Summary of the arguments put forth by Uzbekistan in the dispute with Romak

  1. Romak’s deliveries were made acting as an agent for Odil in fulfilment of Odil’s contract to deliver wheat to Uzkhleboprodukt.  Romak is, therefore, not owed anything by Uzdon/Uzkhleboprodukt and should seek payment from Odil.

This claim was made as part of Uzdon’s submissions to GAFTA.  The arbitration panel explicitly rejected this argument (Section 5:11), finding that Romak’s contract was with Uzdon, and that no relationship existed between Romak and Odil, nor did Romak in any way bear responsibility for fulfilment of Odil’s obligations.

  1. The contract between Romak and Uzdon is not valid because it was not properly registered by Uzdon with the appropriate authorities.  Registration of the contract was not possible because the necessary quotas were never obtained This qualifies as force majeure, negating the contract.

The claim that the contract was not valid was first made on March 20, 1997 in a letter to Romak from Mr. Askarov of the Office of the President of Uzbekistan.  The claim of force majeure was first made on April 10, 1997 in a letter to Romak from Uzdon’s lawyer.  Both parts of this claim were made as part of Uzdon’s submissions to GAFTA and in their application to the London High Court of Justice.  The arbitration panel explicitly rejected these arguments (Section 5:5), finding that Romak’s contract with Uzdon was indeed valid.  The London High Court confirmed this finding, adding that: “UZDON’s own contemporaneous correspondence plainly acknowledged there was a contract between the parties.”

  1. Uzdon did not participate in the GAFTA arbitration.

This claim was made by the Chairman of the Uzbek National Bank, Dr. Azimov, during a presentation to potential investors in New York on November 21, 1997.  It is simply not true.  Uzdon made two submissions to the arbitration court, the first was an explanation of their case and the second a rebuttal of Romak’s submissions (Sections 3:1 to 3:8 and 4:15 to 4:19 of the GAFTA Arbitration Ruling).  The High Court of Justice in London confirmed that Uzdon had participated in the arbitration proceedings had been given ample time and a fair opportunity to present its case.

  1. Uzkhleboprodukt is not a state company and, therefore, the government of Uzbekistan is not responsible for the debts of Uzkhleboprodukt or it’s subsidiary Uzdon.

This claim has been made by various Uzbek officials, including Ronald Kennedie, Senior Advisor to the National Bank of Uzbekistan, in a letter to The Wall Street Journal Europe published December 16, 1997.  It is directly contradicted by the facts.  Uzkhleboprodukt was established by a decree of  Mr. Karimov, President of Uzbekistan, as successor to the former State Grain Ministry of the same name.  Its charter states clearly that the government retains majority ownership and that the company is directly responsible to the Council of Ministers, under the supervision of Mr. Sultanov, Prime Minister of Uzbekistan.  In fact, Uzkhleboprodukt takes orders directly from the Office of the Prime Minister, with whom Romak discussed and agreed its business before signing the contract.  Furthermore, a legal opinion has been given by a lawyer registered with the Uzbek Ministry of Justice in Tashkent stating that: “GAK Uzkhleboprodukt enters the composition of the Council of Ministers of the Republic and is accountable to the Council” and “Uzdon is a constituent part of GAK Uzkhleboprodukt.” (see also: Comments on Uzkhleboprodukt’s Charter)


Documents referenced:

GAFTA Arbitration Ruling

Letter of March 20, 1997 from the Office of the President of Uzbekistan

Letter of April 10, 1997 from Uzdon/Uzkhleboprodukt

High Court of Justice in London Ruling

Letter to The Wall Street Journal Europe from Ronald Kennedie

Presidential Decree of April 22, 1994 establishing Uzkhleboprodukt

Uzkhleboprodukt’s Charter

Legal Opinion on the ownership status of Uzkhleboprodukt and Uzdon