June 16. 2021. 9:51

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$3.7M sanction upheld against Moldovan businessmen in U.K. court Battle with Kazakhstan and National Bank of Kazakhstan


This concludes proceedings before the English High Court in which the Stati Parties were unsuccessful in all stages and which relate to the Stati Parties’ ongoing attempts to enforce an arbitral award obtained against Kazakhstan (the “Award”).

Paradoxically, the Stati Parties then started numerous new court proceedings in six other jurisdictions for which they instructed a number of local counsel and incurred significant legal expenses. In the end, the Stati Parties were allowed to terminate their attempted enforcement proceedings in England on appeal, but only on harsh conditions: they had to agree to have their prior enforcement order set aside, undertake never to seek to enforce the Award in England again, and accept liability to compensate Kazakhstan for its litigation costs.

The Belgian court therefore referred the question of who has a claim against BNYM in respect of the assets held pursuant to the GCA to the English court, which in turn led to the proceedings that are now concluded by the default cost order. The Stati Parties lost their challenge to the jurisdiction of the English Court in December 2018.

Having lost the English proceedings, the Stati Parties were ordered to pay the costs but failed to do so. They also failed to react when their counsel King & Spalding was notified in December 2020 that, following the Stati Parties’ failure to engage with Kazakhstan and NBK, ROK and NBK were initiating detailed assessment proceedings of their costs, resulting in the default costs order being made on 6 January 2021 after their 21 days for responding had elapsed. They have now also lost on their attempt to set aside the default cost order.

In his witness statement King & Spalding partner Egishe Dzhazoyan describes that it took him two weeks to instruct cost lawyers and a further two weeks to transfer the full file: “It took my firm two weeks or so to arrange for a transfer of a copy of the entire electronic data set/file in the required .pst format (…) which was shared with [the cost lawyers] on 4 February 2021. The reason behind the slight delay was to do with the need to seek and obtain certain internal approvals from my firm’s Director of Records & Information Governance concerning collating and sharing this type of data in light of my firm’s data privacy protection policies and procedures.”

The attachment of assets of NBK in the form of cash held by BNYM on an account in London is currently under review in two Belgian proceedings. On 17 November 2020, Kazakhstan’s appeal against the Belgian exequatur decision was also upheld by the Brussel Court of Appeal, which effectively means that Kazakhstan’s fraud case will be re-opened in full.

As reported previously, on 11 February 2021, the Luxembourg Court of Cassation annulled the Luxembourg Court of Appeal’s decision to confirm the award against Kazakhstan in its entirety. The Court of Cassation decided that the judgment of the appeal court violated due process, as it did not allow the admission of crucial evidence from KPMG, while still relying on it in its judgment. The case will now be heard again by a different chamber of the Luxembourg Court of Appeal.

Moreover, through another landmark decision dated 8 January 2021, the Luxembourg district court recognised the seriousness of the criminal complaint filed by the Republic of Kazakhstan against the Stati Parties with the Luxembourg law enforcement authorities, and stayed the validation of the Stati Parties’ title under the award until the criminal procedure comes to an end. After reviewing the evidence of the Stati Parties’ fraud and the various expert opinions submitted by Kazakhstan, the district court found that there is a sufficient nexus between Kazakhstan’s fraud case and the Stati Parties’ purported civil claims under the arbitral award against Kazakhstan. With the above discussed judgment of the Luxembourg Court of Cassation, the Stati Parties’ alleged title under the award in Luxembourg is without basis altogether.

Furthermore, on 12 December 2020, the Dutch Supreme Court nullified the judgment of the Amsterdam Court of Appeal in the summary proceedings relating to the attachment of the assets of Samruk-Kazyna Sovereign Wealth Fund in the Netherlands. The Supreme Court based its decision on the United Nations Convention on Jurisdictional Immunities of States and Their Property, finding that the sovereign immunity of Samruk-Kazyna’s assets has not been disproven.

Earlier last year, the Swedish Svea Court of Appeal also based its decision on the UN Convention while finding that the attachment of NBK’s assets by the Stati Parties is not compliant with public international law obligations relating to affording immunity from execution to central banks’ property.

The Stati Parties’ illicit conduct and fraudulent schemes have also been confirmed by independent legal opinions of two leading experts in international arbitration, Professor George Bermann and Professor Catherine Rogers.