Significant Amendments To The Law On Arbitration Have Been Adopted In Kazakhstan

A number of significant amendments1 have been introduced to the Law on Arbitration2; including, inter alia, amendments to the following provisions:

(a) rules on the law applicable to the merits of a dispute: foreign law can now apply to a dispute involving the state;

(b) grounds for refusal to recognize and enforce an arbitral award: the grounds have been brought in line with the New York Convention3;

(c) grounds for annulment of an arbitral award: among other things, a provision has been added that the court is not entitled to look into the substance of an award;

(d) content of the arbitration agreement: a number of of requirements as to the content of an arbitration agreement have been removed;

(e) consent of the authorized body to conclude an arbitration agreement: a clarification was introduced on irrevocability of the consent.

In our view, the amendments, in general, are positive; some key provisions of the Law on Arbitration have been harmonized with the international conventions and a number of defects in the legal regulation of the arbitration sector have been rectified.

Below is our brief analysis of the main amendments.

Law applicable to the merits of a dispute

1) Law applicable to a dispute involving the state

Previous version of Article 44.1 of the Law on Arbitration provided for the mandatory application of Kazakh law in a dispute with participation of state bodies, enterprises and legal entities in which the state owns 50 % or more (the State Person). This provision contradicted Civil Code4 which allows for the possibility to choose foreign law.

Under the current version of Article 44.1 of the Law on Arbitration, Kazakh law is now mandatory only in a dispute between natural persons and legal entities of Kazakhstan. Accordingly, the parties are entitled to choose to apply foreign law to civil law relations between State Persons and foreign persons.

2) Establishing the applicable law in the absence of agreement between the parties

The current version of Article 44.1 of the Law on Arbitration now establishes that, in the absence of agreement between the parties, the applicable law will be established in accordance with the conflict of laws rules which the arbitral tribunal will deem applicable. Thus, this provision was brought in line with paragraph 1 of Article 7 of the European Convention on International Commercial Arbitration5 which provides for a similar rule and no longer ties the question of establishing the applicable law...