Doing a Business

Arbitration

The Law "On Arbitration" was adopted on April 8, 2016. The Law provides for bringing the norms of legislation in the field of arbitration in accordance with the international obligations of Kazakhstan, in particular, with the New York Convention "On the Recognition and Enforcement of Foreign Arbitral Awards" of 1958, European Convention "On Foreign Trade Arbitration" 1961.

Prior to the adoption of the Law, there were two forms of out-of-court settlement of disputes arising from civil legal relations, which were carried out by international arbitration tribunals and courts of arbitration. The activities of international arbitration were regulated by the law on international arbitration, and the arbitration court - by the law on arbitration courts.

The main changes and innovations in the Arbitration Law include the following:

  • the concepts of "arbitration court" and "arbitration court" are combined
  • established additional requirements for the form and content of the arbitration agreement
  • the right to withdraw from the arbitration agreement is provided
  • the grounds for canceling the arbitral award were supplemented
  • the creation and functioning of the Arbitration Chamber of Kazakhstan is regulated - a non-profit organization, which is an association of permanent arbitration tribunals, arbitrators, created in order to provide favorable conditions for the implementation, stimulation and support of the activities of arbitration tribunals in the Republic of Kazakhstan.
Arbitration is a widely recognized alternative dispute resolution mechanism. The main advantages of arbitration over state courts are ensuring the confidentiality of the proceedings, the speed and economy of the process, impartiality and objectivity.

Arbitration proceedings are carried out in compliance with the principles of autonomy of the will of the parties, legality, independence, competition and equality of the parties, fairness and confidentiality.

Also, one of the principles of arbitration proceedings is the autonomy of the arbitration agreement, which means that the cancellation, amendment or invalidation of the arbitration clause does not lead to the termination, modification or invalidation of the main agreement. Accordingly, cancellation, modification or invalidation of the underlying agreement does not result in the termination, modification or invalidation of the arbitration clause.

Disputes arising from civil law relations between individuals and (or) legal entities may be referred to arbitration by agreement of the parties.

Arbitration is not entitled to consider disputes between individuals and (or) legal entities of the Republic of Kazakhstan, on the one hand, and state bodies, state enterprises, as well as legal entities, fifty or more percent of voting shares (stakes in the authorized capital) of which directly or indirectly belong to the state, on the other, in the absence of the consent of the authorized body of the relevant industry (in relation to republican property) or a local executive body (in relation to communal property).

Specialized Interdistrict Administrative Court of Nur-Sultan and Specialized Interdistrict Economic Court of Nur-Sultan

From July 1, 2021, in accordance with paragraph 3 of Article 102 of the Administrative Procedure Code of the Republic of Kazakhstan dated June 29, 2020 No. 350-VI (APPK), the specialized interdistrict administrative court of the city of Nur-Sultan considers claims of investors referred to in part 1-2 of Article 27 of the Civil Procedure Code of the Republic of Kazakhstan (CPC) on appealing administrative acts, administrative actions (inaction) of administrative bodies , officials.

From July 1, 2021, in accordance with paragraph 1-2 of Article 27 of the Code of Civil Procedure, the specialized interdistrict economic court of the city of Nur-Sultan is considering civil cases in investment disputes, except for cases within the jurisdiction of the specialized interdistrict administrative court of the city of Nur-Sultan, as well as claims of state bodies against investors associated with the investor's investment activities, with the participation of:

1) a foreign legal entity (its branch, representative office) carrying out entrepreneurial activity in the territory of the Republic of Kazakhstan;

2) a legal entity created with foreign participation in the manner prescribed by the legislation of the Republic of Kazakhstan, fifty or more percent of voting shares (stakes in the authorized capital) of which belong to a foreign investor;

3) investors in the presence of a concluded contract with the state for investment.

In accordance with the Law of the Republic of Kazakhstan dated June 29, 2020 No. 351-VI "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Administrative Procedural Legislation of the Republic of Kazakhstan" RK considered disputes of large investors as the first instance. Now all disputes over investment contracts and other agreements between the state and the investor will be considered in the administrative court, if it concerns actions, omissions, administrative acts and actions.

Other disputes arising from legal relations with the participation of the investor, not related to investment activities, as well as disputes with the participation of the investor, subject to consideration in simplified proceedings, are subject to the jurisdiction of the district (city) and equivalent courts in accordance with the jurisdiction established by Chapter 3 of the Code of Civil Procedure.

Judicial chambers for administrative cases have been established in the Supreme Court and regional courts. K.S. was appointed Chairman of the Judicial Collegium for Administrative Cases of the Supreme Court. Musin.

By the Decree of the President of the Republic of Kazakhstan dated January 26, 2021, No. 500, specialized interdistrict administrative courts were created.

Court and Arbitration Center of the Astana International Financial Center

The Independent Court and the AIFC International Arbitration Center began their work in January 2018. The court hears commercial and civil disputes on the basis of the principles of English legal procedure in the official language of the AIFC - English.

Both institutions were created to resolve civil and commercial disputes arising both among the direct participants of the AIFC and any other persons who, for example, in writing, in a contract, prescribe a clause about going to the AIFC court or to the international arbitration center.

In accordance with the Constitutional Law of the Republic of Kazakhstan "On the Astana International Financial Center", the AIFC court has exclusive jurisdiction to consider disputes between the AIFC participants.

The President of the AIFC Court is Lord Harry Kenneth Wolfe. Lord Harry Kenneth Wolfe is an international arbitrator and mediator in financial law with extensive professional experience in the courts of England, Wales, Qatar and Hong Kong.

A legal advisory council has also been created at the AIFC, which includes representatives of such well-known international law firms as Baker McKenzie, Devonshires Solicitors, Hogan Lovells, Michelmores, Norton Rose Fulbright, White & Case, 3 Verulam Buildings.

The AIFC Court operates exclusively on the basis of law based on the principles of English law and the standards of leading international financial centers. More than 70% of all contracts in the world are concluded on the basis of English law. The rules and principles of the legal system of England and Wales help to create an attractive legal environment for investors, as well as create transparency in the resolution of disputes.

Mediation

In order to create a legal basis for citizens and legal entities to choose a method for resolving a dispute that has arisen, including without contacting the relevant state bodies, as well as in order to streamline the activities of persons involved in resolving conflict situations (mediators), on January 28, 2011, the Law was adopted Of the Republic of Kazakhstan "On mediation".

Mediation is an out-of-court method of resolving disputes, chosen by the parties on a voluntary basis, in order to achieve certain goals. The law is intended to ensure the regulation of public relations, contains norms defining general provisions, securing:

  • legal status of mediators and organizations providing mediation;
  • procedure for mediation.
Mediation is based on the following principles: voluntariness, confidentiality, equality of parties, independence and impartiality of the mediator, as well as the inadmissibility of interference in the procedure.

The mediation procedure for disputes (conflicts) with the participation of individuals and (or) legal entities, when one of the parties is a state body, is applied in cases stipulated by the laws of the Republic of Kazakhstan.

The mediation procedure is not applied in criminal cases of corruption offenses and other crimes against the interests of public service and public administration.

If, in the course of mediation, a settlement of the dispute between the parties is reached, a written agreement about this is drawn up, which is signed by the parties.

An agreement on the settlement of a dispute (conflict) is subject to voluntary execution by the parties to the mediation in the manner and terms stipulated by this agreement.

The role of NPP RK "Atameken" in protecting the rights and interests of the business community

The Department of Legal Protection of Entrepreneurs operates in the structure of the NCE to deal with complaints. All Regional Chambers of Entrepreneurs have similar subdivisions - departments of legal protection of entrepreneurs, in which legal experts work.

The Department is a key subdivision in the structure of the NCE for the protection of the rights and legitimate interests of business entities and is part of the Office of the Ombudsman for the Protection of the Rights of Entrepreneurs of Kazakhstan.

The department is the secretariat of the Council for the Protection of the Rights of Entrepreneurs and Anti-Corruption, which considers systemic problems of business and, based on the results of its meetings, sends recommendations to central government bodies.

Among the working methods of the Council and the Department, interaction with the General Prosecutor's Office and the Anti-Corruption Agency is important. The full legal analysis of the entrepreneur on the part of the NPP, the conclusions and the expected consequences, together with reference to the relevant legislative norms, provide a detailed consideration by the prosecutor's office and departments of the Anti-Corruption Agency of a particular problem.

Also, experts of the Department provide legal assistance to entrepreneurs up to assistance in drafting statements of claim (reviews).

The Atameken Arbitration Center was created in 2014 in the form of a non-profit organization - a private institution for resolving disputes between organizations of all forms of ownership in order to help businessmen to quickly and without damage to their reputation resolve disputes, while significantly saving on legal costs (state duty for legal entities is 3% of the amount of the claim, in the arbitration center - 2%).

The Arbitration Center maintains a register of arbitrators, from which the parties can independently choose an arbitrator to resolve their dispute. Also, the parties have the opportunity to choose any other specialist who can act as an arbiter.

The rules of the Atameken Arbitration Center provide for the simplest procedure for considering a dispute. For example, a meeting can be conducted via video conferencing. At the same time, on most issues, the parties themselves can determine the procedure for resolving the dispute. Moreover, due to the less formalism in the consideration of the dispute, the party to the dispute can independently defend its arguments, excluding the costs of the services of a representative or a lawyer.

The parties to the disputes that were resolved in the Arbitration Center are Kazakhstani companies, as well as companies from Belarus, Spain, China, Latvia, Moldova, Poland, Russia, USA, Uzbekistan.

Business Ombudsman

The Commissioner for the Protection of the Rights of Entrepreneurs of Kazakhstan (Business Ombudsman) is appointed by the order of the President of the Republic of Kazakhstan and is accountable only to the President.

The legal status of the Commissioner for the Protection of the Rights of Entrepreneurs of Kazakhstan is determined by Articles 307-317 of the Entrepreneurial Code of the Republic of Kazakhstan.

The main functions of the Business Ombudsman include representing, ensuring, protecting the rights and legitimate interests of entrepreneurs and considering their appeals.

On February 24, 2020, by the order of the Head of State, Zhursunov Rustam Manarbekovich was appointed the Commissioner for the Protection of the Rights of Entrepreneurs of Kazakhstan.

The Business Ombudsman has the following powers:

  • to submit to state bodies proposals for the protection of the rights of entrepreneurs, as well as recommendations for the suspension of by-laws;
  • send to state bodies (officials), whose actions (inaction) have violated the rights and legitimate interests of business entities, recommendations on measures to restore violated rights, including bringing persons guilty of violating the rights and legitimate interests of business entities to account;
  • in case of disagreement with the opinion of state bodies, he can send petitions to the prosecutor's office in order to further restore the violated rights of entrepreneurs;
  • request from state bodies (officials) information, documents and materials affecting the rights and obligations of business entities, with the exception of information constituting state, commercial, banking and other secrets protected by law;
  • apply to the court with a claim (statement) in the manner prescribed by the legislation of the Republic of Kazakhstan;
  • take other legal measures aimed at restoring violated rights and legitimate interests of business entities.
Also, if violations of the rights of entrepreneurs are of a systemic nature and problems cannot be resolved at the level of state bodies, the Commissioner for the Protection of the Rights of Entrepreneurs has the right to submit appeals to the President of the Republic of Kazakhstan for consideration.

Investment Ombudsman

The Institute of the Investment Ombudsman was established in 2014 to improve the country's investment climate. The main task is to ensure the protection of the rights and legitimate interests of investors on issues arising in the course of investment activities, and to make recommendations for their resolution in out-of-court and pre-trial procedures.

The legal status of the Investment Ombudsman is enshrined in Art. 314-317 of the Entrepreneurial Code of the Republic of Kazakhstan, activities are provided by the authorized investment body.

The activities of the Investment Ombudsman are regulated by the Resolution of the Government of the Republic of Kazakhstan dated December 26, 2015 No. 1069.

The Investment Ombudsman is an official appointed (determined) by the Government of the Republic of Kazakhstan, who is entrusted with the functions of assisting in protecting the rights and legitimate interests of investors.

In accordance with the Resolution of the Government of the Republic of Kazakhstan dated April 20, 2019 No. 216, the Prime Minister of the Republic of Kazakhstan was appointed the Investment Ombudsman.

The main functions of the Investment Ombudsman:

  • consideration of investors' appeals on issues arising in the course of investment activities in the Republic of Kazakhstan, and making recommendations for their resolution, including by interacting with government bodies;
  • assisting investors in resolving emerging issues in out-of-court and pre-trial procedures;
  • development and submission to the Government of the Republic of Kazakhstan of recommendations on improving the legislation of the Republic of Kazakhstan on investment activities.
The investment ombudsman's recommendations are drawn up in the form of minutes of meetings with the investment ombudsman or letters.

The Investment Ombudsman holds meetings, consultations, protocol meetings with government agencies and organizations to resolve investor issues, hears the heads of interested government agencies and organizations or their deputies on the consideration of investors' appeals.

Before sending claims to the courts, state bodies inform the working body of the investment ombudsman about the initiation of legal proceedings.

The Investment Ombudsman, if the issues of investors cannot be resolved in accordance with the legislation of the Republic of Kazakhstan, develops and submits recommendations for improving the legislation of the Republic of Kazakhstan to the Government of the Republic of Kazakhstan.

Rights and obligations of the investment ombudsman

1. The Investment Ombudsman has the right to:

  • to request and receive from state bodies and organizations, regardless of the form of ownership, the information necessary for the consideration of applications, with the exception of information constituting a commercial secret;
  • to an immediate reception by the heads and other officials of state bodies and organizations;
  • hear the heads of interested state bodies and organizations or their deputies at the request of investors;
  • other rights necessary for the implementation of the functions assigned to the investment ombudsman.
2. In carrying out his activities, the Investment Ombudsman is obliged to:
  • take measures to ensure the observance and protection of the rights and legitimate interests of investors;
  • consider, in the manner and terms established by the legislation of the Republic of Kazakhstan, applications of investors regarding actions (inaction) of officials, decisions of state bodies, other organizations and their officials, and also take the necessary measures on them;
  • be objective and impartial when considering appeals;
  • not to take any action that interferes with the exercise of the rights of the investor who applied for protection.
Minutes meetings of the investment ombudsman to consider problematic issues of investors are held as needed, but at least once a quarter.

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