Monthly Legal Alert: October-November 2023

SIGNUM regularly provides Legislative/Regulatory Alerts to keep Clients informed about important laws and regulatory changes in the Republic of Kazakhstan (“RK”). This Alert includes recent developments introduced in October-November 2023 related to:

1. Work permit requirements for heads of foreign branches and representative offices;

2. Legal representatives of online platforms;

3. Procurement of GWS by Subsoil Users;

4. Ban on the Export of Certain Types of Goods;

5. Exemption from Visa Requirements between the RK and PRC;

6. Online familiarization with the case file;

7. Normative Resolutions of the Supreme Court of the RK;

8. Depleting Fields and Extension of the Exploration Period.

1. Work permit requirements for heads of foreign branches and representative offices 

As from 8 December 2023, heads of branches and representative offices of foreign legal entities are now required to obtain a work permit¹. In the past, such heads were exempt from work permit requirement.

This amendment did not affect the heads of Kazakh legal entities and their deputies with a 100% foreign participation in their charter capital, who are still not required to obtain a work permit in Kazakhstan. Since this is a recent change, it is still not clear as to how this will work in practice and whether currently working heads would be immediately required to secure work permits and work visas.  We are currently consulting with the labor authorities on this matter.

2. Legal representatives of online platforms

Online platforms (Facebook, Instagram, Tiktok, Youtube, etc.) must appoint a legal representative who will interact with the government authority - the Ministry of Culture and Information of the Republic of Kazakhstan. Legal representative can be either an individual or a legal entity, and a resident or non-resident of the Republic of Kazakhstan. 

Legal representative would among others: 1) counter dissemination of unlawful content in Kazakhstan, 2) reviewi queries of the government authority within 24 hours, 3) post information on an average monthly number of users for the last 6 months of operation of an online platform, 4) suspend accounts with unlawful content, etc.

By way of Order² the Minister of Culture and Information of the RK approved rules for maintaining the register of legal representatives of foreign and Kazakhstan online platforms in Kazakhstan. 

Owners and (or) legal representatives of online platforms email the following details to the Ministry of Culture and Information of the RK: 1) information about legal representatives of online platforms (full name (name), IIN (BIN), address, etc.), 2) e-mail address, 3) domain name of the online platform, 4) e-mail address of an administration of an online platform, 5) number of a registry entry and a date of its inclusion in a register. 

Within 7 business days from the date of receipt of information via e-mail, the government authority must include information about legal representatives of online platforms in its register and notify the owner and (or) another legal representative of an online platform either about its inclusion in the register or refusal due to provision of incomplete information. The history of changes to registry entries is stored in the register, and no information can be deleted there.

3. Procurement of GWS by Subsoil Users

Rules for procurement by subsoil users and their contractors of goods, works and services ("GWS") used in operations for exploration or production of hydrocarbons and uranium mining were amended³.

Below we have highlighted the following novelties:

1. GWS procurement principles. The GWS procurement principles used in hydrocarbon and uranium exploration or production operations were amended. In addition to currently existing principles of  publicity, fair competition, principle of non-discrimination and absence of unreasonable restrictions of competition in relation to potential suppliers were introduced;

2. Suspension of duration term of the contract. If a potential supplier appeals against the decisions of the client in the court, no later than 5 working days from the date of posting the open tender results, the duration term of the contract for purchase of GWS must be suspended until the court ruling on such appeal enters into force. Such suspension does not apply to appeals by a potential supplier who did not participate in the tender. 

4. Ban on the Export of Certain Types of Goods

As from 7 November 2023, the following ban on the export from Kazakhstan will be extended for additional 6 months:

• by all types of transport: waste and scrap of copper, aluminium, lead, as well as spent lead batteries, waste and scrap batteries;

• by road and sea: ferrous metal waste and scrap, ferrous metal ingots for remelting (charge ingots);

• by road and sea: used pipes, rails, elements of railway track and rolling stock⁴.

In addition, the RK has introduced a ban on the export of liquefied petroleum gas (LPG), propane and butane by road and rail for 6 months⁵.

5. Exemption from Visa Requirements between the RK and PRC

The agreement on mutual exemption from visa requirements between the governments of the RK and the PRC entered into force on 10 November 2023⁶.

Citizens of the two countries are exempt from visa requirements for the following purposes:

1. personal reasons;

2. tourism;

3. medical treatment;

4. international transport;

5. transit;

as well as business purposes (conclusion of contracts, negotiations, provision of consulting services and other business purposes)

for entry, exit, transit through the territory of the country of the other party for a period not exceeding 30 calendar days from the moment of crossing the country border, for a total of 90 calendar days within 180 calendar days.

The agreement on exchange of information regarding the citizens of the RK and the PRC⁷, which provides for exchange of the following information: about citizens arriving in the country (under non-visa regime), about visas issued, about violations of entry and stay rules, and about naturalized citizens, entered into force on 11 November 2023.

6. Online familiarization with the case file

Review of case materials is available now on the online court platform of the Republic of Kazakhstan "Judicial Cabinet".

Online review is available in the new version of the site. After authorization you should click on the "Familiarization module" and enter a case number in the search line. When filing a lawsuit/claim, the representative is automatically added to the database, and in other cases the court secretary adds the representative to the database. Before familiarization with the case file, it is required to sign a receipt of reviewing the case materials by means of an electronic digital signature, which is generated automatically.

7. Normative Resolutions of the Supreme Court of the RK

7.1. Application of Rehabilitation and Bankruptcy Legislation by the Courts

In November 2023, the Supreme Court of the RK issued a Normative Resolution⁸ on application of rehabilitation and bankruptcy legislation by the courts. The Normative Resolution aims to unifying court practice rehabilitation and bankruptcy legislation.

The Normative Resolution covers the following main points:

1. Debt restructuring

   Only the debtor may apply for debt restructuring. An application filed by another person cannot be considered.

2. Rehabilitation procedure

   A rehabilitation procedure may be commenced against debtors in the court. Debtor or Creditor may apply to the court for rehabilitation procedure due to temporary insolvency of the debtor.

3. Recognition of the debtor as bankrupt

   All pending proprietary cases against the bankrupt in the court must be terminated from the date when the court declares the debtor bankrupt. Proprietary claims of creditors may be brought against the bankrupt only within the bankruptcy proceedings.

7.2. Application of Arbitration Legislation by Courts

In its Normative Resolution⁹, the Supreme Court has clarified issues relating to application of arbitration legislation by courts. The Normative Resolution aims at ensuring uniformity of court practice in application of arbitration legislation by courts.

According to the Normative Resolution, arbitration is an alternative way of resolving civil law disputes. Legal regulation of arbitration proceedings differs from that of court proceedings.

The Normative Resolution covers the following main points:

1. Arbitration agreement

   Parties may apply to arbitration if there is an arbitration agreement - a written agreement of the parties to submit to arbitration a dispute that has arisen or may arise out of civil law relations.

2. Cancellation of the arbitral award

   Application for cancellation of the arbitral award must be filed with the relevant court of appeal at the location of the permanent arbitral tribunal, if such arbitral tribunal is located in the Republic of Kazakhstan.

   Parties to the arbitration proceedings and third parties have the right to file a motionfor setting aside the arbitral award.

3. Language of the proceedings

   The language of the proceedings must be determined by a court ruling factoring in the language of the motion to set aside the award and irrespective of the language of the proceedings in which the arbitration was held.

   The court, if either party requests the same, must refer the parties to arbitration no later than the filing of its first statement on the merits of the dispute, unless it finds that the arbitration agreement is invalid, void or unenforceable.

4. Compulsory enforcement of the arbitral award

   If the arbitral award is not enforced voluntarily within the term set forth therein, the party to the arbitral proceedings in whose favor the arbitral award was made (claimant) is entitled to apply to the court for compulsory enforcement of the arbitral award. In this case, if the arbitral award does not set a time limit, it must be subject to immediate enforcement.

   An application for compulsory enforcement of an arbitral award must be filed with the court of general jurisdiction.

8. Depleting Fields and Extension of the Exploration Period

We present to your attention the upcoming changes to the legislation on subsoil.

This month the Majilis of the Parliament of the RK adopted the Law¹⁰ on subsoil use and environmental matters and sent it to the Senate of the Parliament of the RK. Below we have highlighted the following main proposed changes from the Draft Dossier¹¹:

1. It is envisaged to supplement the Code "On Subsoil and Subsoil Use" with the concept of "depleted fields" and conditions to subsoil users producing hydrocarbons from depleted fields. Such conditions are as follows (i) the field belongs to the category of depleting fields (depletion of reserves is 85% or more or the oil recovery coefficient is 0.4 fractions of a unit or more) and (ii) fulfilment by the subsoil user of an investment obligation to be determined by Art. 153-1 paragraph 4 of the Code "On Subsoil and Subsoil Use";

2. It is proposed to amend Art. 117 of the Code "On Subsoil and Subsoil Use" concerning the extension of the exploration period under a contract for exploration and production of hydrocarbons at the subsoil area that is not classified as a complex project. We have set out some of the amendments below:

   • For the purpose of evaluating a discovered deposit (set of deposits), the exploration period under a contract for exploration and production of hydrocarbons at the subsoil area that is not a complex project may be extended for over 3 years. In this case, the duration of the period (periods) may not exceed twelve years;

   • A subsoil user has the right to submit an application for an extension of the exploration period under a subsoil use contract for 12 months, provided that the following conditions are simultaneously met:

     • seismic survey and drilling of independent wells provided for by the work programme of the exploration period have been fully completed;

     • there are no uncured breaches of obligations specified in the notification of the competent body;

     • there is a confirmation of discovery by the competent body;

     • the application is submitted before the expiry of the exploration period.

Please be informed that these changes may not be included in the final version of the text or may be supplemented/amended.

1. Decree of the Government of the Republic of Kazakhstan No. 1041 dated 24 November 2023 “On Determining the List of Persons for Whom Permission from Local Executive Authorities is not Required to Attract Foreign Labor for Labor Activities.” Entered into force on 8 December 2023.
2. Order of the Minister of Culture and Information of the RK No. 388/НҚ dated 29 September 2023 
«On Approval of the Rules for Maintaining the Register of Legal Representatives of Foreign and Kazakhstani Online Platforms in the RK». Entered into force on 17 October 2023.
3. Order of the Minister of Energy of the RK No. 338 dated 14 September 2023 "On Amendments and Additions to the Order of the Minister of Energy of the RK No. 196 dated 18 May 2018 "On Approval of the Rules for Procurement of Goods, Works and Services by Subsoil Users and Their Contractors Used in Hydrocarbon Exploration or Production and Uranium Mining Operations". Entered into force on 20 November 2023.
4. Order of the Minister of Industry and Construction of the RK No. 34 dated 18 October 2023 "On Transportation of Scrap and Waste of Ferrous and Non-ferrous Metals". Entered into force on 4 November 2023.
5. Order of the Minister of Industry and Construction of the Republic of Kazakhstan No. 401 dated 13 November 2023 "On Some Issues of Transportation of Liquefied Petroleum Gas". Entered into force on 23 November 2023.
6. Agreement between the Government of the RK and the Government of the People’s Republic of China on Mutual Exemption from Visa Requirements (Xi'an, 17 May 2023). Entered into force on 10 November 2023.
7. Agreement between the Government of the RK and the Government of the People’s Republic of China on Exchange of Information Regarding the Citizens of the Countries of the Parties (Xi'an, 17 May 2023). Entered into force on 11 November 2023.
8. Normative Resolution of the Supreme Court of the Republic of Kazakhstan No. 2 dated 2 November 2023 "On Some Issues of Application by the Courts of the Legislation on Rehabilitation and Bankruptcy of Legal Entities and Individual Entrepreneurs". Entered into force on 16 November 2023.
9. Normative Resolution of the Supreme Court of the RK No. 3 dated 2 November 2023 "On Some Issues of Application of Arbitration Legislation by the Courts". Entered into force on 17 November 2023.
10. Resolution of the Majilis of the Parliament of the Republic of Kazakhstan No. 202-VIII dated 15 November 2023 "On the Law of the Republic of Kazakhstan "On introducing Amendments and Additions to Some Legislative Acts of the Republic of Kazakhstan on Issues of Subsoil Use and Ecology".
11. Dossier on the Draft Law of the Republic of Kazakhstan "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Subsoil Use Issues" (November 2023).