Positive precedent established as Uzbekistan’s legal system upholds foreign arbitration award

Czech Republic

Foreign investors will be gratified to learn that, in the sphere of dispute resolution, a positive precedent has been set. The law firm CMS Cameron McKenna recently represented a foreign investor and successfully achieved the recognition and enforcement, in Uzbekistan, of an arbitration award, that had been made in a European Union country, against the Uzbek party.

Given the sometimes, apparently, insurmountable hurdles needed to be overcome by foreign investors wishing to conduct business here, this is welcome news, and a positive sign that Uzbekistan’s legal system can function normally, and can serve to protect the interests of foreign investors.

It is impossible to say that the case went absolutely smoothly. The consequences of a lack of relevant experience and expertise locally had to be surmounted, as did bureaucratic procrastination. However, in the end, a precedent was set - on the basis of Uzbekistan being a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards - and all of the problems were successfully settled. The foreign participant received fair compensation for the losses incurred, in accordance with the terms and conditions of the relevant agreement.

Of course, ‘One swallow’, as the saying goes, ‘does not make a summer’. It would also seem probable that the strategic industry, that was involved in this particular dispute, helped to focus minds and expedite a resolution favourable to the foreign investor. It remains to be seen if the same will be the case in disputes arising, for example, among partners involved in the undesirable practice [because it depletes hard currency reserves] of importing chewing gum.

Ian Sepion

CMS Cameron McKenna