Since President Shavkat Mirziyoyev took office in 2017, Uzbekistan has introduced a number of significant changes to make investors more optimistic about Uzbekistan's comeback within the world economy and its investment climate. Being rich in hydrocarbons, gold, copper and uranium with relatively cheap human resources, Uzbekistan had been on investors' radar for a long time; however, currency exchange complications and repatriation difficulties prevented investors from entering the country. However, following the liberalisation of currency exchange and repatriation, the situation has changed considerably and has affected all sectors of the economy, including the construction industry.
After 27 years of stagnation, there is a construction boom in infrastructure projects, industrial facilities and as real estate. To foster the growing construction market, the presidential office, government and parliament have enacted an unprecedented number of legislative acts with the aim of easing the conditions for doing business in Uzbekistan.
President Mirziyoyev set an ambitious goal to double gross domestic product (GDP) by 2030 and to increase the industrial sector's share of GDP to 40 per cent. Apparently, budgetary funds do not suffice to ensure such a growth; therefore, Uzbekistan relies on project finance and public-private partnerships (PPPs), especially in implementing infrastructure projects. With this in mind, Uzbekistan established a PPP agency to facilitate their use and to create a comprehensive PPP legal framework. The PPP Law has been signed and became effective on 12 June 2019. Although no project has been implemented based on the Law yet, the preliminary conclusion about the Law is that it allows for the majority of PPP models to be used in Uzbekistan.
Moreover, the country closely cooperates with multilateral development banks, credit agencies and export-import banks to support the need for capital funds. For the first time in its history, Uzbekistan appeared on a sovereign credit ratings list in December 2018, followed in February 2019 by the sale on the London Stock Exchange of US$1 billion of eurobonds in international debt markets.
Finally, to improve the overall business environment in the country, the government is implementing significant reforms in all areas, including construction, banking, public procurement, PPPs, energy, tax and investments.
II THE YEAR IN REVIEW
Following the liberalisation of foreign exchange in 2017, there were a number of significant reforms during 2018, some of which are of particular importance.
First, construction reforms have led to (1) the establishment of a Ministry of Construction to oversee the construction sector, (2) a reduction in the number of licences and other licensing requirements, (3) the introduction of fast-track construction for engineering, procurement and construction (EPC) contractors (i.e., parallel design, procurement and construction), and (4) recognition of construction and design licences issued in OECD countries.
Second, industrial reforms have resulted in the separation of regulatory and commercial functions that were previously combined in state-owned companies. For example, in the energy sector, reforms have led to:
- the establishment of the Ministry of Energy;
- the division of the joint-stock company Uzbekenergo into three separate companies, namely a power generation company, an energy transmission company and a power distribution company, all of which are to be publicly traded companies;
- the provision of access by the private sector to power generation (the first developers have already started work on their construction projects); and
- setting enthusiastic goal to double existing power generation capacity by 2030.
Third, tax reforms have reduced both the quantity and the rates of taxes, making administration more transparent and business-friendly. The reforms are expected to continue with the adoption of a new Tax Code by end of 2019.
Finally, Uzbekistan obtained its first BB- sovereign credit rating and successfully issued its very first sovereign bonds.
III DOCUMENTS AND TRANSACTIONAL STRUCTURES
i Transactional structures
In recent years, private companies acting as investors or operators have been widely involved in the construction and operation of economic and social infrastructure projects. This practice allows increased access to private investment and enhances the economic efficiency of infrastructure. Even though major infrastructure projects used to be operated by state-owned monopolies, the state aims to reduce its presence in business by selling its equity shares via initial public offerings or contracting out operations to trust management companies, while reserving control over strategic sectors.
Until recently, the majority of large infrastructure projects were implemented using public investment with no or limited scope for traditional PPP models.
Despite the lack of a regulatory framework, PPPs are expected to be frequently used. A few projects have been implemented under the build-own-operate (BOO) or build-own-transfer (BOT) delivery models. Importantly, a project can be transferred to a public partner free of charge subject to the provision of an investment commitment. As regards the BOO model, developers usually operate through joint ventures (JVs) set up by a foreign and a local company. The JV then raises financing for the project, builds, operates and owns the project. Examples of this delivery model include the Uzbekistan–China gas pipeline and Surgil Gas and Petrochemical Complex projects. Moreover, thanks to government incentives, PPPs are now being used in pre-school education, sports, tourism, energy, infrastructure, with state-investor relations being structured purely on a contractual basis.
Recently, the government has been showing an interest in new forms of PPP projects, inviting investors to put forward new proposals. The first two projects involving independent power producers (IPP) in the energy sector have been signed, with a concurrent tender for a solar IPP under an international fundraising consultancy.
Depending upon the complexity and source of financing, a project finance transaction may generate quite a number of transactional documents. The precise requirements will depend upon the type of project, the ownership structure, the regulatory environment and the level and nature of public sector involvement.
A complex infrastructure project might require the following transactional documents:
- a government resolution outlining the project details, tax and customs benefits, and any other exemptions necessary for the project's bankability;
- land allotment documents. As all land is currently in public ownership, it is allotted under an order issued by the local governor. However, this situation may change with the expected privatisation of land;
- tender documents consisting of general, technical and commercial parts;
- financing agreements with lenders;
- terms of reference or financial and economic reports, or both;
- feasibility studies or cost analyses, or both;
- contract documents (shareholders' agreement, joint venture agreement, joint operation agreement, investment agreement, EPC contract, offtake agreement, supply agreement, concession or licensing agreement, production sharing agreement, power purchase agreement, operation and maintenance agreement, technical service agreement, etc.);
- design documentation adapted to local standards and examined by the local regulator; and
- security documents (bonds and insurances).
The number of documents required will vary depending on the procurement method, sources of financing (lender's requirements) and the type of project.
iii Delivery methods and standard forms
The Uzbek construction industry is experiencing a transformation that includes switching from tailored to standard contract forms. The choice of delivery method and standard form largely depends on the lenders' requirements. If a project draws financing from public sources, it must be delivered on a turnkey basis. Therefore, the EPC and engineering procurement and construction management methods are those most commonly used in public procurement as they offer maximum risk transfer from public owner to contractor. Given that there is no locally mandatory form, FIDIC Silver Book or other EPC forms might serve as a good starting point for negotiations. However, in privately financed projects, developers have more freedom to choose the appropriate delivery method and standard form. Thus, in projects funded by international financial institutions (IFIs), developers frequently use the FIDIC rainbow suite, including the multilateral development bank harmonised edition, the Engineering Advancement Association of Japan and the Japan International Cooperation Agency standard forms.
IV RISK ALLOCATION AND MANAGEMENT
i Management of risks
Different types of risks may be encountered during the course of a project finance transaction. Typically, parties tend to identify and allocate the risks contractually or pass them to the EPC contractor, subcontractors, suppliers, the offtaker and other counterparties on back-to-back terms, or obtain insurance against the risks insofar as is possible. Generally, insurance is obtained to address the risks that are outside the direct control of the contracting parties.
In large-scale infrastructure projects, the PPP sponsors also attempt to negotiate special regulatory exemptions (for example, offshore collection accounts) to address risks specific to the project.
ii Limitation of liability
Project companies and their subcontractors will frequently negotiate their contractual liability limitations. Under the freedom of contract principle, parties are free to set liability caps in a way they find most effective – as a fixed percentage, fixed sum or formula.
However, should parties fail to set the cap themselves, the statutory limitation will define the limits. Usually, liquidated damages are capped at 50 per cent of the outstanding obligation. Note that as a general principle, actual loss is payable by the breaching party if the agreed cap is not sufficient to cover the actual loss, unless the parties have expressly stipulated that a fine or penalty (liquidated damages) is the exhaustive measure in the event of a contract breach.
Parties are usually relieved from any liability as regards a force majeure event. If a force majeure event occurs, the parties try to seek alternative means to deliver the project. If the event continues for a specific period, the parties are usually entitled to terminate the contract.
iii Political risks
To date, the land in Uzbekistan has belonged to the state and therefore the state has used its domain powers fairly often, especially in recent years. The right of expropriation is limited to public and social needs, such as defence, deposits exploration, adherence to international agreements and construction of transport infrastructure. Expropriation is possible only after market price compensation is paid for the property located on the expropriated plot.
Similarly, the Foreign Investments Law protects investors from following political risks:
- expropriation or any other alienation of property;
- restrictions on the transfer of foreign currency outside the country;
- changes in law that discriminate against particular groups of investors;
- any intervention by the government and its officials in the contractual relations of investors; and
- any other kinds of political and legal risks associated with foreign investors and their investments.
V SECURITY AND COLLATERAL
Creditors may accept a pledge by means of a general security agreement or by concluding a general pledge agreement for movable and immovable assets and property rights. The pledge agreement should specify the objects of security and their value, as well as the nature and terms of the obligation underlying the security. Negotiation of pledge agreements should take into account various perfection requirements for different types of assets. Creditors are free to register pledged rights with the Pledge Registry of the Republic of Uzbekistan. While retaining the voluntary character, creditors who have registered pledged rights can exercise priority of claiming and enforcing the pledges over those creditors who did not register with the Pledge Registry.
Uzbek law also allows for security to be taken over cash deposited in bank accounts and over shares in companies incorporated in Uzbekistan. However, a number of commonly used security arrangements (such as escrow accounts) have not yet been introduced in the country, pending the regulatory amendments that will pave the way for these arrangements.
VI BONDS AND INSURANCE
Generally, the Civil Code provides for the possibility of issuing a guarantee to ensure proper execution of a principal's obligations in relation to the beneficiary of that guarantee. Such guarantees may be issued by banks or other credit organisations, and are irrevocable and non-transferable by default. Although Uzbek law does not regulate demand guarantees, nothing precludes the parties from agreeing on such a guarantee contractually. At the same time, owing to the fact that the banking sector is still immature, the usual practice is to freeze the money in a guarantor's bank accounts up to an amount equivalent to the guarantee obligation; for this reason, this financial instrument is not popular.
By contrast, in large-scale investment projects that involve international contractors and financing by international financial institutions, various types of guarantees are widely used, including bid bonds, advance payment bonds, interim payment bonds and performance bonds. Our experience shows that, in practice, sovereign performance guarantees may be very tough to negotiate.
Under Uzbek legislation, a contractor has an obligation to insure the object of a construction project, and the construction work, at its own expense, if no other procedures and conditions have been determined in the contract between the parties.
If a project is financed from a state budget or through an international financial institution loan against the provision of a sovereign guarantee, the contractor's property rights, liability for injuries, health detriment and damage to third parties' property resulting from construction and installation work must be insured as well.
In addition, the following types of insurance are frequently stipulated in contract agreements:
- workers' compensation;
- cargo insurance (covering loss or damage occurring while equipment and materials are in transit from the point of shipment to their arrival at the construction site); and
- mandatory insurance for vehicles and for employer liability.
VII ENFORCEMENT OF SECURITY AND BANKRUPTCY PROCEEDINGS
Failure of a project company to perform contractual obligations entitles the lenders to recourse to collateral based on a pledge or mortgage agreement. Recourse to collateral is subject to court proceedings unless the parties have agreed otherwise. As a general principle, mortgage and collateral agreements are subject to notary certification.
Once the court renders a decision in a lender's favour, the collateral will be sold at public auction. If the public auction fails to sell the collateral, the lender is offered the chance to take the collateral in kind and set off the claims secured by the collateral against its purchase price. Should the lender not exercise this right, the pledge or mortgage agreement will be deemed to have been discharged.
If a project company becomes insolvent, enforcement against the collateral is subject to the bankruptcy procedure in accordance with Bankruptcy Law, which considers that the lender will not be able to enforce its rights individually. Instead, once an application for bankruptcy has been accepted by the economic court, all the creditors are represented by the board of creditors.
Importantly, collateral consists of the entire property of a project company and if the proceeds from its sale are not sufficient to cover the debts, then the proceeds are distributed to the creditors out after the following debts and expenses have been paid in full:
- court expenses;
- fees to the receiver or liquidator;
- utility payments and operation costs;
- the debtor's property insurance costs;
- any debtor's liability that has arisen since the insolvency; and
- claims from citizens arising from damage caused to their health or property.
VIII SOCIO-ENVIRONMENTAL ISSUES
i Licensing and permits
There are several instruments that regulate social and environmental aspects of project finance transactions and construction contracts. These instruments may be divided into three layers, namely laws, delegated legislation, and environmental and sanitary norms. Laws provide general principles and methods of environmental protection and thus serve as a framework for the other two layers. Delegated legislation, as adopted by the Cabinet of Ministers, sets out the procedures for ensuring compliance with the principles expressed in the laws. Finally, the environmental norms establish precise and detailed requirements to be complied with during the design, construction and operation stages. State environmental examination is the main instrument for ensuring compliance with environmental requirements. Both existing and new projects are subject to state environmental examination by the State Committee for Ecology and Environmental Protection, which is the principal body for the supervision of environmental issues.
As a part of state environmental examination process, the State Committee reviews and approves environmental norms that are mandatory for all entities. Additionally, with respect to new projects, state environmental examination is carried out in the form of an environmental impact assessment consisting of three stages:
- a draft environmental impact statement, which should be prepared before the commencement of financing of the project;
- an environmental impact statement, to be prepared before approval of the project feasibility study;
- an environmental consequences statement, which is a prerequisite for acceptance of a project after construction.
Moreover, production processes affecting the environment are subject to mandatory compensatory payments. These processes are divided into four categories depending on the hazardousness of the wastes they emit. Amount of compensatory payments depend on type of pollutants and volumes of emissions, dumped waste, and pollutants released.
ii Equator Principles
Project finance transactions and construction contracts are not subject to the Equator Principles, as they are not part of the Uzbek legal system. However, they are widely used in large infrastructure projects financed by IFIs, such as the Surgil Gas and Petrochemical Complex project financed by the Asian Development Bank.
iii Responsibility of financial institutions
Uzbek law does not provide for the criminal or administrative liability of legal entities; instead, criminal or administrative liability is imposed on the executive officers or other people in charge of relevant functions, who deliberately, or through negligence, commit such an offence. Depending on the severity of a violation, an officer who commits such a violation can be tried in an administrative or criminal court and liability may range from a fine to imprisonment. In this regard, note that employees and officers of multilateral development banks (e.g., World Bank, EBRD), by virtue of their establishing treaties, have immunity against the legal process.
IX PPP AND OTHER PUBLIC PROCUREMENT METHODS
The institution of the PPP in Uzbekistan is still in its infancy. In recent years, the President has passed several resolutions providing for the implementation of PPP projects in the social sector, such as pre-school education, healthcare and culture. Until recently, the private partner selection process was largely unregulated, and direct negotiation on an ad hoc basis was the primary selection procedure until the adoption of the PPP Law. The latest IPP solar energy project, implemented by SkyPower under a presidential resolution issued specifically for the purpose, is evidence of a widely used case-by-case approach. However, this situation has changed since the PPP law was adopted in May 2019.
Another indication of a changing pattern is the establishment of the PPP Development Agency2 in October 2018, which was assigned to develop a PPP legal framework and to promote the use of PPPs in Uzbekistan. Importantly, the Agency has already initiated bidding for PPP projects in sectors such as energy, healthcare, toll road and airport construction, and utilities.
The PPP Law also introduced a comprehensive framework of principles, the private partner selection process and basic delivery methods. PPP projects may be initiated either by a public body or by a private party with a mandatory proposal for development of the project comprising overview, costs and specifications of the potential PPP project. In the case of a private initiative, the potential public partner should provisionally approve the proposed PPP project. In addition, depending on the total value of the proposed project, the concept is subject to approval by:
- the relevant government authority, if the value of the project is less than US$1 million inclusive;
- the relevant government authority in conjunction with the PPP Agency, if the value of the project is between US$1 million and US$10 million inclusive; or
- the Cabinet of Ministers, if the project value exceeds US$10 million;
Following approval of a proposed PPP project, the public partner starts the procedure for selection of a private partner. The PPP Law provides for tendering as the principal method for this. The selection process can be a one-stage tender if the value of the project is less than US$1 million or a two-stage tender if the value of the project exceeds US$1 million. Alternatively, the Law allows the PPP agreement to be executed on the basis of direct negotiations when:
- the project is related to a national defence capability or security;
- the private partner owns rights to the property and this is indispensable for the PPP project;
- the project is implemented in accordance with a resolution of the President;
- there are no parties interested in implementing an unsolicited proposal other than the initiator of that proposal.
When the private partner has been selected, the parties should execute the PPP agreement, which may be effective for between three and 49 years. The Law establishes minimum requirements regarding the contents of the agreement. Importantly, the Law does not prohibit the transfer of the object of the PPP to the public partner or specify the stage at which the transfer may take place. In contrast, the Law provides that the transfer of the object of the PPP should take place in accordance with the PPP agreement allowing the application of well-established PPP models such as BOOT, BOT, build-transfer-operate, among others. Moreover, the Law envisages that lenders and public partners may have step-in rights that may be exercised in accordance with the terms of the PPP agreement.
Finally, the Law does not restrict the rights of the parties to choose the law that is applicable to the PPP agreement and dispute settlement mechanism.
Before the Law was adopted, PPP projects were implemented within the framework of laws regulating concessions, production sharing agreements, privatisation and attracting foreign investment. For instance, the method of privatisation at zero value against the provision of investment and social obligations by a privatising party may be considered as the appropriate form of PPP even though it is not named as such in the relevant legislation. The decision in early 2019 by the government to privatise a number of chemical plants may serve as an example of this PPP model in action.3
ii Public procurement
The new Law on Public Procurement was adopted in April 2018. It incorporates international public procurement principles, such as professionalism of the procurer, reasonableness, rationality and cost-efficiency, transparency, competition and objectiveness, proportionality, consistency, and the impermissibility of corruption. The Law provides for five types of public procurement procedures, namely e-procurement, reverse auction (in electronic form), competitive bidding, tender and procurement from a single supplier.
Complaints relating to public procurement are reviewed by the Board of Complaints operating under the auspices of the Uzbek Commodity Exchange. Any participant in public procurement may file a complaint about the actions of the budgetary procurer, authorised body, procurement commission or any of its members. Complaints may be filed both before and after the conclusion of the contract. Before the conclusion of a contract, the Board may cancel a decision made by the budgetary procurer, decide to terminate procurement procedures or label the contractor as unconscientious. After the conclusion of a contract, the Board may suspend execution of the contract for a period not exceeding seven business days, during which time it will review the legality of the contract. The decision made by the Board may be further challenged in the courts.
Notably, during the implementation of investment projects financed by foreign loans and grants and executed by foreign contractors, bidding documentation must include a local content requirement in the amount of at least 50 per cent of the work, unless otherwise provided by loan agreements with the international or foreign financial institution.
At the same time, the application of Uzbek procurement laws can be excluded if a loan agreement with a foreign international financial institution provides for a different procurement procedure.
X FOREIGN INVESTMENT AND CROSS-BORDER ISSUES
International financial institutions and design or construction companies can act as lenders and contractors in project finance transactions. Foreign lenders are not required to obtain permits or licences to finance projects. Uzbek banks undertaking to refinance, or other Uzbek commercial banks attracting foreign loans, have to notify the Central Bank of Uzbekistan within five days of receiving a foreign loan, for the purpose of identifying the total amount of Uzbekistan's liability in respect of external loans.
Generally, Uzbek law does not require a foreign company to obtain a licence to construct in the territory of Uzbekistan. However, construction work in certain areas or sectors is subject to licensing. The main sectors within which contractors (irrespective of nationality) need to obtain a licence are:
- design, construction, operation and maintenance of gas or oil pipelines;
- design, construction, operation and maintenance of bridges and tunnels;
- design, construction, operation and maintenance of objects for which production is high-risk and potentially dangerous;
- design of architecture and construction documents; and
- examination of design documents.
Foreign contractors are subject to the same legal regime as local companies, therefore no additional registration is required to carry out the work. As a general principle, under Uzbek law, licences are issued in favour of contractors that can meet licensing requirements. However, in practice, the licensing body may issue a licence in respect of the project itself, thus entitling the contractors involved to execute the licensed work within that project. As Uzbek law does not provide for these types of project-specific licences, they are usually issued under a special government resolution when it is necessary to expedite the commencement of work on high-priority projects.
As of December 2018, EPC projects may be implemented using a fast-track procedure, provided that the EPC contractor and design company form a consortium and accept joint liability for breach of contract. A fast-track procedure implies that the contractor may finalise part of the design and then submit it for state examination. The contractor may commence the work, or parts thereof, that have been submitted for state examination and approved by the Ministry of Construction, and the design company may proceed with the next stage of the design. In other words, the contractor may be entitled to prepare the design step-by-step and have it examined in parallel with the construction work. Ultimately, it enables the contractor to reduce the time taken for completion. The implementation of fast-track construction shall be approved by the National Agency for Project Development, subject to the contractor providing evidence of previous EPC experience, that it is financially sound and capable of carrying out the project. Depending on the specifics of the project, the National Agency for Project Development may impose additional requirements, as the case requires.
Another development is that Uzbekistan now recognises design and construction licences issued in OECD countries.
Removal of profits and investment
Foreign investors can change operating funds or profits from one currency to another without any restriction. There is no control or law restricting repatriation of profits from Uzbekistan. The law on foreign investments expressly guarantees foreign investors' rights to repatriate profits without any restriction. Even though the repatriation of profits or cross-border currency transactions is not subject to any restriction, currency payments are subject to currency control to adhere to Uzbekistan's international obligations to combat money laundering, financing of terrorism and proliferation of weapons of mass destructions.
XI DISPUTE RESOLUTION
i Arbitration and ADR
Alternative dispute resolution (ADR) mechanisms are not very popular in Uzbekistan because of the relatively low cost of litigation and parties' intention to settle a dispute amicably before resorting to court proceedings. However, in cross-border transactions, including project agreements and large-scale government projects, parties prefer to submit disputes to international arbitration rather than litigation. In the absence of specific legislation on arbitration or relevant arbitration infrastructure, parties usually refer their disputes to internationally recognised arbitral institutions, such as the London Court of International Arbitration, the International Chamber of Commerce, the Stockholm Chamber of Commerce or Singapore International Arbitration Centre, seated in London, Paris, Stockholm or Geneva. To make arbitration more accessible for local and regional businesses in their cross-border transaction, and to develop local arbitration infrastructure and expertise, President Mirziyoyev signed a Decree in November 2018 proposing the establishment of the Tashkent International Arbitration Centre,4 which is to be launched later in 2019. The same Decree envisages the adoption of the UNCITRAL Model Law to serve as an Arbitration Law, as such. As part of the government's endeavours to promote ADR, the Mediation Law was enacted in June 2018, although it is designed to facilitate mainly domestic disputes.
Uzbekistan does not have specialist project finance or construction courts; these types of disputes come under the jurisdiction of local economic courts. Nevertheless, nothing in Uzbek legislation precludes parties from opting for international arbitration once a transaction involves a foreign element. In other words, disputes between local residents without any foreign element are likely to be found as not arbitrable under Uzbek law.
Uzbekistan is a party to both the ICSID Convention and the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Historically, enforcement of foreign arbitral awards was not an easy task in Uzbekistan. The main complication was the foreign currency exchange restrictions that existed until 2017, which is no longer an issue. Uzbek courts recognise and enforce foreign arbitral awards in accordance with the Economic Procedural Code, which is not fully in line with the New York Convention. Specifically, the Economic Procedural Code stipulates that a claim to recognise and enforce a foreign arbitral award shall be filed with the economic court local to the award debtor's place of residence or, if that place is unknown, at the place of the award debtor's incorporation. In practice, it means that if the award debtor is a foreign company with assets located in Uzbekistan, the court is likely to refuse to consider the claim on the basis that it lacks jurisdiction because the award debtor is neither resident nor incorporated in Uzbekistan. The existence of any discrepancy complicates the enforcement of an arbitral award as judges tend to adhere to the Procedural Code rather than taking a pro-enforcement approach in line with New York Convention. Enforcement difficulties are mainly attributable to problems arising from the courts' capacity and lack of experience rather than a general pattern of non-enforcement.
Moreover, the absence of an Arbitration Law makes the interaction of courts and arbitral tribunals almost impossible. In addition, the Procedural Code does not provide for procedural tools to deal with challenges regarding the validity of arbitration agreements, interim relief orders issued by arbitral tribunals, set-aside procedures, stay requests, among others, making Uzbekistan less suitable as a seat of arbitration.
The adjudication of construction disputes is not common practice in Uzbekistan for several reasons. First, the concept and commercial advantages of dispute adjudication are not familiar for the majority of construction practitioners. Second, Uzbek legislation is silent about the legal effect of decisions made by dispute adjudication boards (DABs) and therefore it is not clear how to enforce a DAB decision if it is not complied with voluntarily. Thus, the prevailing party has no legal instruments to obtain a writ of execution to enforce a final and binding DAB decision. Moreover, voluntary compliance is somewhat uncertain, especially in public procurement construction. It is doubtful that a DAB decision can serve as a solid legal basis for money transfer for state-owned companies. Finally, contracting parties very often ignore dispute adjudication provisions or do not constitute a board at all, or else they delete any references to dispute adjudication throughout the contract.
XII OUTLOOK AND CONCLUSIONS
Uzbekistan has been undergoing transformative changes in almost all sectors of the economy. These changes are accompanied by a comprehensive revision of the regulatory framework to meet the needs and expectations of businesses. Uzbekistan has set an ambitious goal to double GDP by 2030, emphasising the importance of project finance and PPP as part of the country's economic growth. Legislative changes have already spurred the growth of the construction industry, making that sector one of the drivers of the Uzbek economy. Similarly, the number of project finance and PPP projects is expected to increase steadily. Despite the current political risks, Uzbekistan is striving to become a safer and more predictable harbour for foreign capital and to secure landmark PPP projects, coupled with the interest of foreign investors in the country.
In the short term, we have yet to see the launch of a land privatisation programme as a sign of private property supremacy evolving in Uzbekistan. In parallel, the number of privatisations is also expected to accelerate in the coming years, reflecting the government's intention to discontinue its involvement in non-strategic sectors of the economy.
Assigned credit ratings and the issuance of eurobonds serve as further indicators of Uzbekistan's commitment to provide favourable treatment for all investors.
1 Ulugbek Abdullaev is a counsel, Yakub Sharipov is an associate and Fayoziddin Kamalov is a paralegal at Dentons Tashkent.
3 See 'Uzbekistan continues to reform its chemical industry', Dentons, 24 April 2019, at https://www.dentons.com/en/insights/alerts/2019/april/24/uzbekistan-continues-to-reform-its-chemical-industry.