Recent Developments in the Resolution of «Investment Disputes» in KazakhstanCurtis B. Masters
Judicial reform is a major part of Kazakhstan's efforts to modernize its economy and improve its investment climate. The fair resolution of disputes between the state and investors is a key focus of these efforts.
As with most countries in which foreign direct investment represents a sizeable portion of the economy, disputes with investors are common in Kazakhstan. Many of the largest and most complex disputes occur with investors in the extractive resources sector and usually are resolved through ICSID or other international arbitration. That is unlikely to change in the foreseeable future.
But most disputes with investors are resolved locally, either by the parties' choice or as a matter of law. These disputes can be sizeable and can materially impact an investor's operations in Kazakhstan.
Since December 2015 there have been several major developments regarding the local resolution of disputes with investors in Kazakhstan. They have targeted clarification of what is deemed an "investment dispute" and the establishment of new judicial bodies to hear such disputes. This article summarizes those developments.
Investment Dispute Panels
The first major development was the amendment of the Civil Procedure Code to establish, on 1 January 2016, two new court panels having exclusive jurisdiction to hear "investment disputes." The first investment dispute panel (collegium) is at the Astana City Court and the second investment dispute panel is at the Supreme Court of Kazakhstan.
The two Investment Panels grew out of President Nursultan Nazarbayev's "100 Specific Steps on Implementation of Five Institutions Reforms" in 2015 aimed at making Kazakhstan one of the world's 30 most developed nations. One of the President's Steps called for the creation of separate legal proceedings for investment disputes and the formation of a dedicated investment panel of the Supreme Court for resolution of disputes involving large investors. The President stated that both non-resident and local investors must have confidence in the fairness of Kazakhstan's justice.
The new Investment Panel at the Astana City Court was given exclusive jurisdiction to hear, as the first instance court, all "investment disputes" (except those within the Supreme Court's jurisdiction) and "other disputes between investors and state authorities relating to the investor's investment activity." As a result of this latter clause, this Panel's jurisdiction is not limited to those disputes which are considered "investment disputes."
The new Investment Panel at the Supreme Court was given exclusive jurisdiction to hear, as the first instance court, "investment disputes" with "major investors." A major investor is any investor whose investment is at least two million monthly calculation indices (currently about US$12 million). It also can hear appeals of decisions of the Astana City Court's Investment Panel. Neither panel's jurisdiction is limited to foreign investors, and they may also hear cases involving local investors.