Title

AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE REPUBLIC OF UZBEKISTAN ON THE PROMOTION AND PROTECTION OF INVESTMENTS

Preamble

PREAMBLE

The Government of the People's Republic of China and the Government of the Republic of Uzbekistan (hereinafter referred to as the Contracting Parties).

Intending to create favorable conditions for investment by investors of one Contracting Party in the territory of the state of other Contracting Party:

Recognizing that the reciprocal encouragement, promotion and protection of such investment on the basis of equality and mutual benefits will be conducive to stimulating business initiative of the investors and will increase economic prosperity in both States;

Respect for economic sovereignty of the Contracting Parties,

Desiring to intensify the cooperation of both States, to promote a healthy, stable and sustainable development of economy, and to improve-welfare of the peoples of the Contracting Parties.

Have agreed as follows:

Body

Article 1. Definitions

For the purpose of this Agreement,

1. The term investment means every kind of assets that has the characteristics of an investment, invested by investors of one Contracting Party in accordance with the laws and regulations of the other Contracting Party in the territory of the latter, and in particularly, though not exclusively, includes:

(a) movable and immovable property and other property rights such as mortgages, pledges and similar rights;

(b) shares, stock and any other kind of participation in companies;

(c) claims to money or to any other legal performance under contract having an economic value associated with an investment;

(d) intellectual property rights, in particularly copyrights, patents, trade-marks, trade-names, technical process, know-how and goodwill;

(e) concessions conferred by law or under contract permitted by law, including concessions to search for, cultivate, extract or exploit natural resources.

(f) bonds, including government issued bonds, debentures, loans and other forms of debt, and right derived therefrom, which related to investments.

The characteristics of an investment mean the commitment of capital or other resources, the expectation of gain of profit, and the assumption of risk.

Any change in the form in which assets are invested does not affect their character as investments provided that such change is in accordance with the laws and regulations of the Contracting Party in whose territory the investment has been made.

The investment made by an investor of one Contracting Party through an enterprise which is wholly or partially owned by the investor and having its seat in the territory of the State of the other Contracting Party is also deemed as investment of this paragraph.

For the purposes of this Agreement an investment does not mean (a) claims to money that arise solely from commercial contracts for the sale of goods or services by a national or enterprise in the territory of the State of the other Contracting Party; (b) claims to money that arise from marriage or inheritance and have no characteristics of investment.

Bonds, debentures and loans with original maturity less than 3 years shall not be deemed as investments under this Agreement.

2. The term investor means nationals or enterprises of one Contracting Party who are investing or have invested in the territory of the State of other Contracting Party:

(a) the term national means natural persons who have nationality of either Contracting Party in accordance with the applicable laws of that Contracting Party;

(b) the term enterprise means any entities, including companies, firms, associations, partnerships and other organizations incorporated or constituted under the applicable laws and regulations of either Contracting Party and have their seats and substantial business activities in that Contracting Party, irrespective of whether or not for profit and whether it is owned or controlled by private person or government or not.

(c) legal entities constituted under the laws of a non-Contracting Party but directly owned or controlled by nationals in paragraph (a) or enterprises in Paragraph (b).

3. The term "return" means the amounts yielded from investments, including profits, dividends, interests, capital gains, royalties, fees, return in goods and other legitimate income related to investments.

4. The term territory means,

(a) in respect of the People's Republic of China, the territory, including the land area, internal waters and the territorial sea and the air space above them, as well as any area beyond its territorial sea within which the People's Republic of China has sovereign rights or jurisdiction of explorations

And exploitations of resources of the seabed and its subsoil and superjacent water resources in accordance with Chinese law and International law.

(b) In respect of the Republic of Uzbekistan, the territory, including the land area, internal waters and the territorial sea and the air space above them, as well as any area beyond its territorial sea within which the Republic of Uzbekistan has sovereign rights of explorations and exploitations of resources of the seabed and its subsoil and superjacent water resources in accordance with international law and its national legislation.

Article 2. Promotion and Protection of Investment

1. Each Contracting Party shall encourage investors of the State of other Contracting Party to make investments in the territory of its own State and admit such investments in accordance with its laws and regulations.

2. Subject to its laws and regulations, one Contracting party shall provide assistance in and facilities for obtaining visas and working permit to nationals of the State of the other Contracting Party engaging in activities associated with investments made in the territory of the State of that Contracting Party.

Article 3. National Treatment

Without prejudice to its applicable laws and regulations, with respect to the management, conduct, maintenance, use, enjoyment, sale or disposal of the investments in its territory, each Contracting Party shall accord to investors of the other Contracting Party and associated investments treatment not less favorable than that accorded to its own investors and associated investments in like circumstances.

Article 4. Most Favored Nation Treatment

1. Each Contracting Party shall accord to investors of the other Contracting Party and the investments thereof treatment no less favorable than that it accords, in like circumstances, to

Investors and the investments thereof of any third State with respect to the establishment, acquisition, expansion, management, maintenance, use, enjoyment, sale or disposal of investments.

2. The provisions of Paragraph 1 of this Article shall not be construed so as to oblige one Contracting Party to extend to the investors of the other Contracting Party the benefit of any treatment, preference or privilege by virtue of:

(a) any customs union, free trade, economic union, and agreement resulting in such unions or similar institutions;

(b) any international agreement or arrangement relating wholly or mainly to taxation (including customs payments);

(c) any arrangements for facilitating frontier trade in border areas.

3. Notwithstanding Paragraph 1, dispute settlement mechanisms stipulated in other treaties shall not be referred to investment disputes in the framework of this Agreement.

Article 5. Fair and Equitable Treatment

1. Each Contracting Party shall ensure to accord to investors of the other Contracting Party and associated investments in its territory fair and equitable treatment and full protection and security.

2. "Fair and equitable treatment" requires that investors of one Contracting Party shall not be willfully rejected to fairly judicial proceedings by the other Contracting Party or be treated with obvious discriminatory or arbitrary measures.

3. "Full protection and security" requires that Contracting Parties shall take reasonable and necessary police measures providing investment protection and security. However, it does not mean, under any circumstances, investors shall be accorded treatment more favorable than nationals of the Contracting Party in whose territory the investment has been made.

4. A determination that there has been a breach of other articles of this Agreement, or articles of other agreements, does not establish that there has been a breach of this Article.

Article 6. Expropriatios

1. Neither Contracting Party shall expropriate, nationalize or take any other measure the effects of which would be equivalent to expropriation or nationalization against the investments of

The investors of the other Contracting Party in its territory (hereinafter referred to as expropriation), unless the following conditions are met:

(a) for the public interests;

(b) in accordance with domestic legal procedure and relevant due process;

(c) without discrimination;

(d) against compensation.

"Measure the effects of which would be equivalent to expropriation or nationalization" means indirect expropriation.

2. The determination of whether a measure or a series of measures of one Contracting Party constitutes indirect expropriation in Paragraph 1 requires a case-by-case, fact-based inquiry that considers, among other factors:

(a) the economic influence of a measure or a series of measures, although the fact that a measure or a series of measures of the Contracting Party has an adverse effect on the economic value of investments, standing alone, does not establish that an indirect expropriation has occurred;

(b) the extent to which the measure or the series of measures grant discrimination in scope or application over investors and associated investments of the other Contracting Party;

(c) the extent to which the measure or the series of measures cause damage to reasonable investment expectation of investors of the other Contracting Party: such expectation arises from the specific commitments made by one Contracting Party to the investors of the other Contracting Party;

(d) the character and purpose of a measure and a series of measures, whether it is adopted for the purpose of public interest in good faith, and whether it is in appropriation to the purpose of expropriation.

3. Except in exceptional circumstances, such as the measures adopted severely surpassing the necessity of maintaining corresponding reasonable public welfare, non-discriminatory regulatory measures adopted by one Contracting Party for the purpose of legitimate public welfare, such as public health, safety and environment, do not constitute indirect expropriation.

4. The compensation mentioned in Paragraph 1 of this Article shall be equivalent to the fair market value of the expropriated investments immediately before the expropriation is taken or the impending expropriation becomes public knowledge, whichever is earlier. The compensation shall also include interest at a reasonable commercial rate until the date of payment. The compensation shall be made without unreasonable delay, be effectively realizable and freely transferable.

Article 7. Compensation for Damages and Losses

1. Investors of one Contracting Party, whose investments in the territory of the State of the other Contracting Party suffer losses owing to armed clash, a state of emergency, insurrection or other similar events in the territory the State of of the latter Contracting Party, shall be accorded by the other Contracting Party, as regards restitution, indemnification, compensation and other settlements, no less favorable treatment than that accorded to the investors of its own or any third State, whichever is more favorable to the investor concerned.

2. Investments by investors of one Contracting Party that, in any of the situations referred to in Paragraph 1 of this Article, suffer losses in the territory of State of the other Contracting Party resulting from requisitioning or destruction of an investment or a part thereof by the latter's armed forces or authorities, which was not caused in combat action or was not required by the necessity of situation, shall be accorded restitution or appropriate compensation.

Article 8. Transfers

1. Each Contracting Party shall, subject to its laws and regulations, guarantee to the investors of the other Contracting Party, after fulfillment of all tax obligations, transfer of their returns or proceeds legitimately obtained in the territory of State of the former Contracting Party, and in particularly, though not exclusively, includes:

(a) profits, interests, dividends, capital gains, royalty fees, and other fees in connection with intellectual property rights;

(b) payments in connection with an investment contract, including related payments made pursuant to a loan agreement;

(c) proceeds obtained from the whole or partial sale or liquidation of investments;

(d) earnings and remuneration of nationals of the other Contracting Party who work in connection with an investment;

(e) payments made pursuant to Article 6 and Article 7; or

(f) payments arising out of a dispute in connection with investments.

2. Except as otherwise provided for in this Agreement, each Contracting Party, subject to its laws and regulations, shall ensure that the transfers mentioned above shall be made without any delay in a freely convertible currency and at the market rate of exchange applicable on the date of transfer.

3. Notwithstanding the provisions of paragraph 1 and 2 of this Article, a Contracting Party may prevent a transfer on the basis of equitable, non-discriminatory and good faith application of its laws relating to:

(a) bankruptcy, insolvency or the protection of the rights of creditors;

(b) issuing, trading or dealing in securities futures, options and other derivatives;

(c) suspected of criminal or administrative offenses;

(d) reports of transfers of cash or other monetary instruments; or

(e) ensuring compliance with judicial or administrative proceedings.

4. In case of a serious balance of payments difficulty or of a threat thereof, each Contracting Party may temporarily restrict transfers provided that such a Contracting Party implements measures in accordance with international standards. These restrictions should be imposed on an equitable, non-discriminatory and good faith basis.

Article 9. Subrogation

If one Contracting Party or its designated agency makes a payment to an investor under a guarantee or a contract of insurance against non-commercial risks it has accorded in respect of an investment of that investor made in the territory of the State of the other Contracting Party, the latter Contracting Party shall recognize:

(a) the assignment, whether under the law or pursuant to a legal transaction in the former Contracting Party, of any rights or claims by that investor to the former Contracting Party or to its designated agency, as well as,

(b) that the former Contracting Party or its designated agency to entitled by virtue of subrogation to exercise the rights and enforce the claims of that investor and assume the obligations related to the investment to the same extent as the investor.

Article 10. Denial of Benefits

1. A Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is an enterprise of such other Contracting Party and to investments of that investor if nationals of a non-Party own or control the enterprise when/if:

(a) the denying Contracting Party does not maintain diplomatic relations with the non-Party; or

(b) the denying Contracting Party adopts or maintains measures with respect to the nonParty or a person of the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Agreement were accorded to the enterprise or to its investments.

(c) the enterprise has no substantial commercial business in the territory of the other Contracting Party,

2. A Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is an enterprise of such other Party and to investments of that investor if the enterprise has no substantial business activities in the territory of the other Party and nationals or enterprises of the denying Party own or control the enterprise.

Article 11. Settlement of Disputes between Contracting Parties

1. Any dispute between the Contracting Parties concerning the interpretation or application of this Agreement shall, as far as possible, be settled with consultation through diplomatic channel.

2. If a dispute cannot thus be settled within six months, it shall, upon the request of either Contracting Party, be submitted to an ad hoc arbitral tribunal.

3. Such tribunal comprises of three arbitrators. Within two months of the receipt of the written notice requesting arbitration, each Contracting Party shall appoint one arbitrator. Those two arbitrators shall, within further two months from both of them are appointed, together select a national of a third State having diplomatic relations with both Contracting Parties as Chairman of the arbitral tribunal.

4. If the arbitral tribunal has not been constituted within four months from the receipt of the written notice requesting arbitration, either Contracting Party may, in the absence of any other agreement, invite the President of the International Court of Justice to make any necessary appointments. If the President is a national of either Contracting Party or is otherwise prevented from discharging the said functions, the Member of the International Court of Justice next in seniority who

Is not a national of either Contracting Party or is not otherwise prevented from discharging the said functions shall be invited to make such necessary appointments.

5. The arbitral tribunal shall determine its own procedure. The arbitral tribunal shall reach its award in accordance with the provisions of this Agreement and the principles of international law recognized by both Contracting Parties.

6. The arbitral tribunal shall reach its award by a majority of votes. Such award shall be final and binding upon both Contracting Parties. The arbitral tribunal shall, upon the request of either Contracting Party, explain the reasons of its award.

7. Each Contracting Party shall bear the costs of its appointed arbitrator and of its representation in arbitral proceedings. The relevant costs of the Chairman and tribunal shall be borne in equal parts by the Contracting Parties.

Article 12. Settlement of Disputes between Investors and One Contracting Party

1. Any legal dispute between an investor of one Contracting Party and the other Contracting Party in connection with an investment in the territory of State of the other Contracting Party shall, as far as possible, be settled amicably through negotiations between the parties to the dispute, including conciliation procedures.

2. If the dispute that an investor of one Contracting Party claiming that the other Contracting Party has breached an obligation under Article 2 through 9, or Article 13, can not be settled through negotiations within six months from the date it has been raised by either party to the dispute, the disputing investor who incurred loss or damage from that breach may, by his choice, submit the claim:

(a) to the competent court of State of the Contracting Party that is a party to the dispute;

(b) to InternationalCenter for Settlement of Investment Disputes (ICSID) under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington on March 18,1965, for arbitration;

(c) to an ad-hoc arbitral tribunal to be established under the Arbitration Rules of the United Nations Commission on the International Trade Law (UNCITRAL); or

(d) to any other arbitration institutions or ad-hoc arbitral tribunals agreed by the disputing parties. The other Contracting Party has the right to require the investor concerned to exhaust the

Domestic administrative review procedures specified by the laws and regulations of that Contracting Party before the submission to international arbitration.

3. If the investor has submitted the dispute to the competent court of the Contracting Party concerned or to international arbitration, the choice of one of the four procedures, referred to in Paragraph 2 of this Article, shall be final.

4. A dispute shall not be submitted to arbitration when more than three (3) years elapsed from the date that the investor first acquired or should have first acquired knowledge of the events which gave rise to the dispute.

5. If the stipulations in this Agreement are in conflict with applicable arbitration rules, the stipulations in this Agreement shall prevail.

6. The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the disputing parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting party to the dispute (including its rules on the conflict of laws), and such rules of international law as may be applicable, in particular, this Agreement.

7. Unless the disputing parties agree otherwise, where an award affirms that a Contracting Party has breached its obligations under this Agreement, the tribunal may only award, separately or in combination:

(a) monetary damages and any applicable interest;

(b) restitution of property, in which case the award may specify monetary damages and corresponding interest in lieu of restitution.

8. The arbitration award shall be final and binding upon both parties to the dispute. Both Contracting Parties shall commit themselves to the enforcement of the award.

9. A disputing party may not seek enforcement of a final award until:

(a) in the case of a final award made under the ICSID Convention:

(i) one hundred and twenty (120) days have elapsed from the date the award was rendered and no disputing party has requested revision or annulment of the award; or

(ii) revision or annulment proceedings have bean completed; and

(b) in the case of a final award under the ICSID Additional Facility Rules, the UNCITRAL Arbitration Rules, or any other arbitration rules selected by both disputing parties:

(i) ninety (90) days have elapsed from the date the award was rendered and no disputing party has commenced a proceeding to revise, set aside, or annul the award; or

(ii) a court has dismissed or allowed an application to revise, set aside, or annul the award and there is no further appeal by any disputing party.

10. In principle, each disputing party shall bear the costs of its appointed arbitrator and of any legal representation in proceedings. The costs of the presiding arbitrator and of other expenses associated with the conduct of the arbitration shall be borne equally by the disputing parties. The Arbitral Tribunal may award one disputing party to bear a higher proportion of the costs and give the

Explanation. If the Tribunal deems that the claim or the objection of one disputing party is frivolous, it may award the losing party to bear reasonable costs and attorney's fees of the prevailing party incurred in objecting or opposing the objection with a reasonable cause.

Article 13. Other Obligations

1. If the legislation of either Contracting Party or international obligations existing at present or established hereafter between the Contracting Parties result in a position entitling investments by investors of the other Contracting Party to a treatment more favorable than is provided for by the Agreement, such position shall not be affected by this Agreement.

2. Each Contracting Party shall observe any written commitments in the form of agreement, treaty or contract it may have entered into with the investors of the other Contracting Party as regards to their investments,

3. Notwithstanding Paragraph 2, the breach of one Contracting Party of the obligation under a commercial contract is not a breech of this Agreement.

Article 14. Application

1. This Agreement shall apply to investment made prior to or after its entry into force by investors of one Contracting Party in the territory of the State of other Contracting Party in accordance with the laws and regulations of the Contracting Party concerned, but not apply to the dispute arose before its entry into force.

2. Article 12 of this Agreement shall apply to the investor stipulated in Paragraph 2 (c), Article 1 only under the following circumstance: there is no legitimate claim or the investor waives the legitimate claim under other agreements signed by the non-contracting party, under whose laws and regulations the investor has established, and the other Contracting Party.

Article 15. Consultations

1. The representatives of the Contracting Parties shall hold meetings from time to time for purpose of:

a) reviewing the implementation of this Agreement;

b) exchanging legal information and investment opportunities:

c) resolving disputes arising out of investments;

d) forwarding proposals on promotion of investment;

e) studying other issues in connection with investment.

2. When either Contracting Party requests consultation on any matter of Paragraph 1 of this Article, the other Contracting Party shall give prompt response and the consultation be held alternatively in Beijing and Tashkent.

Article 16. Interpretation

1. In the dispute settlement procedure stipulated in Article 12, upon request of the Contracting Party to the dispute, the arbitral tribunal shall require both Contracting Parties to interpret articles of this Agreement to the dispute together. Both Contracting Parties shall submit combined decision of interpretation in writing to the arbitral tribunal within seventy days from the request is raised.

2. Combined decision made by both Contracting Parties pursuant to Paragraph 1 shall be binding upon the arbitral tribunal. The award shall be consistent with the combined decision. If both Contracting Parties fail to make such decision within seventy days, the arbitral tribunal will make decision independently.

Article 17. Amendments

This Agreement may be amended by mutual consent of the Contracting Parties through written protocols between them and will enter into force under the proceadure stipulated in Article 18 and form an integral part of this Agreement.