Legislation

Legal Framework for Investment Activities

Since investment is a major prerequisite for economic development in the Kyrgyz Republic, investment legislation of the Kyrgyz Republic is liberal.
Thus, under the legislation of the Kyrgyz Republic, foreign investors enjoy the national treatment applied to individuals and legal entities of this country. Legislation provides for a broad scope of rights and guarantees to foreign investors, including guarantees of export and repatriation of investment, property, and information out of the Kyrgyz Republic, guarantees of protection against investment expropriation and coverage of losses incurred by investors, guarantees of income use and freedom of monetary transactions, and others.
According to the IFC-World Bank 2008 Doing Business Report, Kyrgyzstan ranked 33rd out of 178 countries in investor protection in 2008.

The Kyrgyz Republic has entered into a number of bilateral treaties on mutual support, encouragement and protection of investment (capital expenditure). Such treaties have been signed with a number of countries such as:

The Government of the Kyrgyz Republic has approved draft agreements on mutual support, encouragement and protection of investment with the Czech Republic, and the Netherlands. Similar agreements with Japan, Austria, Singapore, Hungary, Macedonia, Belgium-Luxembourg Economic Union, Italy, Slovakia, and Canada are currently planned.

The Ministry of Economic Development of the Kyrgyz Republic is the authorized executive body responsible for development of national investment policy. It drafts and implements a cohesive national macroeconomic, financial, tax and customs policy and policy that covers economic development, foreign trade and economic activities, encouraging investment, technical regulation, support and development of entrepreneurship, and the development of free economic zones.

State Guarantees to Foreign Investors

Subject to its legislation, the Kyrgyz Republic provides the following guarantees to foreign investors:

• National treatment of business activities, equal investment rights of domestic and foreign investors, no intervention into the business activities of investors, protection and restitution of infringed rights of investors in accordance with the legislation of the Kyrgyz Republic and international treaties
• Export or repatriation of profit gained on investment, proceeds of investment activities in the Kyrgyz Republic, property, and information, out of the Kyrgyz Republic
• Protection against expropriation (nationalization, requisition, or other equivalent measures, including action or omission on the part of authorized government bodies of the Kyrgyz Republic that has resulted in seizure of investor’s funds or investor’s deprivation of the possibility to use the results of their investment). In exceptional cases involving public interest, investments may be expropriated with concurrent state guarantees of appropriate coverage of damage incurred by the investor
• The investor’s right to freely use the income derived from their activities in the Kyrgyz Republic
• The freedom to invest in any form into objects and activities not prohibited by legislation of the Kyrgyz Republic, including the activities subject to licensing
• Freedom of monetary transactions (free conversion of currency, unbound and unrestricted money transfers; should provisions restricting money transfers in foreign currency be introduced into legislation of the Kyrgyz Republic, these provisions will not apply to foreign investors, with the exception of cases where investors engage in illegitimate activities (such as money laundering)
• Free access to open-source information
• The right to: establish legal entities of any organizational and legal form provided by legislation of the Kyrgyz Republic; open branches and representative offices within the territory of the Kyrgyz Republic; select any organizational and managerial structure for the business entities, unless a different structure is explicitly required by law for the given organizational and legal form of a business entity; acquire property (with the exception of land plots), shares, other securities, including governmental securities; participate in privatization of state property, establish associations and other unions; hire local and foreign employees subject to legislation of the Kyrgyz Republic; and engage in other investment activities not prohibited by legislation in the Kyrgyz Republic
• Recognition by public authorities and officials of the Kyrgyz Republic of all intellectual property rights of foreign investors
• Freedom for the investor to choose within 10 years from the beginning of the investment activity (or within the term provided by the respective investment agreement) conditions most favorable for the investor, should investment, tax, customs legislation of the Kyrgyz Republic (with the exception of the Constitution of the Kyrgyz Republic, laws related to national security, health care, and environment protection) be amended
• Other guarantees specifically provided in bilateral and multilateral international treaties on the promotion and protection of investment, to which the Kyrgyz Republic is a party

Settlement of Investment Disputes

Under legislation of the Kyrgyz Republic,30 investment dispute parties may agree on any judicial institution to settle their dispute; these institutions may include third-party courts located within or outside the Kyrgyz Republic, domestic or international arbitration. Should an agreement thereupon not be reached, the dispute is subject to settlement by the judicial bodies of the Kyrgyz Republic.

Wherever possible, investment disputes shall be settled by consultation between the parties. Should the parties fail to amicably settle their dispute within three months of the date of the first written request for such consultation, any investment dispute between an investor and public authorities of the Kyrgyz Republic will be subject to settlement by the judicial bodies of the Kyrgyz Republic.
Any of the parties may initiate a settlement by recourse to:

• The International Centre for Settlement of Investment Disputes under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States or procedures regulating use of additional means for the Centre’s Secretariat hearing);31 or
• Arbitration or a provisional international arbitration tribunal (commercial court) established under the arbitration procedures of the UN Commission for International Trade Law (UNCITRAL).

The International Court of Arbitration (ICA) has been active in the Kyrgyz Republic since its establishment in 2003. The goal of the ICA CCI is to render support to individuals and legal entities interested in out-of-court settlement of their disputes that arise from civil law relations, such as foreign trade and other international business relations, including investment disputes, on condition that a third party agreement (arbitration clause) empowers the ICA CCI for this.

The ICA is represented by 141 experts from 20 countries, including 63 international arbitrators from the United States, Switzerland, France, Kazakhstan, Russia, Ukraine, Uzbekistan, the United Kingdom, Sweden, the Netherlands, Turkey, India, Croatia, Romania, Austria, Korea, Poland, Italy, and other countries.