Government of Uzbekistan Holds Foreign Investors Hostage in Resource Nationalism Attack against Oxus Gold PLC

By Amsterdam Peroff, PRNE
Sunday, July 10, 2011

LONDON, July 11, 2011 -


An important foreign-investor dispute in Uzbekistan escalated in
recent weeks, as the Government of Uzbekistan elected to pursue a
mudslinging strategy instead of good faith negotiations required
under international law.  The dispute involves a company owned
by Oxus Gold plc (Oxus) - once Uzbekistan’s largest foreign
investor - and two entities controlled by the Government of
Uzbekistan, all of whom joint venture in a precious metals
extraction operation, Amantaytau Goldfields A.O. (AGF), in the
Kyzylkum Region of Uzbekistan’s Navoi Oblast.  Following
expropriatory conduct by the Uzbek entities, Oxus formally asked
the Government of Uzbekistan in March 2011 to participate in
obligatory good faith settlement discussions under an applicable
bilateral investment treaty.  While Uzbekistan gave lip
service to meaningful discussions, its real effort went into
launching a campaign of disinformation to try to force AGF into
involuntary liquidation, which Oxus’ lawyers assert smacks of
resource nationalism.

“On June 28, 2011, state-owned Goskomgeology accused Oxus - its
own joint-venture partner - of failing to meet technology and
environmental standards, and of creating ‘threats to human life,’”
noted Robert R. Amsterdam, international counsel to Oxus. 
“These false accusations were leveled against the first company
ever in Uzbekistan to implement an environmental plan that complied
with World Bank standards, which far exceed local Uzbek
environmental regulations.  In most countries, these false
allegations would be the source of jokes, but the Uzbek officials
are shamelessly motivated by their desire to steal a profitable
foreign investment.”

Amsterdam also points out that the Uzbek authorities have
conjured up punitive tax audits, initiated a pattern of
bureaucratic harassment, and imprisoned Oxus’s former chief
technologist - Mr. Said Ashurov - on fabricated charges of
espionage.  “This kind of conduct effectively holds Oxus
hostage.  The international business community should take
note of what happens to foreign investors who achieve success in
Uzbekistan,” said Amsterdam.

On July 6, 2011, Oxus’ lawyers delivered a letter to the
President of Uzbekistan and other officials, refuting the recent
false allegations.  A copy of that letter is available on href="www.robertamsterdam.com/uzbekistan">www.robertamsterdam.com/uzbekistan.

This media campaign by the Uzbek government is the latest
development in a dispute that commenced formally on March 3, 2011,
when Oxus gave formal notice under the investment arbitration
treaty between the governments of Uzbekistan and the United
Kingdom.  The principal basis for Oxus’ claim is that Oxus and
its subsidiaries have been subjected to expropriatory, unlawful,
unfair and discriminatory treatment, resulting in catastrophic
losses of no less than $400 million.

“The Uzbek government’s conduct has been unlawful and morally
reprehensible,” Mr. Amsterdam stated.  “Uzbekistan’s
reluctance to resolve the AGF dispute in a lawful manner will not
only lead to significant injury in terms of foreign investment, it
also jeopardizes critical aid programs if Uzbekistan is found to
have violated the arbitration treaty.”

 

James Kimer, kimer at amperlaw.com, +1-917-355-0717

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