Keywords

Introduction

Policies to improve the legal culture and legal consciousness of people as well as developing their participation in legal reforms in Uzbekistan have become quite important in recent years. Many studies have addressed the legal consciousness of citizens and presented their theoretical conclusions. In particular, Susan Silbey (2008), Lawrence Meir Friedman (1994), Fernanda Pirie (2013), and others have examined the sociological aspects of legal consciousness and legal culture, as well as the impact of law on relations in society. However, scant research exists on examining legal consciousness and the legal culture in Central Asia or assessing their importance in society and their influence on the rule of law.

An analysis of the legal culture is particularly important for studying the essence, content, and interrelation of law and society in the field of legal education and research in Uzbekistan. The importance of the legal culture is especially visible in the field of economic law. In this field, it is imperative not only to analyse legal norms, but also to conduct sociological research on how the law operates in society and to obtain information regarding resolving disputes between entrepreneurs and their impact on the business environment. This requires a study of economic court decisions and examining the views of legal practitioners and business representatives involved in court cases. The successful development of businesses depends on their legal protection. At the same time, the emergence of disputes between entrepreneurs and their resolution are closely tied to the legal culture. The state of the legal environment and the level of the legal culture alongside other factors directly affect and determine the degree of protection of a business and its interests.

Estimates suggest that more than one million different economic contracts are concluded in Uzbekistan each year. With such a high volume of economic activity, it is important that business disputes are resolved as rapidly as possible. According to data provided by the Statistics Agency of Uzbekistan (UZSTAT), as of May 2022, the number of registered business entities stood at 517,501 with 484,935 of them operating at that time (UZSTAT, 2022). Today, we see that most economic disputes between entrepreneurs arise from contracts concluded between them, creating a strong likelihood for conflicts. In Uzbekistan, the range of mechanisms regulating such conflicts has expanded substantially in recent years. Indicatively, measures have been taken to develop the dispute resolution methods widely used in other countries: pre-trial (claim) settlement procedures and the judicial settlement of disputes through negotiations (mediation) and amicable (settlement) agreements, as well as alternative means of resolving conflicts through arbitration.

The fulfilment or non-fulfilment of contractual obligations by entrepreneurs is closely connected to the legal culture. A contract is clearly not a normative legal document. Yet, a contract creates obligations for the parties that have concluded it, whereby a failure to fulfil these obligations carries legal consequences. Therefore, it is correct to say that a contract is an act of applying the law. The legal culture is the level of legal knowledge and awareness of current laws, a conscious attitude toward the law, respect for the law, and compliance with it. Many developed countries, such as the USA and Japan, use alternative dispute resolution (ADR) methods as a conflict resolution tool. In Uzbekistan, business disputes are primarily resolved by the courts. Conflicts can arise between business owners due to various misunderstandings. Moreover, it is not always possible to settle disputes peacefully. The parties have several alternative options to solve problems, which may include an appeal to the court or to a third party, based on all available information and would help parties reach an agreement. So-called ‘resolutions’, ‘settlements’, or ‘terminations’ are frequently not the end of the story in a particular dispute or case, especially in a situation of continuing relationships (Twining, 1993, p. 392).

In each of these processes, distinctive patterns of the legal culture play a substantial role in shaping the efficacy of new dispute settlement policies. Given that more than one million economic agreements are concluded in Uzbekistan annually, the analysis of legal relations in the field of business disputes and entrepreneurship activities may produce nuanced insights into the legal culture and legal consciousness in Uzbekistan. Given the prevalence of informal law in Uzbekistan, parties may be inclined to resolve their disputes through informal, extra-legal means. However, given that Uzbekistan launched legal reforms in 2018 with a particular emphasis on increasing access to the courts, citizens might be more inclined to resolve their disputes through formal legal channels. In this regard, analysing business disputes allows us to shed light on the legal consciousness (legal culture) of different members of society, such as legal practitioners, entrepreneurs, and ordinary citizens. Thus, the analysis of business disputes allows us to understand the role of law in everyday life, showing, specifically how the legal consciousness of people and the legal culture can impact social life and the formation of a rule-of-law culture in Uzbekistan.

Based on these considerations, this chapter provides a socio-legal investigation of the legal consciousness (legal culture) of legal practitioners, entrepreneurs, and ordinary citizens in Uzbekistan by analysing economic disputes amongst business actors. More specifically, in exploring these processes, we emphasise various adjudication levels: pre-trial (claim) settlement procedures and the judicial settlement of disputes through negotiations (mediation) and amicable (settlement) agreements, as well as alternative means of resolving conflicts through arbitration. In undertaking this task, we analyse issues related to using the ADR process in commercial contracts, focusing on mediation and pre-trial (claim) settlement procedures. We explore the following questions in our study:

  • How have the legal consciousness of citizens and the legal culture in Uzbekistan developed in recent years, as demonstrated by changing attitudes and practices concerning economic dispute settlement?

  • To what degree are entrepreneurs aware of how to resolve a dispute before a court, through an economic court, or through an arbitration court which is not a state court? What does this tell us about the legal consciousness of entrepreneurs in Uzbekistan?

  • To what extent is the increase in the number of entrepreneurs’ claims for the non-fulfilment of contractual obligations by regions related to the level of the legal culture of entrepreneurs? Is this a positive or negative indicator?

  • How do new legal mechanisms affect the process of considering entrepreneurs’ appeals to economic courts and their appeals? What does this tell us regarding how the government considers the importance of raising awareness of the legal culture of citizens, and what kinds of measures have been taken in this field?

  • What is the importance of involving ordinary citizens in the process of lawmaking, and how may it influence the sociopolitical life of the country?

Methodology

This study primarily relies on an analytical legal method. It originates from the dogmatic method (Kleineman, 2018), which seeks to establish ‘current law’. The analytical method, however, develops the concept further by systematising relevant legal sources and studying them in light of accompanying argumentation. In this case, sources on the legal consciousness and the legal culture are applied through a discussion of the behaviour of state institutions and ordinary people, focusing on how they could be improved. We analyse the latter factors using questionnaires, conducting official and unofficial interviews, and in meetings. Select economic court decisions are also used as case studies. In addition to the analysis of select court cases, we also rely on survey data collected by the second author, which aimed to study the views of legal professionals—namely, judges and prosecutors—on the nature of economic court cases and the legal culture of entrepreneurs. We surveyed 137 respondents, amongst whom 84 were judges from economic courts and 22 were employees of the prosecutor’s office. A more detailed overview of the survey results appear in the sections below.

Socio-Legal Approaches to the Legal Culture and Legal Consciousness

Every person has a ‘legal culture’, just as every person has a general culture and a social culture; every person has individual, unique traits as distinctive as their own fingerprints, but each person is at the same time part of a collective, a group, a social entity, and shares in the ideas and habits of that group (Friedman, 1994).

Legal culture stands between the law and culture, with unclear borders in both directions. According to a widespread understanding, the legal culture represents the cultural background of the law, which both creates the law and is necessary to give meaning to the law (Michaels, 2012). The legal culture often merely describes an extended understanding of the law and is, thus, synonymous with ‘living law’ (Ehrlich, 1912) or ‘law-in-action’ (Pound, 1910). Legal sociologists in particular understand legal culture as the values, ideas, and attitudes that society has with respect to its law (Friedman, 1994). Moreover, the term ‘legal culture’ is closely connected with legal consciousness. Legal consciousness is a collection of understood and/or imagined ideas, views, feelings, and traditions embedded in a society, reflecting a legal culture amongst individuals, a group, or a given society at large. The legal consciousness evaluates the existing law and also considers an image of the desired or ideal law (Brisman, 2010). Consciousness is not an individual trait nor solely ideational; legal consciousness is a type of social practice reflecting and forming social structures (Silbey, 2008).

A legal culture can be described as the general level of legal knowledge of a society, society’s objective attitude toward laws, or an aggregate of legal knowledge. Forms of legal culture are also different, including society’s legal culture, a group’s legal culture, and an individual’s legal culture. Legal consciousness, as a form of social consciousness, is a factor associated with improving and developing law. Legal consciousness arises under the influence of people’s perceptions, feelings, and practical experiences of the law and legislation and expresses their attitudes toward the law (Brisman, 2010). Low levels of legal culture may lead to the proliferation of legal nihilism within a society; the formation and persistence of ‘separate’ (street) rules and informal norms in communities beyond official laws; high levels of crime and corruption; a lack of understanding in communications between individuals and a government; and high levels of victimisation due to a low level of legal knowledge. Legal awareness, the legal culture, and legal activism practiced by citizens ensure the rule of law. The rule of law is a key feature of a democratic political system, and raising the level of legal awareness and the legal culture of citizens represent the most important factors for a state.

Legal Culture and Consciousness in Uzbekistan

Examining recent history, we know that, in the early 1990s, the collapse of the USSR meant that almost all former Soviet republics suffered a period of so-called ‘difficult transition’. This was a period when Soviet laws remained in force, but new legislation had not yet been drafted or enacted. According to World Bank (2002) statistics (see Fig. 7.1), in the 1990s (after the collapse of the Soviet Union), all post-Soviet countries, including Uzbekistan, experienced exceptionally high rates of crime.

Fig. 7.1
A graphical status Dynamic crime statistics in Uzbekistan

Dynamic crime statistics in Uzbekistan, 1990–2000 (Macrotrends, 2023)

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Often, ordinary people were encouraged to breach the law, a legal culture visible in the use of folk expressions such as, ‘Do not have a hundred roubles, have a hundred friends’ and ‘Normal heroes always take the roundabout way’ (cf. Humphrey, 2002, 2012). On the one hand, this phenomenon was caused by the collapse of the Soviet system, which had long been recognised as strong and indivisible. There was a widespread perception in Uzbekistan and other post-Soviet societies that all values—including law and order—associated with the Soviet system had to be eliminated. On the other hand, there was no perception of the form any new model of statehood ought to take and how it should survive given the difficult economic climate of the time (Kandiyoti, 2007). Furthermore, the economic downturn that prevailed at that time manifested in several economic consequences, such as the low living standards of the population, as well as the significant decrease in the salaries of citizens working in the public sector (Ilkhamov, 2001). Monetary devaluation and a decline in purchasing power also affected the situation. As a result, legal nihilism intensified through the behaviour of citizens living in the former Soviet republics (Hendley, 2012). Crimes such as theft, hooliganism, assault, and other misdemeanours became frequent amongst unemployed, homeless, or economically disadvantaged citizens (Humphrey, 1999), and the frequency of large-scale offences began to increase significantly. Those who committed such violations were often recognised as ‘respected people’ in society (Volkov, 2002). As a result, the number of serious crimes such as kidnapping, racketeering, and robbery increased in these countries. Furthermore, victims were commonly forced to seek help from so-called ‘avtoritets’ (‘thieves in law’). These included people with great power and respect in society based on ‘street’ norms, which included criminal businessmen leading illegal businesses and leaders of the underworld, or, individuals in prisons, representing the highest level in the informal hierarchy of prisoners (Volkov, 2000).

These conditions had an exceptionally negative impact on the image of the state, creating conditions for legal disorder and contributing to economic and political collapse (Humphrey, 1999, 2002). Accordingly, governments in post-Soviet states made it a priority to take various measures to ensure the rule of law. Compared with other post-Soviet countries, Uzbekistan demonstrated an understanding of the importance of establishing law and order in society, and the government-initiated reforms to build a state with a strong legal system and law enforcement institutions immediately following independence. During this process, legal acts were initially adopted, which could serve as the basis of legal reforms, and, subsequently, work to improve the level of legal culture continued and remained a matter of ongoing importance. As part of this larger and longer process, in the last five years, the Uzbek government has introduced significant measures to expand legal awareness and the legal culture of the population. This became a priority in national legal policy, a fact reflected in numerous legal reforms and mechanisms to promote the rule of law.

In recent years, several laws and decrees regulating this sphere have been adopted. In particular, 9 January 2019 witnessed the adoption of the Presidential Decree of the Republic of Uzbekistan ‘On the Significant Improvement of the System of Radical Improvement of the System of Raising Legal Awareness and Legal Culture in Society’. This decree states that raising legal awareness and the legal culture in society are the most important conditions for ensuring and strengthening the rule of law. The decree notes that the lack of legal knowledge amongst the population leads to abuses to the rights of citizens. Therefore, according to this document, the following objectives were outlined:

  • The formation of a system that informs ordinary citizens of the content and essence of ongoing socioeconomic reforms in the country, as well as new legislation and state programmes;

  • The declaration of the concept of ‘deciding the spirit of respect for the law in the society—the key tool in building a democratic state’;

  • Raising legal awareness and the legal culture in society by first paying attention to the systematic and integral conduct of legal education;

  • Inculcating the legal consciousness and legal culture in all segments of the population, beginning from preschool education;

  • Inculcating in the minds of the younger generation the concepts of law and duty, honesty and purity, as well as moral norms to teach them important aspects of the Constitution from early childhood;

  • The organisation of legal and educational events for the formation of the legal culture amongst the population in accordance with the historical, religious, and national values of the Uzbek people;

  • Strengthening the sense of belonging and patriotism by forming in every citizen a sense of pride in state symbols;

  • Raising the legal awareness and legal culture of civil servants, and establishing an intolerance to corruption and other offences;

  • Strengthening cooperation between public authorities and administration, including law enforcement agencies and civil society institutions, in the implementation of targeted legal advocacy;

  • Establishing on a systematic basis the broad and effective use of the principles of social partnership in the organisation of activities to improve legal awareness and the legal culture in society;

  • Increasing the role of the media in providing legal information and the widespread use of innovative methods of legal advocacy, including the expansion of the use of web-based technologies;

  • Improving legal education, as well as developing a system of training, retraining, and advanced training for legal personnel; and

  • The in-depth study of the scientific basis for raising legal awareness and legal culture in society.

The need to improve the legal culture in society is a defining feature of this decree, and lists the measures aimed at improving the legal culture of the population.

The Current Status of Legal Literacy in Uzbekistan

This section analyses those factors that play an important role in shaping the legal consciousness and legal culture of citizens. In recent years, information technology has rapidly penetrated almost all spheres of public and government action in Uzbekistan, with the use of new technologies creating new complexities (e.g., a mobile phone is used not only to communicate but also to take photos and videos, serve as a computer, scanner, flashlight, metre, and perform other functions). The convenience of these technologies for ordinary people, increases in the number of purchases of equipment (falling prices, rising wages, etc.), and other factors have made mobile phones (smartphones) an integral part of people’s daily lives. In urban settings specifically, people actively use mobile phones in their daily lives almost every day and everywhere (at home, at work, in transport, in restaurants, and in leisure facilities). This situation is becoming transboundary—that is, similar situations can be observed in almost any country.

As a result of this, people are more likely to use mobile phones, for example, to meet on social networks, communicate with friends, acquire up-to-date information, watch videos, play games, make payments through mobile applications, and participate in training sessions (including through the Zoom platform). It should be noted that citizens tend to obtain information through social networks on their mobile phones rather than using television or radio to read the news, or by reading traditional print newspapers and magazines. This is basically done in three ways: through networks (channels on the social media site Telegram) officially established by state bodies and institutions, through informal Telegram channels, and through channels for legal information.

Currently, one outcome of this is that the demand for legal information amongst the population is growing. This may be explained through the following. First, certain categories of the population find it convenient and inexpensive to obtain legal information through informal sources, including via social networks (free legal aid provided by government agencies is not sufficiently available, and not everyone has equal access to legal services). Second, certain groups of people, such as car drivers, have obtained a certain level of legal knowledge through social media. Drivers, as users of roads, are not fully acquainted with the general traffic rules, but they know they have certain rights, such as not being obliged to provide documents to a traffic police officer who is serving without a body camera. Drivers learn from social media that traffic police officers who demand documents are required to show drivers the ‘dislocation map’ (the document arranging the route of their service, which must be shown to drivers upon demand). Drivers have also learned that they are allowed to present documents to police officers without leaving their vehicle. In such ways, citizens have developed and learnt to use their own ‘knowledge’ in certain situations. In cases where such knowledge leads to a positive outcome, they derive a kind of ‘satisfaction’ from doing so. Third, it is increasingly recognised that the ‘effective application of the law’ is an expedient way of resolving disputes, such that formal law supplants ‘street laws’, ‘acquaintanceship’, or ‘hard power’ as a medium of dispute settlement. For example, citizens who come to a government agency to use a specific service requiring state servants to comply with the rules set out in the law, including norms of ethical conduct (for example, to introduce themselves, to be polite, not to make them wait for long periods of time, to provide relevant information, to explain how to complain, etc.). This shows that the legal literacy of citizens who do not have legal knowledge at a professional level is increasing, and that the need for legal knowledge continues to grow.

In addition, the legal culture and legal consciousness are affected by measures to increase the participation of ordinary people in lawmaking processes. In fact, citizens may submit draft laws or proposals for the adoption of a new law, amendments, or additions to the law. Citizens may also petition to declare an existing law or a part of it invalid. Draft laws or proposals submitted by state bodies, nongovernmental organisations, or citizens who do not have a right granted by a legislative initiative may be accepted by on the basis of draft laws developed by specific groups. Currently in Uzbekistan, according to the newly adopted Constitution, once 100,000 citizens of the Republic of Uzbekistan with the right to vote have signed a petition, in the form of a legislative initiative, they can then submit proposals to the Legislative Chamber of the Oliy Majlis (Parliament) of the Republic of Uzbekistan.

The subject of a right in a legislative initiative has the right to organise a study of public opinion, including, if required, participation from representatives of civil society institutions and research institutions, prior to submitting the law to the Legislative Chamber. This represents a great opportunity for citizens to participate directly in the development of the law. As a part of efforts aimed at the democratisation of public administration and the further development of civil society in the Republic of Uzbekistan, a system of ‘e-government’ is being established. A single state portal of interactive servicesFootnote 1 was launched on 1 July 2013, in order to provide the population with access to interactive public services. At the same time, a portal for the discussion of regulatory legal actsFootnote 2 was developed, the purpose of which is to (1) identify possible (existing) positive and negative consequences of the adoption of a normative legal act by analysing the problem, the purpose of its regulation, and the existing solution; (2) to identify norms and rules in the draft normative legal act and the adopted normative legal act that create the conditions for corruption and other offences in the system of public authorities, impose or create the conditions for the introduction of excessive administrative and other restrictions for business entities; and (3) to identify norms and rules that lead to unreasonable costs to business entities. The portal contains draft laws and regulations related to business activities developed by government agencies, and all registered users have the opportunity to submit proposals on these documents. The proposals are reviewed and accepted by the state body that posted the draft law and the adopted regulations, or a justified refusal is issued. Users can not only submit their proposals item by item on the posted normative legal acts, but also fill out a special questionnaire with their comments on these documents.Footnote 3 Individuals and legal entities can also exercise their political rights by submitting proposals to government agencies. For this purpose, there are several virtual reception portals in the country. The most popular portal allows citizens to submit their applications, complaints, and suggestions directly to the President.Footnote 4

Current Status of Economic Dispute Settlement: Mediation, Alternative Dispute Resolution, and Court Procedures

Attempts have aimed to popularise alternative dispute resolution (ADR) amongst entrepreneurs in order to ensure the smooth functioning of markets and businesses. The main prerequisites for the use of ADR are the following three conditions: (1) the parties to the conflict should have the desire to preserve the existing relationship between them, and they should be willing to resolve disputes through negotiations; (2) the parties should be prepared to resolve the conflicts via informal means; and (3) the parties should wish to resolve the conflict expeditiously. Until 2019, the only way to reduce the number of cases considered by the economic court was to seek a pre-trial settlement of disputes—that is, claims proceedings, which is normal for Uzbek law. (In 2023, amendments were made to the Economic Procedural Code regarding mediation.) Recent amendments to the law affect various aspects of legal activities, including the organisation and working conditions of the courts. These amendments are designed to ensure the accelerated implementation of the requirements stipulated in the indicators of the World Bank’s annual Doing Business report (World Bank, 2020). In the Doing Business report (2020), it was stated that one of the highlights of Uzbekistan’s reforms is ensuring an easier contract enforcement process by introducing a consolidated law on voluntary mediation, establishing financial incentives for the parties to attempt mediation, and publishing performance measurement reports on local commercial courts.

Most of the contracts concluded by business entities today stipulate that, when a dispute arises, the parties must resolve the dispute amicably through negotiations; if the dispute is not resolved through this method, they must go to court. In most cases, the settlement of disputes through negotiations (amicable resolution) is specified in the contracts as a separate item, article, or chapter. If the parties fail to reach an agreement during such negotiations, the disputes shall be settled in court. If the contract provides for the peaceful settlement of disputes between the parties, but does not specify the procedure for resolving the dispute, then the procedure for resolving the dispute through a pre-trial (claim) settlement procedure is not mandatory. According to the general theory, the use of ADR methods cannot be an obstacle to bringing a dispute to court. The mandatory provision of the mediation procedure may violate the disputants’ right to access justice, but the mediation procedure should not become a barrier to litigation (Karaketov, 2014).

The use of the pre-trial (claim) settlement procedure to resolve a dispute aims at a prompt resolution to a dispute, and serves as an additional guarantee of the protection of rights. This is the preeminent mode of dispute resolution in Uzbekistan. The pre-trial (claim) settlement procedure of disputes works through the exchange of letters (a claim and a response to a claim) stating the views and proposals of the parties to resolve the dispute. The business entity that claims that its rights and legitimate interests have been violated shall have the right to lodge a claim against the business entity that violated these rights and interests. This claim is made, as per the law or regulation, in writing and includes the following: the name of the business entity making the claim and the business entity subject to the claim; the filing date and claim number; the circumstances forming the basis of the claim; evidence confirming the circumstances of the claim; the applicant’s requirements; the amount of the claim and its calculation, payment, and the postal details of the applicant; and the list of documents attached to the claim. The business entity receiving a claim must reply to it within 15 days from the date of receipt of the claim.

In cases involving a full or partial recognition of the claim, the claimant has the right, within 20 days upon receipt of the response, to submit to the bank an order to write off the amount recognised by the debtor. The debtor’s response shall be attached to the order. A party may file a court claim and an application for a court ruling to be issued to the economic court in cases of a refusal (partial refusal) or a failure to receive a response to the claim within the prescribed period from the other party. According to the Economic Procedural Code, if the law establishes a pre-trial (claim) settlement procedure for a certain category of disputes or if it is requested by a contract, the case may be initiated in court only after the parties have taken measures to voluntarily settle their dispute. But, in the law, ‘On the Contracting and Legal Basis of the Activity of Business Entities’, it is defined as a right. This law also states that business contracts shall be checked for compliance with the law by the legal service of business entities or by the lawyers involved in the preparation Process. The conclusion of contracts without their approval is not permitted.

The outcomes of these processes for legal consciousness are visible in the following data.

According to statistical information provided by the Supreme Court of the Republic of Uzbekistan on economic cases heard in courts for the first time in 2022, a total of 175,443 such cases were resolved by the courts in 2021, growing to 277,862 in 2022; this shows that the number of appeals to the court is increasing.Footnote 5 However, 156,873 of these cases (56.5%) were related to the suspension of operations of the bank accounts of entrepreneurs. The primary reason for the increase in the number of cases related to the suspension of operations of bank accounts stems from entrepreneurs not submitting timely reports to the tax authorities. This suggests that improving the tax culture of entrepreneurs is an urgent issue.

Court cases related to the suspension of bank account operations are published on the Supreme Courts website (e.g., No. 4-1701-2301/6303, 4-1505-2301/1364, and others).Footnote 6 If we examine the content of most of the court decisions on this issue, we find the following sentences:

Although the defendant was notified about the court session electronically in their personal cabinet, they did not participate in the court session and did not express an objection. In the case files, there is electronic information confirming that the defendant received the information from the court about the exact time and place of the court hearing.

Legislation allows for the resolution of the dispute if the respondent has been notified of the time and place of the court session, but does not show up. It would be interesting to know why a defendant did not participate in the court session in some cases. In our research, we assumed that the reason was related to the fact that the respondents did not always monitor their electronic cabinets (i.e., work email accounts), which are normally used for communication with state institutions. Ideally, efforts would focus on increasing the Internet literacy of state institutions and their employees.

Most of the cases considered in economic courts—that is, 68,575—were resolved in the inter-district economic court of Tashkent, the capital of Uzbekistan. This illustrates the high skill of resolving disputes through the economic court amongst entrepreneurs in the capital. We see that 88.2% of these cases were resolved in favour of the plaintiff. We also identified 8770 cases in 2022 in the Khorezm region, one of the remotest regions of Uzbekistan. We can assume that the number of economic disputes in a specific area is specifically related to the number of entrepreneurs.

To provide evidence of the efficiency of these measures, the third author conducted a survey in 2022 on these processes, in which 137 respondents took part. Amongst respondents, 84 (61.3%) were judges and 22 (16.1%) were employees of the prosecutor’s office. The respondents were asked to what extent the increase in the number of lawsuits by entrepreneurs in the regions related to the level of the legal culture amongst entrepreneurs and whether this was a positive or negative indicator. According to the survey results, 38% of respondents classified this situation as a negative indicator, and 62% rated it as a positive indicator, demonstrating that entrepreneurs’ knowledge of laws is increasing and they are more inclined to use formal legal channels to resolve disputes.

Disputes should be made available on the website where court decisions are published (that is, the Supreme Court’s website), including the name of any business entity with their consent. This allows parties wishing to sign a contract to obtain information about their future partner based on previous contractual disputes. When I talked with entrepreneurs, they told me how to evaluate the counterparty before signing a contract. In the first instance, they described how it is possible to obtain information through open sourcesFootnote 7 about the founder and director of any registered organisation and other related organisations. Some entrepreneurs emphasised that they get information about this from the counterparty itself or from UZSTAT.Footnote 8 Another website via which to obtain information is considered an official government channel.Footnote 9 Many entrepreneurs are also interested in the question of whether there was a dispute in court with the organisation with which they want to conclude a contract. There is a solution for this as well, whereby several technical options have been created, which require some knowledge of laws, internet literacy, and professionalism. For example, to determine whether a company or organisation with which they want to conclude a contract had a court dispute, an entrepreneur needs to know the taxpayer identification number (TIN) or legal name of their future contractual partner. If an entrepreneur knows the official name of the organisation, they can find the TIN via orginfo.uz website. Then, if the TIN is entered on the Supreme Courts website (see Fig. 7.2), it is possible to view the court cases related to that organisation. For example, we can enter any random TIN (such as 310038xxx) on this site, and a court case number beginning with 4-1901-2302/2695 will come up. The case number displayed on the screen can be found in the economic court’s section of the report page with the decision of the court related to this organisation.

Fig. 7.2
The current status and online monitoring of ongoing court cases published on the website of the Supreme Court of the Republic of Uzbekistan.

The current status and online monitoring of ongoing court cases published on the website of the Supreme Court of the Republic of Uzbekistan (Source https://my.sud.uz/pages/monitoring/economical.html)

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These technical tools allow entrepreneurs to search for legal proceedings and court decisions involving a counterparty. In addition, the entrepreneur can obtain information about the tax and other debts of a future contractual partner via other portals.Footnote 10

Our analysis of economic court cases shows that, in some cases, court practices revealed that entrepreneurs did not know the law or violated the law even if they knew it. In particular, buildings belonging to the state were used without concluding a tripartite lease agreement, meaning that the state budget did not receive the rental payments. For example, in economic court case No. 4-2001-2104/3692, as a claimant, one of the regional departments filed a claim to the court for 172,768,874 sou’m in order to collect the rental payment. In this case, several entrepreneurs had used a state-owned buildings in this area without a lease agreement. The plaintiff wrote to the defendant several times, demanding to lease the buildings owned by the state, acquired through an auction. According to legislation, renting out state property without signing a lease agreement results in a double rent calculation. It can be concluded from this case that the legal culture of entrepreneurs is still influenced by informal norms and ways of thinking rather than state law.

ADR is a less formal procedure in comparison with the procedure for considering cases in court, and was designed specifically to relieve the burden on the judicial system whilst resolving any conflict that arises (Rustambekov, 2020). Mediation differs from other alternative methods of dispute resolution (arbitration or pre-trial [claim] settlement procedure) in its informal nature. Mediation can be used even during the court session, for example, when a dispute is being considered (before the judge leaves the session for a separate [advisory] chamber to make a decision), as well as during the process of executing judicial acts and acts of other bodies. If a mediation procedure is initiated, the economic court is obliged to suspend the proceedings for a maximum period of 60 days. The court shall leave a statement of claim without consideration in the following circumstances:

  • If the plaintiff has failed to observe an order settling the dispute with the respondent through mediation;

  • If it has been established by legislation for the given category of disputes or by a contract;

  • If the parties who have petitioned for mediation after the expiry of its term have failed to appear, without a valid excuse, at the court session; or

  • If the parties have concluded a mediation agreement.

If the mediation agreement is not fulfilled, the parties are entitled to apply to the court for protection of their rights. Thus, the plaintiff shall have the right to petition the court again.

Mediation has many advantages over litigation. For example, it is time- and cost-efficient. During mediation, there are no winners or losers since it provides for the consolidation of agreements between parties. The mediation process consists of several stages (the choice of a mediator, the conclusion of an agreement on the use of mediation, the mediation and conclusion of a mediation agreement, and the execution of a mediation agreement). When a dispute is resolved through a mediation agreement, the state fee paid is returned, except in cases where a mediation agreement is reached during the process of executing judicial acts and acts of other bodies (Article 17 of the Law ‘On Mediation’, 2018). In this respect, a pertinent example is the ruling of the Gulistan inter-district economic court, dated 23 March 2023 (case No. 4-1201-2301/852). As a result of the ruling, the following was determined: According to a contract, company ‘X’ renovated a building, which belonged to a government institution. However, the other party to the contract did not pay the company for the renovation work. A settlement agreement was reached during the trial, and the proceedings were terminated. At the end of the trial, a state fee of 5,043,893,197 sou’ms was collected. If the parties had entered into a mediation agreement instead of a settlement agreement, the state fee would not have been paid. Therefore, it is necessary to consider the issue of explaining the possibility of using the opportunities and privileges created by legislation to the people by the courts.

Currently, the Chamber of Commerce and Industry has achieved important results in dispute resolution and mediation. According to the Chamber of Commerce and Industry of Uzbekistan, in the first half of 2019, 793 disputes between business entities were resolved during the process of pre-trial dispute resolution (mediation). For example, in Sh.M. LLC, the Namangan Regional Department of the Chamber of Commerce and Industry filed a lawsuit against the Namangan regional administration for 3,414,000,000 sou’ms, but the lawsuit was dismissed due to a mediation agreement between the parties (case No. 4-16-2105/27, dated 12 November 2021). According to the Law ‘On the Chamber of Commerce and Industry of the Republic of Uzbekistan’, the Chamber of Commerce has the right to conduct a pre-trial settlement of disputes between parties. In addition, the Chamber of Commerce can examine all primary documents before filing a lawsuit in the interests of its members, and the responsible officer of the Chamber of Commerce holds a meeting between the parties to resolve the dispute through a pre-trial settlement procedure (mediation).

In addition, economic courts assist parties in resolving disputes by recommending that the parties enter into a mediation agreement, explaining the consequences and giving them appropriate time to do so. This is a sign that the conflicting parties realise that the new institution is effective. This institution is similar in many respects to the procedure for the pre-trial settlement of economic disputes (submission of applications) and the procedure for concluding a settlement agreement. Yet, it also differs. The difference is that mediation is carried out with the participation of a mediator, the proceedings are not terminated when the mediation agreement is concluded, but the claim is left without consideration. Then, the parties have the right to petition the court to protect their rights in cases of non-compliance with the terms of a mediation agreement. When a mediation agreement is concluded, the state fee paid to the court is refunded, but not in a settlement agreement.

Conclusions

As shown in previous sections, we find that recent reforms in economic law, public law, and legal procedure have had measurable effects on legal consciousness in Uzbekistan. These effects are visible, primarily in the changing legal culture, reflected in changing attitudes toward the courts and in changing patterns of dispute resolution. This demonstrates a broader process of legal formalisation, which gained momentum through recent reforms. Overall, we can conclude that the reforms have obtained some success in strengthening lines of accountability between the government and citizens and in promoting the adequate settlement of economic disputes. Our findings indicate that a considerable shift is taking place within society toward the use of formal law, a tendency showing that patterns of legal culture and legal mobilisation are changing in Uzbek society.

Some desiderata, of course, remain in these reforms. As such, some measures could be introduced to increase citizens’ and entrepreneurs’ use of the formal legal system, thereby improving the legal culture. Notably, it is necessary to improve the current national legislation on the pre-trial (claim) settlement procedure of economic disputes and mediation in the following ways:

  • Business contracts should include a mediation clause to allow for alternative or out-of-court dispute resolution if the parties want it. Currently, the Law ‘On Contracting and the Legal Basis of the Activity of Business Entities’ does not require parties to specify and follow the mediation procedure in contracts.

  • Disputes should be made available on the website where court decisions are published (Supreme Court of the Republic of Uzbekistan), including, with their consent, the name of any business entity. This allows parties wishing to sign a contract to obtain information about their future partner related to any previous contractual disputes.

  • The procedure for conducting ‘negotiations’ as a pre-trial settlement of disputes should be established at the legislative level, and the consequences of non-compliance should be established in the Code of Economic Procedures.

  • The Code of Economic Procedures of the Republic of Uzbekistan should be amended to allow businesses to not only apply the procedure for filing an application for a pre-trial (claim) procedure, but also the procedure of ‘negotiation’ and ‘mediation’ as other methods of pre-trial settlement.

  • When a dispute is resolved through a mediation agreement, the state fee paid shall be returned. Therefore, the state should provide some privileges for the state fee of the parties who settle a dispute through amicable (settlement) agreements as well.

  • Entrepreneurs should be informed about the existence and possibilities of a pre-trial (claim) settlement procedure for economic disputes and mediation; in addition, judges, lawyers, and business entities should be involved in any interviews, conferences, and roundtable discussions devoted to these topics.

  • Entrepreneurial entities are legal entities as well as individuals who have completed state registration procedures and can engage in entrepreneurial activities. At the same time, there are several types of organisational and legal forms to economic entities (e.g., joint stock company, limited liability company, private enterprise, etc.). In general, the introduction of mechanisms in the education system aimed at developing the necessary skills in the field of entrepreneurship amongst the population should be strengthened.

  • From 30 April 2023, the new Labour Code of the Republic of Uzbekistan entered into force; in this regard, it should be strongly promoted amongst entrepreneurs and amongst their employees. Specifically, the new labour regulations are currently imposing strict requirements, and ignorance of this or the incorrect application of legal norms could lead to negative consequences. In the activities of some small business entities, there may be violations such as not concluding an employment contract with employees. This issue may lead to other social problems.

  • The basis of the legal culture in terms of ensuring entrepreneurship and the business environment is the law and legal regulations adopted in the field of entrepreneurship. However, currently the number of such normative legal documents is rather large. Therefore, the adoption of the new Entrepreneurship Code in Uzbekistan for entrepreneurs and people who want to become entrepreneurs needs to be accelerated.