In an investment dispute with a government authority, one of the most serious mistakes is to incorrectly identify the legal nature of the conflict. Challenging an authoritative decision of a government authority, seeking performance of an investment agreement, and a situation where a regulatory authority itself seeks to suspend an investor’s activities are three different procedural frameworks. They are governed by the Law of the Republic of Uzbekistan dated 25 December 2019 No. ZRU-598 “On Investments and Investment Activities”, the Code of the Republic of Uzbekistan on Administrative Court Proceedings, and the Economic Procedural Code of the Republic of Uzbekistan. In the case of a foreign investor, the applicable international treaty of the Republic of Uzbekistan must also be reviewed. What guarantees are provided by the Law on Investments? Article 15 of Law No. ZRU-598 expressly prohibits government authorities and their officials from interfering with the lawful activities of investment entities. If a government authority identifies a violation, it may apply only those measures which it is empowered by law to impose and which are directly related to remedying the specific violation. At the same time, the existence of one violation may not be used as a basis for restricting other lawful activities of the investor that are unrelated to that violation. This is a fundamental rule in situations where a specific deficiency in a project is used as a basis for effectively shutting down the entire business. Can a government authority itself suspend an investor’s activities? Article 60 of Law No. ZRU-598 allows investment activities to be restricted, suspended, or terminated by decision of the investor, an authorised government authority, or a court. However, the Law establishes a specific safeguard. If the restriction, suspension, or termination of investment activities simultaneously results in the suspension or termination of the activities of a business entity, such a measure must be imposed through judicial proceedings. An exception is provided for a restriction or suspension lasting no more than 10 business days, where such measure is necessary to prevent emergencies, epidemics, or another genuine threat to the life and health of the population. LexUZ expressly refers, in connection with this provision, to Chapter 27 of the Economic Procedural Code — “Proceedings in Cases Concerning the Application of Measures of Legal Influence”. Under Article 215 of the Economic Procedural Code, an application for such measures is filed with the economic court by the regulatory authority, and in considering the case the court examines whether a violation occurred, whether the inspection was legally grounded, whether the regulatory authority had the necessary powers, and whether the relevant measure of legal influence is provided for by law. Accordingly, in cases prescribed by law, a government authority may not independently and conclusively suspend a business activity, but must establish the grounds for such a measure before an economic court. When does the investor itself apply to an administrative court? A completely different situation arises where there is already a decision, action, or omission of an administrative authority that infringes the investor’s rights. Article 61 of Law No. ZRU-598 expressly provides that such decisions and actions may be challenged before a superior authority or in court. Administrative courts hear disputes concerning unlawful authoritative decisions, actions, and omissions of government authorities. In addition, Article 27¹ of the Code on Administrative Court Proceedings specifically classifies as investment disputes cases between investors and administrative authorities or citizens’ self-government bodies concerning decisions, actions, or omissions of their officials relating to compliance with the terms of an investment agreement. Thus, for example, a dispute concerning an unlawful refusal by a government authority, an improper administrative prohibition, or an omission does not become an ordinary contractual claim merely because the claimant is an investor. The decisive factor remains the nature of the challenged act or conduct. When is a dispute heard by an economic court? Article 30¹ of the Economic Procedural Code defines a separate category of investment disputes. These include disputes concerning the conclusion, amendment, and termination of investment agreements, their invalidation, performance of an investment agreement, performance by the investor of tax, customs, social, environmental, and other obligations arising from such agreement, as well as recovery of property provided to the investor and recovery of penalties or damages under an investment agreement. Accordingly, a dispute in which “a government authority issued an unlawful authoritative act” and a dispute in which “a party failed to perform an obligation under an investment agreement” require different procedural classifications. The mere involvement of the state in the relevant legal relationship is insufficient to determine which court has jurisdiction. Can an administrative act be challenged and damages claimed at the same time? Yes. Article 27 of the Code on Administrative Court Proceedings allows a claim for damages to be brought together with an application challenging an administrative decision, action, or omission, provided that the damages claim has a causal connection with the principal claim. If a damages claim is filed separately, it is considered by a civil court or an economic court, depending on jurisdiction. This allows an investor, already at the stage of preparing the application, to determine whether it is sufficient merely to eliminate the unlawful administrative act or whether its financial consequences should also be addressed. Who must prove the lawfulness of the government authority’s decision? Administrative proceedings apply a special allocation of the burden of proof. Under Article 67 of the Code on Administrative Court Proceedings, the obligation to prove the lawfulness of the challenged decision, action, or omission rests with the administrative authority or the relevant official. Moreover, the government authority may rely only on those grounds upon which it relied when adopting the decision or taking the action. In other words, after an application has been filed with the court, the authority should not be permitted to completely replace its original reasoning with new grounds. At the same time, the claimant itself must prove the amount of the damages claimed. Accordingly, in an investment dispute, proving the unlawfulness of an administrative act and proving the amount of financial loss are two separate elements of the case. What is the time limit for challenging an administrative act? The general time limit is established by Article 186 of the Code on Administrative Court Proceedings. Unless the Code or another law provides otherwise, an application challenging a decision, action, or omission of an administrative authority must be filed within six months from the date on which the person became aware of the violation of its rights and legitimate interests. However, special legislation must be reviewed before filing an application. Land, tax, customs, construction, licensing, and other legal relationships may be subject to special rules and special limitation periods. Therefore, the six-month period cannot automatically be applied to every dispute between an investor and the state. Can the operation of an administrative act be suspended while the court proceedings are pending? Yes. The provisions of the Code on Administrative Court Proceedings concerning interim protection measures allow this issue to be addressed even before the final judgment is rendered. Under Article 92, the court may grant interim measures where there is a clear risk that the applicant’s rights may be infringed before the final judicial act is adopted, or where subsequent protection of those rights would be impossible or substantially hindered. Article 93 expressly allows the court to prohibit the respondent or other persons from taking certain actions, suspend the sale of property, impose an attachment on property or funds, and, particularly importantly, suspend the execution of the challenged administrative act in whole or in part. Therefore, if the execution of the act may result in the suspension of construction, disposal of property, changes to registration records, or other consequences that would be difficult to reverse, the issue of interim protection should be considered simultaneously with filing the application with the court. A new safeguard introduced in 2026 — protection of legitimate expectations In 2026, Article 11¹, entitled “Legal Protection of Trust”, was introduced into the Code on Administrative Court Proceedings. It provides that the trust of a person acting in good faith in the lawfulness of a decision of an administrative authority or an action of an official is protected by law. For investment projects, this provision may be particularly important where an investor has received a decision from a government authority, relied on its lawfulness in good faith, and on the basis of that decision invested funds, commenced construction, or otherwise materially altered its financial or proprietary position. However, Article 11¹ does not mean that every previously adopted administrative act automatically becomes incapable of being revoked. It is a principle of administrative court proceedings that must be applied in light of the specific circumstances and other applicable provisions of law. What if an investor suffers damages as a result of an unlawful act? Article 62 of Law No. ZRU-598 expressly provides for compensation of losses caused by decisions of government authorities that infringe the rights of investment entities, as well as by unlawful interference of government authorities in their business activities. If losses arise from an unlawful administrative act of a government authority or official, such losses are subject to compensation by the state on the basis of a court decision — primarily from the extra-budgetary funds of the relevant authority, followed by recourse against the responsible person. However, the investor must prove that the losses are real, establish their amount, and demonstrate a causal link between the unlawful conduct of the government authority and those losses. Procedural legislation provides an additional safeguard. Under Article 92 of the Code on Administrative Court Proceedings, where a claim for damages resulting from unlawful administrative decisions is considered, the court must, upon the applicant’s request, impose interim protection measures. Article 93 of the Economic Procedural Code provides an equivalent special safeguard for claims brought by a business entity for damages resulting from an unlawful act of a government authority or unlawful actions of its officials: upon the claimant’s application, the court must impose measures securing the claim. Can a foreign investor apply directly to international arbitration? The mere existence of a foreign investment does not automatically create such a right. Article 63 of Law No. ZRU-598 establishes the following sequence for disputes relating to foreign investments: negotiations, followed by mediation, and, if the dispute remains unresolved, the competent court of the Republic of Uzbekistan. International arbitration is permitted where the dispute cannot be resolved through the above procedures and the applicable international treaty of the Republic of Uzbekistan and/or an agreement between the investor and the Republic of Uzbekistan contains a valid arbitration clause. The Law expressly emphasises that the Republic of Uzbekistan’s consent to arbitration may exist only in the form of written consent contained in an international treaty in force and/or an agreement with the investor existing at the time the investor applies to international arbitration. Accordingly, Article 63 itself does not constitute universal consent by the state to international investment arbitration. For a foreign investor, it is necessary to separately examine the applicable bilateral or multilateral international treaty, the definitions of “investor” and “investment”, the scope of the arbitration clause, any pre-arbitration procedures, and other jurisdictional requirements. This is particularly important because Article 2 of Law No. ZRU-598 establishes the priority of international treaties: where an international treaty of the Republic of Uzbekistan provides rules different from those contained in domestic legislation, the rules of the international treaty apply. Not every investment project is regulated solely by Law No. ZRU-598 The Law itself expressly excludes a number of specialised sectors from universal regulation. Separate legislation governs, in particular, public-private partnerships, special economic zones, production-sharing agreements, investment and mutual funds, and the capital market. In addition, almost every specific project intersects with land, urban planning, tax, customs, environmental, or permitting legislation. Accordingly, before applying to court, the legal framework should be mapped not merely by reference to the general label “investment dispute”, but by reference to the specific action of the government authority, the relevant agreement, and the investor’s asset. Conclusion In a dispute between an investor and a government authority, the first task is to correctly identify the applicable procedural framework. If a regulatory authority seeks the application of a measure resulting in the suspension of business activity, Article 60 of Law No. ZRU-598 and Chapter 27 of the Economic Procedural Code should be examined. If an investor challenges an unlawful authoritative decision, action, or omission of a government authority, administrative court proceedings apply, including the possibility of suspending the operation of the disputed act and claiming related damages. If the dispute concerns the conclusion, performance, amendment, or termination of an investment agreement, it falls within the special category of investment disputes under Article 30¹ of the Economic Procedural Code. International investment arbitration is available not merely because the investor is foreign, but only where there is valid written consent of the state contained in the applicable international treaty and/or an agreement with the investor. Legal framework: Prepared as of 29 August 2026.Investor Dispute with a Government Authority: Where to Apply and How to Suspend an Unlawful Decision
