On the Recognition and Enforcement of Foreign Arbitral Awards in Kazakhstan

Published
May 20, 2020

Issues related to the enforcement of foreign arbitral awards on the Republic of Kazakhstan territory are very common. Are such awards enforceable in Kazakhstan? Is it possible to present for execution an enforcement order issued by a foreign court to a private enforcement agent of the Republic of Kazakhstan? What needs to be done to enforce the foreign arbitral award on the territory of the Republic of Kazakhstan?

In this publication, I would like to offer general answers to these questions in the following sequence:

legal basis
enforcement procedure
grounds for a refusal to enforce foreign arbitral awards
enforcement
list of the supporting enforcement documents
deadlines for the presentation of the enforcement documents
appeal to a bailiff

The procedure for the enforcement of foreign arbitral awards is quite regulated by the laws of Kazakhstan, international treaties, and agreements ratified by our country.

One should distinguish (1) the decisions of foreign courts that are part of the country's judicial system (for example, arbitration courts, which, in accordance with Article 1 of the Federal Constitutional Law April 28, 1995, No. 1-FKZ "On Arbitration Courts in the Russian Federation" are federal courts and are included in the judicial system of the Russian Federation) and (2) decisions of arbitrations that are not part of the state courts system, since the procedure of their enforcement is subject to separate legal rules and is quite different.

Legal Basis

Interaction between the local state courts and foreign arbitrations is regulated by the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, June 10, 1958); European Convention on International Commercial Arbitration (Geneva, April 21, 1961); Convention on the Settlement of Investment Disputes Between States and Nationals of Other States - International Centre For Settlement Of Investment Disputes (Washington, March 18, 1965); Convention on Settling Disputes Related to Commercial Activities (Kyiv, March 20, 1992).

The provisions of the New York Convention apply to the recognition and enforcement of foreign arbitral awards, as well as arbitral awards that are not considered "internal" to the state where recognition and enforcement are sought.

Article 3 of the New York Convention states that each contracting state shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied on.

The provisions of paragraphs 1, 3 of Article 1 of the New York Convention allow the applicability of this convention to foreign arbitral awards rendered in any foreign state, whether it is a contracting state or not. If the state where the recognition and enforcement of such awards are sought has made a reservation of reciprocity on the basis of paragraph 3 of Article 1 of the Convention than the exception could be made.

Thus, the issues of recognition and enforcement of foreign arbitral awards are regulated by the 1958 New York Convention, as well as the rules of Chapter 57 of the Civil Procedure Code "Proceedings on cases involving foreign persons."

Enforcement Procedure

According to Article 501 of the Civil Procedure Code of the Republic of Kazakhstan (hereinafter - the Civil Procedure Code), arbitral awards of foreign arbitrations are recognized and enforced by the courts of the Republic of Kazakhstan, if the recognition and enforcement of such acts is provided for by legislation and (or) an international treaty ratified by the Republic of Kazakhstan, or based on reciprocity.

In accordance with Article 4 of the New York Convention, applications for the enforcement of the decisions of the arbitration that are not part of the state judicial system shall be supported by:

(a) The duly authenticated original award or its duly certified copy;

(b) The original agreement or its certified copy under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.

The provisions of the New York Convention are fully consistent with the Normative Resolution of the Supreme Court of the Republic of Kazakhstan dated July 11, 2003, No. 5 "On Judicial Decision." In accordance with paragraph 30, the enforcement of the foreign arbitral award is carried out at the request of the interested party by a court of the Republic of Kazakhstan in accordance with the rules on jurisdiction determined by the Code of Civil Procedure of the Republic of Kazakhstan at the place of execution of the decision. The application is usually supported by:

a) The duly certified copy of the decision, the enforcement of which is being sought;

b) The official document that the decision is final, if this fact is not obvious from the text of the decision;

c) Evidence confirming the proper serving of the party or its representative in case of procedural incapacity of the party against which the decision is made;

d) The enforcement order with a note on the partial execution of the decision, if any;

e) In cases of contractual jurisdiction, a document confirming the agreement of the parties on this issue.

A court considering an application for recognition and authorization of the enforcement of an arbitral award shall be limited to establishing circumstances in which enforcement of the award is possible.

Grounds for Refusal to Enforce Foreign Arbitral Awards

With regard to foreign arbitral awards, such grounds are contained in Article 5 of the New York Convention.

According to Paragraph 1 of Article 5 of the New York Convention, recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement are sought, proof that:

(a) The parties to the agreement were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

In accordance with the mentioned above Normative Decree of the Supreme Court of the Republic of Kazakhstan No. 5, the court has the right to refuse to enforce the court decision when the other party, in respect of which permission is required to enforce the court decision, provides evidence attesting to:

a) consideration of the dispute by an incompetent court;

b) consideration of the case in the absence of a party not notified of the process;

c) the expiration of a three-year limitation period for the presentation of a decision for enforcement;

d) another decision that has entered into legal force between the same parties on the same subject and on the same basis.

In all cases mentioned above, the court is exempted from the obligation to collect evidence and, if it is not submitted by the party against which the arbitral award has been made, the decision could be recognized, and an enforcement order could be issued.

Enforcement

According to Article 503 of the Civil Procedure Code, if foreign arbitral awards are not executed voluntarily within the time frames set by them, the party in whose favor these awards are issued has the right to apply for enforcement in court at the place of consideration a dispute, at the place of residence of the debtor, or at the location of the body of the legal entity. If the place of residence or location is unknown, then at the location of the property of the debtor.

List of Enforcement Documents

Article 9 of the Law of the Republic of Kazakhstan "On Enforcement Proceedings and the Status of Bailiffs" (hereinafter referred to as the Law) provides an exhaustive list of enforcement documents that may be accepted for execution by bailiffs.

According to paragraph 3) of Article 9 of the Law, executive documents are the enforcement orders issued on the basis of the local judicial acts on the enforcement of international and foreign arbitral awards on the territory of the Republic of Kazakhstan.

Therefore, enforcement orders issued by foreign states cannot be accepted as enforcement orders by bailiffs of the Republic of Kazakhstan. Before submitting a foreign arbitral award for enforcement, you must first obtain a ruling from the appropriate court of the Republic of Kazakhstan on its enforcement in our country, and then on the basis of this ruling, obtain an enforcement order.

Deadlines for the Execution of the Enforcement Orders

Enforcement documents may be presented for enforcement within three years. In case the enforcement order issued on the basis of a court ruling on the enforcement of arbitral awards, the specified period shall be calculated from the day such decision came into force.

A claimant who missed the deadline for presenting the enforcement document for execution has the right to apply to the court that issued the judicial act, or to the court at the place of execution with a request to restore the missed deadline.

If the court recognizes the reasons for missing the deadline for presenting the enforcement order valid, the term can be restored.

Appeal to a Bailiff

The bailiff initiates enforcement proceedings on the basis of the enforcement order at the request of the claimant. The application shall be signed by the claimant or his representative. The representative attaches to the application power of attorney or other document proving his authority.

A copy of the judicial act with a mark on entry into force certified by the signature of the judge and the seal of the court must be attached to the enforcement orders. Failure to comply with this requirement is one of the grounds for refusing to initiate enforcement proceedings.

Thus, the algorithm of actions to enforce decisions of foreign courts and foreign arbitrations in the Republic of Kazakhstan is as follows:

(1) The claimant or his representative has to file a request to enforce a foreign arbitral award and an application for the issuance of an enforcement order to the court of the Republic of Kazakhstan at the place of residence of the debtor or at the location of the body of the legal entity, if the place of residence or location is unknown, then at the location of the debtor's property.

(2) The claimant or his representative has to present an enforcement order issued by the court of the Republic of Kazakhstan on the enforcement of a foreign arbitral award to a private bailiff of the Republic of Kazakhstan on the basis of a request from the claimant or his representative with a mandatory attachment of a copy of a judicial act (ruling of the court of the Republic of Kazakhstan on the enforcement of a decision of a foreign court or arbitration) with a note on entry into force, certified by the signature of the judge and the seal of the court.