Written by: Mironshokh Murodilloev and Khushnazar Juraev
Image source: Kun.uz
June 1, 2021


Today, property disputes can be found at every step in Uzbekistan. One such example can be a single apartment building near the Akay City apartment complex in the Mirzo Ulugbek district of Tashkent city. It has not been demolished and it has already been causing problems between the investor and owner (parties). The dispute between the administration of the complex and the owners of the apartment has been going on for several years. They have not yet accepted the company’s offer. So, the company has filed a lawsuit to evict the homeowners. In this blog post, we will conduct a legal analysis to evaluate the parties’ positions, and in the end, we will provide what the pending court decision will look like.

Facts of the case and the positions of parties.

Firstly, according to the owner, the house had become the property of six owners as a result of the gift agreement, and he claimed that compensation would be paid if each of the owners agreed.

Secondly, according to the officials in the investing company, the house itself was in a dispute, and the number of owners has artificially been increased after the house fell into disrepair. For this reason, the company is not financially able to satisfy every owner.

Thirdly, the total area of ​​the yard is more than 400 sq.m (4 sotix). The total living area is 131 sq.m. The company offers 169 sq.m. houses not based on the total area of the land plot, but on the living space. But citizen Chingiz Rasulov said that the total area of the house has been 400 sq.m. and he has been asking for 400 square meters of housing in a multi-story residential complex.

Fourthly, if in 2018 the owner filed an application to the administrative court to annul the decision of the governor of Mirzo Ulugbek due to illegality while the investor appealed to the civil court to forcibly relocate the owner.

Fifthly, due to the negligence of the construction crews and the damage caused to the property the moral damages have been claimed by the landlord and as a result of the noise since the construction has been going on around the house for three years.

Below, we provide an in-depth analysis of the rights and obligations of both parties: the owners and Akay City, based on applicable law, and try to predict how the court will act in this case.

Rights of the investor

In this problematic situation, the main claim of the investor (Akay city) is the possibility of the invalidation of the gift contract between the current owners (concluded by this court in March 2020). According to the investor, when citizen Chingiz Rasulov found out that his property was in “snos” (the term which is used for a property built illegally), he plans to use “tricks” in the vernacular. That is, he entered into a gift contract with several close relatives as a co-owner on the basis of a gift agreement. According to Article 116 of the Civil Code, an agreement that does not comply with the requirements of the law, as well as an agreement entered into for the purpose of deliberately violating law and order or moral principles, is not valid in itself.

These types of transactions fall into the category of transactions that are not automatically valid. The person may have acted intentionally to invalidate the transaction. This includes not only direct but also indirect prejudice (that is when a person desires and consciously allows such consequences). An agreement entered into intentionally contrary to law, order or morality will be found automatically invalid from the outset. Deliberately concluded for purposes contrary to law, order or ethics constitute the most “dangerous” and most harmful part of an unrealistic agreement. They fall into the category of spontaneous, unrealistic transactions, which, if implemented, can have very serious consequences. In practice and in theory, such agreements are called anti-social. The main features of this agreement are: 1) the purpose: the agreement is concluded for unlawful or immoral purposes; 2) at least one of the parties to such an agreement has a malicious intention. This is the basis for several conclusions from the content of the Article:

Firstly, it follows that the purpose itself may be sufficient to include the transaction in this type of unrealistic transaction. An agreement is legal in content and form, but the goal is to make it a very dangerous, unrealistic agreement.

Secondly, the legal framework and the ethics framework are considered by law to be equal criteria for assessing the risk of a transaction. In other words, in order for an agreement to be invalid, it is sufficient that it was entered into on the basis of, for example, an unethical purpose. However, such a goal is not always clear. This is not the usual legal purpose for the transaction. It is a matter of intentional action by the parties to achieve a legal outcome of the agreement. Because the act was a “dangerous outcome” necessary for the transaction to take place, the transaction was deemed to have been committed intentionally against law or order. The goal itself does not have the same consequences as the agreement. The consequences are associated with efforts to enforce such an agreement. That is, it is very likely that the court will consider the invalidation of the current gift contract invalid. The reason for this is that a citizen enters into a gift contract with two people in order to get a larger share of the housing only after a citizen knows that the investment projects in the area will be implemented and the investors will compensate the houses. This agreement is significant because it is one of the agreements concluded in civil law for malicious purposes. Another fact that proves the contract was made in an unnatural and biased way is that, during a discussion with reporters, the Kun.uz reporter asked the homeowner exactly with whom the gift contract was made, their relation with this person, or their closeness to the house. The owner was not able to give a clear answer on that, he admits those people are not even his relatives. Under Article 116 of the Civil Code, transactions that are intentionally contrary to the rules of ethics are more likely to be declared invalid by a court in the event of a dispute. In general, such an artificial increase in the number of owners on the eve of “snos” is completely contrary to the principle of fairness.

Third, the next source of dispute between the investor and the citizen is the amount of compensation. The landlord claimed that the amount of compensation should commensurate with the total amount of the house, while the lawyer said the Cadastral Office would provide housing that matched the living space of the house (a total of 169 sq.m. according to the latest proposal). Approved by the Resolution of the Cabinet of Ministers of November 16, 2019 “On additional measures to ensure guarantees of property rights of individuals and legal entities and to improve the procedure for withdrawal and compensation of land” the withdrawal of land plots in accordance with subparagraph “41 a” of the Regulation named “On the procedure for withdrawal of land plots and compensation of owners of real estate located on the land plot” (Regulation) quantitative compensation is provided based on the total cost of real estate in the area. When we pay closer attention to those negotiations, the lawyer-consultant emphasizes that the total living space is 149 sq.m. in accordance with the data given by/presented by Cadaster, while the owner claims 400 sq.m. In our opinion, the above-stated norm confirms that the arguments of the lawyer are more persuasive.

Finally, the company says that the housing provided will be a total of 169 square meters by 16 million soums for per square meter. This is about 2 billion 704 million soums, and this is significantly higher than the price of the owner’s house.

The issue could be viewed from a different angle, and this approach is relatively radical. That is, it is necessary to pay attention to Article 27 of the Housing Code in cases when the houses of citizens are confiscated in the appropriate order. According to it, in case of confiscation of housing, compensation will be provided within the social norm of living space, which is 16 square meters, as stipulated in Article 43 of this Code. Paragraph 8 of the Resolution of the Plenum of the Supreme Court of the Republic of Uzbekistan “On Judicial Practice in Housing Disputes” also fully supports the above. So, if we take the list of permanent residents (conditionally) as 6 people, 6×16 = 96 square meters. However, the living space of the owner’s house is 75 square meters (131 square meters this is a total construction area, not a living area). Although the investor provides 169 square meters (almost twice as much) of a new house in this particular case violates the principle of “equality” enshrined in Article 29 of the above code, the owner is beyond the scope of fairness. It does not only contradict the law, but also the principles of justice.

Rights of the home owner

The landlord possesses no fewer rights to juxtapose with the investor in the expected trial. In particular, he has a number of substantial benefits in recovering compensation for the property which is going to be seized due to investment-based issues, and, as the owner claims, in recovering the material and moral damages caused by the construction crews. They are discussed below:

Firstly, as was claimed by the owner, he decided to initiate administrative litigation in Mirzo Ulugbek district trial to set aside the resolution in 2018 of the City Mayor on seizing his house for investment activities. The owner considers this claim to be out of the competence of the Mayor of Tashkent city. For him, the relevant decision on the seizure of land for the implementation of investment projects in accordance with paragraph 1 of paragraph 3 of the Charter on Expropriation and Compensation of Land(Charter) should be made only by the Council of Deputies. However, the owner must also take into account the principle of “non-retroactivity” which is one of the general legal principles of law. In particular, adopted legal acts inter alia resolutions have no power of retroactivity under Article 31 (1) of Law on “Legal acts”. In accordance with Paragraph 2 of the Resolution of the Cabinet of Ministers on May 29, 2006, No. 97 “On approval of the Regulation on the procedure for compensation of damage caused to citizens and legal entities in connection with the seizure of land for state and public needs” mayors have such authorities. If we take into account that the Charter came into force on November 16, 2019, this action of the Mayor in 2018 is legal and is impossible to be set aside.

Secondly, as stated in Article 13, Section 2, Subparagraph 2 of the Statute, the investor shall provide the authorities with documents confirming the availability of sufficient funds for property compensation. However, according to a report by reporters, the investor claims that the company did not have enough funds to reach an agreement with the owner in terms of a bona fide agreement. At the same time, it is a bit strange that the government approved the project documents, even though the compensation to be paid to the investor owners has been initially regarded/considered as financially impossible.

Thirdly, the approved Protocol “On the results of the open discussion with the owners” following Article 33 of the Charter has not been published on the official website of the relevant authority. This presumably works to the detriment of the investor if the third stage of the procedure is violated and transparency is not achieved.

Fourthly, the owner’s house is a detached house, as defined in the Charter. Pursuant to Subparagraph G of Paragraph 45, by agreement of the parties, the landlord should be provided with ad valorem land and housing located in one or another district (city) with the landlord’s consent. In negotiations with the owner and the company’s legal adviser, the owner demanded that the new houses be provided be skyscraper residential buildings in the same area, and his demand is justified. Because, according to the above-stated norm, according to the agreement of the parties, the transfer of housing must be in the area chosen by the owner.

Fifthly, the dispute between the two parties and the fact that it has reached the level of the court since the investor has not properly fulfilled its obligations. According to Paragraph 2 of Article 50 of the Charter, in case of disagreement between the parties, the valuation of real estate is to be carried out by the appraiser at the initiative of the appraisal organization. That is, the appraiser will review the situation and provide the parties with an approximate estimate, and the total cost should have been borne by the initiator, Akay City LTD. However, the investor may have filed a lawsuit to evict the owner from his or her home without consulting an appraiser in order to avoid excessive costs.

Sixthly, according to Article 8 of the Law “On guarantees of the rights of citizens” the landlord has the right to recover damages through litigation while investment-based activities are carried out near his home. The compensation also includes damage to a citizen’s health. However, it should be noted that the damage caused by the investor so far has not been substantiated by the owner, that is, there is no act or assessment opinion in determining the amount of damage, and this fact is unlikely to be detrimental to the owner.

Concluding part

The entire Uzbek segment is now eagerly awaiting the outcome of this dispute between the investor and the owner, rather than details, as similar cases are likely to be seen as jurisprudence constant in similar situations in the future. Based on the above, it can be concluded that the court ought not to be one-sided in this particular situation, but to make a balanced decision considering all facts and evidence.

In particular, the award may be in favor of the investor. That is, when Akay City cannot agree on the amount of compensation, the court will force to assess at the expense of the initiator. The appraisal, of course, concludes that the compensation should be based on the market size and fair market value of the home, not on the size of the land. Because public policy is also based on the development and protection of the interests of investors, it is likely that the award will be made to the detriment of the owner. Because, if a citizen sues to increase compensation by increasing the number of owners as a result of the area of ​​the house and the gift agreement, thousands of other people observing this situation will do the same, making investors virtually financially insolvent in their deals. As a result, the interest in the housing sector among business people will probably decline.

Second, because the landlord’s right to choose his or her home is justified, the investor will provide the home in the area claimed by the landlord, but the landlord will also be forced to accept the terms of the investor’s legal adviser.

Third, a lawsuit to overturn a landlord governor’s decision may also be declined as District Mayors have authority to adopt resolutions to seize residential properties only fair and equitable compensation needs to be paid.

Fourth, the total damage caused by the construction crew’s carelessness and negligence towards the property of others will also be covered at the investor’s expense.

Cite as: Mironshokh Murodilloev and Khushnazar Juraev, “Landlord versus Investor of Akay City: in whose favor can the problem be solved?”, Uzbekistan Law Blog, 1.06.2021