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International Investment Law and Investor-State Disputes in Central Asia: Emerging Issues

On April 20, 2023, the New York office of Dentons US LLP hosted an event titled Emerging Issues in Investment Disputes in Central Asia.  The event featured scholars and practitioners from around the world with interest in the Central Asian region.  This post provides insights from the event and additional remarks on the key topics influencing and shaping international investment law and dispute resolution in the Central Asian region (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan).

The event opened with remarks by Kristen Weil (Partner, Dentons US LLP).  Weil took a moment to highlight Denton’s international arbitration practice and recent achievement of an 11th place ranking in Global Arbitration Review’s GAR 30Weil noted that the program would draw upon ideas elaborated in the recently published book International Investment Law and Investor-State Disputes in Central Asia: Emerging Issues, mentioning that the book is the first in-depth exploration of investment treaty arbitration in Central Asia.

Kiran Nasir Gore (Independent Arbitrator & Counsel; Professorial Lecturer, GW Law) then discussed the importance of the Central Asian region as an example of the development of international investment law.  Gore noted that, starting as early as two years after the fall of the USSR, the region saw a proliferation of investment treaties, of which there are nearly 200 today. 

The book tracks this development and the takeaways for the broader global community, including experiential examples and lessons learned from the investor-State disputes that have arisen under those treaties.  The book has 17 chapters and was contributed to by 21 individuals, some of whom would draw upon their contributions during the main panel discussion to follow.

The keynote address was followed by Prof. Dr. Islambek Rustambekov (Director, Tashkent State University of Law).  Rustambekov explained that the growing significance of the Central Asian region in the international investment law community cannot be overstated.  He expects that this importance will continue to grow with the region’s increasingly important geo-political positioning, particularly in light of its rich natural resources and the challenges emerging in those sectors.  Rustambekov concluded by stressing the need for governments and investors to stay engaged in the region to ensure that its full potential is unlocked.

Panel Discussion

The main panel discussion was moderated and led by Lucy Reed (Member, Arbitration Chambers) and featured as speakers David Attanasio (Counsel, Dechert LLP), Dr. Crina Baltag (Professor of International Arbitration, Stockholm University), James Boykin (Partner, Hughes Hubbard & Reed LLP), and Diora Ziyaeva (Partner, Dentons US LLP).

Lucy Reed opened with a disclosure that she is currently the presiding arbitrator in the Herzig v. Turkmenistan case (ICSID Case No. ARB/18/35) and thus would not delve into the substance of investor disputes in Turkmenistan or the other States. 

Reed began by noting that foreign investment lives in parallel legal frameworks (domestic and international) and asked Ziyaeva – the co-author of a chapter on the investment legislation of Central Asian States – to walk through the evolution of domestic investment legislation in the region.  Ziyaeva explained that investment legislation in the region developed in three primary phases. 

In the first phase, in the early 1990s, each State’s domestic legislation originated from the existing legal framework in the USSR and was, in fact, imported almost verbatim into each State’s domestic law.  Initially, this policy was quite successful and coincided with a significant influx of foreign investment into the region. 

In a second phase, over the next decade, the investment legislation was revised and tailored to specifically direct foreign investment towards infrastructure, agriculture, and developing sectors which were in need of economic growth.  In the 2000s, a third phase of legislative development among the States resulted in a combination of general and industry-specific legislation. 

Ziyaeva also noted that the region lacks a single piece of investment legislation defining investor-related provisions and providing a framework for investors.  Addressing this gap in the future will ensure that Central Asia remains an attractive destination for foreign investment.  Ziyaeva expects that the Central Asian States will do so, leading to a further increase in the sophistication of the States’ domestic legislative frameworks.

Reed followed up by asking whether arbitral tribunals have played a role in the development of domestic legal frameworks in the region.  Ziyaeva explained that several arbitral tribunals have interpreted provisions of Central Asian investment legislation and several others have addressed substantive protections.  A prime example is Penwell v. Kyrgyzstan (PCA Case No. 2017-31) where the tribunal considered whether the State’s investment legislation reflected its consent to arbitration.  The tribunal found that Article 18 of the Kyrgyz Investment Law confirmed the State’s consent to arbitrate investment disputes.  Following the decision, the Kyrgyz legislature amended Article 18 to limit the finding of jurisdiction, thus demonstrating the effects that arbitral tribunals can have on domestic legal frameworks.

Reed then shifted topics to note the importance of the definition of “investor” under investment treaties.  Reed asked Baltag – who contributed a chapter on the notion of “investor” in international investment law – about the requirements for an investor to qualify for investment protection under the applicable treaty. 

Baltag explained that most treaties use the incorporation test, which looks at where the company is incorporated to determine its nationality.  However, there are numerous treaties where additional factors are required.  For example, some treaties also require that the seat or headquarters of the company be present in the state.  Other treaties require that the company’s real or significant business activities be in the same state as the incorporation.  Baltag believes this area is poised for development going forward as treaties rarely define “real or significant business activities.”

Reed next described examples of the use of denial of benefits provisions arising out of the war in Ukraine and asked Baltag about important developments on this topic.  Baltag noted that only one Respondent has successfully invoked a denial of benefits provision.  Doing so is difficult as the right of the state must have been made known to the investor prior to the arbitration.

Reed next focused on the interpretation of investment treaties, asking Attanasio – the co-author of a chapter on the interpretation of investment treaties – to discuss subsequent agreements under Article 31 of the VCLT.  Attanasio explained that it is not common for this provision to be invoked simply because it is not common for states to enact subsequent agreements.  However, several investment treaties in the region envision that the Contracting States may hold consultations to potentially reach agreements on treaty interpretation.  For example, Article 8 of the Kazakhstan-Uzbekistan BIT provides that the Contracting States may propose that consultations be held to determine interpretations of treaty provisions. 

Attanasio then highlighted the Energy Charter Treaty as a potential example of the development of subsequent agreements, since the EU Commission has suggested a supposed agreement on the interpretation of that treaty.  Bringing the issue back to Central Asia, Attanasio pointed out that one could question the fairness of potentially holding Central Asian States to the provisions of an EU agreement that the EU itself has partly repudiated.

Turning to a different issue relevant to the interpretation of investment treaties, Reed asked Attanasio to discuss issues arising in treaties that have been authenticated in more than one language.  Attanasio pointed to the Turkey-Turkmenistan BIT, which includes language in the Russian version that requires litigation before Turkmenistan courts before resorting to international arbitration, while the English version does not.  Tribunals have looked to Article 33 of the VCLT to determine how to address such conflicts between the multiple authentic language texts of the treaty. 

However, even identifying the pool of possible authentic and authoritative treaty texts is not necessarily a straightforward proposition.  For example, the English version of the BIT mentions English and Russian versions.  The Russian version of the BIT mentions English, Russian, Turkman, and Turkish versions.  Tribunals have faced the challenge of these discrepancies, for example in İçkale v. Turkmenistan (ICSID Case No. ARB/10/24) and Kiliç v. Turkmenistan (ICSID Case No. ARB/10/1) and have differed on how to handle the issue.

Finally, Reed focused on the annulment process with Boykin – who authored a chapter focused on the annulment proceedings in KilicAs an introduction, Boykin discussed the difference between New York Convention review and review in the supranational ICSID system.  Boykin stressed that while annulment in the ICSID system is a limited remedy, it is extremely important.  He focused primarily on Article 52(1)(b) of the ICSID Convention – manifest excess of powers by the tribunal – as a mechanism for annulling critical mistakes on jurisdiction.  Boykin highlighted the importance of effective counsel in annulment proceedings, recommending that counsel focus only on their strong arguments, instead of a “firehose” approach. 


The program highlighted the utility of viewing international investment law through the lens of the experiences of the Central Asian region.  The region’s adoption and expansion of investment treaties and participation in investor-state disputes provides a case study for states outside the region and to further global discussions at policymaking fora such as UNCITRAL’s Working Group III.

The promo code 20ILI2023 offers a 20% discount on the retail price of International Investment Law and Investor-State Disputes in Central Asia: Emerging Issues in the Wolters Kluwer eStore. The code is valid through October 31, 2023.

Cody Anthony, Dentons US LLP

Kiran Nasir Gore, The George Washington University Law School

Diora Ziyaeva, Dentons US LLP

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