Photo: culture.ru
Uzbekistan has prevailed in a $700 million arbitration case brought by a Turkish textile company, following a legal battle that lasted nearly seven years. The Ministry of Justice announced that the International Centre for Settlement of Investment Disputes (ICSID) rejected all claims filed by Bursel Tekstil Sanayi against the Uzbek government.
Although the tribunal issued its decision in October of last year, details were made public only recently.
The case began in July 2017 when Bursel Tekstil alleged that its investments in Uzbekistan’s textile sector had been expropriated. The total amount claimed by the Turkish company was approximately $700 million.
According to the ICSID ruling, all of Bursel’s claims were dismissed. Furthermore, the company has been ordered to reimburse Uzbekistan for arbitration costs. Under ICSID rules, the tribunal's decision is final and binding.
Bursel Tekstil Sanayi ve Dış Ticaret A.Ş. is a Turkish firm that began investing in Uzbekistan’s textile industry in the early 2000s. The company was involved in a project to build a textile factory in Tashkent, funded by the OPEC Fund for International Development and the European Bank for Reconstruction and Development (EBRD). By 2011, Bursel operated three factories in Uzbekistan.
In 2019, Uzbekistan’s Ministry of Economy and Industry identified 15 key challenges to attracting foreign investment, including excessive state involvement in the economy, regulatory inefficiencies, and low technological capacity in production. However, the list did not include the risk of arbitrary asset seizure—an issue that has plagued numerous foreign investors under former president Islam Karimov. Companies affected in the past include Russia’s MTS and Wimm-Bill-Dann, the U.S.-based Newmont Mining and Coca-Cola, Israel’s Metal-Tech Ltd., the U.K.'s Oxus Gold PLC, and Turkish businessmen who once owned the Turkuaz and Demir shopping centers in Tashkent.
