1.1 Prevalence of Arbitration
Arbitration is becoming more and more popular in Uzbekistan as an alternative to litigation. With adoption of the Arbitration Law in 2006, the number of arbitration tribunals established in Uzbekistan reached 247 in 2020. One of the most active is a network of arbitration courts under Chamber of Commerce and Industry of Uzbekistan (CCI).
The CCI confirms that 10,623 cases were heard by all CCI arbitration courts across Uzbekistan in 2019.
The main trend of arbitration in Uzbekistan in 2018-19 is a move towards international commercial arbitration. Current arbitration law allows cases to be accepted and heard only under Uzbekistan law and, therefore, a special law on international commercial arbitration has been drafted and is being reviewed by the parliament. The law is made based on UNCITRAL model law and is expected to be enacted in 2021.
Following this trend, an international arbitration court has been established under the CCI which currently accepts cases under Uzbekistan law. CCI reports show that nearly 68 cases have already been heard in 2020.
The Consequences of COVID-19
The spread of the COVID-19 pandemic has negatively impacted the number of arbitration filings. The vast majority of arbitration courts have ceased activities, with only a few remaining active and accepting cases either without inviting the parties to attend arbitration hearings or prefering to conve the hearings through online platforms. Despite a significant slowdown during the pandemic, arbitration courts under the CCI have already accepted and reviewed nearly 3,400 cases in 2020. The filing rate in summer 2020 seems to have stabilised and 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 activity in recent years. Based on active reforms and development of projects, it is also possible to identify energy, automobile and telecommunications as industries subject to grow in terms of involvement in international arbitration.
1.4 Arbitral Institutions
The most experienced and reputable international arbitration in Uzbekistan is an International Arbitration Court under the CCI. Comprising prominent practitioners and former state judges as well as overall strong reputation of arbitration courts under the CCI allow this court 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.
2. Governing Legislation
2.1 Governing Law
Currently international arbitration is regulated by Arbitration Law 2006, which requires all hearings be heard under Uzbekistan law only. It was drafted based on UNCITRAL model law and there are no other significant inconsistencies with the model law. Currently, the parliament of Uzbekistan is reviewing draft law on international commercial arbitration, which is also drafted based on UNCITRAL model law and allows hearing cases under any foreign law. It is expected that this law will be enacted in 2021.
2.2 Changes to National Law
There have not been many significant changes to Arbitration Law 2006. A new provision to the Law, enacted in 2019, has been the introduction of mediation procedures under which the parties to a dispute are allowed to suspend an arbitration hearing to enter the mediation procedure at any time before arbitration award has been made.
3. The Arbitration Agreement
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 its subject 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.
In accordance with the Arbitration Law 2006, any dispute arising from civil relations, including economic disputes between business entities, can be referred arbitration. By civil relations the Law implies 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;
- 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 reject acceptance of cases if there is no duly signed arbitration agreement or arbitration agreement is restricted to particular issues only or competence of a particular arbitration court cannot be identified.
3.3 National Courts' Approach
The approach of 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 the case on its merits but merely inspect compliance with procedural requirements. Provided that a respective 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 Bureau for Mandatory Enforcement under General Prosecutor's office.
The Law on arbitration establishes that arbitration agreements made in the form of arbitration clauses are separate. Any conclusion of the court regarding an underlying contract being invalid does not, by virtue of Article 24 of 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 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 this 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 resolution of a dispute;
- persons who have been announced by courts as having no or limited legal capacity;
- persons having outstanding criminal conviction or non-served decision of 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; or
- any person who is due to his 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 arbitration board, then such a dispute shall be heard by three arbitrators and each party shall appoint its own arbitrator within 15 days. Two arbitrators choose the third arbitrator who shall act as a chairperson.
In ad hoc arbitration tribunals, a party to a dispute has to choose its arbitrator within 15 days from receiving the 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 chairman 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 of specific regulation to multi-party 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 the 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 chairman 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 acting as an arbitrator for any reason.
4.4 Challenge and Removal of Arbitrators
The Arbitration Law 2006 allows for the removal of arbitrators by any party if a 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 resolution of a dispute;
- is a person who has been announced by courts as having no or limited legal capacity;
- is a person having outstanding criminal conviction or non-served decision of 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 is due to his 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 dispute. Both parties are entitled to remove this arbitrator at their own discretion. If the parties have been informed prior to the appointment of this arbitrator and have not exercised their right for 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.
5.1 Matters Excluded from Arbitration
The Arbitration Law 2006 establishes that the disputes arising from the following relations cannot be arbitrated:
- administrative relations (disputes with public authorities);
- family relations;
- employment relations; and
- 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 revision of this filing, an arbitration court makes a decision on its competence by means of issuing a resolution.
If an arbitration court makes a decision on absence of competence then the case cannot be heard on its merits by this 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 arbitration agreement 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 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 Article 28 and 223 of Economic Procedural Code jurisdiction issue 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 Economic Procedural Code of Uzbekistan national courts cannot review the case on its merits and may only review overall procedural compliance of arbitration hearings.
5.6 Breach of Arbitration Agreement
Any challenge of 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 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 of procedural requirements for commencing and holding 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 make a decision to refuse any annulment of an arbitration award.
5.7 Third Parties
Any challenge of an arbitration award must be made by means of filing a lawsuit with the 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.
A review of arbitration awards is made only to identify inconsistencies in the compliance to procedural requirements for commencing and holding the 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 make a decision to refuse annulment of an arbitration award.
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 shall lead to inability or restricted ability to enforce arbitration award. Application for interim relief must be reviewed and decided upon by national courts within one working day after it has been filed.
6.2 Role of Courts
All applications related 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 reliefs in respect of only disputes heard in domestic arbitration courts:
- arresting property and money owned by the defendant;
- forbidding the defendant to make certain actions;
- forbidding third persons to make certain actions in respect of 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 make certain actions in respect of disputed property (security or other); and
- transferring a disputed property to third person.
It is noted that the institute of emergence arbitrators does not exist under Uzbekistan law.
6.3 Security for Costs
In accordance with Article 94 of 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 defendant.
7.1 Governing Rules
Procedural rules for permanent arbitration courts are approved by 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 should be implied by law:
- arbitration court and arbitrators are duly registered;
- arbitration agreement is duly executed in written or electronic version;
- filing is made by the claimant;
- arbitrators are chosen by the parties or as per the procedure;
- all parties are duly notified of hearing day and venue; and
- 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 qualification requirements;
- inform the parties of any conflict of interest or existence of any other grounds invalidating them to act as an arbitrator;
- act impartially and professionally;
- ensure all notifications are sent to all parties in due course;
- make decision under Uzbekistan law;
- make fair and lawful arbitration award; and
- sign the arbitration award within ten days after 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 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.
8.1 Collection and Submission of Evidence
Rules for collection and submission of evidence is approved in Articles 33 and 34 of the Arbitration Law 2006. The general rule is that each party is responsible to collect and provide to arbitration court all evidence of its arguments. If arbitration court is not satisfied with evidence provided by the parties then it may request 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 experts 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 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 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 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.
9.1 Extent of Confidentiality
In accordance with Article 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 has 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 arbitration board;
- names and addresses of the parties, 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 decision. However, once made 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 is costs, for example, contracts with advocates or evidence of some costs to third parties, arbitration courts have been observed to grant the compensation of such costs in Uzbekistan.
Interests are also subject to payment under general rule established by Article 327 of the Civil Code, which is frequently employed by arbitration courts. Article 327 of the Civil Code entitles to claim interest for unlawfully kept or non-paid money. Interests are 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 Economic Procedural Code of Uzbekistan, national courts cannot review the case on its merits and may only review overall procedural compliance of arbitration hearings. An arbitration award may be annulled only in the following situations:
- an arbitration agreement is invalid;
- an arbitration court did not have competence and jurisdiction;
- arbitrators do not comply with requirements of Arbitration law; and
- an award is not made under Uzbekistan law.
A party to a dispute has not been duly notified of appointing arbitration board or of 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 the 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
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 would be 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 criteria 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.
Once the enforcement decision is made by 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. Actual length of enforcement shall depend on various factors related to existence of assets and financial funds of a debtor enterprise, location of these assets and funds, existence of any restrictions to use these 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 there are no procedural mistakes or omissions and 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 confirm that this ground has not been frequently used by national courts in Uzbekistan.
13.1 Class-Action or Group Arbitration
Uzbekistan arbitration as well as litigation rules do not provide for class-arbitration or group arbitration. Every lawsuit should be filed by each claimant separately.
13.2 Ethical Codes
All advocates participatingin 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 Ethical Code of an Arbitrator which is expected to be jointly approved and be mandatory for all arbitrators of the member courts by 2021.
13.3 Third-Party Funding
Uzbek 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 are paid with submission of justification and documentary evidence.
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 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 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 these third parties are not members to arbitration agreement.
The article was publishes in Chambers and Partners International Arbitration 2020 Guide
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