Promoting a Favorable Investment Climate in Kazakhstan

Speeches Shim

Tuesday, November 3, 2020
Current issues of investment proceedings roundtable in Kazakhstan in Feb. 2020
American Bar Association Rule of Law Initiative

Kazakhstan enjoys the largest economy in Central Asia while serving as a link between fast-growing markets in Asia and those of Russia and Western Europe by road, rail, and a port. At the same time, Kazakhstan continues to have below-average rates of employment, tax revenue and an underdeveloped private sector. Despite institutional and legal reforms, concerns remain about the protection of law enforcement and investors rights in court. Investors have repeatedly cited the need for improved regulations since almost all disputes previously resolved were in favor of the state.

In order to tackle these issues, the Government of Kazakhstan recognized the need to address how the country positioned itself on property rights, government accountability and legislation. Since 2016, the Government of Kazakhstan has created separate court proceedings on investment disputes, established the Investment Dispute Panel at the Supreme Court to consider disputes with large investors, and created both the International Arbitration Center AIFC in Nur-Sultan and the International Council under the Supreme Court of Kazakhstan. However, additional reforms were needed to guarantee the protection of investors’ activities, including fair and transparent judicial considerations of investment disputes between investors and state bodies.

Since 2012, the USAID-funded Kazakhstan Judicial Program, implemented by the American Bar Association Rule of Law Initiative, has provided a platform for key stakeholders, including foreign and local investors, judges, major legal firms, and state bodies to discuss the most important judicial issues in the country, including the improvement of investment litigation. The program has connected Kazakhstan’s judicial actors with internationally recognized experts and introduced international best practices to settle investment disputes to create a more favorable climate for domestic and foreign investors.

Judges from Kazakhstan’s Supreme Court, regional courts, and judicial personnel visited Estonia and the United States to improve their understanding of international approaches and best practices in investment dispute resolutions. The group met with organizations such as the International Center for Settlement of Investment Disputes and the United States Patent and Trademark Office to adapt best practices on investment disputes to Kazakhstan’s domestic context. Following the study tours, investors were invited to participate in roundtable meetings with government officials to discuss the protection of investors in investment disputes.

As a result, legislative action was taken to amend the country’s Civil Procedure Code. The amendment expanded the jurisdiction of investment dispute panels and increased the preparation time for case examinations from one month to two months. These changes, at first glance, look small, but give foreign investors the confidence that potentially complex investment disputes will be carefully and fairly considered.

The dynamics and structure of foreign investment in Kazakhstan are changing. Compared to the same period in 2019, Kazakhstan has seen an 8.1 percent increase in foreign investment in 2020. Improving the adjudication of investment disputes is a critical step toward improving the overall investment climate in Kazakhstan, paving the way for more economic opportunities, higher tax revenues, and development of the country’s thriving private sector.