Comments by LexUz
This Law will become invalid from January 27, 2020 in accordance with the Law of the Republic of Uzbekistan dated December 25, 2019 No. LRU-598 “On investments and investment activities”.
This Law establishes guarantees and measures for the protection of the rights of foreign investors engaged in investment activities on the territory of the Republic of Uzbekistan.
determination of conditions for the provision of additional guarantees and protection measures for certain categories of foreign investors and foreign investments.
Aspects related to the provision and implementation of guarantees and measures to protect the rights of foreign investors are regulated by this Law, the Law of the Republic of Uzbekistan «On Foreign Investments» and other legislative acts.
Should an international treaty of the Republic of Uzbekistan establish other rules than those provided for by the legislation on guarantees and measures to protect the rights of foreign investors, then the rules of the international agreement shall apply.
The State guarantees and protects the rights of foreign investors engaged in investment activities in the territory of the Republic of Uzbekistan.
Discrimination against foreign investors is prohibited in respect to their citizenship, residence, religion, location of economic activity, and depending on the country of origin of investors or investments, with taking into account the implementation of international treaties of the Republic of Uzbekistan.
Legislative acts, including state agencies regulations are not retroactive in cases where their execution is detrimental to a foreign investor or foreign investment.
If the subsequent legislation of the Republic of Uzbekistan worsens the investment conditions, then the legislation in force at the date of investment is applied to foreign investors within ten years from the date of investment. A foreign investor has the discretion to apply those provisions of the new legislation that improve the conditions for its investment.
The deterioration of the conditions of investment are the introduction of changes and amendments to the legislation, as well as the adoption of new legislative acts of the Republic of Uzbekistan, providing for:
increase in the size of income tax on income received in the form of dividends paid to a foreign investor;
imposing additional requirements that complicate the repatriation procedure or reduce the amount of income (profit) of a foreign investor transferred outside the Republic of Uzbekistan, except for cases of suspension by the authorized state body of the repatriation of foreign investor’s funds with non-discriminatory application of acts of legislation in cases of insolvency and bankruptcy of an enterprise with foreign investments or protecting creditors’ rights, criminal or administrative offenses committed by a foreign investor acting as an individual, or any other need to suspend such repatriation in accordance with a court or arbitral award;
introduction of quantitative restrictions on the volume of investment and other additional requirements on the size of investments, including in the form of increasing the minimum size of foreign investment in enterprises with foreign investment;
the introduction of restrictions on the share of a foreign investor in the charter funds (charter capital) of enterprises;
introduction of additional procedures for processing and extending visas for foreign investors acting as individuals, as well as other additional requirements for foreign investment.
The procedure for applying the provisions of the fourth and fifth parts of this article is determined by the Cabinet of Ministers of the Republic of Uzbekistan.
All contracts for foreign investment, primarily private, are under the control of the relevant authorities authorized by the Government of the Republic of Uzbekistan in terms of ensuring unconditional guarantees of their implementation.
State administrative bodies and local authorities do not have the right to interfere in the economic activities of foreign investors, carried out in accordance with the legislation of the Republic of Uzbekistan.
Should state administrative bodies and local authoritiesdetect a violation of the legislation by a foreign investor while practicing their legal powers, they can only take measures within their jurisdiction and aim at the elimination of a specific violation. State administrative bodies or local authorities cannot use the fact of a violation as a basis for interfering or restricting other legitimate activities of a foreign investor.
This article does not apply to the adoption, addition or repeal of acts of legislation that are directly related to the protection of the interests of the national security of the Republic of Uzbekistan, determined in accordance with generally accepted principles of international law.
The legislation may provide additional guarantees and protection measures including ensuring the unconditional fulfillment by partners of their obligations to foreign investors along with general guarantees and measures for the protection of foreign investors.
Additional guarantees and protection measures may be provided to foreign investors in each particular case when investing:
in priority sectors ensuring sustainable economic growth, progressive structural changes in the country's economy;
in priority projects ensuring the strengthening and expansion of the export potential of the republic and its integration into world economic relations;
in projects in the field of small business, the implementation of which is aimed at processing raw materials, the production of consumer goods and services and providing employment for the population.
Additional guarantees and protection measures for foreign investors may include the provision of guarantees by the Government of the Republic of Uzbekistan, assistance in financing investment projects, the creation of a special tax and payment regime, state monitoring of project implementation, provision of external engineering and communication networks and other measures in accordance with legislation.
Additional guarantees and protection measures are provided to foreign investors on the basis of decisions of the President of the Republic of Uzbekistan or the Government of the Republic of Uzbekistan, which in particular stipulates the conditions and procedures for investing, using and ensuring the payback of foreign investments and (or) approving investment contracts concluded between the Government of the Republic of Uzbekistan and a foreign investor in the manner prescribed by law, with fixing the investment obligations of foreign investor.
Foreign investments and other assets of foreign investors in the Republic of Uzbekistan shall not be nationalized.
Foreign investments and other assets of foreign investors shall not be requisited, except in cases of natural disasters, emergency accidents, epidemics, epizootics.
The decision on requisition is made by the Cabinet of Ministers of the Republic of Uzbekistan in accordance with the requirements for which the requisition is:
limited to the minimum amount of investments or other assets necessary to solve the problems arising from the specified cases;
accompanied by the payment of compensation that is adequate to loss. The State acts asthe guarantor of the timely implementation of these compensation payments.
The income of foreign investors received in the Republic of Uzbekistan may be reinvested in the territory of the Republic of Uzbekistan or used in any other way at the discretion of the foreign investor.
open, use and manage accounts in any currency, in any bank in the territory of the Republic of Uzbekistan, as well as abroad;
Restrictions on the use or the forced withdrawal of funds from the accounts of enterprises with foreign investments by the state administrative bodies and local authorities can be carried out exclusively in accordance with the procedure prescribedin law.
Foreign investors are guaranteed free transferoffunds in foreign currency to and from the Republic of Uzbekistan without any restrictions provided that they pay taxes and other obligatory payments in the manner established by the legislation of the Republic of Uzbekistan. Such transfers include:
In accordance with international law, a state may suspend the repatriation of a foreign investor’s funds on conditions of non-discriminatory application of legislation in cases of insolvency and bankruptcy of an enterprise with foreign investments or protection of creditors’rights, criminal acts or administrative offenses committed by a foreign investor acting as an individual, or other need for suspension of such repatriation in accordance with a judicial or arbitral award.
A foreign investor has the right to terminate investment activities in the Republic of Uzbekistan in the manner prescribed in law.
Upon the termination of investment activities, a foreign investor has the right to free repatriation in monetary form or in kind of their assets obtained as a result of the termination of investment activities, without hampering the fulfillment of the obligations of a foreign investor in respect to the Republic of Uzbekistan or other creditors.
Legislative acts, departmental normative acts as well as court rulingsthat touch upon the interests of foreign investors in any way, should be made available to them, and shall be published in cases prescribed by the legislation of the Republic of Uzbekistan.
Upon the request of foreign investors, state administrative bodies and local authorities are obliged to provide information of interest to them in the manner prescribed by law.
A dispute directly or indirectly related to foreign investment (an investment dispute) shall be resolved by agreement between the parties through consultation between them. Should the parties be unable to reach an agreed resolution, such a dispute shall be resolved by the Economic Court of the Republic of Uzbekistan or through arbitration in accordance with the rules and procedures of international treaties (agreements and conventions) to resolve investment disputes to which the Republic of Uzbekistan has joined.
The parties involved in an investment dispute may upon mutual agreement determine the body considering such a dispute, as well as the country where the arbitration proceedings shall be conducted for an investment dispute.
Disputes of foreign investors that are not related to their investment activities in the territory of the Republic of Uzbekistan shall be resolved in accordance with the legislation of the Republic of Uzbekistan, unless the agreement provides for a different procedure for resolving disputes in accordance with the norms of international law.
Should any legislation be violated on guarantees and measures to protect the rights of foreign investors, a foreign investor has the right to receive adequate compensation for damages through the courts.
Should any state administrative bodies or local authorities adopt regulations that infringe the rights of foreign investors as well as in cases of their unlawful interference in the economic activities of foreign investors, these losses are reimbursed by these authorities through the court.
Should any officials of state administrative bodies or local authorities violate the laws on guarantees and measures to protect the rights of foreign investors they will be liable as perestablished procedure.
If any inconsistency between the provisions of this Law and other legislative acts or international treaties of the Republic of Uzbekistan, the provisions most favorable to foreign investors prevail.