General legal newsletter for July 2021

In July 2021, the most notable legal developments were the adoption of the Law “On Licensing, Permits Issuance, and Notification Procedures” and of a new edition of the Law “On Courts”; new measures to improve the efficiency of public procurements procedures and the provision of state services; the establishment of the Agency for Strategic Development; and the abolishment of some privatization mechanisms.

 1.  NEW LAW ON LICENSING AND PROVISION OF PERMITS  

The Law "On Licensing, Permits Issuance, and Notification Procedures” has been adopted. It aims to set a holistic regulatory regime for the relevant procedures and, among other things:

• defines powers of the Cabinet of Ministers and the Agency for the Provision of State Services in the relevant spheres;
• contains an exhaustive list of the actives for the engagement in which licenses, permits, or notification of a relevant regulator are required (202 in total); 
• sets terms of validity for licenses and permits: generally, such a term is unlimited, except for a number of activities (medical services; pharmaceutics; mobile services; the extraction, processing, and sale of oil, gas, and gas condensate; etc.); 
• sets general procedural rules for the issuance, reissuance, and revocation of licenses and permits;
• sets the cases where a regulator may refuse in the provision of a license or a permit;
• establishes rules for the operation of the special online system “License”;
• sets general requirements for sending notifications for the cases where an individual or a legal entity may engage into an activity upon notifying a regulator;
• establishes sanctions for violating the Law, including by setting the amount of relevant fines for legal entities in each industry.

It is, among others, clarified by the Law that (i) branches and representative offices of legal entities do not require to obtain separate licenses and permits; (ii) applications for licenses and permits and/or notifications on engaging into a regulated activity may be sent electronically via the special online system “License” or the Single Portal for the Provision of State Services.

Law “On Licensing, Permits Issuance, and Notification Procedures” No ZRU-701 of 14 July 2021

 2.  REVISED LAW ON COURTS 

The President has signed a new edition of the Law "On Courts", entering in force on 28 July 2021. The Law describes the country’s judicial system and defines the powers of each court, reflecting earlier changes to the Procedural Codes. It further provides for the main principles of the administration of justice, the rules for appointing and dismissing judges, the requirements to judicial candidates, the measures for financial and social support of judges.

It has, among other things, been fixed in the Law that all court hearings are public and may be closed for the public only in cases specified by law; individuals present in the courtroom, including representatives of the media, may take photographs and may make video and audio recordings (subject to relevant procedural rules set by law).

Law “On Courts” No.ZRU-703 OF 28 July 2021

 3.  IMPROVEMENT OF PUBLIC PROCUREMENT PROCEDURES   

The President has issued a Resolution on measures for ensuring the transparency and improving the efficiency of public procurement procedures. The following measures are, among others, envisaged by the Resolution:

• starting from 5 July 2021, corporate procurers specified in Annex 1 to the Resolution, which includes Uzbekistan’s largest state-owned enterprises (e.g. Uzbekneftegaz, Uzkimyosanoat, the Navoi Mining and Metallurgical Combine, National Power Grids of Uzbekistan), must (i) announce the conduct of procurement procedures and relevant results on a special website and in mass media; (ii) where the cost of a purchase exceeds 25,000 times the baseline calculation value (approx. USD 575,000), submit procurement documentation for expertise by the State Center for Expertise of Projects and Import Contracts under the Ministry of Economic Development; (iii) ensure that their supervisory boards review annual and quarterly procurement plans for checking justifiability of procurements;
• starting from 5 July 2021, the practices for purchasing goods and services from a single supplier or without holding a tender, having been applied by the above corporate purchasers based on targeted resolutions of the President or the Cabinet of Ministers, must be abolished;
• the State Commission for Ensuring Open and Transparent Public Procurement is established and is, among other things, instructed to review public procurement contracts for more than USD 1 mln for taking optimization measures (particularly, in respect of the contracts that have been performed for less than 30% or paid for less than 30%);
• the Ministry of Finance, the State Agency for Managing State Assets, the State Tax Committee, and the above corporate procurers must develop an electronic system of accounting inventories, being integrated with information systems of the tax authorities.

Presidential Resolution No. PP-5171 of 2 July 2021

 4.  IMPROVEMENT OF PROVISION OF STATE SERVICES 

The President has signed a Decree “On the Measures for Improving the Infrastructure for the Provision of Public Services”. The following measures are, among others, established:

• starting from 1 November 2021, 50% of paid state fees will be returned, if there is a delay in provision of state services through the State Portal for the Provision of State Services or the information system “License” for more than 3 business days;
• starting from 1 December 2021, access to electronic systems for the provision of state services will be provided to foreign individuals, legal entities, and citizens of Uzbekistan living abroad; for that purpose, they will be able to obtain an electronic signature from Uzbekistan’s embassies and consulates;
• starting from 1 January 2022, a greater number of state services will gradually become accessible electronically, including the state expertise of construction documentation, the state expertise and registration of certain types of contracts, the accreditation of representative offices of foreign companies, and the registration of securities issues;
• starting from 1 January 2022, state agencies will no longer have the right to request a number of documents for the provision of state services, including documents confirming the state registration of legal entities; documents confirming the payment of a relevant state duty, etc.

Presidential Decree No. UP-6269 of 24 July 2021

 5.  ABOLISHMENT OF PARTICULAR PRIVATIZATION METHODS 

The President has adopted a Decree, which, among others, provides for the abolition of (i) the right of regional municipalities to sell non-strategic state property at a "zero" purchase value with the imposition of investment obligations; (ii) the practice of putting up state property for a public auction at a starting price of UZS 1 with the attachment of investment and social obligations.

Presidential Decree No. UP-6258 of 8 July 2021

 6.  ESTABLISHMENT OF AGENCY FOR STRATEGIC DEVELOPMENT 

The President has established the Agency for Strategic Development, accountable to the Council for Strategic Development, headed by the President. Functions of the Agency, among other things, include study of strategic matters related to the attraction of investments and the implementation of investment projects; determination of promising spheres for the attraction of investments; organization of work on improvement of the country’s investment climate; organization of work of the Secretariat of the Council of Foreign Investors under the President.

Presidential Decree No. UP-6264 of 19 July 2021

 7.  ENERGY PROJECTS IN KHOREZM AND SURKHANDARYA REGIONS 

The President has signed Resolutions approving the implementation of two conventional energy investment projects. The first project, implemented by “Stone City Energy” (Netherlands), envisages financing, designing, constructing, and operating for 25 years a combined cycle power plant with a capacity of 1500-1600 MW in the Surkhandarya region of Uzbekistan. The second project, implemented by “Hidro Enerji Elektrik Uretim Sanayi A.S.” (Turkey), is for financing, designing, constructing, and operating for 25 years a piston-based engine power plant with a capacity of 174 MW in the Khorezm region of Uzbekistan. In both projects, a power purchase agreement is concluded between a project company established by a relevant foreign investor and state-owned JSC “National Power Grids” for 25 years.

Presidential Resolution No. PP-5193 of 24 July 2021
Presidential Resolution No. PP-5195 of 24 July 2021

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Have a good day!

Sincerely,
Kosta Legal Law Firm