The Principle of Legitimate Expectations in Judicial Practice Concerning Privatization Disputes

One of the key factors underpinning the investment attractiveness of any jurisdiction is not only the existence of statutory safeguards for property rights, but also the manner in which those safeguards are applied by the courts.

A recent decision of an administrative court in Uzbekistan is noteworthy in this regard.

The case concerned a challenge to an administrative act that had served as the legal basis for the privatization of state-owned property more than twenty years ago. Over the years, the property had changed hands several times, and the current owner had acquired title through duly registered transactions and had exercised its ownership rights for an extended period.

The court ultimately dismissed the claim.

What makes the decision particularly significant, however, is not its outcome but the legal reasoning adopted by the court.

Protecting Legal Certainty

Rather than focusing exclusively on the legality of an administrative act issued decades ago, the court examined the consequences that setting aside that act would have for long-established property relations.

Granting the claim would inevitably have affected the rights of a party that had acquired the property through duly registered transactions, had acted in good faith in relying on the lawfulness of the State's actions, and had exercised its ownership rights over a considerable period of time.

This approach reflects one of the fundamental principles of modern law — legal certainty, which requires legal relationships to remain stable and legal consequences to be predictable.

The Principle of Legitimate Expectations in Practice

One of the central elements of the court's reasoning was Article 59 of the Law of the Republic of Uzbekistan "On Administrative Procedures", which codifies the principle of protection of legitimate expectations.

The essence of this principle is that a person who has acquired rights in good faith, relying on the legality of an administrative act, is entitled to expect that the legal consequences arising from that act will be preserved unless otherwise provided by law.

Significantly, the court relied on this principle not as an abstract doctrinal concept, but as an independent legal basis for resolving a specific property dispute.

This demonstrates the growing practical importance of the Law on Administrative Procedures in cases affecting the rights of private individuals and businesses.

Limiting the Review of Privatization Results

Equally noteworthy is the court's reliance on Paragraph 1 of Presidential Decree No. UP-4525 dated 20 November 2019, which provides that the review of privatization results or the revocation of privatization decisions constitutes an interference with the inviolability of private property.

The court's reference to this provision is particularly significant.

Rather than treating the Presidential Decree merely as a statement of public policy aimed at improving the investment climate, the court relied upon it as one of the legal benchmarks for resolving the dispute before it.

From the perspective of judicial practice, this is an important development, suggesting that statutory guarantees of the stability of privatization outcomes are increasingly receiving meaningful judicial recognition.

Practical Implications for Business

Although court decisions in Uzbekistan do not constitute binding precedent, individual judgments often provide valuable insight into the evolving judicial approach to the application of legislation.

The present decision suggests that, when resolving similar disputes, courts are prepared to consider not only the legality of the original administrative decision but also the need to preserve the stability of commercial transactions, protect the legitimate expectations of good-faith market participants, and uphold the principle of legal certainty.

For investors and property owners alike, this is of considerable importance, as the predictability of the legal framework remains one of the essential prerequisites for investment decisions.

LEGATE Commentary

In our view, the most significant aspect of this judgment lies not in the outcome of the particular dispute, but in the legal approach adopted by the court.

The court analysed the case through the interconnected principles of legitimate expectations, legal certainty, and the stability of established property relations, emphasising that any attempt to revisit administrative decisions underpinning privatization requires consideration not only of the legality of those decisions when they were made, but also of the consequences that such a review may have for the rights of good-faith participants in civil commerce.

The consistent application of these principles strengthens business confidence in the legal system and contributes to the development of a more predictable and investment-friendly legal environment.