Arbitration Law in Kazakhstan
Arbitration Law in Kazakhstan
Kazakhstan has a well-established arbitration system, governed by a combination of domestic laws and international standards. The country’s legal framework for arbitration is designed to facilitate both domestic and international arbitration, making Kazakhstan a growing hub for dispute resolution in Central Asia.
1. Legal Framework
The primary legislation governing arbitration in Kazakhstan is the Law of the Republic of Kazakhstan on Arbitration (No. 395-IV) adopted on December 28, 2015. This law governs all forms of arbitration and aligns closely with international standards, including the UNCITRAL Model Law on International Commercial Arbitration.
Amendments: In 2018, the law was amended to further modernize the arbitration process and strengthen the country’s arbitration framework.
International Treaties: Kazakhstan is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which ensures the recognition and enforcement of foreign arbitral awards within Kazakhstan.
Additional Relevant Legislation:
- The Civil Code of Kazakhstan (2007), which provides general rules for contracts and dispute resolution, is also relevant to arbitration.
- The Civil Procedure Code of Kazakhstan (2015), which regulates the recognition and enforcement of arbitral awards by Kazakh courts.
2. Arbitration Agreement
Arbitration in Kazakhstan is based on a valid arbitration agreement. The law permits both domestic and international arbitration, provided that there is an agreement between the parties to arbitrate their disputes.
Form: The agreement must be in writing and can take the form of a separate agreement or an arbitration clause in a larger contract. It can also be implied if the parties engage in arbitral proceedings.
Arbitration Agreements: The law upholds the principle of party autonomy, allowing the parties to freely choose arbitration as their dispute resolution method, provided they consent to arbitration.
Enforceability: Arbitration agreements are enforceable, and courts in Kazakhstan will generally support the enforcement of valid arbitration agreements unless the agreement is contrary to public policy or fundamental principles of Kazakh law.
3. Types of Arbitration
Kazakhstan allows for both domestic and international arbitration:
Domestic Arbitration: This is arbitration between parties within Kazakhstan, where both parties or their assets are located in the country.
International Arbitration: Arbitration that involves foreign parties or assets located outside Kazakhstan. Kazakhstan adheres to the UNCITRAL Model Law, which provides a framework for international arbitration.
Investment Arbitration: As part of its commitment to promoting foreign investment, Kazakhstan allows for arbitration in investment disputes. The country has entered into several international investment treaties that may allow foreign investors to arbitrate disputes outside of Kazakhstan, such as through the International Centre for Settlement of Investment Disputes (ICSID).
4. Arbitration Procedure
The procedure for arbitration in Kazakhstan is designed to be flexible, enabling the parties to choose their own rules and procedures. If the parties do not agree on certain procedural aspects, the arbitrators can decide.
Arbitrators: The parties are free to choose their arbitrators, provided they are competent and impartial. If the parties cannot agree on arbitrators, the Kazakh courts may appoint them.
Arbitral Tribunal Composition: The number of arbitrators is typically decided by the parties, though the default position in Kazakhstan is a panel of three arbitrators, unless the parties agree to a sole arbitrator.
Arbitration Rules: The parties can select their own arbitration rules, which can include institutional rules like those of the International Chamber of Commerce (ICC), UNCITRAL, or others. If the parties do not agree on the rules, the tribunal will determine the applicable rules based on the circumstances of the case.
Language of Arbitration: The parties can choose the language of the arbitration. If they do not, the tribunal may determine the language, but it will typically be a language understood by all parties and the arbitrators.
Place of Arbitration: The place of arbitration is decided by the parties. If they do not agree, the tribunal may determine the seat of arbitration, which could be Kazakhstan or any other place, depending on the preferences of the parties.
5. Court Involvement
Kazakh courts play a limited role in the arbitration process. However, they retain certain supervisory powers to ensure that the arbitration process is fair and lawful.
Appointment of Arbitrators: If the parties fail to agree on the appointment of arbitrators, either party may approach the Kazakh courts to appoint the arbitrator(s).
Interim Measures: The Kazakh courts have the authority to grant interim measures or provisional remedies before and during arbitration. These measures can include actions to preserve the status quo or prevent harm to a party’s interests during the arbitration process.
Setting Aside Awards: A party can challenge an arbitral award before the Kazakh courts on limited grounds, including:
- Lack of jurisdiction of the arbitral tribunal.
- A violation of public policy in Kazakhstan.
- Failure to follow proper procedural rules (e.g., a denial of due process).
6. Recognition and Enforcement of Foreign Arbitral Awards
Kazakhstan is a party to the New York Convention and has committed to recognizing and enforcing foreign arbitral awards in accordance with its provisions.
Recognition and Enforcement Process: To enforce a foreign arbitral award, the party must file a request with the Kazakh courts. The courts will assess whether the award meets the criteria under the New York Convention, including compliance with Kazakh public policy.
Grounds for Refusal: An arbitral award may be refused recognition or enforcement in Kazakhstan on the following grounds:
- The award is contrary to Kazakhstan’s public policy.
- The party against whom the award is made was not properly notified of the proceedings.
- The dispute was not arbitrable under Kazakh law.
7. Arbitration Institutions in Kazakhstan
Kazakhstan hosts several institutions that facilitate arbitration, both for domestic and international disputes:
Kazakhstan International Arbitration Centre (KIAC): Based in Almaty, KIAC is an important institution for resolving both commercial and investment disputes. It offers arbitration services under various rules, including the UNCITRAL Rules and its own institutional rules.
AIFC Court and International Arbitration Centre: Located in Astana (Nur-Sultan), the AIFC (Astana International Financial Centre) is a modern financial hub with its own arbitration and dispute resolution mechanisms, designed to attract international business and investment.
International Chamber of Commerce (ICC): While not based in Kazakhstan, the ICC is frequently used for international arbitration involving parties in Kazakhstan, especially in the energy and resource sectors.
8. Challenges and Opportunities in Arbitration in Kazakhstan
Challenges
Legal Tradition: Kazakhstan’s legal system is still evolving, and some domestic parties may be more inclined to use local courts rather than arbitration, which could slow the adoption of arbitration as a preferred method of dispute resolution.
Awareness and Familiarity: Despite improvements in the legal framework, there may still be a lack of widespread understanding of the benefits and procedures of arbitration, particularly among smaller businesses.
Opportunities
Strategic Location: Kazakhstan’s position as a key player in Central Asia makes it an attractive venue for arbitration involving disputes in the region.
Investment Hub: As Kazakhstan continues to attract foreign investment, especially in energy, infrastructure, and natural resources, the demand for arbitration is likely to grow, making it a strong contender for international arbitration cases.
Modern Arbitration Framework: Kazakhstan’s commitment to aligning with international arbitration standards and its membership in the New York Convention provide a robust and secure environment for both domestic and international arbitration.
Conclusion
Kazakhstan’s Arbitration Law of 2015 is a modern, comprehensive framework that aligns with international arbitration standards. The country’s adherence to the New York Convention and growing reputation as a regional investment hub make it an increasingly attractive jurisdiction for arbitration. With a flexible procedure, supportive courts, and active arbitration institutions, Kazakhstan is positioning itself as a prominent player in dispute resolution, particularly in Central Asia.
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