Enforcement of Foreign Arbitral Awards in Kazakhstan: Main Points and Useful Statistics
I have been preparing a presentation on enforcement of foreign arbitral awards in Kazakhstan for a local event, and I have thought that it would be useful to share with you some of the points of my presentation. Apart from the boring stuff like the procedure, we have found out some interesting statistics which you may find useful.
1. Kazakh courts enforce foreign arbitral awards and judgments based on a treaty or on the basis of reciprocity (Kazakhstan is a party to the 1958 NY Convention, the 1961 European Convention);
2. One can seek to enforce a foreign arbitral award or a judgment within three years following entry into effect.
There is a caveat – when you formulate a relief requested before a foreign arbitral tribunal please bear in mind the following: Kazakh law governing enforcement of judicial acts makes it very clear – it is relatively straightforward to enforce a money judgment as opposed to the one which requires a debtor to undertake certain actions. In relation to the latter category of judgments/awards the debtor’s main monetary exposure would be to pay a daily penalty of approx. USD 69. This may not be as painful in the case of a multi-million-dollar award;
3. Judgment creditor should file an application to a Kazakh court at the place of the debtor’s registration or the location of its assets along with:
3.1. The award (original or a certified copy) and its certified translation (Russian/Kazakh) + apostille;
3.2. The arbitration agreement (original or certified copy) and its certified translation (Russian/Kazakh) + apostille;
3.3 Proof of payment of the state duty (approx. US$35);
Some additional documents-sometimes weird, may be required by a court (applies mostly to regional courts) e.g. proof of entry of the award into effect or a stamp on the award, etc.);
4. Court reviews the application within 15 business days; may set a hearing (at its discretion);
5. Court’s ruling is enforceable immediately, but it can be appealed. It is good that the court must issue an enforcement writ within a day following announcement of its ruling on the application, and it can be enforced right away, although an appeal may be pending. But this puts the debtor in a difficult situation, if the debtor disagrees with the ruling. By the time the Court of Appeals reviews an appeal, funds may be out of the country, and injunctive relief is very rarely granted to keep the funds inside Kazakhstan;
We have very randomly looked at the statistics of enforcement of foreign arbitral awards in Kazakhstan since 1 January 2016. Our review, which does not pretend to be exhaustive and absolutely reliable, suggests that Kazakh courts have enforced approx. 89% of foreign arbitral awards.
However, this does not necessarily mean that everything will be ok. The larger the amount of the award, the greater is the risk of issues at the stage of review of the application and enforcement.
Among those 11% of rejected applications we have found the following grounds some of which look really weird:
- No proof of proper notice to respondent;
- Invalidity of a guarantee based on which an arbitral award was issued;
- External monitoring procedure (seems like a foreign law governed insolvency) is not envisaged by Kazakh law;
- No proof of partial enforcement or non-enforcement outside Kazakhstan;
- Cancellation of an arbitral award;
- No proof of entry of the arbitral award into effect;