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New Civil Procedure Code of Kazakhstan

16 february 2016, 17:38
0

GRATA Finance & Securities Group has released a legal alert covering important legal developments in the Kazakhstani legislation that occurred in 2015.

Most of the changes were introduced in the legislation pursuant to adoption in May 2015 of a new policy document – the Plan of the Nation: 100 Steps for Implementation of 5 Institutional Reforms – governing the development of Kazakhstan in the short-term perspective.

The legal review covers the following areas:

1. Law on Corruption Countermeasures
2. New Civil Procedure Code
3. Law on Astana International Financial Center
4. Law on Judicial System
5. Law on Supreme Judicial Council
6. Resolution on Application of Bankruptcy and Rehabilitation Legislation by the Courts
7. New Commercial Code
8. PPP Law
9. Law on WTO Accession
10. Law on Special Defensive, Antidumping and Compensational Measures
11. Law on Ownership Right Further Protection
12. Law on Amendments to Electric Power Industry
13. Law on Amendments Related to Non-performing Loans,  Financial Services and Financial Organisations
14. Law on Agricultural Cooperatives
15. Privatisation Decree
16. Rules of Electronic Trades
17. New Procurement Law

Each of them is addressed in a separate release on our website, whereas the today’s release deals with the new Civil Procedure Code.   

NEW CIVIL PROCEDURE CODE

The new Civil Procedure Code (the “CPC”) (Civil Procedure Code of the Republic of Kazakhstan No 377-V dated 31 October 2015) is effective from 1 January 2016 and introduces substantial amendments to the civil process in the Republic of Kazakhstan. In support to the CPC and in order to implement the CPC provisions, the CPC Law (Law of the Republic of Kazakhstan no. 378-V dated 31 October 2015 “On Amendments and Additions to the Certain Legislative Acts of the Republic of Kazakhstan on Questions of Improvement of Judicial System”) that amends relevant provisions of various legal acts of the Republic of Kazakhstan (e.g. Tax Code, Customs Code, Land Code, Ecology Code etc) has been enacted from 1 January 2016.

Please see below main amendments enacted by the CPC and the CPC Law.

Abolishment of “Supervision Instance” of the Civil Process

Previously, Kazakh civil procedure included four stages: first instance, appeal instance, cassation and supervision (executed by the Supreme Court of the Republic of Kazakhstan (the “Supreme Court”).

The CPC has abolished supervision instance and transferred cassation instance (that became the final instance of the Kazakh civil process) to the competence of the Supreme Court. Cassation tribunals of the courts have been abolished.

Appeal claims will be now generally considered by three judges, subject to certain exceptions. Cassation claims will be generally considered by not less than three judges of the Supreme Court. Cassation claim can be submitted subject to prior consideration of the appeal claim on the same case.

Certain cases cannot be considered in cassation instance (e.g. cases resolved by amicable agreement/mediation; cases related to individuals’ proprietary rights with the amount of claim not exceeding 2,000 monthly calculation indexes and cases related to legal entities’ proprietary rights with the amount of claim not exceeding 30,000 monthly calculation indexes; rehabilitation and bankruptcy cases etc). Such cases can be reconsidered only in exceptional circumstances, e.g. if relevant decisions do breach the rights of unlimited number of persons etc.

Decisions of the Supreme Court taken in cassation instance can be also reconsidered in exceptional circumstances by the broader tribunal of the Supreme Court of not less than seven judges.

Introduction of Investment Court

Investment disputes shall be now considered and resolved in the first instance by the special investment tribunal of Astana court. Investment disputes that involve major investor shall be considered by the Supreme Court. Major investor is an individual or a legal entity that invested in the Republic of Kazakhstan the amount of not less than 2,000,000 monthly calculation indexes (Monthly calculation index for 2016 is KZT 2,121) or approximately USD 11,622,000 (Exchange rate USD/KZT as of 31 January 2016).

Mandatory Prejudicial Settlement for Certain Cases

The CPC broadened the list of cases that can be resolved only upon the attempt of prejudicial settlement.

Currently, the following cases are subject to mandatory prejudicial settlement: cases involving subjects of entrepreneurship, intellectual property rights protection, consumers’ rights protection, cases challenging actions/inactions of certain state bodies etc. 

The CPC has introduced the provision that aims to encourage case parties to indeed use prejudicial settlement. The court is now entitled, irrespective on outcome of the case, to confer court expenses to the party that failed to answer the letter of the counterparty sent before the court action as an attempt of prejudicial settlement or committed delay in answering such a letter.

Strengthening of Evidence Provision and Counter-Claim Filing

All the evidence shall now be provided by both parties during the period of “preliminary preparation to the case” that lasts for 15 business days from the moment of acceptance of the case to consideration by the court (with the extension option of up to 1 month). The counter-claim shall be filed by the counterparty within the same period. Upon expiry of the mentioned period, the additional evidence may be provided only if the relevant party will prove that it was not possible to provide such evidence earlier. The counter-claim may be filed upon expiry of the mentioned period only if defendant has not been notified on the time of “preliminary preparation to the case” and, accordingly, was not able to file its counter-claim at that stage.

The court is now entitled to confer court expenses to the party that failed to provide all the evidence in time if such delay led to delay of the whole court process.

The CPC has also clarified that burden of proof in cases challenging actions/inactions of the state bodies shall be vested on the state bodies whose actions/inactions are being challenged.

Amendment of Appeal/Cassation Deadlines

The deadline for making an appeal of court decision is now one month and the deadline for making an appeal of court order is now 10 days from the moment of final decision/order. Under the old CPC, the deadline for making an appeal of court decision/court order was 15 days from the moment of final decision/order.

The deadline for filing a cassation claim to the Supreme Court is now 6 months upon entering of appeal decision into legal force. Under the old CPC, the party could file a claim to the Supreme Court within one year from the moment of entering of the relevant court act into legal force.

Amendments Related to the Court Duty

The appealing party does not now have to pay a court duty for the appeal claim.

Court duty payable in relation to the case on invalidation of the certain proprietary transactions (sale and purchase, pledge etc.) and claims for moral damage shall be now determined based on the market value of the relevant property or the amount claimed as moral damage (1% for an individual and 3% for a legal entity), respectively. Under the old CPC, the question as to whether invalidation case is a proprietary one was not clear, and often the party challenging the transaction paid low court duty applicable for non-proprietary claims (that was not fair and allowed dishonest parties to challenge even decent transactions without incurring substantial expenses).

In case of reconciliation of the parties in appeal instance, the court duty shall be now returned in full, in reconciliation happened in cassation instance, 50% of the court fee is refundable.

Fast-track Interim Remedies

Court ruling on interim remedies can now be sent directly to the person/entity that shall enforce it (e.g. a bank where accounts of plaintiff are open, property registration body etc) and not the bailiff as previously was provided by the old CPC. This amendment will allow to fast-track interim remedies and, accordingly, make them more efficient.

PoA for Legal Representative

The new CPC has broadened the list of authorities that legal representative (a person who is authorised to represent the interests of his/her client before the court) is entitled to perform only provided that such authorities are clearly stated in the Power of Attorney issued by the client of the legal representative.

Introduction of Participation Procedure

The new CPC has introduced so called “participation” procedure as one of amicable dispute resolution options where the parties reach the agreement with mandatory involvement of their advocates and without involvement of the court.

 

Comments and recommendations can be sent to schikanayev@gratanet.com. We will make sure we fix any problems and continue to offer you the best service we can.

Shaimerden Chikanayev, Partner

Email: schikanayev@gratanet.com 

Mob: 7701 7878020

Marina Kahiani, Partner

Email: mkahiani@gratanet.com 

Mob: 7701 7251269

This Legal Alert is provided for your convenience and does not constitute legal advice. It is prepared for the general information of our clients and other interested persons. This Legal Alert should not be acted upon in any specific situation without appropriate legal advice and it may include links to websites other than the GRATA website. If you no longer wish to receive legal alerts from the GRATA Finance & Securities Group, please send an email to schikanayev@gratanet.com


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