Applicable law and jurisdiction clause: frequently asked questions

Currently, Uzbekistan is becoming an attractive region for foreign companies and investors. New enterprises are being created, as well as shares in existing Uzbek companies are being purchased, businesses are being relocated from foreign countries, state assets are being acquired, and large projects are being carried out through permanent establishment. All these processes, of course, are accompanied by the conclusion of agreements and contracts.
 In the practice of the Legate Law Firm, clients often ask questions about the choice of applicable law and jurisdiction for concluded contracts. In this information, we will try to briefly address the most frequently asked questions.
  In agreements concluded with foreign companies, the parties have the right to provide for a condition on “applicable law”, that is, to determine which country’s law will govern the relations of the parties entering into the agreement.
  Thus, according to Article 1189 of the Civil Code of the Republic of Uzbekistan, the contract is governed by the law of the country, chosen by agreement of the parties, unless otherwise provided by law. At the same time, the parties to the contract can choose the applicable law both for the contract as a whole and for its individual parts.
 The “applicable law” agreed upon by the parties, by virtue of Article 1192 of the Civil Code of the Republic of Uzbekistan, covers, in particular: interpretation of the contract; rights and obligations of the parties; execution of the contract; consequences of non-fulfillment or improper fulfillment of the contract; termination of the contract; consequences of the nullity or invalidity of the contract; assignment of claims and transfer of debt in connection with the contract.
  However, when choosing the “applicable law”, it must be borne in mind that with regard to the methods and procedure of execution, as well as measures to be taken in case of improper execution, in addition to the applicable law, the law of the country in which the execution takes place is also taken into account.
  Thus, the parties, for example, have the right to choose English law when concluding a transaction with securities in Uzbekistan, but such a transaction will be subject to the requirements of Uzbek law regarding registration of the transaction, payment of redemption payments, movement of securities, etc.
 The parties also have the right to determine the place for resolving disputes if any arise during the performance of contractual obligations by the parties.
  In this case, it is necessary to keep in mind the existence of exceptions established by law, for example, according to Art. 240 of the Economic Procedural Code of the Republic of Uzbekistan establishes the exclusive competence of the economic courts of the Republic of Uzbekistan on disputes related to the denationalization and privatization of state property.
  In addition, when choosing a foreign court, it is necessary to keep in mind that if it is necessary to enforce a decision made by a foreign court on the territory of Uzbekistan, the party will additionally, in accordance with Chapter 33 of the Economic Procedural Code, go through the procedure for recognizing and enforcing such a decision of a foreign court or arbitration.