New Arbitration Law: What’s New?
On April 8, 2016, a new law of the Republic of Kazakhstan, “On Arbitration,” (hereinafter referred to as the “Arbitration Law”) was introduced. Pursuant to the Arbitration Law, the following laws have been repealed:
Law of the Republic of Kazakhstan “On Third Party Courts” dated December 28, 2004
Law of the Republic of Kazakhstan “On International Arbitration” dated December 28, 2004
The Arbitration Law came into force on April 20, 2016.
This update covers the following key amendments and developments of the Arbitration Law:
1. Consolidation of definitions “third-party court” and “arbitration court”
Pursuant to novelties introduced in the Arbitration Law, arbitration includes such definitions as “third-party court” and “arbitration court.”
Previously, the main difference between third-party and arbitration courts was that the third-party courts considered cases involving only residents of the Republic of Kazakhstan, while the arbitration courts considered disputes where one of the parties is a non-resident of the Republic of Kazakhstan.
2. Additional requirements to the form and content of the arbitration agreement
Paragraph 4 of article 9 of the Arbitration Law tightens requirements to formalize the arbitration agreement. An arbitration agreement must contain
– an intent of the parties to consider bringing the dispute before the arbitration court;
– an indication of the triable subject of the dispute;
– an indication of a specific arbitration court; and
– if one of the parties is a state body or entity or a legal entity owned by the state, the consent of the authorized body for entering into the arbitration agreement.
3. Invalidity of the contract does not entail invalidity of the arbitration agreement
The new Arbitration Law expressly provides that the arbitration clause that forms part of a contract shall be construed as a separate agreement independent of the other terms of the contract. Thus, if a contract is held to be invalid, it does not invalidate the arbitration clause.
4. Right for repudiation from the arbitration agreement
Pursuant to article 9 of the Arbitration Law, a party has the right to unilaterally repudiate the arbitration agreement by giving prior notice to the other party within a reasonable period. This article provides a reference to provisions of article 404 of the Civil Code of the Republic of Kazakhstan in accordance with which, in our opinion, a reasonable deadline for the notification for unilateral repudiation from the arbitration agreement will be a period of not less than one month before the date of the alleged repudiation.
5. New bases for annulment of arbitral awards
The Arbitration Law has established additional grounds for annulment of an arbitral award. Thus, if
– there is a court or arbitral decision, which has entered into legal force, rendered in a dispute between the same parties on the same subject and on the same grounds, or a court or an arbitration ruling on termination of the court proceedings due to the refusal of the claimant of the claim; or
– the arbitral award does not meet the requirements regarding writing form and signature provided by the Arbitration Law,
a party may file a petition for cancellation of an arbitral award in accordance with chapter 56 of the Civil Procedure Code of the Republic of Kazakhstan and the Arbitration Law.
6. Establishment and functioning of the Arbitration Chamber of Kazakhstan
Chapter 2 of the Arbitration Law stipulates the establishment of the Arbitration Chamber of Kazakhstan—a non-profit organization representing the union of the permanent arbitration courts and arbitrators, created for providing favorable conditions for the implementation, promotion and support of arbitration courts in the Republic of Kazakhstan.
At the date of publication of this news, the Arbitration Chamber of Kazakhstan had not been established.
