10.6092/issn.2531-6133/9065
The main purpose of this paper is to familiarise the reader with how foreign investors are protected in Uzbekistan under its BITs. Thus, the paper will analyse BIT clauses of Uzbekistan and investor-state dispute resolution mechanisms available under Uzbek BITs. Throughout the following paper, the reader will notice that although Uzbek BITs contain some provisions inherent in modern BITs in terms of investor-state dispute settlement there is still room for improvement. Therefore, recommendations for improvement will be provided at the end of this article.
application/pdf
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Eldor Tulyakov
University of Bologna Law Review
Dispute
Bilateral Investment Treaties of Uzbekistan: Investor-State Dispute Resolution
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https://bolognalawreview.unibo.it/
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Articles & Essays
2019-02-14
2019-02-11
2019-02-14
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UBLR
Eldor Tulyakov
2019/02/14
10.6092/issn.2531-6133/9065
1
Parliament of the Republic of Uzbekistan
2531-6133
1
Dispute
en
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Bilateral Investment Treaties of Uzbekistan: Investor-State Dispute Resolution
https://bolognalawreview.unibo.it/article/download/9065/8954
4
 ARTICLES & ESSAYS                                                      https://doi.org/10.6092/issn.2531-6133/9065




            Bilateral Investment Treaties Of Uzbekistan:
                 Investor-State Dispute Resolution

                                          ELDOR TULYAKOV, MP†


TABLE OF CONTENTS: 1. Introduction; 2. Available Forums for the Settlement of Disputes
Under Uzbek Bits; 3. Uzbekistan’s Tendency of Concluding Bits; 4. Source of Uzbekistan’s
Consent to Arbitration; 5. Waiting Periods and Amicable Settlement; 6. “Fork in the Road”
Provision; 7. Most-Favoured-Nation and Umbrella Clauses; 8. Final Awards; 8.1. Costs of
Arbitration; 8.2. Diplomatic Interference; 8.3. Operation of Bits in Practice; 9. Summary
and Recommendations.

ABSTRACT: The main purpose of this paper is to familiarise the reader with how foreign
investors are protected in Uzbekistan under its BITs. Thus, the paper will analyse BIT
clauses of Uzbekistan and investor-state dispute resolution mechanisms available under
Uzbek BITs. Throughout the following paper, the reader will notice that although Uzbek
BITs contain some provisions inherent in modern BITs in terms of investor-state dispute
settlement there is still room for improvement.          Therefore, recommendations for
improvement will be provided at the end of this article.

KEYWORDS: Investment; BIT; Uzbekistan; Protection; International Law; Investor-State
Arbitration; Dispute


JEL CODES: K33, K41




                                     UNIVERSITY OF BOLOGNA LAW REVIEW

                                                  ISSN 2531-6133

                                                  [VOL.4:1 2019]

            This article is released under the terms of Creative Commons Attribution 4.0 International License



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           1. INTRODUCTION

Any rational person who is considering making direct investments abroad
wants to make sure that these will be safe. Of course, there are many risks
inherent in such investments, such as, market risks, currency exchange
risks, political risks, legal risks some of which are measurable while some
of them are not, and some of which are manageable while some of them
are not. But the bottom line is that a rational investor carefully assesses
all these risks before making his final decision. They normally decide to
invest only if a return that they expect from the investment would justify
the risks taken. If a host country’s risk profile is lower, it will be easier
and cheaper for the country to attract foreign investment because in this
case investors will have access to relevant information for them to take the
decision on making the investment. Therefore, it may reduce the time and
cost of some otherwise necessary due diligence.
           Bilateral investment treaties (hereinafter BITs) play an important
role in this paradigm.1 They often provide some level of comfort against
political and legal risks for foreign investors. They reflect agreements
between two countries (the so-called “host” and “home” countries)
containing reciprocal undertakings for the promotion and protection of
private investments made by nationals of both signatory countries in
each other’s territories.             These agreements provide the terms and
conditions under which nationals of a home country invest in the host
country, including their rights and protections. As the BITs’ terms vary
and they differ in the protections they provide, investors often check the
†
    B.A. (Hons.), University of Westminster, 2008, LL.M., Institute for Law and Finance, 2011.
    The author is currently a Member of the Committee on Budget and Economic Reforms,
    Legislative Chamber of Oliy Majlis (Parliament) of the Republic of Uzbekistan. The views
    expressed in this article belong to the author and do not reflect the view of the Parliament
    of the Republic of Uzbekistan.
1
    According to the U.N.C.T.A.D., in 2016, countries concluded thirty-seven new
    International Investment Agreements (hereinafter I.I.A.): thirty bilateral investment
    treaties (BITs) and seven treaties with investment provisions (hereinafter T.I.Ps.).
    In addition, twenty-six I.I.As. entered into force. This brought the size of the I.I.A.
    universe to 3,324 agreements (2,957 BITs and 367 T.I.Ps.) by year-end UNCTAD, WORLD
    INVESTMENT REPORT 2017, INVESTMENT AND DIGITAL ECONOMY, U.N. SALES NO. E.17.II.0.3
    (2017), http://unctad.org/en/PublicationsLibrary/wir2017_en.pdf.



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availability of such treaties and their provisions. BITs typically include
rights and protections such as: (a) National and Most-Favoured Nation
Treatment, (b) Protection against Expropriation, (c) Fair and Equitable
Treatment, (d) Full Protection and Security, (e) Free transfer of
investment-related payments,                returns and movable property,                     (f)
Umbrella clauses, (g) Compensation for Losses, and (h) Settlement of
Investment Disputes between a Contracting Party and an Investor of the
other Contracting Party, all of which have the effect of reducing risks for
the foreign investor.2
          Briefly stated, these protections                 help ensure that foreign
governments treat investors from the other BIT signatory country in the
same way as domestic companies (“national treatment”), and guarantee
that investors in the host country are given the same types of benefits
that      other     foreign    investors          receive    (“most-favoured             nation
treatment”).         Through BITs, host governments                 often agree to treat
investors from the home country on a “fair and equitable” basis in
accordance with international law.                  This can, for example, protect
investors from licensing requirements that do not apply to other,
domestic or foreign companies or from discriminatory treatment.
          BITs also protect investors in a number of other ways.                             For
example, some BITs limit foreign governments from nationalising or
otherwise         expropriating     an    investor’s    investments.              Where       an
expropriation occurs, BITs often provide that the government must offer
fair and timely compensation to the investor.
          Perhaps the most important protection that many BITs provide is
access to arbitration against the host government where a dispute arises.3
Among other things, providing access to dispute resolution against the
host government, this provision can be very useful in countries where the
legal system is not favourable to foreigners or where the legal system is
not transparent or well-developed.
2
    See also PETER T. MUCHLINSKI, MULTINATIONAL ENTERPRISES & THE LAW (2nd ed. 2007).
3
    In 1969, I.C.S.I.D. published a series of model arbitration clauses for use in BITs.



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Therefore, it is important for a host country to honour its commitments
made in BITs. At the end of the day, these commitments are relied on by
investors.4 It is also very important for an investor to be able to dispute
the matter if the host state breaches its commitment. This leads to the
main theme of this paper – the investor-state dispute settlement under
bilateral investment treaties of Uzbekistan. The purpose of this paper is to
familiarise the reader with investor-state dispute resolution mechanisms
available under Uzbek BITs. Throughout the following paper, the reader
will notice that although Uzbek BITs contain some provisions inherent in
modern BITs in terms of investor-state dispute settlement there is still
room for improvement.            Therefore, recommendations for improvement
will be provided at the end of this article.




        2. AVAILABLE FORUMS FOR THE SETTLEMENT OF DISPUTES UNDER UZBEK BITS

In general, according to the BITs signed by Uzbekistan, an investor has a
choice of national courts, ad hoc arbitration, or the World Bank’s
International Centre for the Settlement of Investment Disputes
(hereinafter I.C.S.I.D.), when the dispute is with the government. It is well
known that I.C.S.I.D. awards enjoy recognition and enforcement in all
I.C.S.I.D. member states, whether or not they are parties to the dispute.5
Along with 161 signatory states, Uzbekistan is a member of the
I.C.S.I.D.Convention6 and a signatory to the 1958 United Nations
4
  See U.N.C.T.A.D., THE ROLE OF INTERNATIONAL INVESTMENT AGREEMENTS IN ATTRACTING
  FOREIGN DIRECT INVESTMENT TO DEVELOPING COUNTRIES, U.N. SALES NO. E. 09.II.0.20
  (2009); see also Kenneth J. Vandevelde et al., THE EFFECT OF TREATIES ON FOREIGN DIRECT
  INVESTMENT: BILATERAL INVESTMENT TREATIES, DOUBLE TAXATION TREATIES, AND INVESTMENT
  FLOWS (Karl P. Sauvant & Lisa E.Sachs eds., 2009).
5
  Nevertheless, one should also admit that due to certain particularities in practice
  sometimes difficulties may also arise in enforcing the award. See, e.g., the case of Hösgsta
  Domstolen [HD] [Supreme Court] 2011-07-1 p. 12 No. Ö 170-10 (Swed.). (Mr. Sedelmeyer
  fought the Russian government for over a decade and launched over eighty different
  disputes to try to recover an S.C.C. arbitration award he had received against the Russian
  government).
6




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Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (hereinafter New York Convention).7 The importance of the New
York Convention can be seen from the stated objectives which encompass
common legislative standards for the recognition of arbitration
agreements and court recognition and enforcement of foreign and
non-domestic arbitral awards.8 Additionally, one should also note that
the Convention’s principal aim is that foreign and non-domestic arbitral
awards will not be discriminated against and it obliges parties to ensure
such awards are recognised and generally capable of enforcement in their
jurisdiction, in the same way as domestic awards.
        For instance, with regard to settlement of disputes according to the
Austria-Uzbekistan BIT , dispute settlement is divided into two parts. An
investor is provided with a number of means of settlement to choose
from, unless the dispute is settled by negotiation or consultation. The BIT
also requires that sixty days’ notice must be provided to the host state
before filing a Request for Arbitration. An additional requirement is that
the dispute should be submitted not later than five years from the date the
investor first acquired or should have acquired knowledge of the events
which gave rise to the dispute. Exceptions to these requirements are not
foreseen.
        The Uzbekistan-Israel BIT only lists I.C.S.I.D. as means of investor-
state dispute resolution.9 This is of course different in relation to other
BITs discussed which provide the investors with other options.
6 See I.C.S.I.D., List of contracting states and other signatories of the Convention, I.C.S.I.D./3

  (Aug. 27, 2018). Of these, only 153 states have ratified the Convention. Uzbekistan
  is a member of the International Convention on the Settlement of Investment Disputes
  between States and Nationals of Other States 1965 (hereinafter I.C.S.I.D. Convention) since
  March 17, 1994 and it is in force for Uzbekistan since August 25, 1995; Uzbekistan ratified
  the New York Convention on February 7, 1996 and it has been in force for Uzbekistan since
  May 7, 1996.
7
  U.N.C.I.T.R.A.L., CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL
  AWARDS, JUN. 10,1958, Vol.15-05576.
8
  Id.
9
  See Agreement on the Reciprocal Promotion and Protection of Investments, Isr.- Uzb., art.
  VIII, Jul. 4, 1994 1997 U.N.T.S. 1-34213.




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         3. UZBEKISTAN’S TENDENCY OF CONCLUDING BITS

 In conformity with its commitment to respect international practice of
 dispute resolution between investors and states, Uzbekistan is ratifying
 and implementing international treaties10 and concluding more and more
 BITs with states that foresee arbitration as a neutral and the most
 appropriate way of resolving disputes to guarantee the protection of
 investments made by foreign nationals and states. Hence, Uzbekistan has
 been actively involved in concluding BITs since the early stages of its
 independence11 . In fact, more than 60% of Uzbekistan’s BITs were signed
 between 1992 and 1999, about 30% were signed between 2000 and 2010,
 and 10% were signed after 2011. Currently, Uzbekistan is a party to around
 fifty BITs which are concluded with states such as; Austria, Azerbaijan,
 Bangladesh, Belgium and Luxembourg, China, Czech Republic, Finland,
 France, Germany, Hungary, Pakistan, the Russian Federation, the United
 Kingdom, and the United States, although not all of these treaties have
 been ratified and/or entered into force.12




         4. SOURCE OF UZBEKISTAN’S CONSENT TO ARBITRATION

 We know that international arbitration is a voluntary and consent-based
 method of dispute resolution. However, unlike in commercial arbitration,
 in investment treaty arbitration, a unilateral offer of consent to arbitration
10
   At the C.I.S. level, Uzbekistan also ratified the Convention on Legal Aid and Legal
   Relations in Civil, Family and Criminal Cases, CIS, Jan.22, 1993, Collection of International
   Instruments and Legal Texts Concerning Refugees and Others of Concern to UNHCR, Vol.
   4, 2007 and the Kiev Convention on settling Disputes related to Commercial Activities,
   CIS, Mar. 24, 1992.
11
   Following the breakup of the Soviet Union, it declared independence as the Republic of
   Uzbekistan on 31 August 1991.
12
   For example, despite the fact that the Treaty concerning the encouragement and
   reciprocal protection of investment, U.S. - Uzb., Dec.16,1994 S. TREATY DOC. No. 104-25
   (1996). has been signed on December 16, 1994, it has not been ratified yet. See
   also U.N.C.T.A.D., Database on BITs. of Uzbekistan, INVESTMENTPOLICYHUB.UNCITAD.ORG,
   http://investmentpolicyhub.unctad.org/IIA/CountryBits/226.



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 is given by the contracting states. Investors, on the other hand, typically
 express their consent to arbitration by filing a request for arbitration. As
 such one may ask where the host state’s consent to arbitration is usually
 expressed. One source of consent may be found in a contract between the
 foreign investor and the host state. The second source can be the state’s
 national legislation. A third place where one might find the consent of the
 state is in the state’s BITs. (or more generally I.I.As.).13
        Like most other states, the main source of Uzbekistan’s consent to
 arbitration is reflected in its BITs. However, the fact that Uzbekistan’s law
 “On Guarantees and Measures for Protection of Rights of Foreign
 Investors” (hereinafter R.F.I.L.) contains explicit consent of the state to
 arbitration was disputed in the past. In fact, the Constitutional Court of
 Uzbekistan held that R.F.I.L., does not reflect Uzbekistan’s explicit
 consent to arbitration.14 In this decision, the Court interpreted article
 10(1) of R.F.I.L which states that a dispute, directly or indirectly
 concerning foreign investments (hereinafter investment dispute), can be
 resolved upon the agreement of the parties by means of consultations
 between them.15 Furthermore, the article foresees that if the parties are
 not able to reach a consensus, such a dispute should be resolved by the
 economic court of the Republic of Uzbekistan or by means of arbitration
 according to the rules and procedures of the international treaties
 (agreements and conventions) on resolution of investment disputes
 which the Republic of Uzbekistan has joined.16                     Accordingly, the
 Constitutional Court of the Republic of Uzbekistan delivered a decision
 that article 10(1) of the R.F.I.L. did not include the notion of “agreement of
13
   UNCTAD, Special Update on Investor-State Dispute Settlement: Facts And Figures, IIA
   Issue Note, No. 3, (2017).
14
   DECISION OF THE CONSTITUTIONAL COURT OF THE REPUBLIC OF UZBEKISTAN, “ON
   INTERPRETATION OF THE PART ONE, ARTICLE 10 OF THE LAW OF THE REPUBLIC OF UZBEKISTAN
   “ON GUARANTEES AND MEASURES FOR PROTECTION OF THE RIGHTS OF FOREIGN INVESTORS””
   (Nov. 20, 2006).
15
   Law of the Republic of Uzbekistan “On Guarantees and Measures for Protection of
   the Rights of Foreign Investors” (1994) (amended 1995), available in Russian at
   http://lex.uz/docs/8522.
16
   Id.




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 the parties” within its meaning.17 The Court further stated that the part of
 the provision that prescribed the resolution of investment disputes by
 means of arbitration in accordance with the rules and procedures of
 international agreements (treaties and conventions) on resolution of
 investment disputes that Uzbekistan has joined, could not be equated
 with the expression of agreement of the Republic in accordance with the
 I.C.S.I.D. Convention.
        The Justifications given with regards to this decision were that the
 provision only provided options on the resolution of investment disputes
 and did not include the written consent of either party for the resolution
 of the disputes by any of those means of dispute resolution stated,
 whereas, in reference to Article 25 of the I.C.S.I.D. Convention, obligatory
 written consent of the parties of the investment dispute is required for an
 I.C.S.I.D. tribunal to resolve the dispute. Thus, the Court noted that the
 provision of the article set common rules with no reference to any
 concrete agreement or Convention.18 As such, Global Arbitration Review
 (hereinafter G.A.R.) also noted that the Uzbek Constitutional Court said,
 with regard to the article 10(1) of the R.F.I.L. which provides for
 international arbitration “is not an expression of consent” in any
 particular case.19
        From the point of view of a state’s consent, it is widely accepted
 that BITs can be classified into several groups such as: explicit consent,
 implicit consent, agreement to provide consent in the future and
 reservation of consent to arbitration.20
        By analysing the BITs of Uzbekistan one can see that most of them
 contain implicit consent to arbitration, as shown, for example in the
 Uzbekistan-Japan BIT :
17
   Uzbekistan Court Queries Treaty Consent, GLOBAL ARBITRATION REVIEW (Dec. 8, 2006).
18
   Id.
19
   Id.
20
   See ANDREW NEWCOMBE Lluis Paradell, Law and Practice of Investment Treaties: Standards
   of Treatment 44 (2009).




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             Article 16. . . . . 3. If the investment dispute cannot be
             settled through such consultations within three months
             from the date on which the investor requested the
             consultation in writing, the investment dispute shall at
             the request of the investor concerned be submitted to
             either:
                       (1) conciliation or arbitration in accordance with
             the provisions of the Convention on the Settlement of
             Investment Disputes between States and Nationals of
             Other States done at Washington D.C. on March 18, 1965
             so long as the Convention is in force between the
             Contracting Parties, or conciliation or arbitration under
             the Additional Facility Rules of the International Centre
             for Settlement of Investment Disputes so long as the
             Convention is not in force between the Contracting
             Parties . . . ..
                       Nevertheless, explicit consent is also agreed in
             some Uzbek BITs, including the Uzbekistan-Greece BIT .
             According to Article 9 :
                       2.   If such disputes cannot be settled within six
             months from the date either party requested an amicable
             settlement, the investor concerned may submit the
             dispute either to the competent courts of the Contracting
             Party in the territory of which the investment has been
             made or to international arbitration.
                       Each Contracting Party hereby consents to the
             submission of such dispute to international arbitration.21

 Regarding the duration of consent or so-called “survival clauses” or
 “sunset clauses” most of the Uzbekistan BITs contain expressly agreed
21
     See also Bilateral Investment Treaties, Uzbek. – Poland, art. X, Jan. 11, 1995 and
     Agreement between the Government of the Republic of Singapore and the Government
     of the Republic of Uzbekistan on the Promotion and the Protection of Investments, Sing -
     Uzbek., art. XIII, July 15, 2003, respectively.



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 terms which guarantee that the provisions of the treaty remain in effect
 for ten years even if it is denounced, as stated in, among others, the BITs
 with Poland, Russia, Turkey, Malaysia, United Arab Emirates, Latvia,
 Portugal, Georgia, Turkmenistan. However, what is more interesting and
 a sign of long time consistency, is that the Uzbekistan-Germany BIT
 contemplates that the BIT will remain in effect for an additional twenty
 years after it has been denounced.22 We should acknowledge that due to
 certain geopolitical issues, diplomatic relations between states may come
 to an end.      Therefore investors may fear losing investments due to the
 complications beyond their control. Whereas, according to Article 13 of
 Uzbekistan-Germany BIT investors are additionally protected under the
 BIT even in absence of a diplomatic or consular relation between the
 states.23     Moreover, the BITs between Uzbekistan and Switzerland,
 Finland, Sweden, Netherlands and Greece provide for a sunset clause of
 fifteen years.
         Additionally, in order to benefit foreign investors, Uzbekistan’s
 “Law on Foreign Investments” (hereinafter 1998 FIL) also fixed the
 period during which the investor would be protected from any legislation
 that “adversely affects the conditions of investment” at a full ten years.24
 Thus, if the subsequent legislation of the Republic of Uzbekistan was to
 worsens the conditions for investment, then the laws applicable at the
 date of investment will continue to be applicable for the next ten years. In
 addition to that,        foreign investors will have the right to apply the
 provisions of the new legislation that improve the conditions of their
 investments. Accordingly, even though a state may unilaterally terminate
22
   Gesetz zu dem Vertrag vom 28. April 1993 zwischen der Bundesrepublik Deutschland
   und der Republik Usbekistan Ober die Forderung und den gegenseitigen Schutz von
   Kapitalanlagen [Law of the 28 April 1993 Treaty between the Federal Republic of
   Germany and the Republic of Uzbekistan on the Claim and Mutual Protection of Capital
   Investments], Germany - Uzbek., art. XIV, Apr. 28, 1993.
23
   Similar provisions are also foreseen in Bilateral Investment Treaties, Uzbek-Kuwait , art.
   XI, Jan. 19, 2004.
24
   Law of the Republic of Uzbekistan “On Foreign Investments”, No. 609-I (1998) (as
   amended by the Law of the Republic of Uzbekistan No. 832-I of August 20, 1999), available
   in Russian at s/7452http://lex.uz/docs/7452.




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 a BIT, its consent to investor-state arbitration and privileges provided for
 the investors will not usually terminate at the same time.25




         5. WAITING PERIODS AND AMICABLE SETTLEMENT

 Almost all BITs of Uzbekistan in the initial stage provide for an
 investor-state resolution of disputes by friendly means like negotiations,
 consultations and through diplomatic channels. For example, the BIT
 between Uzbekistan and the Belgium-Luxembourg Economic Union26
 apart from the above mentioned means of negotiations also sets forth
 settlement by means of third-party expert opinion.
         Similarly,     the Uzbekistan-France BIT also foresees dispute
 settlement by means of friendly negotiations. We should note that these
 procedures are often not formal and thus legal rights and obligations are
 not emphasized unlike strict procedural laws and regulations                            in the
 courts. Accordingly, parties may attract a neutral third party who aims to
 help the parties reach consensus. often this person is highly qualified in
 the area of investments or speaks the same language27 of the parties.
 Therefore, as long as the solution reached is just and reasonable, the
 parties may adhere to it.
         Furthermore, almost all BITs of Uzbekistan set a requirement for
 reaching the dispute settlement by peaceful means within six months. A
 three-month period has been agreed on, only with Oman, Japan, United
25
   It should be noted that as of 20th of October 2018 government of Uzbekistan has
   announced of its completed work on the concept paper regarding the draft law on further
   substantially strengthening the available rights and guarantees of foreign investors.
26
   Accord entre l’Union économique belgo-luxembourgeoise,                  d’une part,     et
   le Gouvernement de la République d’Ouzbékistan, d’autre part, concernant
   l’encouragement et la protection réciproques des investissements [Agreement between
   the Belgo-Luxembourg Economic Union and the Government of the Republic of
   Uzbekistan concerning the Reciprocal Promotion and Protection of Investments],
   BLEU - Uzbek., Apr. 17, 1998.
27
   By that we mean not only the common language the parties speak but also all the
   particularities which may arise during the communication due to various factors like the
   background of the parties, tradition, culture, business and technical terminology, etc.


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Kingdom and Finland. Although a six-month period is common in BITs
and seems to be realistic, in most circumstances this period is still not
sufficient. A three-month period might be even too short. One might
wonder how an amicable settlement is possible within such a short period
of time and what the communication will be like between foreign
partners.     Additionally, decision-making processes within the host
government may take longer, especially if the dispute is over a significant
investment in terms of financial amount and/or close partner or if the
investment is made in a strategic sector.
       Despite the fact that amicable ways of dispute settlement can help
to save time and money, find a mutually acceptable solution, prevent
escalation of the dispute and preserve a workable relationship between
the disputing parties, still one can see that BITs of Uzbekistan with
Kazakhstan, Turkmenistan, Azerbaijan, Kyrgyzstan, Latvia, Bangladesh,
Moldova, Netherlands, Israel, and Georgia do not foresee or require
dispute resolution by friendly means at the initial stage. Notwithstanding
this fact, Uzbekistan enjoys a good relationship with many of these states,
particularly with neighbouring countries such as Kazakhstan. As a result,
disputes between parties under these investment treaties will be typically
resolved using amicable means of dispute resolution. It would not be
surprising if the relevant BITs were amended to memorialize this practice
in writing.




       6. ”FORK IN THE ROAD” PROVISION

Despite the fact that most investment treaties do not require an investor
to exhaust local remedies, and permit an investor to have direct recourse
to international arbitration, the investor-state dispute resolution part of
the Republic of Uzbekistan-United Arab Emirates BIT provides that upon
failure to resolve the dispute by friendly means within six months, at the

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 request of the investor, the dispute should be submitted to the court
 where the investment is made.28 Though paragraph 3 further provides
 recourse for I.C.S.I.D. arbitration only after twenty-four months have
 elapsed, as such this period is available to the local court to resolve the
 dispute.
         Here we should also mention that there are many advantages to
 having the case heard in a national court. The first and most important
 one is that it may be easier and faster to enforce a court decision in
 Uzbekistan rather than an award of an international arbitral tribunal.
 Because, to take a simple example of a language barrier, one can already
 face certain complications translating judicial decisions into the official
 language of Uzbekistan for them to be recognized and enforced.                                    Of
 course, nowadays it is not really hard to find a proper translator, but it
 may cost the parties additional time, money and efforts.                                     Other
 advantages can be cost and time savings, at least in terms of international
 flights, legal counsel, interpreters, and arbitration costs.29                          This will
 especially work and be beneficial for both parties when the non-Uzbek
 party has an office and personnel in Uzbekistan, including legal personnel
 (also local lawyers with proper national legislation background) to handle
 the case. This might eliminate the need to travel internationally and thus
 save resources. Also, court proceedings may allow parties to control the
 confidentiality of the case and thus avoid harm to their reputation be it a
 host state or the foreign investor.30 This is especially important when a
 dispute is over a significant or sensitive matter . In some cases details of
28
   Agreement between the Government of The United Arab Emirates and the Government Of
   The Republic Of Uzbekistan for the Promotion and Reciprocal Protection of Investments,
   United Arab Emirates - Uzbek., Oct. 26, 2007.
29
   Because national courts are available for a reasonable fee only. Additionally, according to
   article 330 of the Tax Code of Uzbekistan business entities are exempted from payment
   of state duty to the courts when applying to the courts over the decisions of state and
   other bodies, actions (inaction) of their officials, violating the rights and legal interests of
   business entities in relation to the implementation of entrepreneurial activities. See TAX
   CODE art. 30, No. ZRU-136 (2008).
30
   Local court will also often have the authority to order more varied types of relief, such as
   declaratory or injunctive relief, in addition to monetary damages. We should note that
   although these types of relief are of course also available to arbitrators, they may be less
   likely to award such types of damages than courts.



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 the arbitration can be available        to the public; whereas, Uzbek legal
 proceedings (unlike court proceedings in some other countries) are
 guaranteed to be confidential.       For example article 8 of the Economic
 Procedural Code foresees that the hearing of the case in a closed session is
 allowed when it is necessary to preserve the state secret or commercial
 secret. As such, to avoid harm in the market (for example, stock prices of
 the investor, investment reputation of the state or others) parties may
 sometimes consider referring their disputes to national courts.
        Nonetheless, if there is a lack of trust              in the local court’s
 independence, impartiality and competence, a “fork in the road”
 provision31 may inhibit the fair resolution of the dispute, because a
 foreign investor might feel a local court would be biased toward the host
 state. Therefore, it may take a longer time period to reach a fair decision
 (at least from the point of view of the investor) which may deteriorate the
 investment and diminish or destroy its value.




        7. MOST-FAVOURED-NATION AND UMBRELLA CLAUSES

 Analysis of the BIT clauses show that where a matter is governed
 simultaneously, both by the BIT and by another international agreement
 to which both Contracting Parties are parties, the investor is free to take
 advantage of whichever rules are the more favourable to his case.32 The
 Uzbekistan-Korea BIT and Hungary-Uzbekistan BIT also provide that
 where a matter is governed simultaneously both by the BIT and by
31
   Preventing duplicative claims i.e.    “Fork-in-the-road” clauses require investors
   to choose between domestic courts and international arbitration at the outset.
   Once an investor starts domestic proceedings, it loses the right to resort
   to arbitration, and vice versa.        See U.N.C.T.A.D., Investor - State Dispute
   Settlement - UNCTAD Series on Issues in International Investment Agreements
   II, UNCTAD/DIAE/IA/2013/2 (2014), 86.         for more information.   Available at
   en.pdfhttp://unctad.org/en/PublicationsLibrary/diaeia2013d2_en.pdf.
32
   This is of course only true where the other international agreement provides for
   international arbitration.




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 another international agreement to which both Contracting Parties are
 parties, nothing in the BIT shall prevent an investor of one Contracting
 Party who owns investments in the territory of the other Contracting
 Party from taking advantage of whichever rules are the more favourable
 to his case. Furthermore, BITs of Uzbekistan also foresee that if the laws
 and regulations of the other Contracting Party provide more favourable
 treatment than the BIT concluded, more favourable treatment shall be
 accorded.33




           8. FINAL AWARDS

 Another issue of concern is the matter of the final awards. For example,
 differences between the BITs can be seen in directly agreeing to the fact
 that the arbitral awards shall be final and binding for both parties to the
 dispute and enforced in accordance with the domestic laws of the
 Contracting Party concerned. One can see that these issues are agreed in
 the BITs with the Russian Federation, Sweden, China, Lithuania, Greece,
 Poland, Kuwait, Bahrain, Oman, Hungary, Bulgaria, Saudi Arabia, BLEU,
 Finland whereas other ones do not contain such provisions.



       8.1. COSTS OF ARBITRATION

 Arbitration historically was considered to be a prompt and inexpensive
 way of dispute resolution. However, one should note that these factors
 may not always be the case nowadays. Because of the changes within the
33
     See for further examples Agreement between the Government of the Republic of Korea
     and the Government of the Republic of Uzbekistan for the Promotion and Reciprocal
     Protection of Investments, Uzbek- ROK, art. XII, June 17, 1992; Agreement between the
     Government of the People’s Republic of Bangladesh and the Government of the Republic
     of Uzbekistan for the Promotion and Reciprocal Protection of Investments, Uzbek-BD,
     artt. IV, X, XI, July 18, 2000; Agreement between the Government of the Hellenic Republic
     and the Government of the Republic of Uzbekistan for the Promotion and Reciprocal
     Protection of Investments, Uzbek- GR, artt. IX, X, Apr. 1, 1997.



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 society and the business environment, arbitration might take longer than
 litigation. The advancement of technology, legislation requirements and
 the complications in the business are factors that may delay arbitration
 proceedings. Therefore, costs of arbitrating must be carefully considered
 before referring to it for dispute resolution.                The remuneration of
 arbitrators alone can amount to a sizeable part of the overall arbitration
 costs.34   Subsistence allowances and reimbursement of travel expenses
 may also be extensive.          Under the United Nations Commission on
 International Trade Law (hereinafter U.N.C.I.T.R.A.L.) Rules, costs can be
 even higher, as arbitrators generally set their own fees taking into
 account the monetary amount in dispute, the complexity of the
 subject-matter, and the amount of time spent by the arbitrators. Here we
 could also refer to Professor Kreindler’s findings and implement the most
 suitable approach for the country where he states that tribunals have
 taken at least seven different approaches to costs: (1) costs follow the
 event — victor takes all; loser pays all costs of the arbitration and all
 attorneys’ fees; (2) costs follow the event ”pro rata” — loser pays all
 costs and prevailing party’s attorneys’ fees proportional to the outcome;
 (3) costs follow the event “modified” — loser pays all costs but does not
 pay prevailing party’s attorneys’ fees; (4) costs shared equally, including
 attorneys’ fees and irrespective of differences in their amount; (5) costs
 shared equally, but attorneys’ fees borne by the party retaining the
 attorneys; (6) the “American Rule” — each party bears its own costs and
 attorneys’ fees; (7) the “American Rule” exception — if there is manifest
 fraud, corruption, or the like, the culpable party would bear some or all of
 the costs of arbitration and/or some or all of the opposing side’s
 attorneys’ fees35 .
34
   In the I.C.S.I.D. system, arbitrators’ fees are set according to the schedule —
   currently US$3,000 per day per arbitrator. See for further information at I.C.S.I.D.,
   https://icsid.worldbank.org/en/Pages/icsiddocs/Schedule-of-Fees.aspx, (Mar.      26,
   2018).
35
   Richard Kreindler, Final Rulings on Costs:         Loser Pays All?, TRANSNATIONAL
   DISPUTE MANAGEMENT, (Jan.           10, 2018), https://www.transnational-dispute-
   management.com/article.asp?key=1505.




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 Accordingly, in BITs with China, Poland and Bulgaria it is agreed in the
 written form that each Contracting Party shall bear the cost of its own
 arbitrator and its representation in the arbitral proceedings and the cost
 of the President of the arbitration board in discharging his or her duties
 and the remaining costs of the arbitration board shall be borne equally by
 the Contracting Parties.        Other BITs do not expressly regulate the issue.
 The Uzbekistan-Poland BIT also sets an exception to the rule. This BIT
 envisages that the arbitral tribunal may allocate the expenses incurred by
 one of the sides based on a different proportion, and that the decision is
 mandatory for both. According to the Uzbekistan-China BIT the arbitral
 tribunal may award one disputing party to bear a higher proportion of the
 costs. Thus, exceptions to the provision have also been foreseen in the
 BIT itself. The BIT goes further regarding the fate of cost distribution in
 case of frivolous claims. Thus, it establishes the norm that if the tribunal
 deems that the claim or the objection of one disputing party is frivolous, it
 may       order the losing party to bear reasonable costs               as well as the
 attorney’s fee incurred by the prevailing party                  which opposed the
 objection with a reasonable cause.
           We should note that there is no uniform rule with respect to the
 final allocation of costs by the tribunal.          Some arbitral rules contain
 presumptions about the allocation of costs. For example, Article 42(1) of
 the U.N.C.I.T.R.A.L. Rules (2010) provides that:                 “The costs of the
 arbitration shall in principle be borne by the unsuccessful party or parties.
 However, the arbitral tribunal may apportion each of such costs between
 the parties if it determines that apportionment is reasonable, taking into
 account the circumstances of the case.”
           An illustrative example would be the Romak case.36 As stated in the
 award, the BIT was silent with respect to the allocation of the arbitration
 costs and the costs of legal representation of the parties. Therefore, the
 tribunal applied provisions on costs contained in Articles 38 to 40 of the
36
     Romak S.A. (Switzerland) v. The Republic of Uzbekistan, U.N.C.I.T.R.A.L. PCA Case
     No.   AA280 (2009) available at https://www.italaw.com/sites/default/files/case-
     documents/ita0716.pdf.


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 U.N.C.I.T.R.A.L. Arbitration Rules. Thus, the arbitral tribunal fixed the
 costs of the arbitration in the amount of EUR 293,462.27 (including
 VAT).37 When deciding how the arbitral costs should be apportioned
 between the parties, the arbitral tribunal noted its discretion in allocating
 costs and expenses in accordance with the U.N.C.I.T.R.A.L. Rules. As a
 result, the tribunal firstly noted that the Respondent had prevailed
 entirely as a matter of jurisdiction.38          The question therefore became
 whether the Claimant should bear more than half of the arbitration costs
 and/or pay the Respondent’s legal fees and expenses.                       The     tribunal
 ordered that the parties should bear the arbitration costs of EUR
 293,462.27 in equal shares, to be satisfied out of the advance on costs
 already paid by the parties.         The tribunal also ordered that each party
 should bear its own costs for legal representation and assistance.39
         Similarly, in Oxus Gold the arbitral tribunal recalled Articles 40 and
 42 of the U.N.C.I.T.R.A.L. Arbitration Rules which were the relevant
 provisions regarding costs.40           The Claimant claimed total fees and
 expenses (including those for witnesses and experts and its Hearing
 expenses) of USD 9,546,369.53. Respondent’s total fees and expenses
 (including those for witnesses, experts, translation and the hearing)
 amounted to USD 15,672,698.10 and EUR 28,852.50.                       Considering the
 wording of Article 42(1) of the U.N.C.I.T.R.A.L. Arbitration Rules and the
 cases discussed in the award, the arbitral tribunal therefore considered
 that where there is not a clear winner or loser, costs should in principle be
 awarded ”following the event”, i.e.            taking into account the parties’
 relative success regarding their claims and defenses.                          In limited
 circumstances, a party’s conduct during the proceedings such as
 deficiencies in its presentation of the case or obstructive behavior may
 justify a deviation from that principle. The tribunal determined that the
37
   Said amount included both arbitrators’ fees and the expenses of the arbitral tribunal.
38
   Romak S.A. (Switzerland) v. The Republic of Uzbekistan, supra note 36.
39
   Id.
40
   Oxus Gold plc v.     Uzbekistan, U.K. - Republic of Uzbekistan U.N.C.I.T.R.A.L. (ad
   hoc tribunal) IIC 779 (2015) https://www.italaw.com/sites/default/files/case-
   documents/italaw7238_2.pdf.



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 Respondent failed in its attempted jurisdictional defense against the
 Claimant’s standing, its other jurisdictional and admissibility objections
 as well as the Respondent’s counterclaims . It also rejected the Claimant’s
 claims in their essential part. The tribunal also found that the parties
 were equally at fault for any aggravation or complexity of the arbitration.
 In light of this and because it determined the parties’ success and defeat
 were “equally distributed”, the tribunal concluded that each party should
 pay half of the arbitral tribunal’s fees and expenses and should bear its
 own fees and expenses, including those for witnesses and experts.41
           In Metal-Tech Ltd. v. Republic of Uzbekistan42 the Claimant’s total
 costs incurred in connection with the proceedings amounted to USD
 1,687,966.86, comprising legal fees and expenses of USD 1,112,966.86 and
 payments to I.C.S.I.D. of USD 575,000.00.              The Respondent’s costs in
 connection with the arbitration were USD 7,985,954.95, comprising legal
 fees and expenses of USD 7,435,954.95 and payments to I.C.S.I.D. of USD
 575,000.00. Each party requested that their costs be borne by the other
 party. The tribunal decided that the costs of the proceedings, including
 the fees and expenses of the tribunal and the fees of I.C.S.I.D., should be
 borne by the parties in equal shares. Additionally, it was decided that each
 party should bear the legal fees and other expenses it incurred in
 connection with the arbitration. The reasoning of the tribunal on the
 allocation of costs was essentially the following:
           It is true that the Respondent prevails. At the same time, it is also
 true that the Claimant sought to minimize the costs of the proceedings,
 which is not the case of its opponent, as the disparity of the cost figures
 shows. The choice not to bifurcate jurisdiction and liability, but only
 quantum, does not plead against the tribunal’s apportionment. Indeed, if
 jurisdiction was not bifurcated it is because the Respondent’s objections
 addressed facts that related to both jurisdiction and merits.                          More
 important, the tribunal’s determination is linked to the ground for denial
41
     Id.
42
     Metal- Tech Ltd v.      Republic of Uzbekistan, I.C.S.I.D. Case No.       ARB/10/3,
     https://www.italaw.com/sites/default/files/case-documents/italaw3012.pdf.


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 of jurisdiction. The tribunal found that the rights of the investor against
 the host State, including the right of access to arbitration, could not be
 protected because the investment was tainted by illegal activities,
 specifically corruption.43



     8.2. DIPLOMATIC INTERFERENCE

 Research shows that another difference lies in the fact that BITs with
 Portugal,     Kuwait and United Arab Emirates foresee that neither
 Contracting Party shall pursue through diplomatic channels any matter
 referred to arbitration until the proceedings have terminated and until a
 Contracting Party has failed to abide by or to comply with the award
 rendered by the arbitral tribunal. Nevertheless, it is worth noting that the
 Kuwait BIT also provides a positive exception by stating that an unofficial
 exchange of diplomatic writings for the purposes of facilitating the
 process of dispute settlement does not constitute diplomatic protection
 envisaged in that paragraph.44



     8.3. OPERATION OF BITS IN PRACTICE

 It was mentioned above that states give their advance consent to all of the
 forums/rules in several ways; for what concerns for Uzbekistan we noted
 that BITs serve as a main source for that. Therefore, states typically have
 no influence on the choice of the arbitral forum/rules when a dispute arises.
 The forum is usually chosen by the claimant alone.
         So far, out of ten investment claims brought against Uzbekistan
 eight of them were brought under I.C.S.I.D. Convention Arbitration Rules
 (I.C.S.I.D. Additional Facility - Arbitration Rules) and two under
 U.N.C.I.T.R.A.L. Arbitration Rules.45 In I.C.S.I.D. cases, the instruments
43
   Id.
44
    See generally Bilateral Investment Treaty, Uzbekistan-Kuwait, art. 9, Jan. 1, 2004.
45
   See, e.g., Romak S.A. (Switzerland) v. The Republic of Uzbekistan, supra note 36; Oxus Gold
   plc v Uzbekistan, supra note 40.



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 invoked included: in three cases the Turkey - Uzbekistan BIT (1992), in
 two cases the 1998 FIL, in one case the Netherlands - Uzbekistan BIT
 (1996), Uzbekistan - Kazakhstan BIT (1997) and Israel - Uzbekistan BIT
 (1994), respectively. In the two U.N.C.I.T.R.A.L. cases, the instruments
 invoked were the Switzerland - Uzbekistan BIT (1993) and United
 Kingdom - Uzbekistan BIT (1993).46 Regarding the status of the cases ,
 six out of ten were concluded and four of them are currently pending. It is
 worth noting that among the concluded cases one was resolved in favour
 of the investor47 , two in favour of the state48 , for one, data is not
 available49 and for two the tribunal issued a procedural order taking note
 of the discontinuance of the proceedings.50
         Analysis of the subject matters raised in investor-State disputes
 involving Uzbekistan include: Textile Enterprise, Textile manufacturing
 activities, Retail enterprise, Oil, Gas & Mining, Cement production
 enterprise, Telecommunications enterprise, Molybdenum plant and Gold
 extraction enterprise.
         The most renowned case against Uzbekistan was Romak vs.
 Uzbekistan. The claim was brought under the rules of U.N.C.I.T.R.A.L. and
 it did touch upon the issue of defining the term ”investment” and the
 claimant initially claimed an investment dispute protected under the
 Switzerland-Uzbekistan BIT However, the arbitral tribunal issued the
 award, where it clarified how “investment” should be understood in
 contradiction to the claimant’s view and resolved the case in favour of the
 Republic of Uzbekistan, thereby making an essential contribution to
46
   We should note that unlike arbitration under the I.C.S.I.D. Convention, arbitration under
   U.N.C.I.T.R.A.L. Rules can be subject to greater confidentiality. For example, the very
   existence of a dispute can be kept secret if both parties so wish.
47
   See Oxus Gold plc v. Uzbekistan, supra note 40.
48
   See Metal-Tech Ltd. v. Republic of Uzbekistan, supra note 42, and Romak S.A. (Switzerland) v.
   The Republic of Uzbekistan, supra note 36.
49
   See Spentex Netherlands, B.V. v. Republic of Uzbekistan, I.C.S.I.D. Case No. ARB/13/26.
50
   See In Newmont USA Limited and Newmont (Uzbekistan) Limited v. Republic of
   Uzbekistan, I.C.S.I.D. Case No. ARB/06/20, the tribunal issues an order taking note of
   the discontinuance of the proceedings pursuant to I.C.S.I.D. Arbitration Rule 43(1) on
   July 25, 2007. In Mobile TeleSystems OJSC v. Republic of Uzbekistan, I.C.S.I.D. Case No.
   ARB(AF)/12/7, the tribunal issued a procedural order taking note of the discontinuance of
   the proceedings pursuant to Article 49(1) of the Arbitration (Additional Facility) Rules on
   November 14, 2014.


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 investment treaty arbitration. The facts of the case are widely known and
 the decision of the tribunal is also openly available.51
         The fact that Romak relied upon various provisions of the BITs of
 Uzbekistan with other states52 was also irrelevant in the end as these
 references concerned ”investment” issues, whereas Romak’s claim was
 found not to be an investment claim. In the end of 2006, Newmont, the
 world’s second largest gold producer, brought two investment claims
 against Uzbekistan. The first claim was filed at I.C.S.I.D. and covered the
 alleged expropriation of assets. The second claim was launched at the
 Arbitration Institute of the Stockholm Chamber of Commerce and related
 to a joint venture agreement. Newmont Mining was operating in the gold
 mining industry in Uzbekistan. It entered into a joint venture with two
 Uzbek state entities in 1992 - the State Committee for Geology and
 Mineral Resources and the Navoi Mining and Metallurgical Combine of
 Uzbekistan. Newmont’s stake was worth US 450 million. The dispute
 arose when, according to Newmont, Uzbekistan expropriated that stake
 without compensation. Uzbekistan claimed that Newmont failed to pay
 taxes in the amount of US 48 million.53 Newmont and Uzbekistan reached
 a settlement less than a year after the arbitration claim was initiated and
 the details of the proceedings have been kept secret.                          Accordingly,
 throughout the arbitration, the process could not be observed by
 interested persons, especially external analysts and investors. However,
 the good news was that the parties were pleased that they could reach an
51
   See The Award of the tribunal is available at: https://www.italaw.com/sites/default/files/
   case-documents/ita0716.pdf.
52
   See generally Agreement between the Government of the Italian Republic and the
   Government of the Republic of Uzbekistan on the Promotion and Protection of
   Investments, Uzbek. - Italy, Annex B art. II (c), Sept. 17, 1997; Accord entre
   le Gouvernement de la Republique Française et le Gouvernement de la Republique
   d’Ouzbekistan sur l’Encouragement et la Protection Reciproques des Investissements
   [Agreement between the Government of the French Republic and the Government of
   the Republic of Uzbekistan for the Promotion and Protection of Investments], Uzbek.
   - France., art. III(1), Oct. 27, 1993; Agreement between the Republic of Austria and
   the Republic of Uzbekistan for the Promotion and Protection of Investments, Uzbek. -
   Austria, art. IV (1), June 2, 2000.
53
   See GLOBAL ARBITRATION REVIEW, Tribunals Constituted in Newmont Claims,
   GLOBALARBITRATIONREVIEW.COM (Apr. 17, 2007), http://www.globalarbitrationreview.com/
   news/article/13825/tribunals-constituted-newmont-claims/.



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 amicable and durable agreement.             Although no financial details were
 given, based on filings with the US Securities and Exchange Commission,
 G.A.R. estimated that Newmont was to receive $80 million as part of the
 settlement.54
           Another case was Metal-Tech Ltd. v. Republic of Uzbekistan. In that
 case, an I.C.S.I.D. panel unanimously dismissed an investment claim by an
 Israeli investor filed pursuant to the Israel-Uzbekistan BIT against
 Uzbekistan. In the award,55 the tribunal found that it lacked jurisdiction
 to hear the parties’ claims and counterclaims brought under the
 Israel-Uzbekistan BIT and Uzbek law due to corruption related to
 Metal-Tech’s investment in Uzbekistan. In particular, the tribunal found
 that payments of approximately USD 4 million made by Metal-Tech to
 several individuals,       while presented as remuneration for various
 consultancy services, in fact constituted corruption and were illegal under
 Uzbek law.56




           9. SUMMARY AND RECOMMENDATIONS

 In conclusion, it can be said that there is some degree of difference within
 BITs of the Republic of Uzbekistan. These differences can be specifically
 observed in terms of length of the BITs, dispute settlement provisions that
 either provide only one option or several options or even have ”fork in the
 road” provisions. Moreover, differences in procedural matters also exist
 as some BITs provide a time bar issue and some others do not; also, some
 BITs provide for cost allocation and others do not.
54
     See   GLOBAL   ARBITRATION      REVIEW,     Goldminer    Settles  with    Uzbekistan,
     GLOBALARBITRATIONREVIEW.COM (Aug. 3, 2007), http://www.globalarbitrationreview.com/
   news/article/13976/goldminer-settles-uzbekistan/.
55
   See The BIT and award are available online at https://www.italaw.com/cases/227.
56
   See ALBINA GASANBEKOVA, Metal-Tech Ltd. v. Republic of Uzbekistan, CISARBITRATION.COM
   (Nov. 17, 2015), http://www.cisarbitration.com/2015/11/17/metal-tech-ltd-v-republic-
   of-uzbekistan.




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 Accordingly, to ensure a continued flow of FDI, Uzbekistan should adopt
 several measures to help further strengthen investor confidence. First, we
 have mentioned above the role of amicable ways of dispute settlement,
 including its advantages. For that reason, before referring the dispute to
 formal ways of dispute settlement taking into account all the advantages
 it has, we should consider amicable ways of dispute resolution or
 alternative dispute resolution (A.D.R.). It is worth noting that Uzbekistan
 has an institutional basis for that. For example, Uzbekistan could use the
 services of the Business Ombudsman57 and the Chamber of Commerce
 and Industry of Uzbekistan for those purposes. If organizations like these
 take the lead when a conflict with an investor arises, this can help resolve
 investment disputes early on, as well as assess the prospects of
 international arbitration.
         Second, procedural rules on dispute settlement should be more
 specific and detailed in some BITs in order to set a clearer mechanism for
 dispute resolution. In other words, it should be stated in the BIT that the
 investor can either go to a local court to protect his or her rights, or refer
 to arbitration. Investors should not be confused as to which mechanism
 comes after which. Prerequisites should be clearly identified to properly
 refer to any means of dispute settlement.
         Third, time limit issues to bring a claim should be taken into
 consideration while concluding agreements on protection of investments.
 It is advised that there should be a time limit set to restrict bringing a
 claim if more than a certain period of time (usually from three to five
 years) has elapsed.          This practice is for example observed in the
 Austria-Uzbekistan BIT58 or the United States model BIT, under which no
 claim may be submitted to arbitration if more than five and three years
57
   See Decree of the President of the Republic of Uzbekistan ”On establishing the Institute
   of Authorized Body on the Protection of the Rights and Legal Interests of the Subjects of
   Entrepreneurship under the auspices of the President of the Republic of Uzbekistan”.
58
   See Agreement between the government of the People’s Republic of China and the
   government of the Republic of Uzbekistan on the promotion and protection of
   investments art. 12, China-Uzbekistan, Apr. 19, 2011.




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 have respectively elapsed from the date on which the claimant first
 acquired knowledge of the alleged violation of the agreement.59
           Fourth, taking into account the wide reforms in all sectors
 happening now in Uzbekistan, the state should have a properly drafted
 model BIT ready for further negotiations with its partners and increase
 the number of concluded BITs.60
           Fifth, measures should be taken to promote encouraging investors
 to seek local remedies for a variety of reasons, including state reputation,
 confidentiality issues, and saving financial, human resources, time, etc.
 For that purpose, Uzbekistan should first of all take all possible measures
 to make its judicial system completely independent so that anyone,
 including foreign investors and our partners, has no doubt on the
 independence and impartiality of the judges. Here, it should be noted that
 although all required guarantees for reaching this aim are provided in the
 laws of the country, further practical measures should be taken so that
 they properly work in the real life. For instance, establishing complete
 financial independence of the judges by increasing their salaries
 substantially would be a way to start because currently their salaries are
 not market based. Furthermore, strengthening the role of the recently
 established Supreme Council of Judges of the Republic of Uzbekistan in
 nominating, appointing and later protecting the judges from external
 threats may be another means to achieve this goal.
           Sixth, cost allocation mechanisms should be clear and concise
 Because if they are of a confusing character the process may be time
 consuming in the end.              Additional misunderstandings between the
 parties to the dispute may make it harder to reach later consensus, and as
 a result, the tribunal will have to deal with an additional issue, thus
 increasing the necessary time to adopt its decision. As such, the Republic
59
     See also UNITED STATES MODEL BIT, ARTICLE 26.
60
     See JONATHAN BONNITCHA, SUBSTANTIVE PROTECTION UNDER INVESTMENT TREATIES: A LEGAL
     AND ECONOMIC ANALYSIS 336 (2014); See also ANDREW NEWCOMBE, Developement in IIA
     Treaty-making, in IMPROVING INTERNATIONAL INVESTMENT AGREEMENTS 15, 21 (Armanda De
     Mesrtal & Céline Lévesque eds., 2013).




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                                                   University of Bologna Law Review
                                                                       [Vol.4:1 2019]
                                                        https://doi.org/10.6092/issn.2531-6133/9065



 of Uzbekistan may consider the option that its BITs can specifically
 require that each party to the dispute shall bear its own costs and fees, or
 that the losing party shall pay the costs and fees.
           The discussions above show that BITs concluded by Uzbekistan do
 provide the choice of application of laws other than local laws for dispute
 settlement. This is mostly guaranteed by the BITs themselves. Moreover,
 local law also provides that international law provisions shall prevail if an
 international treaty of Uzbekistan foresees more beneficial conditions for
 investors.61 Because of the principle of pacta sunt servanda which states
 that every treaty in force is binding upon the parties to it and must be
 performed by them in good faith, Uzbekistan is bound by the BITs and
 other treaties to which it is a party.62 Otherwise it would be a breach of
 international law. Therefore, it is a priority of Uzbekistan to respect its
 obligations and provide investors to choose from the most beneficial
 provisions of the laws.
           We believe that if the above mentioned recommendations are taken
 into consideration along with the other reforms happening in the Republic
 of Uzbekistan, the investment environment will be even friendlier and the
 country will become an even more reliable economic partner in the world
 arena.




61
     Supra note 17, art. 2.
62
     See generally Vienna Convention on the Law of Treaties, art. 26, May 23, 1969, 8 I.L.M.
     679, 1155 U.N.T.S. 331.


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