January 27, 2023

Basic provisions on arbitration in accordance with the legislation of Kazakhstan

Disputes that are not subject to arbitration
Arbitration Agreement
Expenses related to dispute resolution in arbitration
Cancellation of the arbitration award
Enforcement of arbitral awards

The main provisions concerning the consideration of cases in arbitration courts in respect of disputes arising from civil law relations involving individuals and (or) legal entities, regardless of the place of residence or location of the subjects of the dispute within the state or outside it, are regulated by the Law of the Republic of Kazakhstan dated April 8, 2016 “On Arbitration” (further — the law).

According to the law, arbitration is understood as arbitration formed specifically for the consideration of a specific dispute, or permanent arbitration. At the same time, permanent arbitrations can be formed by individuals and (or) legal entities, they approve the rules, the register of arbitrators who will carry out activities in this arbitration. Arbitration for the consideration of a specific dispute is created by the parties to resolve the dispute and is valid until the dispute is resolved or until the parties decide to refer the dispute to the court.{1}

To date, according to the Arbitration Chamber, there are 18 permanent arbitrations in the Republic of Kazakhstan.{2}

1. Disputes that are not subject to arbitration.
According to the law, the following disputes are not considered by arbitration:

which affect the interests of minors, persons recognized as legally incompetent or with limited legal capacity;
about rehabilitation and bankruptcy;
between subjects of natural monopolies and their consumers;
between state bodies, subjects of the quasi-public sector.
arising from personal non-property relations not related to property;
in the absence of the consent of the authorized body to conclude an arbitration agreement with state-owned enterprises, as well as legal entities, fifty or more percent of the voting shares (participation shares in the authorized capital) of which directly or indirectly belong to the state;

2. Arbitration Agreement.
The dispute may be submitted to arbitration if there is an arbitration agreement concluded between the parties. An arbitration agreement may be concluded by the parties in respect of disputes that have arisen or may arise between the parties on any particular civil law relationship.

An arbitration agreement in respect of a dispute that is pending in court may be concluded before a decision on the dispute is made by the said court. In this case, the court issues a ruling on leaving the application without consideration.

The arbitration agreement is concluded in writing in the form of an agreement, an arbitration clause in a contract/document signed by the parties, or by exchanging letters, telegrams, telephone messages, faxes, electronic documents or other documents defining the subjects and the content of their will, as well as exchanging a statement of claim and a response to the claim.

3. Expenses related to dispute resolution in arbitration
Expenses related to dispute resolution in arbitration include:

1) arbitrators’ fee;

2) expenses incurred by the arbitrators in connection with participation in the arbitration proceedings, including expenses for travel to the place of dispute consideration, accommodation and meals;

3) amounts payable to experts and translators;

4) expenses incurred by the arbitrators in connection with the examination and examination of written and material evidence at their location;

5) expenses incurred by witnesses;

6) the costs of paying for the services of a representative by the party in whose favor the arbitration decision was made;

7) expenses for organizational and material support of arbitration proceedings.

The distribution of costs related to the settlement of a dispute in arbitration between the parties is carried out by arbitration in accordance with the agreement of the parties, and in the absence of such, in proportion to the satisfied and rejected claims.

The costs of paying for the services of a representative by the party in whose favor the arbitration decision was made, as well as other costs related to the arbitration proceedings, may be attributed to the other party by the arbitration decision if the claim for reimbursement of the costs incurred was declared during the arbitration proceedings and satisfied by the arbitration.

In addition, the arbitrators have the right to require the parties to provide security for the costs incurred by the arbitrators in connection with the resolution of disputes in arbitration.

4. Cancellation of the arbitration award.
An arbitration award may be annulled by a court of general jurisdiction in the following cases:

1) the arbitration award contradicts the public policy of the Republic of Kazakhstan;

2) a dispute on which an arbitration award has been made cannot be the subject of arbitration proceedings under the legislation of the Republic of Kazakhstan.

An application for annulment of an arbitration award may be filed by the parties to the arbitration proceedings, third parties not involved in the case, but in respect of whose rights and obligations the arbitration has made a decision on the grounds provided for by law, within one month from the date of receipt of the arbitration award.

A petition for annulment of an arbitration award is filed with the appropriate court of appeal of the Republic of Kazakhstan:

1) at the place of arbitration of the dispute, if the arbitration decision was made on the territory of the Republic of Kazakhstan;

2) at the location of the permanent arbitration, if the arbitration decision was made under the law of the Republic of Kazakhstan in a foreign state;

3) at the place of formation of the arbitration in the Republic of Kazakhstan, if the arbitration decision was made under the law of the Republic of Kazakhstan in a foreign state.

A petition for annulment of an arbitration award is considered by a court composed of at least three judges within ten working days from the moment of initiation of the case according to the rules of the Civil Procedure Code of the Republic of Kazakhstan.

When considering a case, the court determines whether or not there are grounds for revoking an arbitration award provided for by law by examining the evidence submitted to the court in support of the stated claims and objections. The court, based on the results of consideration of the petition for the cancellation of the arbitral award, issues a ruling on the cancellation of the arbitral award or refusal to satisfy the petition, but does not consider the case on the merits.

5. Enforcement of arbitral awards
The arbitration award is recognized as binding and, when submitting a written application to the court, is enforced in accordance with the civil procedural legislation of the Republic of Kazakhstan.

If the time limit is not set in the arbitration award, then it is subject to immediate execution.

Enforcement of an arbitration award is carried out according to the rules of enforcement proceedings in force at the time of enforcement of the arbitration award, on the basis of a writ of execution issued by the court for enforcement of the arbitration award.

An application for the enforcement of an arbitration award is filed with a court of general jurisdiction at the place of arbitration of the dispute or at the place of residence of the debtor or at the location of the body of a legal entity, if the place of residence or location is unknown, then at the location of the debtor’s property.

The application for the issuance of a writ of execution is accompanied by:

1) the original or a copy of the award. A copy of the decision of a permanent arbitration is certified by the head of this arbitration, a copy of the arbitration decision for the resolution of a specific dispute must be notarized;

2) the original or a notarized copy of the arbitration agreement concluded in accordance with the procedure established by law.

An application for the issuance of a writ of execution may be filed no later than three years from the date of expiry of the term for voluntary enforcement of the arbitral award.

The court, when considering an application for the issuance of a writ of execution for the enforcement of an arbitration award, does not have the right to review the arbitration award on the merits.

Based on the results of the consideration of the application, the court issues a ruling on the issuance of a writ of execution or on the refusal to issue it. The court’s ruling on the issuance of a writ of execution is subject to immediate execution.

Execution of foreign court decisions in Kazakhstan is carried out only if there is an international agreement: on legal assistance or a multilateral agreement between the CIS countries (in particular, the Chisinau Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Cases of October 7, 2002). Kazakhstan has not concluded very many agreements on legal assistance, mainly again with the CIS countries (Azerbaijan, Turkmenistan, Uzbekistan, Georgia, the Kyrgyz Republic), as well as with Lithuania, the United Arab Emirates, the DPRK, Pakistan, Turkey, Mongolia, China, Iran.

In general, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, June 10, 1958) and the Convention on the Settlement of Investment Disputes between States and Natural or Legal Persons of Other States (ICSID) (Washington, March 18, 1965) are of primary importance for the recognition and enforcement of decisions of international arbitration courts G.).

In accordance with Article III of the New York Convention, “Each Contracting State recognizes arbitral awards as binding and enforces them in accordance with the procedural rules of the territory where enforcement of these decisions is sought, under the conditions set out in the following articles.”

Paragraph 3 of Article 54 of the ICSID Convention stipulates that “the procedure for the enforcement of an arbitration award is determined by the laws on the enforcement of judgments in force in the State in whose territory such enforcement is sought.”

[1] Law of the Republic of Kazakhstan dated April 8, 2016 No. 488-V “On Arbitration” // [electronic resource]/URL: https://adilet.zan.kz/rus/docs/Z1600000488 (accessed: 04.01.2023)

[2] Register of permanent arbitrations and arbitrators, members of the Agro-industrial Complex // [electronic resource]/URL: https://palata.org/registry / (accessed: 05.01.2023)