Shaikenov V., Idayatova A. RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN RUSSIA AND FORMER SOVIET UNION COUNTRIES KAZAKHSTAN – 2019. – С. 698-748.

  The Republic of Kazakhstan (the RK or Kazakhstan) acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958) (the New York Convention) by virtue of the RK President's Decree No. 2485 dated 4 October 1995. A similar Presidential Decree No. 2482 of the same date joined Kazakhstan to the European Convention on International Commercial Arbitration (Geneva, 21 April 1961) (the European Convention). Kazakhstan deposited the instruments of accession to both Conventions with the UN Secretary-General on 20 November 1995. Accordingly, both Conventions entered into effect in Kazakhstan on 18 February 1996.

  The status of Kazakhstan's accession to the New York and European Conventions and their position in the hierarchy of regulatory legal acts has long been and still is the subject of constitutionally convoluted debate among legal professionals. The thing is that in the period of accession to the Conventions, the country had no highest representative body: early termination of the constitutional powers of the 12th Supreme Council as a result of its voluntary dissolution and dissolution of the 13th Supreme Council left Kazakhstan without a functioning Parliament for the period from March 1995 to January 1996.

In that period, the RK President was authorized to issue two types of decrees:

• Decrees having the force of law (among other things, to ratify and denunciate international treaties) – on the basis of the Law No. 2576-XII "On Temporary Delegation of Additional Powers to the RK President and to the Heads of Local Administrations" dated 10 December 1993;
• Decrees not having the force of law, hence, not deemed equivalent to the acts of the highest representative body.

  Some Kazakhstani lawyers opined that the Presidential decrees on accession to the New York and European Conventions should be construed as decrees having the force of law, because, allegedly, the President could not have Kazakhstan accede to an international treaty except by virtue of his powers to act in place of the highest representative body. We find this inference wrong, because the President, by virtue of Article 44.11 of the 1995 RK Constitution and Article 7.2(a) of the Vienna Convention on the Law of Treaties of 23 May 1969, was authorized to represent the state in international relations and enter on behalf of the state into international treaties in his status of the head of state, not only as a person temporarily performing the functions of the highest representative body. Therefore, by adopting a decree that does not have the force of law the President obviously exercised his powers of the head of state, the highest official, but not the highest representative body.

  Our position is consistent with that taken by the RK Constitutional Council, which stated in its Regulatory Resolution No. 2 of 18 May 2006 "On the Official Interpretation of Subparagraph 7 of Article 54 of the Constitution" as follows:

"2. …In this connection, international treaties whose binding nature for Kazakhstan is established by the regulatory legal acts on accession to the international treaties adopted by the Republic's highest representative body performing legislative functions (the Supreme Council and the Parliament of the Republic of Kazakhstan) and by decrees of the President of the Republic of Kazakhstan having the force of law are deemed equivalent to the international treaties ratified by the Republic of Kazakhstan.

3. Non-ratified international treaties of the Republic of Kazakhstan have no prevalence over the laws of the Republic and must be performed to the extent they do not conflict with the laws of the Republic. In the event of a conflict between them, the parties to the treaties have the possibility, in accordance with the Law No. 54-III of the Republic of Kazakhstan "On International Treaties of the Republic of Kazakhstan" dated 30 May 2005, as well as the rules of international law, to resolve the conflict via conciliation procedures and other measures to overcome the conflict."

  This conclusion has practical implications: although the New York and European Conventions form a part of Kazakhstan's legislation, since they have not been ratified by the highest representative body, they do not prevail over Kazakh laws (Article 4.3 of the RK Constitution). The view that the New York and European Conventions have not been ratified, therefore, do not prevail over RK laws is shared by some other authors. Since the current RK Civil Procedure Code of 31 October 2015 (the CPC) (enacted on 1 January 2016) and the RK Law on Arbitration of 8 April 2016 (the Arbitration Law or the Law) (enacted on 19 April 2016) provide for a broader list of grounds for refusing recognition and enforcement of arbitral awards as compared to the New York and European Conventions, the question of whether the Conventions prevail over the said legislative acts goes especially topical.

  However, to date, we are not aware of cases in judicial practice where a court would refuse recognition and enforcement of a foreign arbitral award invoking lack of ratification of the New York or the European Convention. Kazakhstan made no reservations when acceding to the New York and European Conventions.

Judicial Practice

  The technically very complicated search in the judicial acts database makes it impossible to fully and comprehensively analyse Kazakhstan's judicial practice on specific matters and categories of disputes. Besides, the Kazakh courts often do not observe uniformity in the interpretation and application of the rules of law.

  In 2019, the RK Supreme Court published for the first time the Summary of Judicial Practice on Recognition and Enforcement of Arbitral Awards, summarizing the practice over the years 2016 and 2017 and the first quarter of 2018 (the Summary). For all the usefulness of work undertaken, the Summary is not informative enough for the following reasons.

  Firstly, as stated in the Summary proper, "the UAIS and AIS TORELIK systems record data on consideration of materials regarding recognition and enforcement of the said awards under a unified entry: 'issuance of writs of execution over arbitral awards.' This, in turn, does not ensure a separate analysis of these materials and reliability of statistics. Therefore, there is a need for changes in the AIS TORELIK statistical records system to separately reflect the data on recognition and enforcement of foreign arbitral awards, domestic arbitral awards and foreign court judgments."

  Secondly, the Summary is confined to commenting on the judicial acts exposing far smaller problems than those that actually exist. In this chapter, we did our best to compensate for this shortfall by scrutinizing the most problematic judgments not covered by the Summary. The judicial acts cited in this chapter were in some instances handed down during the effective period of the now inoperative RK Law on International Arbitration and RK Law on (Domestic) Arbitral Tribunals of 28 December 2004. Nonetheless, since these judicial acts affect interpretation of the rules and regulations contained in the now effective Arbitration Law as well, we believe that their analysis is of interest, given that similar problems may arise when applying the current law.

Arbitration Legislation under Review

  Since enactment of the Arbitration Law on 19 January 2016, it has been amended twice: the rule concerning repudiation of arbitration agreement was deleted on 10 March 2017 (Article 9.5) and amendments to 24 articles of the Law were simultaneously enacted on 3 February 2019. Some of the 2019 amendments were significant, some – clarifying; the rest were plainly to move the text of some rules from one part of the Law to another. The Law of 21 January 2019 also amended Article 255 of the CPC dealing with recognition and enforcement of arbitral awards. In this chapter, we will focus only on the most significant amendments to the Law and the CPC.

  Whereas some of the rules previously in effect seem to be potentially essential to the future practice over disputes out of previously arising relationships, we deemed it necessary to comment on them in parallel with the regulation in place at the time of this chapter preparation.

Quality of Legal Writing in Arbitration Legislation

  In Kazakhstan, the matters of arbitration, including recognition and enforcement of arbitral awards, are mostly governed by the Arbitration Law and the CPC. The legal writing of certain provisions of the Arbitration Law and CPC rules relating to arbitral awards leaves much to be desired: many provisions, if construed in accordance with the literal meaning of their verbal expression, either bring to naught the idea of arbitration, or run counter not only to the internationally accepted standards of arbitration, but also to common sense. The situation is greatly complicated by the scarcity of available judicial practice records. One should admit that the situation has somewhat improved after the adoption of amendments to the abovementioned legislative acts in February 2019; the amendments, however, giving rise to new theoretical and practical issues, some of which are raised below.

  In this chapter, we offer the readers our outlook on the most reasonable, as we see it, interpretation of Kazakhstan's arbitration legislation, separately highlighting some of its contradictions and related practical risks.

Nature of Arbitration Agreement and Practical Implications of Its Qualification

  Determining the nature of arbitration agreement has important implications, the major one being the possibility to apply the civil law rules to the form, conclusion procedure, invalidation, novation, and other aspects of arbitration agreements. The nature of arbitration agreement is also important as regards the possibility to establish the law applicable to it through the rules of international private law contained in the special part of the RK Civil Code. Neither the Kazakhstan's legislation, nor its judicial practice unequivocally answer the question of what is the nature of arbitration agreement. For instance, the Arbitration Law defines the arbitration agreement as "a written agreement of the parties to refer to arbitration a dispute that arose or may arise out of civil law relations" (Article 2.4). The legislation does not, however, clarify whether such agreement is a civil or procedural transaction.

  If the arbitration agreement is qualified as a procedural transaction, this would create great difficulties in the interpretation and law application, as the institute of procedural transactions is not developed in the Kazakh law.

  The only rule in the Arbitration Law directly referring to the Civil Code in terms of regulation over arbitration agreements, thus hinting at the legislator's position on the contractual nature of arbitration agreements, was contained in Article 9.5 of the Law and was in effect from 19 April 2016 to 10 March 2017. This rule provided for the possibility to repudiate the arbitration agreement before a dispute arose. Although this rule was abolished and ceased to operate on 11 March 2017, it was present in the original version of the Law, signalling that the legislator had probably from the very outset treated arbitration agreements as a type of civil contracts.

  In fact, it may not be enough to determine the nature of arbitration agreement. As Prof. O. S. Ioffe rightly pointed out, when forming branches of legislation, the classifying criterion is elected by the legislator (housing legislation, civil legislation, maritime legislation, etc.), and when legislatively securing the law, all depends on the objective nature of the branches of law, therefore, it is impossible to include a criminal law rule into civil law, and a civil law rule into administrative law, and so forth.

  If we expand on Prof. Ioffe's idea, it can be argued that in order to determine the legal nature of arbitration agreement, it is necessary to first establish the content of the whole complex of relations arising as a result of its conclusion. However, we do not purport to look into this matter in this chapter. Same as in most developed law and order systems, the nature of arbitration agreements must be revealed by judicial practice and doctrine.

  In turn, Kazakhstan's judicial practice testifies to the courts' positivistic approach to law application, one of characteristic features of which is treating the branch-wise division of law as a conventionality, rather abstract and hardly usable in practical terms.

Form of Arbitration Agreement

  The Arbitration Law necessitates a written form of the arbitration agreement. It did not fully imbibe the recommended language of the UNCITRAL Model Law on International Commercial Arbitration as amended in 2006. In particular, the Law does not contain the recommended provision that "an arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means."

  The Arbitration Law (actually, same as the UNCITRAL Model Law) does not answer the question of implications impending in the event the requirements to the form of arbitration agreement are not met. Qualifying an arbitration agreement as a civil transaction would resolve this (and some other issues) by applying the implications described in the Civil Code. We, for one, tend to construe the arbitration agreement as a transaction, but Kazakhstan's judicial practice still does not finally qualify the arbitration agreement and, accordingly, does not describe the implications of non-compliance with its written form. As a general rule, failure to comply with the written form does not invalidate the transaction, but deprives the parties of the right, in the event of a dispute, to corroborate its execution, content or performance by witness testimony. The parties, however, have the right to corroborate the execution, content or performance of the transaction by written or other evidence other than witness testimony (Article 153.1 of the Civil Code). To what extent this rule can be extrapolated to arbitration agreements is still to be established by judicial practice.

  The Arbitration Law deems the written form of arbitration agreement to be complied with, if an arbitration clause is present in a document signed by the parties, or in the exchange of letters, telegrams, phone and fax messages and electronic documents, or other documents that determine the actors and the content of their expression of will (Article 9.1). Given that Kazakhstan's judicial practice is fairly restrictive in construing the electronic documents, lack of a broader definition of "electronic communication" or "data message" in the Law (as, for example, in the UN Convention on the Use of Electronic Communications in International Contracts (New York, 23 November 2005), to which Kazakhstan did not accede) poses risks associated with the potential impossibility to qualify as a proper manner of arbitration agreement execution the exchange of information via SMS, messengers, e-mail, and other electronic communication channels.

  The Arbitration Law allows for the possibility to conclude an arbitration agreement via reference in a contract to a document containing a provision to refer disputes to arbitration, provided that the contract is concluded in writing and the reference is such that makes the arbitration agreement part of the contract (Article 9.3).

  An arbitration agreement is also deemed executed in writing, if it is concluded via exchange of a statement of claim and statement of defence in which one of the parties asserts that the agreement is in place and the other does not object (Article 9.2 of the Law). Content of Arbitration Agreement; Operation of Article 9 of the Arbitration Law in Time in Connection with Amendments Introduced by the Law of 21 January 2019 In the period from 19 January 2016 to 2 February 2019, Article 9.4 of the Arbitration Law was establishing ambiguous, as we see them, requirements to the content of arbitration agreement. Although all requirements to content, except for the authorized agency's consent, have been abolished by the Law of 21 January 2019, their analysis is still relevant to the previously concluded arbitration agreements. In particular, based on the civil law nature of arbitration agreement and, accordingly, proceeding from the rule of Article 383 of the RK Civil Code on correlation between a contract and legislative amendments, arbitration agreements concluded from 19 January 2016 to 2 February 2019 should be evaluated in terms of the requirements in effect during the specified period.

According to the version of Arbitration Law in effect before 3 February 2019, an arbitration agreement was to:

• contain the parties' intent to submit disputes to arbitration;
• specify the subject matter to be arbitrated;
• specify a particular arbitration.

Let us analyse each of the above requirements.

  Indeed, the parties' intent to submit disputes to arbitration should be supported by the existence of the arbitration clause itself. Other requirements to the content of arbitration agreement bring about much larger difficulties in interpretation.

  Subject of arbitration. At the stage of entering into the arbitration agreement, it is absolutely impossible to predict the vast diversity of potential subject matters to arbitrate (except where such agreement is concluded after the dispute has already arisen). If any differences arising from the contract are to be understood as the subject of arbitration, then we deem this broadest understanding of the subject of potential arbitral proceedings as a matter-of-course and requiring no special mention in the Law. However, despite the redundancy of this requirement, the proposed interpretation of the rule being analysed seems to us the most reasonable, since a different interpretation would jeopardize the existence of arbitration as such, because any arbitration clause not describing the specific subject matter of the future arbitration would be at risk of invalidation.

  Specifying a particular arbitration. If this requirement is interpreted in the broadest possible way, it seems reasonable. The parties must choose the rules according to which they wish to arbitrate and decide whether they need the services of an arbitral institution to administer the arbitration proceedings (institutional arbitration) or wish to administer the dispute on their own (ad hoc arbitration). It looks like such broad interpretation is used by the authors, who believe that the requirement to specify a particular arbitration has been necessary.

  However, a stricter look into the text of the Law exposes its internal contradictions. The thing is that the Law defines the term "arbitration" as the "arbitration formed specifically to consider a particular dispute, or a permanent arbitration," thus mixing the concept of an arbitral tribunal considering a dispute with the concept of an arbitral institution administering the arbitration proceedings and not being the entity considering the dispute. Thus, if interpret the rule literally, it turns out that the Law requires that the arbitration clause either specify the particular composition of arbitrators or the arbitral institution to which the dispute administration will be entrusted. Such literal interpretation of the text of the Law looks unreasonable because of the following.

  Firstly, the selection of arbitrators at the stage of arbitration agreement conclusion is often impossible in principle (for one thing, because it is impossible to guess beforehand whether the selected arbitrator will have a conflict of interests at the time of a particular dispute, the essence of which the parties cannot know in advance), let alone that such approach is inconsistent with the international arbitration practice and may infringe on the interests of the contracting parties proper.

  Secondly, the choice of arbitral institution should not condition the validity of arbitration agreement, as the parties may wish to consider their dispute without the administrating institution's assistance or limit its role to the appointment of arbitrators. In this case, it would suffice for the parties to choose the arbitration rules under which they wish to conduct the proceedings.

  Thirdly, even if the parties have not chosen the seat of arbitration, arbitral institution or arbitration rules for the proceedings, in certain circumstances the mechanism of the European Convention may be invoked, enabling a party to apply to the Ad Hoc Committee of the European Economic Commission or to the chairman of the competent chamber of commerce in the respondent's country to seek assistance in filling the gap in the arbitration agreement.

Competent Authority's Consent to the Conclusion of Arbitration Agreement

  Among other requirements to the content of arbitration agreement (not its conclusion), the Law – seemingly, due to a misunderstanding – requires that in order to conclude an arbitration agreement with a Kazakhstan individual or legal entity, the following entities must obtain consent from the authorized agency in the relevant industry or from the local executive authority:

• governmental agencies;
• state-owned enterprises;
• legal entities, in which fifty or more per cent of voting shares (interests in the charter capital) are directly or indirectly owned by the state.

  As per Article 8.10 of the Arbitration Law, the above entities, if intending to enter into an arbitration agreement, must file with the relevant industry's authorized agency (in respect of the national property) or the local executive authority (in respect of municipal property) a request for consent to such agreement, specifying the projected amounts of arbitration costs. The practical difficulties stemming from the need to foresee the costs of arbitration were discussed in literature.

  The nature of the established requirement in relation to each of the said categories of entities (governmental agencies, state-owned enterprises and private legal entities with direct or indirect state participation) is of interest.

  Governmental agencies. Pursuant to the Civil Code, governmental agencies are not independent actors in civil law relations: they enter into these relations either on behalf of the Republic of Kazakhstan or on behalf of its administrative-and-territorial units (Article 111). Accordingly, the interpretation seems logical that the powers to conclude an arbitration agreement and decide on its conclusion on behalf of the Republic or its administrative-and-territorial unit are distributed among different agencies.

  State-owned enterprises have limited legal capacity. For instance, state-owned enterprises are limited in the right to own property, which may be deemed an express incapacitation of these entities. We believe that the need to obtain the authorized agency's consent to conclude an arbitration agreement also falls within the state enterprise's legal capacity. This finding is important because it means that the applicability of this requirement is determined by the legal entity's statute and, from the point of view of international private law, depends on where it was incorporated. This, in turn, means that the choice of foreign law as governing the arbitration agreement a party to which is a Kazakh state-owned enterprise does not cancel the requirement to obtain the authorized agency's consent. If this requirement were to refer to the form of arbitration agreement, it could easily be circumvented by applying foreign law to the arbitration agreement.

  Legal entities with direct or indirect state participation of fifty or more per cent must also obtain the authorized agency's consent to enter into an arbitration agreement. We believe that this is also an example of limitation of the legal entity's legal capacity covered by its statute. Accordingly, the choice of foreign law as governing the arbitration agreement or proceedings does not cancel the applicability of this requirement to the procedure for arbitration agreements conclusion by the so-called quasi-governmental organizations. Repudiation of Arbitration Agreement and Operation of Repudiation Rule in Time In the period from 19 April 2016 to 10 March 2017, Article 9.5 of the Arbitration Law contained the following very exotic rule:

"The parties have the right to repudiate the arbitration agreement before a dispute arises in accordance with Article 404 of the Civil Code of the Republic of Kazakhstan, accordingly notifying the other party within a reasonable time."

  Although this rule was cancelled and terminated on 11 March 2017, in the period of its operation, many counterparties attempted to withdraw from arbitration agreements by submitting repudiation notices. Accordingly, the question arose as to whether this rule would apply to arbitration agreements concluded prior to its enactment, i. e., before 19 April 2016. If we proceed from the civil nature of arbitration agreements, we believe that Article 4 of the RK Civil Code should apply, which reads as follows: "Acts of civil legislation shall have no retroactive effect and shall apply to relations originating after the enactment of such acts. The legal force of an act of civil legislation shall apply to relations originating prior to its enactment in cases expressly stipulated by such act." Since the Arbitration Law of 8 April 2016 has no retroactive effect, it should not apply to relations out of an arbitration clause repudiation. Therefore, in our view, there are no legal grounds to repudiate arbitration clauses concluded prior to the enactment of the Arbitration Law.

  Some might argue that the repudiation notice was submitted after the Arbitration Law had come into force, hence, it is the Law that should apply to these relations. Such assertion would be wrong, since the rights and obligations under the arbitration clause are essentially the content of the regulated relationship. Specifically, this is established by Article 383.2 of the RK Civil Code stating as follows: "If after the conclusion of a contract the legislation establishes the rules mandatory for the parties that are different from those in effect at the time of the contract conclusion, the terms and conditions of the concluded contract shall remain in effect except for the cases where the legislation establishes that its operation covers the relations arising from the previously concluded contracts." Since the right to repudiation is an imperative rule applicable to arbitration agreements, it becomes clear that the repudiation relations arise from the contract, which is to be governed by the legislation in effect at the time of its conclusion.

Repudiation of Clauses Subjected to Foreign Law

  Separately, the question arises about the applicability of repudiation rule to arbitration agreements governed by foreign law. We believe that this rule can only apply to arbitration agreements subjected to Kazakh law, as it regulates the relations stemming from arbitration agreements.

  However, judicial practice demonstrates that courts allow in principle for the possibility to apply the repudiation rule to foreign arbitration clauses. For instance, in the case No. 7199-1700-2a/371 Kamkor Lokomotiv LLP v. Alstom Kazakhstan LLP the parties' arbitration agreement chose the Rules of Conciliation and Arbitration of the International Chamber of Commerce and Geneva as the place of arbitration. In its ruling over the case, the Kazakh court preferred not to look into which country's law was to govern the arbitration agreement, but immediately moved on to the operation in time of the Kazakhstan Arbitration Law of 8 April 2016. Although the court did not apply the Law to the arbitration agreement, it mentioned as the only ground for the Law inapplicability that the arbitration agreement had been concluded prior to the enactment of the Law. This means that had the arbitration agreement been concluded during the effective period of the Arbitration Law, the court could have recognized the agreement repudiation as valid, despite the fact that Switzerland had been chosen as the place of arbitration. We believe that the court was to first of all find out the law and order of which country governed the arbitration agreement.

Entity to Consider Disputes over Arbitration Clause Repudiation

  Let us take a look at the following situation. Party A decided to exercise the right to repudiate the arbitration clause once granted by the Arbitration Law of 8 April 2016 by notice to Party B. Party B replied to the notice that the dispute had already arisen and, in its view, the arbitration clause could not be repudiated on that basis. Party A filed a claim in a state court to recognize the arbitration clause terminated.

  The question is whether the court should consider the dispute to terminate the arbitration clause or whether it should refer the parties to arbitration to resolve the dispute. The answer to this question is contained in Article 20.1 of the Arbitration Law, stating that "arbitration shall independently decide on whether or not it has jurisdiction to consider a dispute referred to it, including in cases where one of the parties objects to arbitration because the arbitration agreement is invalid." Based on this rule, any question of whether an arbitral tribunal has jurisdiction should, in our view, be considered by the tribunal itself. The dispute over validity of the arbitration clause is a particular case of disputes over arbitral tribunal's jurisdiction. In the situation under consideration, the question of whether the tribunal had jurisdiction arose in connection with a dispute to terminate the arbitration clause as a result of repudiation. Therefore, in our opinion, it is the arbitral tribunal, not the court, that has jurisdiction to resolve this dispute.

  Rules Applicable to the Merits of Dispute; Nature of Relations Governed by the Rules of Article 44 of the Arbitration Law; Operation of These Rules in Time Subject to Amendments to the Law of 21 January 2019

  The Arbitration Law seeks to regulate not only relations arising out of arbitration agreements and arbitration proceedings, but also relations concerning the merits of dispute. In the period from 19 January 2016 to 2 February 2019, the Law, inter alia, imperatively established that the RK legislation was to apply when considering disputes between the following categories of persons:

• disputes between individuals and/or legal entities of the RK;

disputes in which one of the parties is:

• a governmental agency;
• a state-owned enterprise;
• a legal entity, in which fifty or more per cent of voting shares (interests in the charter capital) are directly or indirectly owned by the state (Article 44.1).

Exceptions may be established by ratified international treaties.

  Starting 3 February 2019, only the first category of disputes, i. e., disputes between Kazakhstan residents, are, pursuant to the Law, subject to resolution in accordance with the Kazakh legislation.

  Are the rules of Article 44 of the Law conflicting? Should these restrictions be interpreted as non-arbitrability of disputes arising from contracts governed by foreign law the parties to which are the above persons? Do these restrictions mean that in the case described the dispute should be referred to a Kazakh court, even if the parties have concluded an arbitration agreement? Should the rule be interpreted as a general prohibition for these entities to choose foreign law in dealing with each other? Pending an answer from judicial practice to the questions raised, we would offer our own interpretation.

  The content of Article 44.1 of the Law demonstrates that the legislator clearly does not wish the parties to arbitrate disputes under foreign law. This wish itself is very difficult to explain from a rational point of view. It is hardly conceivable that a Kazakh court has more opportunities to better understand the rules of foreign law than an arbitral tribunal qualified in the applicable law (which can easily be formed). We do not know what other goals the legislator may have pursued.

  But the will of the legislator is expressed in the Law, and it has to be interpreted as best as possible. The Law does not prohibit the choice of foreign law, but sets forth that when dealing with disputes between the above entities "... the law of the Republic of Kazakhstan shall apply." It is impossible, of course, to force an arbitral tribunal to apply the Kazakh law in situations where it deems applicable another law, since that would be contrary to the nature of arbitration. Therefore, in situations where the parties have not chosen the applicable law, it should probably be understood that the arbitral tribunal has the right, in accordance with the conflict-of-law regulation, to determine the law under which the dispute is to be resolved. However, even if the tribunal considers foreign law applicable, such decision of the tribunal should not be interpreted as contrary to the requirement of the second paragraph of Article 44.1 of the Law and should not, in our view, jeopardize the validity of the arbitration clause or the enforceability of the award.

  As to the situation where the parties specified in the second paragraph of Article 44.1 of the Law have explicitly chosen foreign law, the risk is high that such clause would be invalidated and the dispute would be referred to a court. We do not consider this approach to the regulation of civil law relations to be any reasonable, but believe that such interpretation is potentially possible in the light of the express will of the legislator.

  A closer analysis gives way to other likely interpretations of the rule. In particular, this rule may not be of conflicting nature, i. e., not be intended to resolve a dispute over the choice of law applicable to the contract, but may be a condition for recognition in Kazakhstan of an arbitral award rendered on the basis of the arbitration agreement with the above composition of parties involved. Indeed, it is very strange that a conflict-of-law rule would apply depending on the method of dispute resolution. Recognizing that the rule under discussion is not inherently a conflict-of-law rule would mean that the arbitrator considering a dispute between two Kazakhstan residents will not be obligated to follow this rule when deciding on the validity of law chosen by the parties (e. g., if two residents choose a law other than Kazakh), while assuming (and putting on the parties) the risk that such award recognition may be refused in Kazakhstan.

  Leaving this matter to further in-depth theoretical scrutiny, we move on to the next, but no less complex, issue of the operation of Article 44 of the Law in time. Should restrictions on the choice of foreign law in effect between 19 January 2016 and 2 February 2019 apply to arbitration agreements concluded during the specified period, if the dispute out of the arbitration agreement arose after 2 February 2019? There can be at least two approaches. If we proceed from the conflicting nature of relations, the question arises about the operation of conflict-of-law rules in time, which has never been clearly answered by the current legislation. Applying, by analogy of law, Article 383 of the RK Civil Code, the following rule can be deduced: if after the conclusion of a contract the legislation establishes conflict-of-law rules other than those in effect at the time of contract conclusion, the law applicable to the contract is determined according to the conflict-of-law rules in effect at the time of the contract conclusion, except where the legislation establishes that it applies to relations arising out of the previously concluded contracts. We believe that the proposed rule could potentially serve the stability of civil circulation and take into account the will of the parties implicitly expressed. The theoretical correctness of this analogy and its universality require scholarly verification, which is not our pursuit within the modest objectives of this chapter.

  If the new version of Article 44 of the Law is to be interpreted as removing impediments to recognition in Kazakhstan of arbitral awards in disputes involving governmental agencies, state-owned enterprises and quasi-public sector entities to which the arbitration has decided to apply foreign law, such impediments should most likely be considered removed in respect of those foreign arbitral awards, the enforcement of which is sought after 2 February 2019, regardless of when the underlying arbitration agreements have been concluded.

Direct Agreements and Protection of the Weaker Party in Contract

  The Federal Law No. 382-FZ "On Arbitration (Arbitral Proceedings) in the Russian Federation" of 29 December 2015 provides for the institute of the so-called direct agreements. Direct agreements enable the parties to agree on such terms of arbitration that the law disallows agreeing on by simple reference to arbitration rules.

  The Kazakh legislation does not set such restriction. Therefore, the parties can agree on the terms of arbitration agreements via direct reference to arbitration rules.

  However, the Kazakh Arbitration Law provides for a mechanism to protect the interests of consumers as a weaker party in contract. For instance, pursuant to the Law, an arbitration agreement to resolve a dispute over a contract the terms and conditions of which have been defined by one of the parties in form sheets or other standard forms and could be accepted by the other party only by joining to the proposed contract as a whole (contract of adhesion) is valid, if such agreement is concluded after the arising of the grounds for a claim (Article 8.4). Starting from 3 February 2019, the same rule also applies to loan agreements between a commercial organization and an individual who is not an individual entrepreneur.

Applying for the Recognition and Enforcement of Foreign Arbitral Awards

  The procedure for applying for the recognition and enforcement of foreign arbitral awards is regulated by the CPC. If an award has not been executed on a voluntary basis within the deadline established therein, the winning party may apply in court for its enforcement (Article 501.1 of the CPC).

  The application is filed at the debtor's place of residence (if the debtor is an individual) or at the location of the debtor's executive body (if the debtor is a legal entity). If the relevant location is unknown, the application is filed according to the debtor's property location. In this case, the applicant normally submits the documents supporting the fact of finding the debtor's property in the territory of Kazakhstan (e. g., extracts from the register of shareholders, certificates of registered title to real estate).

  The application requesting to issue the writ of execution may be filed within three years of the deadline for voluntary execution of the award. If the established deadline has been missed or the required documents have not been attached to the application, the court reverses it without consideration and issues a ruling to this effect, which may be appealed in a specific appeal or a motion brought by the prosecutor. The court may reinstate the deadline for filing the application for writ of execution, if it finds that the reasons for missing the deadline are valid.

  The application for writ of execution is considered solely by a judge within fifteen business days of the date the application is received in court. The court notifies the debtor about the received claimant's application and the place and time of its consideration. The claimant is also notified of the place and time of application consideration. Debtor's or claimant's failure to appear in court does not prevent the application consideration, unless the debtor files a motion stating valid reasons for not being able to appear in court.

  The court's ruling to issue the writ of execution is subject to immediate execution. Documents to Be Attached to the Application for Foreign Arbitral Award Enforcement Article 4 of the New York Convention and Article 503.2 of the CPC contain the same list of documents that a party must proffer to the court along with the application for recognition and enforcement of a foreign arbitral award. The list includes the following documents:

• Duly certified original arbitral award or a duly certified copy thereof;
• Original arbitration agreement (if any) or a duly certified copy thereof;
• If the arbitration agreement or arbitral award are in a foreign language, a duly certified translation thereof into the Kazakh or Russian language.

  However, the Regulatory Resolution No. 5 of the RK Supreme Court "On a Court Judgment" of 11 July 2003 expands this list and requires, in addition to the above, to attach the following documents:

• An official document confirming that the award has entered into legal force, unless this is evident from the text of the award;
• Evidence that the party against whom the award has been invoked, or its representative in the event the party is procedurally incapable, has been duly notified of the proceedings;
• An enforcement document with a mark of partial execution of the award, if any.

  Without going into the internal contradictions of the Regulatory Resolution's additional requirements, as well as the apparent inconsistency between the scope of documents required by the New York Convention and the CPC on the one hand, and the said Resolution on the other, we cannot but fully agree with the excellent analysis of the problem undertaken by our colleague, L. S. Tleulina. In her article, L. S. Tleulina rightly notes that the Supreme Court does not have the power to create, by way of its regulatory resolutions, the new rules of law, and – as regards this case – to expand the list of documents established by the New York Convention and the CPC. We share the view that the documents required by the New York Convention and Article 503.2 of the CPC should suffice to recognize and enforce foreign arbitral awards.

  As to the form of certification of arbitral awards and arbitration agreements or their copies, neither the New York Convention, nor the CPC or the Supreme Court clarify which form is appropriate and which country's law should govern the certification procedure. The courts' approaches to this issue in different countries are described in the UNCITRAL Secretariat Guide on the New York Convention. We are inclined to agree with the Austrian court's approach, according to which certification is a process of confirming that a copy of a document conforms to the original. Accordingly, we believe that the sufficiency of documents submitted to court may be evaluated according to the general rules of evidence evaluation established by Article 68 of the CPC.

Grounds for Refusing Recognition and Enforcement of Foreign Arbitral Awards

  The grounds for refusing recognition and enforcement of foreign arbitral awards are concurrently provided in four acts of the Kazakh legislation: the CPC, the Arbitration Law, the New York Convention, and the European Convention. All grounds listed in Article 255 of the CPC and Article 57 of the Arbitration Law are the same.

  The amendments introduced by the Law of 21 January 2019 removed some substantial impediments to recognition of foreign arbitral awards. However, there remain others and new ones have piled up.

The main problems of law application are in the following contradictions:

• The grounds set out in the Conventions do not completely coincide with those provided for by the CPC and the Arbitration Law;
• There is a chance that potentially qualified as the ground for refusing recognition and enforcement of arbitral awards may be the choice of foreign law to govern an arbitration agreement, or the application of foreign law by an arbitral tribunal in resolving disputes between Kazakhstani residents or in disputes where one of the parties is the state, a state-owned enterprise or a quasi-public sector entity (as regards disputes out of arbitration agreements concluded between 19 January 2016 and 2 February 2019). This risk stems from the contents of Article 44.1 of the Law (see above in the "Rules Applicable to the Merits of Dispute");
• Correlation between the grounds listed in the CPC and the Arbitration Law and those provided for by the Conventions, taking into account the vague status of the Conventions ratification (see Section 1 of this chapter);
• Issues associated with the operation in time of the abolished and amended rules.

  According to the versions of Article 255 of the CPC and Article 57 of the Arbitration Law in effect since 3 February 2019, the court refuses recognition and/or enforcement of an award, irrespective of the country in which it has been rendered, on the following grounds: If the party against whom the arbitral award has been invoked furnishes in court proof that:

• The arbitration agreement is not valid under the law of the state to which the parties have subjected it or, failing any indication thereof, under the law of the country where the award was made;
• The award deals with a dispute not contemplated by the arbitration agreement or not falling within its terms, or contains resolutions on matters beyond the scope of arbitration agreement, or the arbitration lacks jurisdiction over the dispute.
• If the decisions on matters covered by an arbitration agreement can be separated from the decisions on matters not so covered, the issuance of writ of execution for the part of arbitral award covered by the arbitration agreement cannot be refused;
• A party to the arbitration agreement was found incapable or having limited capacity by a court;
• The party against whom the arbitral award is invoked was not properly notified of the appointment of an arbitrator or of the arbitration proceedings, or was unable to present its case to the arbitration for other reasons recognized as valid by the court;
• There is an effective court judgment or arbitral award rendered in a dispute between the same parties, on the same subject matter, and on the same grounds, or a court ruling or arbitral determination to terminate the case proceedings due to the claimant's abandonment of claim;
• The composition of arbitral tribunal or the arbitration procedure in the proceedings was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the laws of the country where the arbitration took place;
• The award has not yet become binding on the parties or has been set aside, or its execution has been suspended by the court of the country under the law of which it was rendered;

The court will establish that:

• The recognition and/or enforcement of the arbitral award is contrary to the RK public policy; or
• The dispute in which the arbitral award has been rendered cannot be the subject of arbitration proceedings under this Law.

  Some problems of foreign arbitral awards enforcement in Kazakhstan have been analysed in great detail in literature. We will focus only on those that, in our opinion, have not been adequately highlighted.

Arbitral Awards Competing with Other Court Judgments or Arbitral Awards

  The Arbitration Law and the CPC are imperative in establishing that recognition or enforcement of a foreign arbitral award must be refused if there is an effective court judgment or arbitral award rendered in a dispute between the same parties, on the same subject matter, and on the same grounds, or a court ruling or arbitral determination to terminate the case proceedings due to the claimant's abandonment of claim.

  This rule is, in our view, redundant, moreover, it poses significant risks of inappropriate application of law by Kazakh courts. If this rule is read literally, one would think that in each case where there is a competing judgment or award, recognition of a foreign arbitral award must be refused.

  Let us look at a telling example. An arbitration clause submitted disputes to resolution in London under the rules of the London Court of International Arbitration (LCIA). A Russian state court, having ignored the arbitration clause or deemed it invalid, took jurisdiction over the dispute and resolved it on the merits. At the same time, the claimant, considering the arbitration clause valid, initiated arbitration proceedings in London, and the formed tribunal recognized its own competence and rendered an award. The party winning in the arbitration applied with a Kazakh court for recognition and enforcement of the arbitral award. Should the Kazakh court, invoking the above provisions of the CPC and the Arbitration Law, refuse the applicant and give preference to the other party's Russian judgment presented to the court? We believe that the answer should not be as categorical as the literal reading of the CPC and the Arbitration Law would suggest. The Kazakh court must look into the validity of the arbitration clause based on which the award was rendered. If the Kazakh court finds that the relevant clause is valid, we see no impediments to the recognition and enforcement of the foreign arbitral award.

  In our view, the rule in question should only affect instances where another Kazakh court has adjudged on a dispute between the same parties, on the same subject matter, and on the same grounds. In this case, the competing judgment of another Kazakh court would be res judicata for the court considering application for recognition and enforcement of a foreign arbitral award; whereas the judgments of foreign courts, all the more the awards of other arbitrations, would not constitute res judicata for the Kazakh court, accordingly, would not per se prevent the recognition or enforcement of the arbitral award.

Invalidity of Arbitration Agreement

  After 2 February 2019. The Law of 21 January 2019 introduced one and the same amendments into Article 57.1 of the Arbitration Law and Article 255 of the CPC, pursuant to which from now on the Kazakh courts are to, at the stage of award recognition, evaluate the validity of arbitration agreement according to the "law of the country where the [arbitral] award was rendered." These amendments eliminate the previously existing contradiction and bring Kazakhstan's law and order closer to the international standards of arbitration regulation, excluding application of the Kazakh law to the arbitration agreement based on which the arbitral award was made outside Kazakhstan.

  At the same time, these amendments dispel all doubts about the legislator's intent to extend the operation of certain provisions of the Arbitration Law and the CPC onto recognition of foreign arbitral awards (to the extent unrelated to the evaluation of validity of arbitration agreements and lawfulness of arbitration proceedings).

  Between 19 April 2016 and 2 February 2019. Before the amendments of the Law of 21 January 2019, it was unclear whether a Kazakh court had grounds to refuse recognition of a foreign arbitral award if the award was made in violation of the Arbitration Law. Although the first part of preamble to the Arbitration Law says that the Law regulates relations arising in the course of arbitration activities in Kazakhstan, the literal interpretation of the second part of the preamble, as well as Article 57.1 of the Law in effect before 3 February 2019, demonstrated the legislator's desire to apply the local Law to the evaluation of foreign arbitration agreements and arbitral awards rendered on their basis at the stage of the awards recognition and enforcement in Kazakhstan.

  The previous wording of Article 57.1 of the Law was as follows: "the court shall refuse recognition and/or enforcement of an arbitral award irrespective of the country in which it was rendered…, if .... the party against whom the arbitral award was invoked furnishes in court proof that ... the arbitration agreement is invalid under the laws of the state to which the parties have subjected it or, failing any indication thereof – under the laws of the Republic of Kazakhstan." A similar rule was contained in Article 255.1 of the CPC, establishing the grounds for denying issuance of a writ of execution for an arbitral award. (A direct reference to Chapter 20 of the CPC containing Article 255 is made in Article 504 of the same Code, regulating enforcement of foreign court judgments and foreign arbitral awards. In other words, the legislator is trying to extend the operation of Article 255 of the CPC onto refusal to recognise and enforce both domestic and foreign arbitral awards).

  Given that Article 57 of the Arbitration Law and Article 255 of the CPC in effect before 3 February 2019 governed the procedure for recognition and enforcement of foreign arbitral awards, a fairly strange situation was looming. In cases where the parties made no express choice of law applicable to the arbitration agreement or such choice did not stem from the rules chosen by the parties, there was a risk that a Kazakh court could evaluate the validity of arbitration agreement based on which the foreign arbitral award was rendered from the standpoint of the Kazakh imperative statutory requirements.

  The situation was even more complicated by the fact that the doctrine of the "legal place of arbitration" (seat of arbitration) has yet been elaborated neither in the Kazakhstan legislation, nor in judicial practice. Therefore, the parties' choice of the place of arbitration abroad may not have meant in the eyes of the Kazakh court the choice of foreign law as applicable to the arbitration agreement or arbitration proceedings.

  Often, the parties do not explicitly choose the law applicable to the arbitration clause. In such cases, the applicable law is normally deduced through the lex arbitri doctrine adopted by many law and order systems, or through other conflict-of-law links. However, since this doctrine has not yet been formed in Kazakhstan's judicial practice and the question of law applicable to an arbitration agreement has not been specifically addressed in court judgments, it was highly likely that the court, absent an express choice of law applicable to the arbitration clause, could, at the stage of deciding on the issuance of the writ of execution, use the Kazakh law as the basis for evaluating the arbitration agreement validity. Having found the foreign clause invalid under the Kazakh legislation, the court could refuse recognition and enforcement of the foreign arbitral award. A situation quite unexpected for law and order systems with developed arbitration regulation, but quite possible in the light of Kazakhstan reality.

  But even after the amendments to the Arbitration Law and CPC enacted on 3 February 2019, the questions concerning recognition of foreign arbitral awards made in disputes out of arbitration agreements concluded in the period when the previous version of the rule was in effect are still there: should the court evaluate the validity of a previously concluded arbitration agreement that does not contain an explicit choice of foreign law from the standpoint of the law of the country where the award was rendered or from the standpoint of Kazakh law? Should an arbitrator considering a dispute after 2 February 2019 over an arbitration agreement concluded earlier apply the rule of Article 57 of the Law under discussion as a conflict-of-law rule that was in effect at the time the arbitration agreement was concluded? Or should this rule be interpreted as a condition (standpoint) for evaluation of a foreign arbitral award for the purposes of its recognition and enforcement in Kazakhstan? If the latter is adhered to, should this standpoint be considered to have changed due to the latest legislative amendments, and should the disputed award be evaluated from the new standpoint, regardless of when the arbitration agreement was concluded? The same questions relate to the operation in time of the rule discussed in the next section, concerning evaluation of the arbitration procedure's compliance with the statutory requirements.

  Definitely, such internal contradictions confuse the participants in civil turnover and require judicial and doctrinal interpretation, and, in some instances, legislative correction. Meanwhile, the analysis of local statutory requirements to arbitration agreements is becoming potentially significant not only for the purposes of domestic arbitration, but also for the recognition and enforcement of foreign arbitral awards.

Arbitration Procedure Non-Compliant with Statutory Requirements

  An example of another very controversial rule, which was in effect before 3 February 2019, is such ground for refusal to recognize and enforce an arbitral award as non-compliance of the composition of arbitral tribunal or the arbitration procedure "with the requirements of law" (Article 1.1 of the Arbitration Law). The rule, however, does not specify which law is in question. This rule was amended and brought in line with the New York Convention by the Law of 21 January 2019.

  The previously effective wording of this provision differed significantly from the New York Convention, which establishes that recognition and enforcement of an award may be refused, if the composition of arbitral tribunal 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. At the same time, until 3 February 2019, the CPC and the Arbitration Law required that the composition of arbitral tribunal and the arbitration procedure comply with the requirements of law.

  This posed a risk that a Kazakh court could sustain the adversary party's argument that the applicant should be denied recognition and enforcement of a foreign arbitral award because the arbitration proceedings conducted under a foreign law violated the imperative requirements of the Arbitration Law. The risk was even higher because of the "legal place of arbitration" doctrine being undeveloped in the Kazakh law, but normally deduced through the conflict-of-law and other links in developed law and order systems.

Rendering of Arbitral Award Becoming Possible as a Result of Commission of a Criminal Offence

  The above rule, extremely poorly formulated, was in effect until 3 February 2019 and was largely fraught with practical risks of misinterpretation. If the case was that in the course of arbitration proceedings a party presented knowingly false information as evidence, thus breaching criminal law, the relevant award must be declared invalid under the law of the country governing the arbitration. In this case, the special mention that such award may not be recognized or enforced in Kazakhstan is redundant: it will be refused not because of the criminal offence, but because the relevant arbitral award is invalidated by the competent authorities of the relevant jurisdiction.

  At the same time, literal reading of the analysed provision is fraught with the risk of expansive interpretation. For example, the award may be obtained in connection with arbitral proceedings initiated especially because one of the parties violated criminal law. In international practice, contracts often contain a provision that criminal liability of a party to the contract or its employees may constitute the ground for the contract early termination by the other party. In this sense, the obtained arbitral award to terminate a contract, which refers to the fact of criminal prosecution, can be interpreted by a Kazakh court as an award becoming "possible as a result of commission of a criminal offence." If the court takes a formal approach to the interpretation of the rule in question, it might refuse to recognize such arbitral award. The Award Has Not Yet Become Binding on the Parties, or Has Been Set Aside or Suspended by the Court of the Country Under the Law of Which It Was Made

  This ground contained in the Arbitration Law and the CPC reproduces (albeit not verbatim) the rule of Article 5(1)(e) of the New York Convention. Meantime, since Kazakhstan has acceded to the European Convention, for Kazakhstan, the application of the said Article of the New York Convention should be limited to cases described in Article 9.1 of the European Convention.

  The question arises: does Article 9.1 of the European Convention limit the application of the relevant provisions of Article 57 of the Arbitration Law and Article 255 of the CPC? The answer to this question will mostly depend on how the problem with the status of Kazakhstan's accession to the European and New York Conventions will be resolved.

SETTING ASIDE ARBITRAL AWARDS

Grounds for Setting Aside Arbitral Awards

  Beside those listed in the UNCITRAL Model Law on International Commercial Arbitration, the Arbitration Law sets forth one additional ground (sub-paragraph 5 below). An award may be set aside in Kazakhstan on the following grounds:

• the award deals with a dispute not contemplated by the arbitration agreement or not falling within its terms, or contains resolutions on matters beyond the scope of arbitration agreement, or the arbitration lacks jurisdiction over the dispute.
• If the decisions on matters covered by the arbitration agreement can be separated from those not so covered, only that part of the award which contains decisions on matters not covered by the arbitration agreement may be set aside;
• A party to the arbitration agreement has been found incapable by a court, or the arbitration agreement is invalid under the law to which the parties have subjected it or, failing any indication thereof – under the RK legislation;
• A party was not duly notified of the appointment of an arbitrator or of the arbitration proceedings, or was unable to present its case for other reasons recognized as valid by the court;
• The composition of arbitral tribunal or the arbitration procedure in the proceedings was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law;
• There is an effective court judgment or arbitral award rendered in a dispute between the same parties, on the same subject matter, and on the same grounds, or a court ruling or arbitral determination to terminate the case proceedings due to the claimant's abandonment of claim.

  The burden of proving the above circumstances rests with the party applying for the award to be set aside. However, it ought to be mentioned that in practice Kazakh courts often fail to observe this requirement to distribute the burden of proof. For instance, in cases seeking to set aside arbitral awards on the grounds of improper notification of the respondent about arbitration proceedings, Kazakh courts satisfy the application for setting aside without requiring the applicant to prove the improper notification and referring only to the fact that the adversary party (claimant in arbitration proceedings) did not furnish proof of proper notification.

In addition, regardless of whether the parties assert this, the court may set aside an arbitral award if:

• The arbitral award is contrary to the RK public policy;
• The dispute in which the arbitral award has been rendered cannot be the subject of arbitration proceedings under the RK legislation (non-arbitrability).

  Speaking about Kazakhstan's judicial practice, it must be mentioned that a comprehensive analysis of judicial practice on specific matters and categories of disputes is very complicated. Kazakhstan has an official bank of judicial acts passed between 2009 and 2018, but this database is incomplete and the function of contextual search for court judgments does not meet the challenge.

  Kazakh courts periodically publish summaries of judicial practice on setting aside arbitral awards. The latest such summary was published in 2019 and covers the years 2016 and 2017 and the first quarter of 2018. It says that during that period 1,729 cases over applications to set aside arbitral awards were completed, of which 1,612 were completed by rulings, including 1,364 satisfying and 121 refusing the application satisfaction; 13 cases were terminated and 83 cases – dismissed.

Our analysis of 2017–2018 judicial acts retrieved from available sources has yielded the following specific grounds for setting aside arbitral awards:

• Improper notification of the respondent of the appointment of an arbitrator or of arbitration proceedings;
• The arbitration lacks jurisdiction over the dispute;
• Non-arbitrability of the dispute;
• The arbitral award is contrary to the public policy;
• The arbitration procedure is not in accordance with the agreement of the parties.

If we look into the judicial acts setting aside arbitral awards on the ground of improper notification of the respondent about arbitration proceedings, it is possible to note the following:

• In the overwhelming majority of cases, applying for the setting aside of arbitral awards are individuals who are borrowers in disputes over collection of debts on consumer loans;
• In some cases, the court requests the arbitration case files to analyse the notices sent to the respondent in the framework of arbitral proceedings;
• In cases where the arbitration case files have not been presented, the court, referring to the lack of proof of proper notification of the respondent about arbitration proceedings, prefers to rule to set aside the award. The court thus places the burden of proof on the adversary party rather than on the applicant requesting the setting aside of the award, which is a violation of legislation – specifically, Article 52.1 of the Arbitration Law – which says that in order for an award to be set aside "the party applying for the setting aside shall furnish proof."

  The judicial practice on setting aside arbitral awards on the ground that arbitration has no jurisdiction over the dispute is ambiguous. Article 8.5 of the Arbitration Law suggests that subject to arbitration are disputes arising from civil law relations submitted to arbitration by agreement of the parties.

  In practice, however, Kazakh courts often boil down the lack of arbitration's jurisdiction over disputes to the lack of arbitration agreement between the parties.

  In one case, for instance, a court of appeal upheld the setting aside of an arbitral award, invoking, among other things, a violation of the terms of jurisdiction. This conclusion was based on the fact that the award did not contain reference to a concluded arbitration agreement. In particular, the ruling read verbatim as follows: "The Board found that the reasoning of the award of Almaty City Arbitration (Arbitral Tribunal) lacks reference to the arbitration agreement concluded between the parties entitling a party to the contract to refer the arising dispute to arbitration for resolution. The above circumstance testifies to the lack of arbitration agreement between the parties."

  There are a number of judicial acts setting aside arbitral awards made by arbitral tribunals of the IUS International Arbitration. The courts, when setting aside arbitral awards because of the lack of arbitral tribunal's jurisdiction over disputes, every time refer to the lack of arbitration agreement between the parties, basing their conclusion on the fact that the arbitration agreement specifies an "international arbitral tribunal," while the dispute was settled by the IUS International Arbitration. In our opinion, this circumstance could be indicative of defects in the arbitration agreement or of the arbitration procedure being not in accordance with the agreement of the parties; however, it is hard to agree with the courts' finding that the disputes are outside the arbitration jurisdiction.

  In one of the cases, the court found that the arbitration lacked jurisdiction over the dispute, because the case had been handled by an inappropriate arbitral institution. Specifically, the arbitration agreement between the parties contained reference to an arbitration institute of the city of Almaty (namely, Almaty Arbitration LLP). This arbitral institution was subsequently renamed into Almaty City Arbitration LLP. In fact, however, the arbitration proceedings were conducted by the Almaty Arbitration (Almaty Arbitration LLP), the name of which does not contain the word "city." In our view, in this case the court applied the law incorrectly, because there was non-conformity between the arbitration procedure and the agreement of the parties, not violation of the arbitration's jurisdiction over the dispute.

  As to the setting aside of awards on the ground of non-arbitrability, in most cases set aside were the awards foreclosing on the mortgaged real estate. In the courts' opinion, the issues of foreclosure on mortgaged real estate cannot be the subject of arbitration proceedings, since the RK Law No. 2723 "On Mortgage of Immovable Property" dated 23 December 1995 provides for only three ways to satisfy the mortgagee's claims (judicial and extrajudicial sale procedure and enforcement of mortgagee's title to real estate), which do not include arbitration. The lawfulness of such judicial acts is fairly questionable, since the instances of dispute non-arbitrability set out in Article 8 of the Arbitration Law do not include disputes over foreclosure on real estate.

  As regards the practice of setting aside arbitral awards on the ground that the arbitration procedure is not in accordance with agreement of the parties, a case could be mentioned where an arbitral award was set aside because the arbitration took place in Kazakhstan according to the claimant's location, while the arbitration agreement between a Kazakh and Chinese company provided for dispute resolution through arbitration at the respondent's location (in China).

  The practice of setting aside arbitral awards reasoned by public policy violation is worth special note. For instance, a court's act of 22 May 2017 set aside an award by "Adilet" arbitration on the ground of violation of the principle of lawfulness and public policy manifested in the lack of justification for awarding the claimant lost profits and hospitality expenses, as well as lack of due verification of respondent's objections.

  The lawfulness of this judgment is questionable, since the violation of the "principle of lawfulness" was removed from the list of grounds for setting aside arbitral awards once the Arbitration Law was adopted in April 2016. In our view, the case lacks sufficient grounds to assert a violation of public policy too, since the latter involves a violation of the fundamentals of law and order system in Kazakhstan, which is not observable in this particular case.

Correlation of Grounds for Setting Aside Arbitral Awards under the European Convention and the Arbitration Law

  The list of grounds for setting aside arbitral awards provided for in the Arbitration Law differs from that in the European Convention.

  In particular, the Arbitration Law sets out the following additional grounds for setting aside arbitral awards, which are not listed in the European Convention:

• There is an effective court judgment or arbitral award handed down in a dispute between the same parties, on the same subject matter, and on the same grounds, or a court or arbitration act to terminate the case proceedings in connection with the claimant's abandonment of claim;
• The arbitral award is contrary to the RK public policy;
• The dispute is non-arbitrable.

  The above differences in the lists of grounds do not create a conflict in setting aside arbitral awards in Kazakhstan, as the European Convention does not regulate this issue.

  The European Convention does regulate recognition and enforcement of a set-aside award. In particular, it establishes that recognition and enforcement of a set-aside award may be refused in another state, only if the award was set aside on one of the grounds provided for in the Convention.

  As applied to Kazakhstan, this means that if an award was set aside in Kazakhstan on the abovementioned additional grounds not provided for by the European Convention, it would be possible to enforce the award in another contracting state of the European Convention (despite the setting aside of that award in Kazakhstan).

Judicial Procedure for Setting Aside Arbitral Awards; Filing an Application for Setting Aside an Award

  Arbitral awards made in Kazakhstan may be appealed on the grounds provided for in Article 52 of the Arbitration Law within one month of the date the award has been made.

  The right to apply for the setting aside of an arbitral award is granted to the parties in arbitration proceedings, as well as to third parties not involved in the case but whose rights and obligations have been affected by the arbitral tribunal's decision.

The question of which court the application should be filed with in Kazakhstan is unclear. The CPC says that the application is to be filed:

• At the place of dispute consideration by the arbitral tribunal, if the arbitral award was made in the RK territory. It is assumed that in this case the legislator had the venue of arbitration hearings on his mind. Then, however, it is unclear how to determine the venue of dispute consideration, if the arbitration hearings were geographically conducted in different places or were organized through videoconferences;
• At the location of permanent arbitration, if the arbitral award is made under the Kazakh law in a foreign state. In this case, it is assumed that the application is to be filed at the location of a Kazakh arbitral institution (while the arbitral award itself may physically be made outside Kazakhstan);
• At the place of arbitral tribunal formation in the RK, if the arbitral award is made under the Kazakh law in a foreign country. This refers to ad hoc arbitrations and implies that the application for setting aside the award is filed at the place of arbitral tribunal formation (while the award itself may physically be made outside Kazakhstan). Again, the question remains of how to determine the place of arbitral tribunal formation if, for example, the parties and the arbitral institution have agreed on the composition of the arbitral tribunal via electronic correspondence.

  The Kazakh legislation does not specify the list of documents to be attached to an application for setting aside an arbitral award. Presumably, the applicant should attach to the application the documents supporting the justifiability of request for setting aside the award. When filing an application for setting aside an award, the following amounts of stamp duty are payable:

• On property claims: 1.5% (for legal entities) and 0.75% (for individuals) of the amount in dispute under the arbitral award;
• On non-property claims: KZT 601.

Consideration in the Court of First Instance

  The courts of first instance competent to consider applications for setting aside arbitral awards are district courts and specialized inter-district economic courts.

  An application for setting aside an arbitral award is considered by the court within ten business days of case institution; this period may be extended in exceptional circumstances. The application is considered in a court session with participation of the parties to arbitration proceedings. Failure of the parties to appear in the court session does not prevent the case consideration, provided that the parties have been duly notified of the date and time of the court session.

  Following the application consideration, the court issues a ruling to set aside the arbitral award or to deny the application satisfaction. The court's ruling enters into force upon expiration of the period for appeal. If the ruling is appealed, it enters into force on the date the court of appeal pronounces its decision.

Appealing in the Court of Appeal

  A ruling of the court of first instance may be appealed in a court of appeal (city or oblast court) within ten business days of the date the ruling is made in the final form. No stamp duty is payable for filing a specific appeal.

  The court of appeal also conducts hearings with participation of the parties to arbitration proceedings, whose failure to appear does prevent the case consideration, provided that the parties have been duly notified. The period for consideration in the court of appeal is two months.

  Following consideration of the specific appeal, the court of appeal issues a judicial act to uphold the ruling of the court of first instance, or to review the judicial act by transferring the case for new consideration or by issuing a new ruling.

  The decision of the court of appeal comes into force from the date of its pronouncement. The ruling of the first instance court (if upheld) enters into force and is subject to enforcement from the same date.

Appealing in the Court of Cassation

  The cassation appeal is not available for all civil cases. The legislation establishes two conditions entitling to apply to the Supreme Court for review of judicial acts in cassation:

• The appellate procedure has been complied with;
• The amounts in dispute under the arbitral award exceed 2,000 monthly calculation indices (MCI) for individuals and 30,000 MCI for legal entities.

  Cases that do not meet these two conditions may be reviewed in cassation on a strictly limited basis.

  The period for applying with the court of cassation is six months from the date of the court of appeal's ruling.

When filing an application with the court of cassation, the following amounts of stamp duty are payable:

• On property claims: 0.75% (for legal entities) and 0.37% (for individuals) of the amount in dispute under the arbitral award;
• On non-property claims: KZT 300.

  The Supreme Court considers the application in two stages. At the first stage, a preliminary consideration of the case is carried out and a decision is made on whether there are grounds for reviewing judicial acts and for requesting the court file. Following the preliminary consideration, the Supreme Court makes a decision on whether to take the case over or reject it due to the lack of grounds for review.

  If the case is taken over, the Supreme Court considers the application in a court session with participation of the parties to the case, whose failure to appear does not prevent the case consideration, provided that the parties have been duly notified.

  The total period for consideration of cases in cassation is two months.

  The Supreme Court is authorized to suspend the execution of appealed court judgments for up to three months.

  Following consideration of the case, the Supreme Court may uphold the existing judicial acts, revise them or set them aside and submit the case for re-consideration. The resolution of the court of cassation enters into force on the date it is pronounced. Please note that the legislation allows for review of the court of cassation's resolutions in the following limited circumstances:

• Where the execution of adopted resolution can lead to serious irreversible consequences for human life or health or for the RK economy and safety;
• Where the adopted resolution infringes on the rights and legitimate interests of the general public or on other public interests;
• Where the adopted resolution breaks uniformity in the interpretation and application of the rules of law by courts.

  If the above circumstances are present, the Chairman of the Supreme Court brings a submission, or the Prosecutor General brings a protest with the Supreme Court, to revise the judicial act.

Recognition and Enforcement of Russian Arbitral Awards

  Kazakhstan's judicial practice relating to recognition and enforcement of Russian arbitral awards is characterized by the fact that Kazakh courts do not always distinguish between arbitration and state arbitration courts (commercial courts) in the Russian Federation. Due to this, judicial acts often make reference to the Moscow Agreement, the Kiev Agreement, and the Minsk Convention.

  As an example, in the case concerning recognition and enforcement in the territory of Kazakhstan of an award made by the International Commercial Arbitration Court (ICAC) of the Russian Chamber of Commerce and Industry, the court of first instance and the court of appeal refused to recognize and enforce the award, stating that the award was missing a note on its entry into force and a deadline for its voluntary execution. The RK Supreme Court, setting aside the judicial acts of lower courts, stated that the case file contained an ICAC certificate of the arbitral award entry into force and that this evidence met the requirements of the Minsk Convention. However, the Minsk Convention does not apply to the enforcement of foreign arbitral awards; the court should have relied on the New York Convention.

  In another case, a Kazakh court, having qualified an award by IUS International Arbitration (a Russian arbitral institution) as a foreign court judgment, invoked the Moscow Agreement. As in the previous case, the court was to apply the New York Convention. The Moscow Agreement is not applicable to international arbitral awards.

  Notable is one more case, which was equitably resolved only in the last instance (Supreme Court of the Republic of Kazakhstan). A Russian company applied to a Kazakh court for recognition and enforcement of an award made by arbitration of the Moscow Chamber of Commerce and Industry. The Kazakh court of first instance refused the award enforcement, stating that the applicant should go to court at the place of dispute consideration by the arbitral tribunal. Here, the Kazakh court applied in error the rules of legislation concerning enforcement of Kazakhstan arbitral awards. The court of cassation, having mentioned this error, still upheld the judicial act, ruling that the applicant needed to go to court at the place of dispute arbitration in accordance with Article 8 of the Kiev Agreement. And only the RK Supreme Court, pointing out that the Kiev Agreement regulates the execution of judicial acts made by the courts of national judicial system, drew a decisive line under the case, setting aside all acts of lower courts.