This CLIENT UPDATE includes amendments and additions to the legislation of the Republic of Kazakhstan (”RK”) introduced in March 2015 and various legal developments.
The legislation outlined in this Client Update concerns both public and private sectors. Some of them may be of interest to you as it may affect your business in Kazakhstan in certain way.
This month we would like to draw your attention to the following legal acts:
On 12 March 2015, the Parliament of the RK approved the Law on Ratification of the Agreement between the Government of the RK and the Republic of Macedonia on Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Income Taxes.
The Law came into force on 12 March 2015.
1) On 19 March 2015, the President of the RK signed the Law “On Ratification of Convention for the Unification of Certain Rules for International Carriage by Air”.
This Convention was adopted on 28 May 1999 in Montreal and came into force on 4 November 2003 (“Montreal Convention”).
Montreal Convention increases the protection level of the passengers in international carriage by air. Also Montreal Convention significantly increases the compensation for lost luggage and introduces compensations for flight cancellation or delay.
The Law came into force on 19 March 2015.
THE AGREEMENT ON COOPERATION IN ORGANIZATION OF INTEGRATED EXCHANGE MARKET FOR MEMBER STATES OF THE COMMONWEALTH OF INDEPENDENTSTATES (CIS)
1) On 15 April 2015, the President of the RK signed the Law “On ratification of Agreement on Cooperation in Organization of Integrated Exchange Market for Member States of the CIS”.
The Agreement allows CIS banks-residents to participate in interbank currency exchange transactions on national exchange markets of CIS members on the terms not less favorable than those set for local banks – residents.
CHANGES IN CUSTOM RATES
2) By the Resolution No. 145 dated 17 March 2015 the Government of the RK changed the custom rates for certain products in Kazakhstan.
The custom rate for crude oil was reduced from USD 80 to USD 60.
The custom rates for heavy distillates: gas oils, black oil, cylinder oil and etc. were reduced from USD 112.9 to USD 60.
The Resolution came into force on 19 March 2015.
NEW CIVIL PROCEDURE CODE
3) On 11 March 2015, the Mazhilis of the Parliament of the RK approved in the first reading the Draft Civil Procedure Code (“Draft CPC”).
The Draft CPC provides for wide use of amicable settlement procedure as well as enhances opportunities for mediation. Subject to the approval by the court, the mediation settlement agreement must be executed similarly to amicable agreement.
The Draft CPC introduces “participatory procedure” as a new settlement procedure aiming at dispute settlement by the parties and their attorneys.
Failure to apply pre-trial dispute settlement would lead the court to leaving the claim without consideration as well as placing an obligation to pay legal expenses on the party opposing to the amicable dispute settlement.
Along with the foregoing, the Draft CPC addresses enforcement of the mediation settlement agreement. These matters are outlined in a new chapter of the Draft CPC – “fast track proceedings”. The “fast track proceeding” allows considering the claim within one month on the basis of the written evidence without actual court hearing. “Fast track proceedings” apply to disputes with materiality level for up to 100 monthly calculation index (MCI for 2015 – KZT 1,982) for individuals and up to 500 MCI for legal entities and to cases based only on written evidences provided by a plaintiff.
ISLAMIC FINANCING AND INSURANCE
1) On 6 March 2015, the Senate of the Parliament of the RK approved in the first reading the Draft Law “On Changes and Amendments into Certain Legal Acts of the RK on Insurance and Islamic Financing”.
The Draft Law aims at further developing and expanding Islamic financing in Kazakhstan. The Draft Law broadens and regulates the Islamic financing instruments recognizing them as bank operations by Islamic banks.
In addition, the Draft Law allows for the Islamic banks to establish non-commercial organizations in the form of a joint stock company to guarantee recovery of deposits attracted by Islamic banks. In other words, Islamic banks can set up insurance/re-insurance companies.
The Draft Law provides that Islamic re-insurance/insurance agreement must comply with requirements applicable to Islamic insurance agreement. Accordingly, the Islamic insurance agreement must be entered into based on the Islamic insurance principles.
In order to differentiate Islamic and traditional insurance activities the Draft Law proposes to introduce certain types of licenses specifically for Islamic insurance/reinsurance companies.
Information contained in this Client Update is of general nature and cannot be used as legal advice or recommendation. Please seek a lawyer for a specific advice. Please note that Kazakhstan is an emerging economy and its legislation and legal system are in constant development. Should you have any questions or would like to discuss matters addressed in this Client Update, please contact us.