Most Popular Litigation Defenses in Uzbek courts

At our law firm, we often receive requests from foreign clients to help recover debts from their Uzbek business partners. After analyzing these cases, one pattern stands out: in most situations, foreign partners enter into agreements without carefully exploring Uzbek legislation or local court practices. Unfortunately, this can lead to serious difficulties when trying to enforce contracts or recover unpaid debts through the courts.

To help avoid these risks, we’ve summarized most popular litigation defenses in Uzbek commercial courts and several important points that foreign companies should keep in mind when contracting with Uzbek partners. These are based on real court practice, though other factors may also be relevant depending on the deal.

1.Verify the authority of the signatory

Under the law, only the director, based on the company charter, may represent the company and sign contracts without a power of attorney. Therefore, before signing, the authority of the person signing on behalf of the local partner must be checked. If it is the director, his/her status must be confirmed. If another person signs, their authority must be verified according to the power of attorney.Even in cases involving framework agreements or public offers, make sure the person placing the order is properly authorized. During enforcement, the debtor may argue that the contract was signed by someone without authority, and the court may accept this and reject the claim.

2. Be careful with large transactions (the most popular litigation defense in Uzbek courts)

If your partner is a limited liability company (LLC), certain deals may qualify as “large transactions.” Generally, this means transactions valued at more than 25% of the company’s assets (based on the latest financial report), unless a different threshold is set in the charter. Large transactions must be approved by the general meeting of the company’s participants. If this approval is missing, the court may declare the contract invalid.

3. Clearly agree on all essential terms

Under Uzbek law a contract must spell out all essential conditions: type and description of goods or services, delivery deadlines, payment terms, liability, dispute resolution procedures, and so on. If these key points are not properly defined, the court may conclude that the contract was never legally formed, leaving your claim unenforceable.

4. Respect formal requirements

Uzbek law establishes the required form depending on the type of contract. For example, a loan agreement requires simple written form, while a real estate sale contract must be notarized and registered with the authorized state body. Failure to comply with this requirement may render the contract invalid under Articles 110 and 111 of the Civil Code.

5. Special rules for state-owned enterprises

If the local partner is a state-owned company or a company with state participation, contracts must be concluded through the public procurement process, unless specific exceptions apply. In addition, contracts with state-owned enterprises must be registered with treasury divisions. Non-compliance may result in the contract being declared invalid and the impossibility of debt recovery.

6. Watch the statute of limitations

According to Article 150 of the Civil Code, the general limitation period is 3 years. If the claim is filed after this period, and the opposing party raises the issue, the court will reject the claim.

7. Handle import/export contracts carefully

Improper drafting and registration of import/export contracts may later create difficulties at banks when the local company makes payments.

The risks above are not exhaustive — other issues may arise depending on the circumstances. The safest course is always to have an experienced local lawyer review your contracts and supporting documents before signing. This simple step can save your business from major losses in the future.

If you have any questions about assessing legal risks or preventing disputes, our team consisting of expereinced trial lawyers will be glad to assist you. Contact us at info@fairlex.uz.