Comparative Analysis Of Injunctive Relief Available Under English And Kazakh Law: Practitioner’s Perspective

Introduction

We often read about the large number of substantial disputes that are brought before the English courts involving parties with no connection to England. Cases considered by the English Commercial Court often involve foreign parties whose business interests are located outside the country and issues in dispute which have no connection with England. Why do so many wealthy businessmen strive to have their disputes resolved by the English courts?

There are many reasons for this phenomenon. One reason often cited is the independence and quality of the English judges (and legal practitioners). However, this cannot be the only reason. The courts and legal professionals of many EU member states and the United States can boast the same qualities. The additional ingredient that England is seen as being able to offer (more so than other jurisdictions) is a legal system that is best able to respond promptly, flexibly and effectively to the needs of businesses.

In this article, an English barrister and a practicing Kazakh lawyer will aim to explain the main differences between the legal regimes governing judicial process in England and Kazakhstan. Given the breadth of the subject matter, the focus of this article will be a comparative analysis of injunctive relief under English and Kazakhstan law, as the authors believe that this is one of the key elements of any judicial process (and a key attraction of the English legal system). If readers find this article interesting, its authors would be pleased to undertake a comparative analysis of other aspects of the judicial processes in England and Kazakhstan in future articles.

Injunctive Relief under Kazakhstan Law

Types of Available Injunctive Relief

The Republic of Kazakhstan Code of Civil Procedure (the "CPC") identifies the following types of injunctive relief that may be granted by the civil courts in Kazakhstan:

(i) freezing of respondent's assets ;

(ii) prohibiting the respondent from undertaking certain actions;

(iii) prohibiting other parties from transferring assets to the respondent or performing obligations to the respondent;

(iv) suspending the sale of assets;

(v) suspending the legal effect of an act of a state authority; and

(vi) suspending collection under a collection order.

In addition to the above, parties are free to request other types of relief, provided the relief meets the objective of Article 158 of the CPC, which provides that:

"[a] court may order injunctive relief at the request of either of the parties to dispute at any time in the course of the proceeding, if the failure to take such measure would make enforcement of the judgment impossible or difficult."

The CPC expressly allows for several types of injunctive relief to be granted simultaneously, although we have not encountered this in practice.

The Standard

It is apparent from the wording of Article 158 that in order to obtain injunctive relief the applicant must be able to show that the failure to take such measures would make enforcement of the judgment "impossible or difficult".

The RoK Supreme Court has explained that "impossibility or difficulty" of enforcing a judgment should be understood as referring to situations where the respondent may "conceal or dispose of all or part of its property, or prepare to leave the Republic of Kazakhstan, etc."1

The CPC sets an additional condition to the granting of injunctive relief: the requested relief must be commensurate with the claim filed with court. An order of injunctive relief must not lead to the debtor's insolvency, interfere with the normal conduct of its business, violate the rights and legitimate interests of other parties, or facilitate the illegal appropriation of the respondent's property. In practice, unfortunately, this rule is observed rarely.

A party to a dispute may seek injunctive relief only if (and once) judicial or arbitral proceedings are initiated. Thus, before ordering injunctive relief the court has to be satisfied that the claim meets all formal requirements to a valid statement of claim, as set forth in Article 150 or 425 of the CPC (e.g. court has jurisdiction over the respondent; the claim has been properly drafted, etc.) or that there is an ongoing arbitration proceeding.

Security for Losses Caused by Injunctive Relief

According to the first sentence of Article 165 of the CPC, when ordering injunctive relief, a judge may require the applicant to provide security of losses which the respondent may incur as a result of the granting of the injunction. In practice this requirement is seldom imposed. The second sentence of Article 165 provides that, if the court rejects the claim, upon the entry of the judgment into effect, the respondent also has the statutory right to bring a claim against the claimant for compensation in relation to any damage caused by the injunctive relief granted.

Restrictions

Injunctive relief is not available against "financial organizations", as defined by Kazakh law. "Financial organizations" are defined as banks, insurance companies, securities brokers and dealers, pension funds, etc.

It is worth mentioning that the types of injunctive relief referred to above are not available in respect to all claims. For example, injunctive relief such as freezing of assets would only be possible if the claimant pursues a monetary claim. This measure would be unavailable, if the claimant pursues a non-monetary claim, for example, a claim seeking invalidity of a transaction or recognition of a right, etc.

In respect of state institutions financed from the state budget and certain state corporations (under so-called "operative management") freezing of assets belonging to the respondent is not available, except in relation to money held in the accounts of these entities. This is because under Kazakh law, certain categories of state institutions and state corporations which hold assets on the basis of operative management do not 'own' the property they hold. This property belongs to the state. For example, a public library manages, but does not own, the building of the library.

Injunctive Relief in Aid of Arbitration

Parties to arbitration proceedings, including arbitration proceedings outside of the RoK, may also seek injunctive relief from RoK courts having jurisdiction over the respondent. In principle the courts of the RoK are able to order injunctive relief in aid of foreign arbitrations. However, complications may arise in practice when the relief is sought in remote regions of Kazakhstan where judges are less familiar (and comfortable) with the concept of injunctive relief in aid of arbitration.

If the injunctive relief is sought in aid of a foreign arbitration, courts of the area where respondent or his assets are located would have jurisdiction to grant appropriate relief. In domestic arbitrations, courts of the area where the arbitral tribunal is seated would have this jurisdiction .

In order...