International investment dispute resolved in favour of Uzbekistan
20/02/2014 15:00
International investment dispute resolved in favour of Uzbekistan
20/02/2014 15:00
Tashkent, Uzbekistan (UzDaily.com) -- An international investment dispute on claims of Metal-Tech Ltd (Israel) was resolved in favour of Uzbekistan, the press service of the Embassy of Uzbekistan in Ukraine said.
The International Centre for Settlement of Investment Disputes (ICSID) considered the dispute. The case under arbitration at the ICSID on the claim of Metal-Tech Ltd against the Republic of Uzbekistan can stand as one of the clearest examples of such state of affairs, the release said.
“The Israeli company has operated in the Uzbek market since 2000 creating an Uzmetal Technology Joint Venture jointly with the Almalyk Mining and Metallurgical Combine and Uzbek Refractory and Resistant Metals Integrated Plant (UzKTJM). The authorized fund of the company which has specialized in processing and manufacturing the molybdenum products was formed by the parties on a parity basis,” the press release of the embassy said.
The release said that taking into account the investment commitments made by the Metal-Tech Ltd in the technical feasibility study, the state gave the appropriate privileges to the joint venture.
“However, using various corruption schemes the company has not complied with a number of basic tasks assigned to it by the constituent documents of the Uzmetal Technology. Thus, despite the initial agreement the joint venture led by representatives of the Israeli company didn’t implement any technology at the UzKTJM, and didn’t provide plant with necessary amount of molybdenum raw and didn’t realize the set plans in terms of production targets,” the release underlined.
The statement said that such manifestations of negligence by the Uzmetal Technology led to blatant violations of currency, customs and tax legislation of the Republic of Uzbekistan. The company didn’t implement the mandatory sale of foreign currency earnings, has unreasonably overstated the customs value of imported goods, as well as has understated the price of their products as compared to the prices for the same products in the world markets. It should be noted that the understatement of the export prices alone has led to uncollected taxes to the state budget of more than 3 billion soums and other obligatory payments. For the same reason, the period of its activity the joint venture received about 4.68 billion soums less.
As a result, the founder from the Uzbek side has filed a claim with commercial court to request to recover the due share of dividends which it had received less due to illegal actions of foreign partners. After these claims have been met the Metal-Tech Ltd had brought an unjustified suit against Uzbekistan at the ICSID. The claim has read that the state had violated a number of its obligations to protect foreign investment in line with the Agreement between the Government of the State of Israel and the Government of the Republic of Uzbekistan for the Promotion and Reciprocal Protection of Investments signed on 4 July 1994 in Tashkent.
However, the investments of the Israeli company were made in violation of the legislation of Uzbekistan and the business of the Metal-Tech Ltd has initially been corrupt.
In this regard, the ICSID arbitration tribunal came to a fair conclusion and has ruled that the dispute in the framework of the aforementioned Agreement didn’t come within its jurisdiction and rejected the claims of the Israeli businessmen. This has once again confirmed the rightness of the decisions made by the state authorities of Uzbekistan.
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