A Modern Business Climate in Kazakhstan
The Rt Hon The Lord Woolf CH, former Chief Justice of the AIFC Court, and Christopher Campbell-Holt, Registrar and Chief Executive of the AIFC Court and International Arbitration Centre discuss dispute resolution
Introduction from HE Erlan Idrissov, Ambassador of Kazakhstan to the UK:
This year, Kazakhstan celebrates a remarkable occasion – the 30th Anniversary of its Independence. While there are many achievements a young and ambitious nation like ours can celebrate, we would like to focus on the institution that has been established recently and has flourished ever since. It has a close connection to the UK and its world-renowned City of London has played a crucial role in its creation. The Astana International Financial Centre (AIFC), which operates based on the principles and norms of English common law, has become a beacon for many foreign investors, both current and prospective, into the Kazakh economy.
It is therefore a pleasure for me to present to you an article by The Rt Hon The Lord Woolf CH, former Chief Justice of the AIFC Court, and Christopher Campbell-Holt, Registrar and Chief Executive of the AIFC Court and International Arbitration Centre (IAC), which focuses on the main judicial bodies of this institution.
The creation of the AIFC in Kazakhstan is a hugely important step in assisting Kazakhstan to become a more competitive economy regionally and globally. The formation of such international financial centres has become a common strategic focus for rapidly emerging and modernising states. Their presence assists with the creation and redistribution of world financial income, attracting capital, generating income from taxes, contributing to the innovative development of economies and increasing the role of states in global governance. By eliminating barriers between domestic and global financial markets, developing ties between them, these centres have proved to attract foreign investment.
Since 2018, the AIFC has been officially operating in Nur-Sultan, formerly Astana, the capital city of Kazakhstan. The AIFC Court and the IAC are two distinct and important independent bodies providing international standard commercial dispute resolution.
The First President of Kazakhstan, Nursultan Nazarbayev, showed great vision in creating the AIFC. His intention to do so was reflected in ‘The Plan of the Nation. 100 Concrete Steps,’ which outlined the steps to implement five institutional reforms. There would be an international financial centre in Astana (Nur-Sultan). The international centre was to include a court, which would be founded on the principles of English law.
The First President of the Republic of Kazakhstan’s article, ‘The Nation’s Plan – The Road to Kazakhstan’s Dream’ stated: “The central question of the third direction of the Nation’s Plan is the creation of the Astana International Financial Centre with an independent judicial system, a separate jurisdiction based on the principles of English law, with the application of English language and the introduction of the investment residency principle.”
The full significance of this initiative has to be seen against the background of the changes that had already taken place in Kazakhstan’s legal system. This is not a common law system but a civil law system, bearing close relation to the systems found in the majority of mainland of Europe.
Kazakhstan’s judiciary had already been the subject of reform. In 2000, a Decree of the First President was adopted that separated the Executive from the existing judiciary and transferred the operation of the courts in Kazakhstan from the Ministry of Justice to the Committee of Court Administration under the Kazakhstan Supreme Court. That court was already established in the Supreme Court’s world class building in Nur-Sultan. However, the effect of the announcement of the First President at the opening of the XVI Congress meant inevitably there was to be a new system of justice to support the AIFC.
It would mean that there would be two systems of justice in Kazakhstan – its traditional system and a new system supported by the AIFC Court and IAC. Both the AIFC Court and IAC now provide critically important support for the role of the AIFC and ensure that the AIFC is a flagbearer for the rule of law. This flag is a huge support for the commercial activities of the AIFC.
From February 2017, Christopher Campbell-Holt, Registrar and Chief Executive of the AIFC Court and IAC and myself, were engaged by the AIFC to advise on the establishment of the AIFC Court and IAC. From 1 January 2018, the AIFC Court and IAC, which were established in a record time as separate independent legal entities, became fully operational. They were established following the approval of the AIFC Court Regulations 2017 and AIFC Arbitration Regulations 2017 by the AIFC Management Council.
Before this could happen, the Parliament of Kazakhstan enacted the AIFC Constitutional Statute 2015 which provided for the establishment of the AIFC.
In March 2017 the Constitution of Kazakhstan was amended to enable there to be a legal regime for a financial centre, the AIFC, in Nur-Sultan, in Kazakhstan.
I became the AIFC Court’s first Chief Justice from 1 January 2018. I retired on 31 January 2020 and from 1 February 2020, Lord Mance, former Deputy President of the UK Supreme Court, was appointed to be the new Chief Justice of the AIFC Court. Since 1 January 2018 Barbara Dohmann QC has been the IAC Chairman and Christopher Campbell-Holt has been the Registrar and Chief Executive of the AIFC Court and IAC.
Now, at the heart of the AIFC is a legal system that has been created to apply common law and international best practices to attract investment by enabling effective commercial practices and providing robust protection of investor rights. The AIFC Court and IAC are the ultimate safeguards to protect investor rights at the AIFC and they provide justice that accords with the rule of law.
The AIFC Court and IAC are still in their early years of operation, but outstanding results have been achieved ahead of time and more quickly than at any other international financial centre. By the end of September 2021, the AIFC Court had already given 17 judgments and orders and additional cases were ongoing. All resolved cases had been enforced in Kazakhstan to one hundred percent satisfaction. 708 arbitration and mediation cases had been successfully resolved at the IAC. The cases at the IAC consisted of 64 arbitration cases and 644 mediation cases, reflecting the appetite for commercial parties in disputes in Kazakhstan to resolve their disputes amicably via mediation without needing to pursue more formal arbitration or litigation.
The AIFC and IAC are playing a central role in establishing Kazakhstan as a successful commercial centre with all of the facilities and international standards that investors expect of such institutions. The establishment of the AIFC Court and IAC will significantly increase the attractiveness and investment in the AIFC, Kazakhstan and the wider Central Asia region where at present there are no comparable commercial dispute resolution institutions.
The successful establishment and operation of the AIFC Court and IAC has ensured that the AIFC has a dispute resolution system that applies the strictest standards of the rule of law. With proven case resolution numbers, enforcement of decisions, inclusion in the dispute resolution clauses of business contracts, and significant outreach, promotions and training programmes, both institutions are quickly becoming the number one choice for commercial dispute resolution for investors engaging in commercial and financial activities in Central Asia. This is a powerful signal to the international commercial world that Kazakhstan has a modern business environment that is committed to the strictest adherence to the rule of law.
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