Kazakhstan - Law & Practice

1. GENERAL INFORMATION

   1.1 Structure of the legal system

   Kazakhstan is a unitary state, and every piece of legislation adopted by relevant bodies of the state applies within its entire territory. Kazakhstan's legal system is based on civil law and the traditions of continental European legal systems. Kazakhstan's legal system has broad similarities with the Russian legal system due to a common history within the former USSR, particularly when it comes to civil law.

   Kazakhstan's legislation comprises the Constitution, laws issued by the Parliament, edicts of the president, resolutions and orders of the central government or its subdivisions, and resolutions of local municipalities, all placed in a hierarchical order in terms of legal force. International treaties ratified by Kazakhstan have priority over domestic legislation and apply directly, except where such treaties require the adoption of a domestic law for their implementation.

   Although the Republic of Kazakhstan Code of Civil Procedure (hereinafter the "CPC") declares that the civil procedure is adversarial, in practice, due to the Soviet past, courts generally tend to take a central role in civil proceedings, requiring parties to produce evidence, questioning the parties and witnesses, appointing experts, and otherwise ensuring that the circumstances of the case are fully and properly examined.

   1.2 Structure of the courts

   Kazakhstan's court system comprises four tiers of courts: (i) Specialised District Courts and General District Courts; (ii) Appellate Courts; (iii) Cassation Courts; and (iv) the Supreme Court.

   Specialised District Courts focus on specific categories of cases, such as administrative, commercial, financial, criminal and juvenile. The vast majority of commercial disputes are tried in Specialised Commercial (Economic) District Courts. These courts have jurisdiction to review all commercial disputes, regardless of their size, provided both parties to the dispute are legal entities or entrepreneurs. General District Courts review all civil cases which do not fall within the jurisdiction of any of the Specialised District Courts.

   The distribution of courts according to specialisation exists only at the level of District Courts. There is no such distribution in the Appellate Court and Cassation Court. In other words, regardless of a subject matter falling within the jurisdiction of a special District Court all judgments could be appealed to the relevant higher court. However, within the Appellate Court, the Cassation Court and the Supreme Court there are special panels which focus on certain categories of cases.

   Civil courts are spread throughout the territory of Kazakhstan, with each administrative region (the territory of Kazakhstan comprises 16 such administrative regions) having one Specialised Commercial (Economic) District Court, Appellate Court and Cassation Court. There are many General District Courts within each administrative region. Generally, each town and smaller district comprising the administrative region would have a General District Court.

   In Kazakhstan proceedings are normally open to the public. Any interested party may participate in court proceedings and record the proceedings, except that a court's approval is required for video filming. In a number of situations where the proceedings concern state secrets or where a party requests the court to hold proceedings in closed sessions in order to ensure the confidentiality of private life, commercial secrets or other information protected by law, the court may declare that proceedings be held in a closed format where the general public is not allowed.

   A court's procedural orders, judgments and minutes of the court proceedings are generally available to the public on-line at the electronic database of the Supreme Court. This generally applies to cases reviewed since 2009 and onwards. Other case files, including evidence, the claim, a response to the claim, expert reviews, etc. are not available to the public. These files can only be disclosed to parties to the proceedings with the permission of the court.

   1.3 Costs

   In order to file a lawsuit, the claimant must pay a state duty. The state duty for property claims, including monetary claims, is set at 3% of the claimed amount when filed by legal entities and 1% when filed by individuals. A state duty in non-monetary claims is generally insignificant, within up to USD50 per each relief sought. Certain categories of claimants, e.g. state institutions, are exempt from state duty.

   Generally, each party bears its own costs in connection with the proceedings, e.g. for collection of evidence, inviting witnesses, engaging an expert (except a court-appointed expert), etc. Upon completion of the proceeding, upon request of a party, the court may order the losing party full reimbursement of the costs or pro rata to the extent to which the claim was granted/rejected. An attorney's fees can also be reimbursed upon request and based on similar principles. However, the attorney's fees are capped at 10% of the amount of the claim. The request to reimburse costs, including attorney's fees, must be filed prior to closing of the case at the district court.

   The CPC also allows a party to be compensated for so-called loss of time caused by a frivolous lawsuit, delays or groundless objections, although, in practice, it is extremely difficult to prove that the relevant claim or objection had no prospect of success, and courts are generally reluctant to satisfy such requests. However, this possibility still helps to prevent the abuse of procedural rights by the counterparty.

   1.4 Funding

   The CPC is silent on litigation funding. Thus, there is no prohibition on third-party funding, although in order to have the opportunity to be reimbursed for costs upon completion of the proceeding, if the litigation is successful, it is generally advisable to channel funds through a party to the proceedings which incurred the costs, because it would be impossible for non-parties to the proceeding to be reimbursed for costs. Any funds extended by third parties would be the subject of a contractual arrangement (e.g. a loan) between the funding party and the recipient.

   Compensation schemes based on a contingency arrangement are not prohibited by law. In fact, this compensation mechanism is popular among domestic law firms and private lawyers. Because the law is silent, the size of the contingency fee is a matter of contractual agreement, provided it falls within 10% of the claimed amount. However, the court may decrease the fee, if it finds that the fees are unreasonably high. Although there is no obligation to disclose a contingency fee arrangement, because a copy of the legal services agreement must be disclosed to the court to support the fees, it is generally made known to the counterparty.

   We are not aware of the use of insurance as a means of funding litigation.

2. INITIATING A LAWSUIT

   2.1 Statute of Limitations

   Statutory limitation is a matter of substantive law, and the rules governing its application are described in the Civil Code. The expiry of the statutory limitation period prior to filing a lawsuit is a ground for rejecting a claim. Statutory limitation is applied by a court only at the request of the defendant, provided this is done prior to the issuing of the judgment. Generally, the statute of limitation in commercial cases is three years following the date when an affected party became aware or ought to have become aware of the violation of his/her right. The Civil Code lists a number of situations where the statute of limitation could be suspended, e.g. if filing a lawsuit was impossible due to force-majeure, suspension of the legal effect of relevant laws or regulations, there is a moratorium applicable to the performance of certain categories of obligations as declared by the president, etc, provided these circumstances existed within the last six months of the statute of limitation. The statute of limitation renews with the filing of a lawsuit, entry by the parties into a mediation agreement, or a debtor's actions which demonstrate recognition of debt or other commitment. Under certain exceptional circumstances where a court may find that the statutory limitation period was missed due to valid reasons, e.g. serious illness, the court may restore the statutory limitation period, provided such circumstances existed within the last six months of the statutory limitation period. There are categories of claims to which the statute of limitation does not apply, e.g. claims of depositors against a bank seeking the return of deposits, claims seeking reimbursement of damage to health, etc. For a number of other civil but non-commercial categories of claims, there are different statutory limitation periods. For example, in relation to claims seeking to challenge acts of a state authority or claims seeking reinstatement following illegal dismissal the statutory limitation period is three months. In relation to all other employment disputes, the statutory limitation period is one year following the date when an employee became aware of a violation of his/her right.

   2.2 Filing

   Generally, there are no mandatory prerequisites for filing a lawsuit. There are two categories of exceptions to this rule: such prerequisites could be established by (i) special laws in a rare set of situations or (ii) contract.

   For example, in relation to certain categories of claims, e.g. claims against transport operators, claims against mass media, claims of consumers, or claims seeking termination of a contract, etc. prior submission of the claim to the potential defendant is mandatory. Bringing a lawsuit would be possible only upon expiration of a time frame set by law following the submission of such prior claim.

   Alternatively, if parties agreed in a contract that, prior to bringing a lawsuit, parties would follow certain preliminary procedures, e.g. mediation...