by Islambek Rustambekov and Shakhzoda Tuychieva 

The ecosystem of international arbitration, comprising international covenants, national legislation, institutional rules, and soft law, creates a comprehensive framework for dispute resolution. Each component interacts with and supports the others, forming an advanced resolution mechanism that adapts to the needs of parties in cross-border commercial disputes. Despite its significant influence in shaping the arbitration landscape, soft law in international arbitration remains underrated within this framework of. While much of the focus of scholarship tends to be on the development and improvement of legislative and binding acts, soft law plays a role in providing flexibility, filling gaps, and enhancing the overall arbitration framework. Soft law, expressed through rules, guidelines, principles, and standards that, unlike “hard” law, are not legally binding, serves as the foundation upon which binding rules are developed. By offering a variety of options and adaptable guidelines, soft law shapes and contours the body of formal regulations and legislation. Taking the model of Uzbekistan, soft law has assisted in transitioning towards a more structured and legally robust system, aligning domestic practices with international standards while allowing flexibility and gradual implementation. In turn, a stable domestic legal framework contributes to economic development and increases the State's attractiveness to investors.  However, given the nature of soft law, it is difficult to uniformly apply soft law concepts across all cases, leading to decreased predictability in the legal system.

Soft law and national legislation – An Example of Uzbekistan

The establishment of Tashkent International Arbitration Center in 2018, followed by Uzbekistan’s adoption in 2021 of the Law on International Commercial Arbitration (the “Law on ICA”) (similar to the UNCITRAL Model Law on International Commercial Arbitration of 1985, as amended in 2006), was the first example of the Uzbek civil law system adopting the non-binding, but persuasive, character of soft law for the purposes of consistency, transparency, and fairness in proceedings such as international commercial arbitration.[1]

In Uzbekistan, soft law functions in parallel with national legislation and party autonomy, complementing the legal framework governing dispute resolution processes such as international commercial arbitration. For example, when a dispute arises, the arbitral tribunal might choose to apply the IBA Rules on evidence if the parties agree, or if the tribunal deems it appropriate, to ensure fairness and efficiency in the proceedings. Thus, Article 40 of the Law on ICA provides that "the arbitral tribunal may determine the admissibility, relevance, materiality, and weight of any evidence."[2]  This provision allows flexibility for the tribunal to incorporate soft law principles like the IBA Rules, provided they are consistent with the arbitration agreement and the procedural framework agreed upon by the parties. 

In cases like Spentex Netherlands, B.V. v. Uzbekistan,[3] Güneş Tekstil and others v. Uzbekistan,[4] and Bursel Tekstil and others v. Uzbekistan,[5] tribunals applied the IBA Rules on the Taking of Evidence to resolve a dispute over document production. This application of soft law principles ensured a fair and efficient process, ultimately leading to a satisfactory resolution for both parties. 

Institutional rules (such as those from the Tashkent International Arbitration Centre or the Uzbekistan Dispute Resolution Centre) also adopted soft law instruments or concepts in formulating their procedural rules. One example is the list process for appointment of arbitrators, which takes its foundation from IBA Rules. Therefore, Article 17 of the Law on ICA refers to the IBA lists for appointment of replacement arbitrators in the event of concerns of disqualifications regarding the independence and impartiality of the arbitrators. 

Compared to its neighbors, Uzbekistan has been particularly proactive in embracing soft law principles, as has Kazakhstan, which has incorporated some UNCITRAL Model Law provisions into its legislation and established the Astana International Financial Centre and the International Arbitration Centre. However, other Central Asian countries like Kyrgyzstan and Tajikistan have been slower to adopt soft law instruments, potentially impacting their attractiveness for both investment and for international arbitration.

An Achilles heel: Challenges related to soft law

Despite the significant development of soft law in arbitration in last decades, its adoption faces several challenges in their uniform application arising from its non-binding nature, the diversity of legal traditions, and the varying levels of acceptance and interpretation by different stakeholders in the arbitration process. We presented an example of one State; however common law and civil law jurisdictions have differing approaches to legal concepts such as permissible evidence and procedural fairness, which can affect the adoption, and application of soft law guidelines like the IBA Rules.

Another challenge is enforcement of these rules. Because soft law instruments are not legally binding, there are no formal mechanisms to enforce their application. This lack of enforceability can result in selective or partial adherence to soft law concepts. For example, if an arbitral tribunal chooses not to apply the IBA Rules on the Taking of Evidence, there are no repercussions or enforcement mechanisms to ensure compliance. There is also a lack of predictability and consistency of arbitration practices because the acceptance of soft law instruments can vary significantly among arbitration practitioners, institutions, and national courts.

Conclusion

Looking ahead, Uzbekistan faces both opportunities and challenges in further implementing soft law in its arbitration landscape. The country aims to enhance its position as a regional arbitration hub, which may involve adopting more soft law instruments. However, this will require ongoing education of legal professionals and harmonization with existing legal frameworks.  

Soft law may adapt to changing international standards while keeping national legal traditions, offering a major benefit to an effective arbitration system. However, uniform application and enforcement remain difficult. A key challenge will be balancing the flexibility of soft law with the need for predictability in the legal system. Since soft law is tailored to fit the specific circumstances of individual disputes or standards, it inherently resists being applied uniformly or predictably across all cases. This means that parties involved in disputes may not have complete clarity on how soft law principles will be interpreted in future claims, introducing a degree of uncertainty and unpredictability into the legal process.

As the landscape of international arbitration continues to evolve, practitioners and policymakers in emerging arbitration hubs like Uzbekistan will need to leverage soft law instruments while addressing the challenges of implementation and enforcement.

[1]      Islambek Rustambekov, ‘CENTRAL ASIA: Uzbekistan. The New – and First – International Commercial Arbitration Law’ (Jus Mundi, 2021) <https://jusmundi.com/en/document/publication/en-central-asia-uzbekistan-the-new-and-first-international-commercial-arbitration-law> accessed 19 July 2024.

[2]      Law of the Republic of Uzbekistan On International Commercial Arbitration 2021 <https://lex.uz/docs/5698676> accessed 24 July 2024.

[3]      Spentex Netherlands, B.V. v. Uzbekistan [2013] ICSID ARB/13/26

[4]      Güneş Tekstil and others v. Uzbekistan [2019] ICSID ARB/19/31

[5]      Bursel Tekstil and others v. Uzbekistan [2009] ICSID ARB/09/18