On 20 November 2006 the Constitutional Court of the Republic of Uzbekistan issued a ruling on the interpretation of part 1 of article 10 of the Law \"On guarantees and measures for the protection of the rights of foreign investors\" (the \"Law\")

In order to avoid the possibility of any misunderstanding of this ruling the following explanation is provided:

On ? May 1994 Uzbekistan ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the \"ICSID Convention\") under which was established the International Center for Settlement of Investment Disputes.

Pursuant to part 1 of article 25 of the ICSID Convention:

\"The jurisdiction of the Center shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Center by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Center. When the parties have given their consent, no party may withdraw its consent unilaterally.\"

Part 1 of article 10 of the Law states that investment disputes may be decided:

- By agreement among the parties through consultation between them, i.e. through the joint reaching of a decision which is mutually acceptable to the participants to the dispute and which may be executed within he framework of and on the basis of the law;

- If the parties did not reach an agreed resolution to the dispute, such a dispute must be decided by the economical court of the Republic of Uzbekistan or through arbitration in accordance with the provisions and the procedures of international contracts (agreements and conventions) on the resolution of investment disputes to which the Republic of Uzbekistan has acceded.

The Cabinet of Ministers applied to the Constitutional Court in order to obtain an official interpretation of part 1 of article 10 of the Law and, in particular, posed the question whether part 1 of article 10 implies the agreement of the Republic of Uzbekistan to the submitting of a dispute for resolution by arbitration under the ICSID Convention.

The Constitutional Court ruled that part 1 of article 10 of the Law contains the different forms of dispute resolution acceptable under Uzbek law but does not contain the written consent by the Republic of Uzbekistan (as a party to a dispute) to arbitration under the ICSID Convention as required in article 25 of the ICSID Convention.

The ruling by the Constitutional Court is fully consistent with the norms of international law and legal practice. Submitting a dispute to arbitration depends on the written consent (agreement) of the parties to the dispute to submit to such arbitration. Where the Republic of Uzbekistan has agreed in writing with another party that disputes between them shall be resolved through arbitration, the Republic of Uzbekistan shall submit to the corresponding arbitration proceedings.

It must further be noted that the recognition and execution of foreign arbitral awards in the Republic of Uzbekistan is regulated by the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the \"New York Convention\") which has been recognized by the Republic of Uzbekistan and which continues to be in effect without any restrictions.