International Business Litigation and Cross-border Dispute Resolution

Kazakhstan: Dispute Resolution Overview

Kazakhstan is experiencing significant political and economic reforms, primarily driven by the transition of power from former President Nazarbayev to current President Tokayev. This shift, ignited by civil unrest in January 2022, has resulted in numerous commercial and criminal legal proceedings related to wealth redistribution.
One key reform includes the introduction of the Unexplained Wealth Law, effective from September 2023, which is expected to trigger a significant number of asset recovery cases both in Kazakhstan and abroad. Additionally, regulatory reforms and heightened enforcement in sectors like mining and oil concessions may lead to increased investment treaty disputes. As a result, the demand for dispute resolution services in Kazakhstan is projected to remain high for the next 3-5 years.
Kazakhstan has also reformed its Administrative Courts, and the Astana International Financial Centre (AIFC) Court, staffed with retired English judges, has gained a reputation for delivering impartial justice, particularly in business-related disputes.

Judicial System in Kazakhstan

Kazakhstan’s judicial system consists of three levels: (1) district courts (both special and general), (2) appellate courts, and (3) the Supreme Court (cassation). Special district courts handle specific types of cases, including administrative, commercial, and criminal matters, with most commercial disputes heard in Special Commercial District Courts (SCDCs).
At the appellate and cassation levels, courts handle all types of cases without subject-matter divisions. The introduction of Special Administrative District Courts (SADCs) in July 2021, alongside the new Administrative Procedure Code, aims to create a fairer playing field for businesses in disputes against the state. In fact, statistics show that claimants win against state bodies in over 50% of cases.

Key Aspects of Civil Proceedings

Kazakh courts follow a predominantly adversarial approach, but they tend to lean more toward an inquisitorial process in practice. Here are some key aspects:
  • Evidence: Courts rely heavily on documentary evidence, and while electronic evidence is accepted, its legal status remains unclear. Discovery is limited, and motions to produce evidence must be precise.
  • Injunctive Relief: Injunctive relief is often granted without requiring security from the claimant.
  • Fees: Filing fees are 3% of the claim amount for legal entities and 1% for individuals, with caps in place.
  • Electronic Systems: Kazakhstan’s courts are well-equipped for electronic filings and case tracking, with most proceedings available online.
  • Timing: The judicial process is generally efficient, with a binding judgment expected within 4-6 months.
  • Foreign Litigation: Kazakh courts only consider foreign litigation as having the effect of lis pendens if an international treaty is in place.
  • Private Enforcement: Judgment creditors can choose from a variety of private enforcement officers, whose fees range from 3-25% of the recovered amount.

Challenges within the System

While corruption and administrative influence are becoming less frequent, they still present challenges in cases involving state-affiliated entities. Inconsistent application of laws and difficulties in accessing the Supreme Court add to the complexity of the legal landscape.

Astana International Financial Centre (AIFC) Court

The AIFC Court operates independently from Kazakhstan’s legal system, offering unique features such as:
  • Retired English judges presiding over cases
  • Proceedings conducted in English
  • Judgments that hold the same force as domestic Kazakh rulings
The AIFC Court primarily handles contractual disputes and arbitration, with procedural rules mirroring those of English courts. Its International Arbitration Centre ensures high enforceability of arbitration awards, bypassing Kazakh courts.

Arbitration in Kazakhstan

Arbitration is a widely accepted method for resolving both domestic and international disputes in Kazakhstan. The country’s Arbitration Law is modeled after the UNCITRAL Model Law but includes specific provisions, such as the requirement for state-owned companies to seek permission before entering arbitration. Arbitration agreements must be in writing, and courts take a strict approach to agreements executed electronically.
While foreign arbitral awards are usually recognized under the New York and European Conventions, Kazakh courts may reject enforcement, especially for large claims.

Enforcement of Foreign Judgments and Arbitral Awards

Kazakh courts recognize and enforce foreign arbitral awards under the 1958 New York Convention, but enforcement of foreign judgments is dependent on either international treaties or reciprocity agreements.
BOND STONE’s legal team has extensive experience in cross-border business litigation, representing international companies in Kazakhstan. We assist foreign clients in filing claims in Kazakhstan under specific conditions, such as the absence of a governing law clause or in cases where Kazakhstan’s law governs the contract.
Additionally, we offer services to enforce foreign court decisions under international conventions to which Kazakhstan is a party. Our attorneys are licensed to practice in Kazakhstan’s trial, appellate, and Supreme courts, providing comprehensive support across all levels of dispute resolution.