Debt Collection in Kazakhstan: A Comprehensive Guide
Debt collection in Kazakhstan is a process that primarily revolves around court proceedings, followed by judgment enforcement. In most cases, pre-trial dispute resolution does not yield the desired outcome, although it remains a mandatory step when a contract includes a pre-trial dispute clause.
Once a creditor secures a favorable court judgment, it marks the completion of the first stage of debt collection. This grants the creditor the procedural right to initiate enforcement proceedings. However, like in many countries, complexities can arise, especially when dealing with debt collection from Kazakhstan-based legal entities. If the debtor has no assets or funds in their bank accounts, the enforcement process might conclude without any recovery. Despite this, there is still hope for creditors, as they can initiate bankruptcy proceedings. This provides an opportunity to hold company directors and founders personally liable for corporate debts under Kazakhstan’s bankruptcy laws.
Creditors can file for bankruptcy litigation when they hold an unenforced court decision or writ of execution for the debtor’s payment, or in cases where the debtor acknowledges the debt. This acknowledgment can be in writing, such as a response to a claim, a bilateral reconciliation statement signed by authorized representatives of both parties, or a letter of guarantee from the debtor regarding payment.
During our extensive debt collection practice, we frequently encounter creditor uncertainty. This uncertainty often arises when the debtor avoids contact, the debtor’s location is unknown, or when the debtor is a legal entity. These are common tactics used by unscrupulous debtors, which can be effectively countered by experienced lawyers.
It is also important to note that creditors must bring their debt claims to court within three years of the repayment due date, as outlined in Article 178 of the Civil Code of Kazakhstan. This limitation period begins once the creditor becomes aware that their rights have been violated. For instance, if a debt is based on a promissory note, the limitation period starts the day after the due date passes. If a creditor files a claim after this period, the court will dismiss it unless the plaintiff can prove valid reasons for the delay.
At BOND STONE, our attorneys are highly skilled in commercial and business international cross-border litigation, including but not limited to Accounts Receivable (AR) collection, payment disputes for goods or services, and joint-venture disputes. We offer tailored legal strategies to maximize your chances of debt recovery.
Contact us today for a legal cost estimate and a detailed analysis of your case’s prospects.
