Mission to Kazakhtstan

Last week, for the very first time, a 6-day mission to Kazakhstan led by the Bar Council took place. A group of UK specialist barristers in the fields of International Arbitration, Corporate Governance, Mediation and International Anti-Bribery and Corruption arrived in the capital Astana on the morning of the re-election of President Nursultan Nazarbayev. The backdrop for the first part of visit was Astana, a gold/silver shimmering city, sitting south of the ancient Kazakh Steppe, the relocated capital of an aspiring nation, where internationally renowned architects have been allowed to set loose their imaginations.  

Following recommendations by the Foreign Commonwealth Office (FCO) and UK Trade and Industry (UKTI), the Kazakh Bar (KAZBAR) and British Embassy invited the barristers to Kazakhstan.

The essence of the mission was to demonstrate the uniqueness that the independent bar has to offer. The aim being to create strong and lasting ties between the Kazakh legal profession and the Bar of England and Wales. Topics on the agenda included "International Arbitration”, "Mediation" and the current buzzwords "Anti-bribery and Corruption" (ABC).

The world’s largest landlocked country and ninth largest on the planet, Kazakhstan is a vast area. The significance of Kazakhstan to the UK is easily apparent, a predominantly sub-soil based economy, its economy is second strongest in the CIS, and the largest economy in Central Asia. Bordering Russia, China, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan, Kazakhstan has been a significantly stable and economically strong nation. It is no surprise that President Nazarbayev has high aspirations. In 2013, on the 20th anniversary of the nation's independence he announced the "2050 Strategy", that by 2050 Kazakhstan should aim to enter the club of the "30 most developed nations in the world". With 'EXPO 2017' (Astana) around the corner, along with Almaty's hopes of securing the 'Winter Olympics 2022', the world is due to discover a great deal more about this regional economic power.

With its strong economy Kazakhstan's aspirations include the aim of becoming a Central Asian financial centre; this would include the presence of:

  1. an independent and internationally recognised Centre of Arbitration,
  2. a well regulated and safe financial investment sector, as well as,
  3. transparent corporate governance and open government.

One of the keystones in this policy is to allay foreign corporate fears over bribery and corruption. In 2013, Kazakhstan was ranked 50th of the most competitive economies in the world, yet disappointingly remains 126 out of 175 on the International Perceptions Index. Couple the latter with recent surveys showing that the prime areas of 'bribery and corruption' remain firmly within the worldwide sub-soil industries, and it is not hard to see why Kazakhstan is keen to improve its reputation.

For the UK, Kazakhstan is its second most significant trading partner. Both enjoy a strong mutual trade and investment relationship based on free market access, significant two-way trade and investment flows. This is matched with regular dialogue at senior levels. Consequently, the UK is one of the largest investors in Kazakhstan, usually either in second or third tier position for Foreign Direct Investment (FDI). UK exports to Kazakhstan in 2011 were circa £530 million whilst UK imports from Kazakhstan were close too £459 million. Both imports and exports are up on a year-by-year basis since 2010 with 124% rise annually between 2010 and 2013. (source: UKTI).

For the Kazakhs the English Legal system and its lawyers are still renowned for their expertise in commercial and regulatory areas of international law. In international multi-complex contracts the London Centre for International Arbitration (LCIA) still remains the location of choice within the arbitration clauses of complex commercial contracts. Internationally, the English legal system still holds a strong sense of fairness. According to a recent survey by the Portland Group, Kazakhstan generates the second highest number of CIS cases decided in the Commercial Court in the UK. Not including the many high value arbitrations heard in London which emanate from Kazakhstan.

In conjunction with the Kazakh government’s pledge to put the country on an equal footing with the leading economies of the world, its invitation to the Bar was in keeping with its process of a long term overhaul of its justice and judicial system.

The Kazakh government has pledged to alleviate the millstone of bribery and corruption, which has dogged the nation's reputation. In that regard it has looked closely at the UK’s Bribery Act (UKBA). As a general observation since the inception of the UKBA in July 2011, jurisdictions around the world are focusing in on what has come to be regarded as one of the most stringent ABC legislations in the world. Where the US normally leads the field in regulatory law, the UKBA has left the US or, more significantly, its Foreign Corrupt Practices Act (FCPA) a little distance behind.  

On Monday 27th May, following briefings at the British Embassy, and lunch with various business leaders, a full afternoon of lectures and discussion took place regarding "international arbitration, mediation and the impact of the BA on Kazakh corporations". The event was fully subscribed with leading lawyers, judges, as well as, senior officials from the sub-soil industries. 'Question and Answer' sessions were lively and engaging.

The UK specialist barristers focused in on the traditional contractual models for the sub-soil industries, namely Product Sharing Agreements (PSA), Joint Ventures (JV), Concession Contracts (CC), Service Contracts (SC) and Co-insurance Agreements (CA). It was clear that Kazakhs have an appetite for complex legal matters, whilst the sessions were aided by live interpretation the majority of the attendees understand and spoke excellent English. There was a sense of energy and keenness to see Kazakhstan enter not only the economic and financial world but also the legal world and all seminars were well received. An eager nation was easily adduced during the course of the day.

The same was repeated in Almaty, the country’s former elegant capital. With a population encroaching on 2 million, 40% of which are under 24, this is the commercial heart of Kazakhstan. Green, lush and sitting in the foothills of the high Tien Shan Mountains, the conference was full. Much the same as in Astana, the attendees from the main legal firms of the city were highly educated and engaging. Significant questions were posed to the speakers from issues relating 'confiscation proceedings in respect of section 7 BA act offences', through to 'contempt of court in respect of arbitral awards'. The delegation was again engaged till late at night following the event answering the complex questions of attendees.

The UK party left on Friday, with professional friendships and genuine networks created, along with the reputation of both sides enhanced. For the future it is planned that a delegation of KAZBAR will visit London.

With the majority of major construction work in Kazakhstan being performed by Turkish corporations there is an appetite for the Kazakhs to go to Turkey, once again with the British barristers at the forefront.The aim, to holding in Istanbul an international symposium on Arbitration, Corporate Governance, ABC and Mediation. These are for future, more importantly, both the Kazakhs and British barristers parted with a sense that the mission did achieve its purpose with foundations laid for the creation of long and lasting professional legal ties .

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