October 28, 2024

The correlation between the competencies of national courts, arbitration courts and international commercial arbitration

Legislation:

  1. Law of the Republic of Uzbekistan «On courts», dated from 28.07.2021 № ZRU-703;
  2. Law of the Republic of Uzbekistan «On arbitration courts», dated from 16.10.2006 № ZRU-64;
  3. Law of the Republic of Uzbekistan «On international commercial arbitration», dated from 16.02.2021 № ZRU-674.

Content:

  1. National courts;
  2. Arbitration;
  3. International commercial arbitration;
  4. Differences between arbitration and international commercial arbitration.

1. National courts

The judicial power in the Republic of Uzbekistan operates independently of the legislative and executive powers, political parties, and other public associations. In accordance with Article 2 of the Law of the Republic of Uzbekistan “On Courts” (hereinafter referred to as “ZRU-703”), the Judicial system in the Republic of Uzbekistan consists of:

  • Constitutional Court of the Republic of Uzbekistan;
  • Supreme Court of the Republic of Uzbekistan;
  • military courts;
  • Courts of the Republic of Karakalpakstan, regional and Tashkent city courts;
  • Administrative Court of the Republic of Karakalpakstan, administrative courts of regions and the city of Tashkent;
  • interdistrict, district, and city courts for civil cases;
  • district and city courts for criminal cases;
  • interdistrict, district, and city economic courts;
  • interdistrict administrative courts.

The activities of the court are aimed at ensuring the rule of law, social justice, civil peace and harmony.

The activities of certain courts are regulated by certain Codes accordingly.

Thus, the activities of courts:

  • in civil cases it is regulated by the Civil Procedure Code of the Republic of Uzbekistan;
  • in Economic cases it is regulated by the Economic Procedural Code of the Republic of Uzbekistan;
  • in criminal cases it is regulated by the Criminal Procedure Code of the Republic of Uzbekistan;
  • in Administrative Cases are regulated by the Code of the Republic of Uzbekistan on Administrative Proceedings.

In accordance with Article 18 ZRU-703, the Supreme Court of the Republic of Uzbekistan is the highest judicial authority in the field of civil, criminal, economic and administrative proceedings.

The Supreme Court of the Republic of Uzbekistan has the right to supervise the judicial activities of lower courts.

2. Arbitration 

In accordance with the Decree of the President of the Republic of Uzbekistan “On measures to further improve the system of the legal protection of business entities” (dated June 14, 2005, No. UP-3619) and in order to ensure the protection of the rights and legitimate interests of business entities, the Law of the Republic of Uzbekistan was adopted on October 16, 2006, About arbitration courts.” It regulates the procedure for their formation and activities, the referral of disputes to arbitration courts, the form and content of the arbitration agreement, the formation of the court, its expenses, arbitration proceedings, acts of the arbitration court, and challenging and enforcing its decision.

First of all, it is worth noting that arbitration courts are not legal entities on the basis of Article 5 of the ZRU “On Arbitration Courts” (hereinafter referred to as “ZRU-64”).

Arbitration courts resolve disputes arising from civil legal relations, including economic disputes arising between business entities.

Arbitration courts do not resolve disputes arising from administrative, family, and labor relations, as well as other disputes provided for by law in accordance with Article 9.

Arbitration courts can be formed by legal entities. In this case, they are created in the form of Permanent Arbitration Courts on the basis of Article 6 ZRU-64.

Also, the parties may establish a temporary arbitration court to resolve a specific dispute that has arisen between them. After consideration of the case, the temporary arbitration court ceases its activities. The presiding judge of the arbitration tribunal (in case of a collegial consideration of a dispute) or the arbitrator (in case of a sole consideration of a dispute) before the start of the arbitration proceedings, sends to the judicial authority at the location of the temporary arbitration tribunal a copy of the arbitration agreement and a written notification of the formation of the temporary arbitration tribunal.

According to Article 11 of the Law, a dispute may be submitted to arbitration if there is an arbitration agreement.

In form, the arbitration agreement is concluded in writing, and can also be drawn up as a clause in the contract, which is an integral part of the contract, or in the form of a separate agreement.

An arbitration agreement is considered to be concluded in writing if it is contained in a document signed by the parties to the arbitration agreement, or is concluded through an exchange of letters or messages using electronic or other means of communication that ensure the recording of such an agreement.

If the above requirements are not met, the arbitration agreement is considered invalid.

It is worth noting that an arbitration agreement in relation to a dispute that is being resolved by a competent court may be concluded before the competent court makes a decision on the dispute.

The arbitration agreement must contain a provision that all or certain disputes that have arisen or may arise between the parties to the arbitration agreement are subject to consideration in the arbitration court, as well as the name of the permanent arbitration court if the dispute is referred to this arbitration court. If these requirements are not met, the arbitration agreement is considered invalid.

If the name of the arbitration tribunal is indicated incorrectly or incompletely, the court may refuse to accept the application for proceedings.

The arbitration agreement may contain information on the number of arbitrators, the place and language of the arbitration proceedings, the applicable rules of arbitration proceedings, and the period for consideration of the dispute.

Article 14 ZRU-64 specifies the requirements for an arbitrator. Thus, a citizen of the Republic of Uzbekistan who is at least 25 (twenty-five years old), capable of providing an impartial resolution of the dispute, who is not directly or indirectly interested in the outcome of the dispute, who is independent of the parties to the arbitration agreement and who has agreed to perform the duties of an arbitrator, can be appointed as an arbitrator.

An arbitrator who resolves a dispute alone must have a higher legal education. In case of collegial resolution of a dispute, the chairman of the arbitration tribunal must have a higher legal education.

The requirements for the qualifications of an arbitrator may be agreed upon by the parties to the arbitration agreement directly or determined by the rules of a permanent arbitration court.

It is important to know that the arbitrator cannot be:

  • a person with limited legal capacity or incapacity;
  • a person who has an outstanding or unexpunged conviction for a crime committed;
  • a person whose powers as a judge, lawyer, notary, investigator, prosecutor or other law enforcement officer were terminated in accordance with the procedure established by law for committing offenses incompatible with his professional activities;
  • a person who, in accordance with his official status determined by law, cannot be appointed as an arbitrator.

At the request of the parties to the arbitration proceedings, the arbitration court makes a decision to approve the settlement agreement, if the settlement agreement does not contradict the law and does not violate the rights and legitimate interests of other persons. The contents of the settlement agreement are set out in the arbitration court decision.

In accordance with Article 46 ZRU-64, an arbitration award may be challenged by a party to the arbitration proceedings by filing an application to set aside the arbitration award with the competent court within thirty days from the date of its receipt.

Thus, the basic concepts of the Law indicate that the competent court is an economic court or a civil court in accordance with the jurisdiction established by the Economic Procedural Code of the Republic of Uzbekistan or the Civil Procedural Code of the Republic of Uzbekistan.

3. International commercial arbitration 

On February 16, 2021, the President of the Republic of Uzbekistan signed the Law “On International Commercial Arbitration” (hereinafter referred to as “ZRU-674”). As a result, Uzbekistan became the 85th country and 118th jurisdiction to enact legislation based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration.

An arbitration agreement is an agreement between the parties to submit to arbitration all or certain disputes that have arisen or may arise between them in connection with any specific legal relationship, regardless of whether it is contractual in nature or not. An arbitration agreement may be concluded as an arbitration clause in a contract or as a separate agreement.

According to Article 4 of ZRU-674, disputes arising from all relationships of a commercial nature, both contractual and non-contractual, may be submitted to international commercial arbitration by agreement of the parties.

Arbitration is international if:

  • the commercial enterprises of the parties to the arbitration agreement at the time of its conclusion are located in different states; or
  • one of the following places is located outside the state in which the parties have their places of business:
  • the place of arbitration, if it is determined in or in accordance with the arbitration agreement;
  • any place where a significant part of the obligations arising from the commercial relationship must be performed, or the place with which the subject of the dispute is most closely related; or
  • parties have expressly agreed that the subject of the arbitration agreement is related to more than one country.

It is important to note that, based on Article 6 of the Law, arbitrators, experts appointed by the arbitral tribunal, the arbitral institution, and its employees are not liable to the parties or other persons for any actions or inaction in connection with the arbitration proceedings, unless it is proven that such action or the omission was deliberate. (Law of the Republic of Uzbekistan “On Arbitration Courts” does not provide arbitrators with such immunity, other than “witness” immunity, which is mentioned in Part 2 of Article 28).

Based on Article 15 of the Law, the parties have the discretion to determine the number of arbitrators. In the absence of such a determination, three arbitrators shall be appointed. The parties may, at their discretion, agree on a procedure for appointing an arbitrator.

In accordance with Article 46 of the Law, if during the arbitration proceedings, the parties settle the dispute, the international commercial arbitration court terminates the proceedings, and, at the request of the parties, and in the absence of objections from the arbitration court, fixes this settlement in the form of an arbitration award on the agreed terms.

An arbitral award on agreed terms is made in accordance with the provisions of Article 47 of the Law and contains an indication that it is an arbitral award. Such arbitral award has the same force and effect as any other arbitral award on the merits of the dispute.

It is worth noting that, according to Article 51 ZRU-674, the arbitration award, regardless of which country it was made, is recognized as binding and is enforced when a written application is submitted to the court.

4. Conclusion

To sum up, national courts do not interfere in the activities of arbitration courts, except in cases provided for by law. Also, national courts have the right to challenge court decisions of arbitration courts and international commercial arbitration courts if a party to the proceedings files an application to challenge the decision.

At the same time, it is undeniable that judicial protection in the form of arbitration proceedings has very significant features. Arbitration courts are not only not state bodies and are not part of the state justice system, but they are not organizations at all in the literal sense of the word and do not constitute any system, while international commercial arbitration courts can be both state and non-state non-profit organizations. Arbitration courts are not subject to state registration (only require notification of the justice authorities about its formation).

Thus, arbitration courts (both permanent and temporary) are special jurisdictional bodies for the protection of violated or disputed property rights of legal entities and individuals, whose competence is based on the will of the parties that created them. At the same time, this competence is limited by law – in accordance with Article 9 of the ZRU on arbitration courts, they can only consider disputes arising from civil legal relations. It should be recognized that, within the meaning of the law, we are talking about private law, mainly contractual disputes between entrepreneurs that do not affect public law relations.

Arbitration and international commercial arbitration courts are quite similar (both are translated into English as “arbitration court”), but there are some differences:

  1. Arbitration courts are independent in their activities; arbitration courts are not vested with such a right;
  2. No person may be deprived of the right to act as an arbitrator in international commercial arbitration courts because of his citizenship, unless the parties agree otherwise, while a citizen of the Republic of Uzbekistan at least twenty-five years of age may be elected (appointed) as an arbitrator in arbitration courts;
  3. Arbitrators in international commercial arbitration courts have immunity under the Law and are not liable to the parties or other persons for any actions or inactions in connection with the arbitration proceedings, while arbitrators in arbitration courts are not vested with such immunity. However, arbitrators in arbitration courts have “witness” immunity, enshrined in part 2 of Article 28 ZRU-64;
  4. Unless the parties to the arbitration proceedings agree otherwise, the arbitration tribunal shall consider the dispute in a closed session; in international commercial arbitration courts – the dispute shall be considered in an open session;

Neither arbitration courts nor international commercial arbitration courts can issue writs of execution. In accordance with Article 51 ZRU-64 and Article 51 ZRU-674, national courts issue writs of execution and carry out enforcement on the basis of decisions of arbitration and international commercial arbitration courts at the request of a person.