Debt collection in Uzbekistan

The debt collection procedure in Uzbekistan begins with an analysis of the financial capacity of the debtor, his field of activity, the history of the enterprise, the availability of documentary evidence of the debt, current court cases and initiated enforcement procedures, as well as the possibility of contesting the debt. This analysis forms the strategy that will be used on behalf of the client to recover the debt.

If there are no open lawsuits against the debtor or unexecuted court decisions on debt collection, and if he is actively engaged in his business, then it is advisable to use amicable debt collection.

At the amicable debt collection stage, the creditor’s position is usually formed through lawful negotiations, a written demand for payment and preservation of evidence confirming the debt. The purpose of this stage is to determine whether the debtor is ready to repay the debt voluntarily, agree on a repayment schedule, return goods, transfer the debt to a third party or propose another lawful settlement option.

Communication with the debtor may be carried out by mail, email, telephone or instant messengers, but it should be structured as a legally correct demand and negotiation process. The creditor should keep proof of delivery, replies from the debtor, payment promises, reconciliation acts and any other documents showing recognition of the debt or refusal to pay.

The duration and effectiveness of out-of-court debt collection in Uzbekistan depend on the quality of the documents, the debtor’s response, the existence of a dispute, the debtor’s solvency and whether the contract requires a mandatory claim procedure before going to court. If the debtor ignores the demand, disputes the debt without grounds or if the initial analysis shows that amicable collection is not suitable, the creditor should proceed to judicial debt collection.

Before filing a claim, the creditor should assess the limitation period. The general statute of limitations in Uzbekistan is three years, and the parties cannot change the limitation period or the rules for calculating it by agreement. As a general rule, the limitation period starts from the day when the creditor learned or should have learned about the violation of its right; for obligations with a fixed performance date, it starts after the expiry of that performance date. The court accepts a claim even if the limitation period has expired, but applies limitation only upon a party’s request made before the court decision. The limitation period may be interrupted by filing a claim in the prescribed manner or by actions of the debtor indicating recognition of the debt; after interruption, the period starts again.

Before going to court, the creditor should check whether a mandatory pre-trial or claim settlement procedure is required by law or by the contract. If such a procedure applies, the creditor should send a written claim to the debtor and keep evidence of its delivery. Failure to provide evidence of compliance with the mandatory claim procedure may create procedural obstacles for the court case.

For debt collection in Uzbekistan, the creditor should prepare the contract, invoices, delivery notes or acts of performed works, reconciliation statements, correspondence with the debtor, payment reminders, proof of partial payments, evidence of debtor acknowledgment, calculation of the principal debt, penalties or interest, proof of sending documents to the debtor and, if applicable, a foreign judgment or arbitral award with the documents required for recognition and enforcement.

Uzbek law provides several procedural routes for debt collection through the economic courts: a court order, ordinary claim proceedings and simplified proceedings. The correct route depends on the amount of the claim, the debtor’s position, the documentary basis of the debt and whether there is a real dispute between the parties.

A court order may be used for claims to recover receivables based on documentary recognition of the debt. The application should identify the court, the creditor and the debtor, state the creditor’s demand with reference to the law, describe the circumstances and evidence, calculate the amount to be recovered and specify the period for which the debt arose. The creditor must also provide documents confirming delivery of a copy of the application to the debtor.

If the debtor does not object within the procedural period after receiving the relevant documents, the court may issue a court order that can be used for compulsory enforcement. If the debtor objects or the court establishes that there is a dispute over the debt, the creditor should proceed with ordinary claim proceedings.

Ordinary claim proceedings are initiated by filing a statement of claim with the competent economic court. Before filing the claim, the plaintiff must send the defendant and third parties copies of the statement of claim and the attached documents that they do not have. The claim should contain the amount of the claim, factual circumstances, evidence, calculation of the debt, legal grounds and information about compliance with a mandatory pre-trial procedure, if such a procedure applies.

A first-instance court decision may be appealed within one month from the date of its adoption, unless another term is established by law. If no appeal is filed within the applicable procedural term, the decision enters into legal force and may be used for enforcement.

Simplified proceedings apply to claims where the value of the claim does not exceed twenty base calculation units for legal entities and five base calculation units for individual entrepreneurs. Such cases are considered by a single judge without a court hearing, without summoning the parties and without hearing their oral explanations. The case is considered within twenty days after the court ruling accepting the claim and initiating proceedings, and this period is not extended. A decision in simplified proceedings enters into legal force ten days after its adoption unless an appeal is filed.

An appeal against a first-instance decision is considered within one month from the date when the appeal is accepted for proceedings. Appeals against decisions in simplified proceedings are considered within fifteen days from the date the appeal is received by the court. The appellate court reviews the first-instance decision within the limits established by procedural law and does not accept new claims that were not considered by the first-instance court.

A cassation appeal may be filed within six months from the date when the first-instance decision entered into legal force. Cassation complaints are considered by the competent judicial panel for economic cases, and the complaint is filed through the court that adopted the decision. In cassation, the court reviews the legality and validity of the first-instance decision; new claims that were not considered by the first-instance court are not accepted. The cassation complaint is considered within one month from the date it is accepted for proceedings, and in exceptional cases this period may be extended by no more than one month.

If the creditor already has a foreign court judgment or arbitral award against a debtor located in Uzbekistan, a separate recognition and enforcement procedure may be required before compulsory enforcement in Uzbekistan. The application is filed with the competent Uzbek court at the debtor’s location or residence, and if that is unknown, at the place of the debtor’s state registration. The court considers whether the foreign judgment or arbitral award can be recognized and enforced in Uzbekistan and issues a ruling granting or refusing recognition and enforcement. This stage is especially important in international debt collection cases where the creditor obtained a decision abroad but needs to recover assets located in Uzbekistan.

After the court decision enters into legal force and the debtor does not perform it voluntarily, the creditor should obtain a writ of execution and initiate enforcement through the Bureau of Compulsory Enforcement under the General Prosecutor’s Office of the Republic of Uzbekistan. A writ of execution issued on the basis of a court decision may generally be presented for enforcement within three years.

If the creditor has information about the debtor’s bank accounts, the enforcement document for recovery of money may be sent directly to the bank or another credit organization. The bank must execute the recovery request no later than the next business day after receiving the enforcement document or make a note of full or partial non-execution if there are insufficient funds in the debtor’s accounts.

Compulsory enforcement may include recovery against the debtor’s money and other property, money and property held by third parties, the debtor’s salary or other income, certain property rights and the debtor’s receivables. For business debts, this means that enforcement should not be limited only to checking bank accounts: it may also be important to identify the debtor’s debtors, contractual receivables, property rights and assets held by third parties.

The statutory period for compulsory enforcement actions is generally two months after the expiry of the voluntary compliance period set by the state enforcement officer. However, the expiry of this period does not terminate enforcement proceedings. In practice, the real duration of enforcement depends on the availability of assets, bank accounts, receivables, debtor cooperation, asset search measures and possible challenges by the debtor.

Insolvency proceedings should be considered as a separate legal mechanism, not as an automatic final stage of every debt collection case. Under Uzbek insolvency law, signs of temporary insolvency may exist when the debtor is unable to satisfy creditors’ monetary claims or tax obligations and the relevant obligations have not been fulfilled within three months from the date they arose. Permanent insolvency may be connected with the debtor’s liabilities exceeding the value of its assets under the criteria established by law.

A creditor has the right to apply to the court to initiate insolvency proceedings against the debtor in connection with failure to fulfill monetary obligations. From the moment the court accepts an application to initiate insolvency proceedings, creditors cannot seek individual satisfaction of their claims outside the insolvency framework, and their interests are represented through the creditors’ meeting or creditors’ committee. This is why insolvency may be strategically useful when individual enforcement is ineffective, several creditors are competing for the debtor’s assets, or the debtor’s financial condition requires collective proceedings.

For debt collection purposes, insolvency may also be important where the debtor’s lack of assets is connected with actions of its management, owners or other persons controlling the debtor. Uzbek insolvency law contains mechanisms related to subsidiary liability of persons managing the debtor’s affairs. If unpaid creditor claims remain because the debtor’s property is insufficient, the issue of subsidiary liability may become a separate instrument for increasing the practical chances of recovery.

Criminal-law consequences should not be treated as an alternative to civil debt collection. They may become relevant only where there is a court act and the debtor or its officials continue to evade its execution after an administrative sanction has already been applied. Article 232 of the Criminal Code of Uzbekistan establishes liability for non-execution of a court act, and Article 232¹ addresses interference with compulsory enforcement. Therefore, this mechanism may support enforcement in cases of deliberate non-compliance, but it does not replace the court judgment, writ of execution and enforcement proceedings.

If you need support with international debt collection in Uzbekistan, GrandLiga can assist with document analysis, debtor assessment, amicable recovery, court proceedings, recognition and enforcement of foreign judgments and arbitral awards, enforcement proceedings and insolvency-related recovery strategies. You may upload your case for a preliminary assessment so that the appropriate legal route can be selected according to the documents, debtor status, available assets and procedural stage of the claim.

# DEBT COLLECTION AGENCY UZBEKISTAN

06.02.2022

5937