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Kazakhstan: Supreme Court’s explanation on the introduction of the state of emergency

14 May 2020 - On 6 May 2020, the Supreme Court of the Republic of Kazakhstan (the “Supreme Court”) issued Explanation No. 1 on certain issues of judicial practice in connection with the introduction of the state of emergency.

We have identified the explanations of the Supreme Court which are principal in our view. It is worth noting that the Supreme Court reserves the right to amend or supplement the clarifications listed below:

Questions

Explanation

Is the state of public emergency (the “PE”) introduced by the President of the Republic of Kazakhstan a force majeure event?

The introduction and subsistence of the PE includes all the signs of a force majeure event, as it is of an extraordinary and inevitable nature.

Is it a must to go to court for the PE to be established a force majeure event, i.e. recognised as a legal fact?

There is no need to go to court for establishing the legal fact that the force majeure event exists in connection with the introduction of the PE, since the PE is a generally known fact.

Is a party to a contract exempt from liability for failure to perform or improper performance of an obligation if the breach of the obligation occurred due to the introduction of the PE?

Any failure to perform obligations, which was caused only by the occurrence of a force majeure event, specifically, measures and temporary restrictions implemented within the PE, entails no financial liability. Civil law classifies financial liability as compensation for damages, charging of a penalty (fine, default interest).

What principles should courts be guided by in resolving disputes related to the inability to perform contractual obligations due to the PE?

In this situation, the courts will proceed from the fundamental principles of the Republic’s activities enshrined in the Constitution, which are social harmony and political stability, economic development for the benefit of the whole people, etc. Considering that the COVID-19 pandemic caused a halt or slowdown in entrepreneurial activity, failure to perform or improper performance of contractual obligations, the parties are encouraged to be guided by the principles of business ethics and use the possibilities of amicable settlement of disputes to reduce the negative consequences for the economy.

Should the parties to a contract comply with the procedure for pre-trial or out-of-court settlement of a dispute related to a failure to perform any obligations due to the introduction of the PE?

Courts have the right to return statements of claim (applications) in view of non-compliance with the procedure for pre-trial or out-of-court settlement of a dispute, if such a possibility of applying this procedure is not lost.

How does the PE affect the calculation of limitation periods?

Introduction of the PE suspends the limitation period.

How does the PE affect the extension and restoration of procedural time limits?

The time limits for filing statements of claim (applications), appeals and private complaints, cassation petitions for the review of judicial acts which entered into legal force, as well as other procedural time limits missed during the PE, may be extended and restored by the court.

Is it possible to change the time limit for the performance of an obligation if the failure to perform such obligation is caused by the introduction of the PE?

If the failure to perform an obligation is due to force majeure, the interested party shall have the right to demand a change in the time limit for the performance of the obligation.

Is the basis for refusal to accept statements of claim the provisions of paragraph 9-1 of the Government Decree 6 of the Republic of Kazakhstan dated March 20, 2020 No. 127 “On the determination of the special procedure for public procurement” (the Resolution).

The ban on filing a claim seeking the recognition of a supplier as a bad-faith participant of public procurements and claiming penalties extends also to contracts, which were entered into in accordance with the public procurement legislation and under which the supplier's failure to perform or improper performance of contractual obligations was caused by the introduction of the PE. If such a claim is filed by a customer, the judge will refuse to accept the statement of claim as it is not to be considered in civil proceedings.

What is the procedure for terminating proceedings on administrative offences related to the breach of the rules of the PE after it is over?

The termination of the PE entails termination of the proceedings in an administrative offence case in connection with a breach of the rules of the PE. After the PE is over, any administrative offence cases in which the proceedings commenced but no procedural decisions have been taken, shall be terminated by the officials or the court before whom they are pending.

This alert was prepared by members of Kinstellar’s Kazakhstan team: Joel Benjamin (Managing Partner), Kuanysh Shekerbekov (Senior Associate) and Alfiya Sharipova (Legal Assistant).

For further information, please contact Joel Benjamin, the Managing Partner of the Central Asia practice of Kinstellar at

e-mail

and Kuanysh Shekerbekov, Senior Associate at .