Director of the Political Science and International Relations master's program at the Faculty of Humanities and Social Sciences. 16 Figure 2 Lawsuits against decisions, actions and inaction of state bodies filed with the special collegium of the Supreme Court of the Republic of Kazakhstan, by province.
Lawyers and Business Disputing in Kazakhstan
Research Questions and Hypotheses
Participation in negotiations and information on the context of dispute resolution, such as the possibility of settlement. It has already been mentioned that the main role of lawyers is that of informer, which consists of advising businesses on the best way to resolve the dispute.
Designing the Study of Foreign Business Disputes in Kazakhstan
Interviews with in-house lawyers were conducted to gather information about their experience in resolving disputes involving their firm. Interviews with arbitrators helped to gather information about the essence of arbitration practice in Kazakhstan, to understand the characteristics of arbitral tribunals that seem favorable to foreign companies, and to determine whether the choices of lawyers who are also arbitrators differ from commercial and in-house lawyers.
Keeping Foreign Investors under Control in Non-Democracies
Structural and Motivational Determinants of Disputing Experience. What Affects
Such structural conditions may also include legal conditions, such as the enforceability of arbitration and court decisions and the form of the contract between the parties to the dispute. Here, scholarship focuses more on the merits of the former over the latter. According to Schönfelder (2007), arbitration is rarely used because of the legal illiteracy of these traders.
Markus argues that it is the low-level bureaucrats, not the rulers, who are endangering the property rights of entrepreneurs. Here the distinction between these two categories of litigants was determined by the repetition of litigation experience and the resources the parties received. Judges' professional interests and ambitions also turn out to be strong independent variables when it comes to the determinants of judicial bias (Xu 2017).
The political nexus of the Chinese business environment and the dependence of the judiciary and its bias on the government in China is very similar to the situation in Kazakhstan, where the political elite consists of the business elite.
Financial-Industrial Groups as Political Actors in Kazakhstan
According to Kjærnet et al. 2008), there are three main types of symbiotic relationships between these communities. There are companies that do not have permanent and direct links with the government, but can get ad hoc support through “trusted contacts” (Kjærnet et al. 2008). The second type is usually called a roof, which has a powerful protector with connections to other more powerful people (Kjærnet et al. 2008).
For example, President Nazarbayev's son-in-law, Timur Kulibayev, has been appointed to important economic positions and controls one of the country's largest banks. Peyrouse (2012) agrees with that position of Özcan (2008) in that he also emphasizes the importance of family ties, and with that of Kjærnet et al. 2008) in that political and business system functions through patronal relationships. Peyrouse (2012) claims that three groups can be distinguished in this patronal system: the family (of the president), the oligarchs and the technocrat elite (“key ministers, governors of both the capitals and the regions, heads of the presidential administration , etc.” (348)).
The “power” of these clusters is also determined by the proximity of their members to the president.
The Roles of Lawyers in Shaping the Disputing Behavior of Their Clients and
Undoubtedly, social and economic backgrounds play a significant role in shaping the practices and choices of lawyers, but my research is not interested in the identity of lawyers. The central question for this work is what lawyers can explain that contests behavior and under what circumstances they would be interested in the cooperative settlement of the case. Their arguments stem from the notion that lawyers may be interested in prolonging the litigation to increase their profits.
McEwen (1998) contributes to this discussion by arguing that lawyers are interested in early resolution of cases and in doing so reduce business clients' costs of litigation. Regarding the role of lawyers when it comes to business activity in foreign countries, practices of providing international support have been developed. When it comes to their functions related to litigation, about 40% of research participants who work in enterprises without a formal legal department (employees provide legal advice) found that they never had one.
These determinants need to be specifically emphasized in non-democracy, where the dispute resolution environment is highly uncertain.
How Do Political Actors Determine the Choices of Lawyers?
Control over State Courts
Therefore, even a special Collegium of the Supreme Court is inaccessible to a large number of foreign firms operating on the territory of Kazakhstan. As of the end of 2016, the Special Collegium of the Supreme Court of Kazakhstan has provided some limited data on its caseload (see Table 3 and Figure 2 below). The existence of such a Collegium in the Supreme Court, however, does not guarantee the fairness of the system when political actors are involved in the dispute.
One of the lawyers claimed that the "popular" moves of Kazakh companies in resolving disputes are "right by phone". For example, I am a company that wants to change the purpose of the company (tselevoe naznachenie biznesa). I am filing a lawsuit with the court asking that it recognize Akimat's actions as illegal and order Akimat to change its business purpose.
They decide that the actions of the akimat were illegal, but say that they cannot force the authority to do so.
Control over Arbitration
The Law on International Commercial Arbitration states that for a case to be considered in international arbitration at least one of the parties to the dispute is assumed to be a non-resident of Kazakhstan. When examining the request, the authorized body of the relevant branch or the local executive body must take into account the economic security and the interests of the state. Data on Kazakhstan's dispute in international arbitration show that most cases are quite often sent to the SCC and ICSID (Table), in addition, the expert argued that political actors in Kazakhstan prefer the applicability of British law in such cases.
The essence of the aforementioned case lies in the fact that the Special Judge. However, since there is no evidence of how exactly the Chamber helped to resolve the case, there is insufficient evidence to argue that the performance of this body is contributing to the growth of the arbitration institution in Kazakhstan. ICSID cancellation of a project for the development of a residential apartment complex and the subsequent transfer of the project property to the city of Almaty without compensation.
Kazakhstan's acquisition of approximately 75 percent of BTA's shares through the Samruk-Kazyna National Welfare Fund.
Control over Negotiation and Lawyers’ Practices
This is an excellent example that shows the state politicians' attempts to create platforms to resolve disagreements without resorting to formal institutions. These formulations were used in connection with the enforcement of arbitral awards and the promotion of the institution of arbitration. Only the approval of states, which is the approval of the president, can guarantee the protection of foreign investments.
From my point of view, as some interviewees also argued, such notions are the Soviet heritage of law and the state. This finding is similar to the results obtained by He and Su (2013) in China, where the court is viewed as a state agency. According to the Civil Code of the Republic of Kazakhstan, the state is an equal subject of law.
This perception that the state is above the law has a very damaging effect on the choices of lawyers and their clients in challenging conduct.
Pathways of the Foreign Business Disputes with Political Actors in Kazakhstan
Thus, when the parties are already in dispute, the chances of the dispute being resolved by arbitration are extremely low. This means that the hypothesis on the comparative cost of the dispute with the cost of the arbitration procedure is supported by such evidence. One of the main concerns here is the inability of foreign companies to bring the state into domestic arbitration.
It should be noted that the choice of lawyers may differ depending on whether the dispute is resolved in arbitration courts based in Kazakhstan or courts based outside the country. If the matter is below this threshold and you would still like the matter to be settled in arbitration, please refer to the Arbitration Center under the auspices of the National Chamber of Entrepreneurs of the Republic of Kazakhstan "Atameken". It is also one of the ways that profit interests (cost and time) determine lawyers' choice of where to settle a dispute.
However, Kazakh lawyers differ in their assessment of the reputation of themselves and other legal professionals involved in foreign business disputes, a sign of the (albeit very limited) autonomy of the legal profession in the country.
Reputation Matters: Views of Lawyers, Arbiters, and Judges in Kazakhstan
One of the respondents argued that, for example, in tax disputes, they do not become actively involved in the dispute until it reaches the Supreme Court. Another argument holds that only Supreme Court judges have the influence on legislation and statutory interpretation. Even if the judges of the Supreme Court are considered to be more professional than regional judges, there are still problems related to their competence.
One of the lawyers claimed that the reason judges and the legal system are distrusted in Kazakhstan is that the courts are overloaded with disputes and the judges are under pressure from deadlines. One of the respondents states that the judges do not actually ask for bribes. It is claimed that the culture of resolving disputes in court through informal or illegal means is the “mentality of the people of Kazakhstan”.
The role of arbitrators and their reputation is said to be one of the essential advantages of arbitration over litigation.
The law turns out to be more than a mere facade of business-government relations. The important theoretical contribution of my study is that it includes the role of the lawyer in the litigious behavior of foreign investors. Another important policy implication of the study is that it proves that political actors are very creative when it comes to business disputes in the country and take powerful instruments to control it.
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