Legislative News. September-October 2017
This Client Update covers key amendments to the laws of the Republic of Kazakhstan (‘RK’) and various legal developments introduced in September-October 2017.
NOVELTIES IN LEGISLATION
The laws covered by this Client Update are related to both public and private sectors. Some of them may be of interest to you as they may affect your business in Kazakhstan.
We would like to draw your attention to the following legislative acts.
DECREES
New Special Economic Zone (SEZ)
On 6 October 2017, the Prime-Minister of the RK signed Decree No. 624 ‘On Certain Matters of Special Economic Zones’.
According to the Decree, a special economic zone ‘International Center for Cross-Border Cooperation ‘Khorgos’ was established for duration up to 2041. The Decree sets forth SEZ regulations, key performance indicators and critical level for failure to reach those indicators.
In addition, the Decree approved the regulations on ‘Morport Aktau’, ‘Ontustik’ and ‘Pavlodar’ SEZ, including key performance indicators and critical level for failure to reach those indicators.
The Decree came into force on 6 October 2017.
Private Court Bailiff Payment
On 21 October 2017, the Prime Minister of the RK signed Decree No. 666 ‘On Amendments to Government Decree No. 1053 dated 24 December 2015 ‘On Fee Determination for Private Court Bailiff’s Services Related to Enforcement of Writs of Execution on Recovery of Alimony and Wages’.
The Decree sets the amount of 15 MCI* to be paid to private court bailiffs per one enforcement proceeding related to enforcement of writs of execution on recovery of alimony and wages.
The Decree came into force on 6 November 2017.
ORDERS
Control Measuring Devices
On 29 June 2017, the Minister of Energy of the RK signed Order No. 227 ‘On Approval of the Rules for Equipping Production Facilities with Control Measuring Devices and Ensuring the Functioning of Control Measuring Devices’. On 15 September 2017, the Minister of Investment and Development of the RK also approved the Order.
In accordance with the Order, control measuring devices (CMD) are installed at production facilities in accordance with technological scheme of production facilities of the entities engaged in oil production and turnover (‘Subjects’).
Volume measurements of CMD are determined according to a certified and statutorily registered methodology for performing measurements with margin of error as per GOST 8.587-2006 ‘NUMAS. Mass of oil and oil products. General requirements for measurements technique’.
The data from CMD installed in the Subject’s scheme is stored and processed in its software. Transfer of processed data from CMD to the oil accounting system is carried out through the Subjects’ software.
The Order will come into force on 1 January 2020.
SUPREME COURT NORMATIVE RESOLUTIONS
Settlement of employment disputes
On 6 October 2017, the Supreme Court of the RK adopted Normative Resolution No. 9 ‘On Certain Matters Related to Exercise of Justice by Courts in Employment Disputes’. We would like to draw your attention to the following important clarifications:
•\tConciliation commissions consider individual employment disputes with respect to (i) employment relations, (ii) relations directly related to employment issues, (iii) social partnership, and (iv) safety and labor protection;
•\tIf a party to an employment dispute does not agree with the decision of conciliation commission in whole or in part, the dispute is deemed unsettled. Such party is entitled to file a claim with the court for settlement of an employment dispute;
•\tEven if a party to an employment dispute fails to observe the deadline for applying to conciliation commission, the conciliation commission must consider its application and award a ruling to enable such dissenting party to further file a claim with the court;
•\tClaims in employment disputes must be filed with the court at the location of the defendant;
•\tIf an employee or employer (customer/contractor) fails to confirm employment in a documentary form, the dispute over the existence or absence of employment between the parties may be settled by the court without first applying to the conciliation commission;
•\tCourts must distinguish civil-law relations from employment relations. The nature of employment relations may be evidenced by employee’s personal performance of his/her employment function under a certain qualification, specialty, profession subject to the labor order, with payment of salary by the employer;
•\tThe employer’s act must indicate grounds for termination of employment contract pursuant to the Labor Code. Otherwise, the court must invalidate respective acts;
•\tTermination of employment contract due to the non-conformity of employee with the position held due to insufficient qualification confirmed by the results of attestation must be based on the decision of the attestation commission with at least one representative of the employees present, unless the laws provide otherwise;
•\tIf during consideration of a dispute on employment restoration of a person whose employment contract is terminated by agreement of the parties, the court concludes that the employment contract provides for the employer’s right to terminate employment contract without notifying employee and without specifying the date of termination but with the payment of compensation set forth by the employment contract, such employee cannot be restored;
•\tIt is prohibited to impose full material liability on the employee for the damage which can be classified as normal industrial and economic risk.
The Normative Resolution came into force on 24 October 2017.
INSURANCE DISPUTES
On 6 October 2017, the Supreme Court issued the Normative Resolution No. 8 ‘On Judicial Practice on Disputes Arising from Insurance Contracts’. We would like to draw your attention to the following important clarifications:
•\tInsurance-related disputes are considered according to the general rules of territorial jurisdiction – at the location of the defendant;
•\tWith respect to payment of the state duty, monetary claims include claims for recovery of insurance payment including subrogation or recourse claim, collection of penalty interest and others. Non-monetary claims include appeal against refusal of the insurer to make an insurance payment, recognition of occurrence of the insured event, invalidation of the insurance contract and others;
•\tPolicy holders and insurers are exempt from payment of state duties regardless of whether they act as claimant or defendant, whereas beneficiaries do not enjoy such benefit;
•\tClaims arising from insurance contracts have general statute of limitations of three years. Change of creditors due to subrogation does not entail change in statute of limitations and the procedure for calculation thereof, hence the debtor can claim expiration of this period in the same way as if the former creditor acted instead of the new one;
•\tPolicy holder must inform the insurer about all circumstances known that are of significant importance for determining probability of occurrence of the insured event and the amount of possible losses from its occurrence. Policy holder’s report to an insurer of knowingly false information about insurance object, insurance risk, insurance event and its consequences is a basis for an insurer to refuse making a payment;
•\tSubrogation is a transfer to an insurer that carried out insurance payment of the right of claim which the policy holder (beneficiary) lodges against a person responsible for losses compensated by insurance. Subrogation is not a recourse claim and is possible only under property insurance contracts. In case of recourse claim, a new obligation arises whereas in subrogation only a person (creditor) is changed in the existing obligation;
•\tInsurance amount is the amount of money for which the insured object is insured and which represents ultimate liability of the insurer in case of insured event. The obligation of the person, who insured against liability, to compensate difference between insured amount and actual amount of damage in accordance with Article 924 of the Civil Code arises only in case of insufficiency of the insurance amount for full compensation of the damage caused; and
•\tAmount of damage associated with loss of earnings (income) due to level of employee’s loss of professional capacity or death is determined by an insurer in accordance with the Civil Code. Insurance payment implies compensation of lost earnings and compensation of additional expenses caused by damage to health.
The Normative Resolution came into force on 24 October 2017.
Court Practice on the Special Part of the Administrative Code
On 6 October 2017, the Supreme Court of the RK issued Normative Resolution No. 7 ‘The Court Practice on the Special Part of the Code of the Republic of Kazakhstan on Administrative Offenses’. We would like to draw your attention to the following important clarifications:
•\tBringing individual entrepreneurs and legal entities to administrative liability releases an employee of such individual entrepreneur or legal entity from administrative liability for the same offense;
•\tIllegal interference of government officials may result in abuse of public authority. Illegal interference of government officials exercising supervisory and control functions as well as local executive bodies’ interference into the activities of individual entrepreneurs, legal entities by issuing illegal acts and giving illegal orders that impede their entrepreneurial activity is an administrative offense;
•\tIf a legal entity voluntarily refuses to continue licensed activity or ceases full-time entrepreneurial activity, its license and (or) the application to the license terminates. In such cases, the licensee must return the license within 10 business days, save for e-license. Failure to comply with this obligation does not constitute an offense but leads to mandatory payment of a license fee;
•\tFor failure to timely provide required documents, materials or information at the advocate’s query while performing his/her professional duties or for incompletely providing such documents, materials or information, an official faces administrative liability for precluding an advocate’s legitimate activities.
The Normative Resolution came into force on 24 October 2017.
DRAFT LAWS
Currency Regulation and Currency Control
In September 2017, the Draft Law of the RK ‘On Currency Regulation and Currency Control’ was submitted for review to the Majilis of the Parliament of the RK.
In accordance with the currency control laws, the residents are all legal entities incorporated in accordance with the Kazakhstan laws, located in the RK, as well as their branches and representative offices located in and outside Kazakhstan.
Whereas the currently effective Tax Code of the RK determines that residents are legal entities incorporated in accordance with the Kazakhstan laws and (or) legal entities incorporated in accordance with foreign laws, the place of effective management (location of actual management body) of which is located in the RK.
Given the fact that the notions of residency for branches and representative offices in tax laws and currency control laws respectively currently differ, it is proposed to ensure uniformity of such notions. The dual approach to the residence of the branches and representative offices poses certain legal problems and ambiguities.
It is also contemplated to fill in the legislation gap due to adoption of the Constitutional Law of the RK ‘On the International Financial Center ‘Astana’, as well as the draft law ‘On Special Economic Zone – International Center for Cross-Border Cooperation ‘Khorgos’, which provide for special regime for currency transactions.
Furthermore, it is contemplated to clarify circulation of currency valuables in the RK, the list of currency transactions permitted between residents, determine procedure for opening accounts by residents in foreign banks taking into account step-by-step introduction of a universal declaration of individuals’ property and income.
*Monthly Calculated Index in the amount of KZT 2,405 for 2018.
