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In Uzbekistan, the legal framework for investment projects has been improved. On 30 April 2020, the Cabinet of Ministers has adopted the Resolution No. 264 (the “Resolution”) intended to introduce two new Regulations – guidelines for foreign investors. This is associated with the adoption of the new Investment Law in December 2019 that has brought alterations in the investment projects development and implementation. As a result, the procedures for (i) notification of a state authority with the intention to use the ‘change in law’ protection and (ii) investment agreement conclusion have been updated.
Change in Law Protection
As per the Regulation in its new edition, a foreign investor intending to use this type of guarantee shall submit an application to a relevant state authority. The notification shall necessarily specify the circumstances that worsen investment conditions and a legal act that had been in force at the moment of investment (i.e. the legal act that a foreign investor intends to refer to instead of the newly introduced).
The following state bodies have been specified as relevant state authorities:
There is no specific timeframe indicated, within which an investor has to provide such a notification. A foreign investor may notify a relevant state authority at any time as soon as the adversely affecting legal act is enacted. However, the term of change in law protection will be calculated from the enactment date of the adversely affecting act.
In case of disagreement, the notified state authority is entitled to seek an opinion of the Ministry of Justice. The Ministry of Justice provides its opinion within 2 weeks. Further, the notified authority may refer to court proceedings. A foreign investor starts to enjoy the ‘change in law’ protection from the notification day until the court finds such an enjoyment to be in contradiction with the legislation in force.
Conclusion, amendment and termination of an investment agreement
When the Government of Uzbekistan wishes to grant additional guarantees and/or benefits (i.e. in addition to those already envisaged by Uzbek laws) in exchange for investment obligations, an investment agreement is concluded between a foreign investor and the Government of Uzbekistan.
A new Regulation is adopted setting procedures for the conclusion, amendment, termination and performance of investment agreement. The Regulation will apply to investment projects initiated after 30 April 2020. The investment agreements concluded with the local municipalities for the projects with total value of foreign investments not exceeding USD 10 mln fall outside the scope of the Regulation.
In accordance with the updated procedure, the following steps shall be taken to conclude an investment agreement:
1. An application, which specifies an object of investment and the investor’s relevant experience in similar projects, is submitted to the Ministry of Investment and Foreign Trade (the “Ministry”) or the Investment Promotion Agency under the Ministry (the “Agency”). The application is accompanied by the following supporting documents:
All further clearance procedures that previously were within the obligation of the applicant are now carried out by the Ministry or the Agency, who shall be in coordination with the Ministry of Justice (for legal review), the Ministry of Finance and the Ministry of Economic Development and Reduction of Poverty (for financial-economical assessment), the State Custom Committee and the State Tax Committee (for review of the intended tax benefits).
All the submitted documents shall be reviewed within 15 days starting from the submission of a date investment agreement. The submitted documents may be returned to the applicant for further refinement and, if returned, the state authorities have 15 more days from the date when the application has been resubmitted.
If required, negotiations may be conducted between the applicant and the Ministry/the Agency.
2. Once the draft investment agreement is finalized, it is submitted to the Cabinet of Ministers for its consideration and approval. If any improvements are required, the draft investment agreement will be returned to be revised. The Ministry executes the investment agreement upon receiving the Cabinet of Ministers’ approval.
3. For the investment agreement to enter into force, a relevant Government/Presidential resolution shall be issued confirming the due execution of the investment agreement.
The Ministry is responsible for monitoring the project implementation. As per the Regulation, the foreign investor is obliged to regularly report to the Ministry on the project implementation process based on terms and conditions specified in the investment agreement.
Corresponding amendments and/or addendums to the executed investment agreement are introduced by mutual consent in a written form in accordance with the terms and conditions specified in the investment agreement.
An investment agreement may be terminated both by mutual agreement and unilaterally in accordance with the procedure set forth in the investment agreement.
As enshrined in the Investment Law, except for cases of mutually agreed termination, if an investment agreement is terminated prematurely, a foreign investor is obliged to repay all the taxes and other payments to the state budget that it was exempted from under the investment agreement.
 The local municipalities (khokimiyats) are vested with the authority to enter into an investment agreement when a state property objects or property rights to them are being transferred to a foreign investor at a preferential or zero purchase price as well as when tax benefits or interest rate subsidies are being provided.
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