifications and requirements to legal representatives of the parties to appear before an arbitration court. The only legal requirement is the existence of power of attorney to all representatives participating in arbitration hearings on behalf of the parties.

8. Evidence

8.1 Collection and Submission of Evidence

The rules for collection and submission of evidence are set out in Articles 33 and 34 of the Arbitration Law 2006. The general rule is that each party is responsible for collecting and providing to the arbitration court all evidence of its arguments. If the arbitration court is not satisfied with any evidence provided by the parties then it may request the provision of additional information and materials.

If the parties do not agree otherwise, any documents and materials provided by them to the court must also be provided to the other party.

If an arbitration court uses any expert opinion as one of the grounds for its award, a copy of this opinion must be provided to all parties.

When sending documents and materials to the parties, all deliveries should be addressed to the last known address of the parties by registered mail with confirmation of delivery. Any correspondence shall be treated as if it were provided on the day of its actual delivery. All other procedures for providing evidence can be agreed by the parties or should be regulated by the internal procedural rules of arbitration courts.

8.2 Rules of Evidence

As a rule, the arbitration courts of Uzbekistan apply rules of evidence as approved by the procedural codes for national courts of Uzbekistan. All evidence provided to courts must be identifiable, genuine and relevant to the hearing. Documentary evidence is treated as the strongest evidence. Any attempt to forge evidence shall be treated as a criminal offence.

8.3 Powers of Compulsion

The Arbitration Law 2006 does not grant arbitration courts any powers of compulsion to order the production of documents or require the attendance of witnesses. The court shall issue an award based on any witness statements and evidence provided by the parties.

9. Confidentiality

9.1 Extent of Confidentiality

In accordance with Articles 4 and 28 of the Arbitration Law 2006, confidentiality is one of the main principles of arbitration in Uzbekistan. All information related to proceedings is kept confidential from any third persons and remains non-disclosed.

10. The Award

10.1 Legal Requirements

An arbitral award is made in writing and is signed by all arbitrators, including an arbitrator who has any special opinion (for example, if such an arbitrator voted against the decision).

In accordance with Article 39 of the Arbitration Law 2006, the award should contain the following information:

date of award;
place of arbitration;
members of the arbitration board;
names and addresses of the parties, and/or their representatives;
justification of the court's competence;
subject of the claim and defence;
description of the circumstances of the case and dispute; and
resolutive part.

The Law does not establish any deadline for arbitrators to make a decision. However, once made, the decision must be sent to the parties within ten days.

10.2 Types of Remedies

There are no limits on the types of remedies an arbitral tribunal may award. Each case should be reviewed based on its peculiarities. That said, it is noted that arbitration courts in Uzbekistan tend to apply the approach used by national courts in respect of remedies.

As a rule, identical or similar remedies for the same breach are refused, and if the defendant produces evidence of its poor financial status, the court may reduce the amount of remedies at own discretion.

10.3 Recovering Interest and Legal Costs

All damages and costs recoverable in arbitration courts are regulated by underlying contracts between disputing parties as well as general provisions of the Civil Code of Uzbekistan. If a party provides sufficient evidence of its costs ‒ for example, contracts with advocates or evidence of some costs to third parties ‒ arbitration courts have been observed to grant compensation for such costs in Uzbekistan.

Interest is also subject to payment under the general rule established by Article 327 of the Civil Code, which is frequently employed by arbitration courts. Article 327 of the Civil Code entitles interest to be claimed for unlawfully kept or non-paid money. Interest is applied at the rate of refinancing approved by the Central Bank of Uzbekistan (15% in 2020).

11. Review of an Award

11.1 Grounds for Appeal

In accordance with Article 47 of the Arbitration Law 2006 and Article 226 of the Economic Procedural Code of Uzbekistan, national courts cannot review a case on its merits and may only review the overall procedural compliance of arbitration hearings. An arbitration award may be annulled only in the following situations:

the arbitration agreement is invalid;
the arbitration court did not have competence and jurisdiction;
the arbitrators did not comply with requirements of the Arbitration Law;
the award was not made under Uzbekistan law; or
a party to a dispute was not duly notified of the appointment of the arbitration board or of the place and time of arbitration hearing and therefore could not provide its own position on the case.

11.2 Excluding/Expanding the Scope of Appeal

The Arbitration Law 2006 does not allow the parties to agree to exclude or expand an appeal or challenge under national law.

11.3 Standard of Judicial Review

National courts are forbidden by law to hear appeals on the merits of a case. Only procedural compliance is analysed.

12. Enforcement of an Award

12.1 New York Convention

Uzbekistan is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Uzbekistan has not made any revisions or exclusions to the text of the Convention.

12.2 Enforcement Procedure

When an award is subject to ongoing set-aside proceedings at the seat (eg, no impact, suspension of enforcement proceedings pending a resolution of the proceedings at the seat), the state court of Uzbekistan may postpone the recognition hearings until the set-aside proceedings at the seat have been completed. Postponement is not made unilaterally but should be requested by one of the parties to the case. If no request has been filed, the Uzbek state court will continue the recognition hearings and shall make a decision in due course.

Enforcement of foreign arbitration awards is made by state economic courts of Uzbekistan. In accordance with Article 4 of the New York Convention and Article 251 of Economic Procedural Code of Uzbekistan, to obtain the recognition and enforcement of a foreign arbitration award it is necessary to submit the following documents to Tashkent City Economic Court:

application for recognition;
duly authenticated original award or its duly certified copy;
original arbitration agreement or its duly certified copy;
formal confirmation of the award coming into force if the award is silent about it;
documents on any previous execution of the award (if any);
documents confirming due notification of the parties;
powers of attorney for representatives;
evidence of sending the application for recognition to all parties;
evidence of payment of state fee; and
a notary translation of all documents which are not in Uzbek language.

The established judicial practice in Uzbekistan provides the criterion of a "duly certified copy", which is a notary certified copy of a document and its subsequent apostillisation or legalisation at the consular department of the Embassy of the Republic of Uzbekistan in the country where an arbitration tribunal is registered.

No awards which have been set aside (or that have not come into force) shall be recognised or enforced in Uzbekistan.

Enforcement Actions

Once an enforcement decision has been made by the relevant economic court, actual enforcement actions will be carried out by law enforcement officers of the Bureau for Mandatory Enforcement under the General Prosecutor's Office. As a general rule, the law enforcement officers initiate the enforcement procedure within three calendar days after receiving the court order on recognition and enforcement of foreign arbitration award. The actual length of enforcement will depend on various factors relating to the existence of assets and financial funds of a debtor enterprise, the location of those assets and funds, the existence of any restrictions on using those assets, for example, pledge, arrest and other factors.

12.3 Approach of the Courts

Uzbekistan courts do recognise and enforce foreign arbitral awards on a frequent basis. Provided that there are no procedural mistakes or omissions and that no grounds for refusal under the New York Convention are applicable, national courts of Uzbekistan will make a recognition decision and issue a writ of execution.

A "public policy" ground is not defined in Uzbek law in details. Based on judicial practice, it could be confirmed that this ground has not been frequently used by national courts in Uzbekistan.

13. Miscellaneous

13.1 Class-Action or Group Arbitration

Uzbekistan arbitration as well as litigation rules do not provide for class-action arbitration or group arbitration. Every lawsuit should be filed by each claimant separately.

13.2 Ethical Codes

All advocates participating in arbitration procedures are bound to comply with the rules for professional ethics of an advocate approved by the Chamber of Advocates in 2013.

At the moment, there are no ethical codes for arbitrators; however, it is known that the Association of Arbitration Courts of Uzbekistan, together with the Chamber of Commerce of Uzbekistan, are working on drafting and approving an Ethical Code for Arbitrators, which is expected to be jointly approved and be mandatory for all arbitrators of the member courts by 2021–22.

13.3 Third-Party Funding

Uzbekistan laws do not regulate third-party financing issues. Therefore, it is technically possible to arrange payment of arbitration costs by third parties on a contractual basis. If arbitration fees are to be paid by a third party, the beneficiary party has to address a respective arbitration court to issue permit for third-party financing prior to any arbitration fees being paid with submission of justification and documentary evidence.

13.4 Consolidation

The Arbitration Law 2006 does not regulate the possibility of the consolidation of arbitration cases in Uzbekistan. Based on the confidentiality principle approved by Articles 4 and 28 of the Law, consolidation should be impossible if the cases have different parties. If there are two or more cases between identical parties, the parties are free to sign a corresponding arbitration agreement to consolidate all those cases, thus enabling the arbitration court to consolidate multiple cases into one.

13.5 Third Parties

An arbitration court cannot issue an award binding any third parties to perform certain actions as long as those third parties are not parties to the arbitration agreement.

Originally Published by Chambers and Partners

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Uzbekistan: International Arbitration 2021