By Minister of Justice Dr. Foziljon Otakhonov of the Republic of Uzbekistan.
Independent Uzbekistan is gradually moving along the path of building a democratic legal state and a civil society with a socially oriented stable market economy and an open foreign policy. With the election of Shavkat Mirziyoyev as the President of the Republic of Uzbekistan in 2016 December, Uzbekistan became the center for various economic, social and legal reforms.
Reform is a multi-faceted and long-term process, in which the most important areas are the creation of perfect legislation, ensuring the strict implementation of laws, raising the legal culture of the population and officials, and clearly defining the rights and duties of citizens, and government. In this process, a special place is occupied by the legal service of the bodies of state power and administration, as well as economic entities.
According to the State Statistics Committee in Uzbekistan, the number of registered legal entities (excluding farmer and dehkan farms) as of January 1, 2017 was 285 300, of which 57.0 percent are limited liability companies, 33.2 percent are private enterprises, 3, 9 percent - family enterprises, 1.1 percent - unitary enterprises, 0.3 percent - joint-stock companies and 4.5 percent - enterprises of other organizational and legal forms. In general, the figures are significant. And the main thing is that all these business entities constantly, seasonally, periodically or one-time need legal assistance, legal services, and legal support for their activities. And those services are performed either by full-time legal advisors, legal advisers, or advocacy. As a result, the total number of legal advisors in the field of entrepreneurship reaches several thousand people.
Today, in all countries with market economies, including in Uzbekistan, the main goal of any business entity is profit-making; accordingly, the task of their legal service to the maximum extent to facilitate legal means to achieve this main goal. In this regard, the legal service should: 1) ensure legal compliance in the activities of business entities of law and order; 2) to ensure the achievement by legal means of the main objective of any business entities - the maximum extraction of profit.
The solution of the task of ensuring legality in the activities of business entities is not only an exclusively private issue for the business entities themselves, their legal services, but also a state-significant problem. In a certain way, it relies on the problem of the need for state influence on the market economy. And without its principled solution, it is hardly to expect the development of the institution of legal service in business.
Over the past period, based on the principles and provisions of the Constitution of Uzbekistan, a national system of legislation has been established. It has become the legal basis for socio-economic and political development of the country and strengthening its defense capability, effective reforms that are being carried out in all spheres of our life.
In carrying out reforms, the legal services of government bodies and management, as well as economic entities, have a significant role to play. In this regard, after gaining independence, the Uzbekistan adopted a number of laws and by-laws regulating the activities of legal services that determine the rights and duties of their employees, as well as the role and importance of the legal service in ensuring law.
For instance, Decree No. UP-314 of the President of the Republic of Uzbekistan of January 8, 1992 “On the improvement of the activity of the Ministry of Justice of the Republic of Uzbekistan” was of great importance for the development of legislation on the legal service, since for the first time the Ministry of Justice was tasked with preparing, retraining and organization of attestation of employees of legal services.
The radical transformations in the country’s economy, the reform of the management system, with all its acuteness, raised the question of the need to improve legal services, increase their role and responsibility in ensuring the rule of law, and regulating the rights and duties of legal services employees. In this regard, the Cabinet of Ministers of the Republic of Uzbekistan, by resolution No. 118 of March 2, 1993, approved the Regulations on the Legal Service in the State Administration and Enterprises of the Republic of Uzbekistan.
At the same time, a comprehensive analysis of the past stage of the country's development, the changing conjuncture of the world economy in the context of globalization and the growing competition call for the development and implementation of radically new ideas and principles for further sustainable and advanced development of the country.
In order to radically improve the effectiveness of the reforms, create conditions for ensuring comprehensive and accelerated development of the state and society, implement priority areas for the modernization of the country and liberalize all spheres of life, the Strategy of Action has been adopted in five priority development directions of the Republic of Uzbekistan in 2017-2021 and approved by the Decree of the President of the Republic of Uzbekistan of February 7, 2017 No. U -4947.
In this Strategy, improvement of state and public construction, ensuring the rule of law and reforming the judicial and legal system, further development of the economy and social sphere, ensuring security, interethnic harmony and religious tolerance are defined as the main directions, continuing a deeply thought out foreign policy based on the principles of constructive dialogue and mutually beneficial cooperation.
In the implementation of reforms, the legal services of government bodies and management are given a significant role. Increasing the effectiveness of the legal services of state bodies is envisaged as one of the tasks for the priority direction of the country's development of the Strategy of Action for Five priority directions of the development of the Republic of Uzbekistan in 2017-2021.
During the years of independence, comprehensive measures were implemented in the country aimed at building a legal democratic state, a strong civil society, developing the economy based on free market relations and the priority of private property, creating conditions for the peaceful and prosperous life of the people, and finding Uzbekistan a worthy place in the international arena.
In this regard, a number of normative and legal acts regulating the activities of legal services, defining the rights and duties of their employees, as well as the role and importance of the legal service in securing legality adopted. In this direction, the adoption of the Decree of the President of the Republic of Uzbekistan on 19 January 2017 No. PP-2733 "On measures to radically improve the activities of the legal service" is an important step in improving and improving the effectiveness of the legal service in state bodies and organizations. With a view to further strengthening the rule of law in the activities of state bodies and organizations, the progressive strengthening of the role and responsibility of the legal service in carrying out democratic and legal reforms, the decree defines the most important areas of activity of legal services.
Not only legal service in entrepreneurial activity, but also management of dispute settlement is also equally important. After president Mirziyoyev came to power, he re-started wide-ranged reforms that aims to attract bulk of foreign direct investment to Uzbekistan. And of very potential and reliable partner of Uzbekistan is South Korea. Korean brands are already well-known, and Korean business has sufficiently strong ties with local Uzbekistani business partners as well. One clear example of strong and reliable relationship is that South Korea and Uzbekistan has already concluded so-called Agreement for the Promotion and Reciprocal Protection of Investment for the sake of their respective investors’ protection already in 1992.
Nonetheless, investor-state treaty arbitration is very costly and fortunately no Korean investor has ever sued Uzbekistan to ISDS until now. But it does not mean Korean investors will not use nor business to business dispute settlement has no importance. With the flow of foreign investment, one has also to ensure the development of alternative dispute settlement mechanisms which are flexible and that can help parties to keep their face as well as their confidential information. Against such background, president of Uzbekistan signed to his historical decree on the establishment Tashkent International Arbitration Center (TIAC) under the Chamber of Commerce and Industry of Uzbekistan on November 5, 2018. To improve the investment climate of the Republic, the promotion of international commercial arbitration and alternative dispute resolution methods will be primary goals of TIAC.
Furthermore, the TIAC provides advice to both of domestic and foreign entities, including foreign investors. Foreign experts may also work as an arbiters and they enjoy exemption from income tax.
President decree specifically established that, Tashkent International Arbitration Center will be allocated separate premises, receive telecom facilities and high-speed internet at low tariffs as well as granted customs relief. Showing its very liberal approach, the TIAC will have a jurisdiction on IP and blockchain disputes which is very good signal for overseas investors to select the Tashkent International Arbitration Center as their dispute settlement forum.
With the robust legal service regulation that is developed during the 27 year of independence, and newly established modern international arbitration center, newly born Tashkent is ready to host foreign investors from the all around the world.
The writer, Mr. Foziljon Otakhonov (Ph.D.), is an independent researcher at the Academy of Public Administration under the President of the Republic of Uzbekistan. Mr. Otakhonov is also the former Minister of Justice of the Republic of Uzbekistan (2006-2007).