US Court Gives Green Light To Recovery Of US$525 Million Judgment Against Republic Of Kazakhstan
NEW YORK, Nov. 14, 2018 /PRNewswire/ -- On November 13, 2018, the U.S. District Court for the District of Columbia ruled in favor of the Stati Parties in Stati et al. v. Rep. of Kazakhstan, again rejecting the efforts of Kazakhstan in refusing to honor its obligations under the Energy Charter Treaty to pay a US$525 million arbitral award issued in their favor.
In March of this year, the U.S. court entered judgment on the arbitral award pursuant to the provisions of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, rejecting all of Kazakhstan's claims that it should not be recognized in the U.S.
In its ruling this week, the U.S. court expressly authorized the Stati Parties to take steps to execute their US$525 million judgment against any Kazakh state assets in the U.S. Notably, the court refused Kazakhstan's request to stay such enforcement efforts, ruling that execution may proceed unless Kazakhstan posts a bond for the full value of the judgment. It also authorized the Stati Parties to continue in their efforts to seek discovery in the U.S. of any and all Kazakh assets that may be subject to attachment.
Anatolie Stati, CEO and shareholder of Ascom Group, one of the Petitioners to the action, has said: "We welcome the latest judgment of the U.S. court, which represents an important win in our hard-fought efforts to collect the award. These efforts have been continuously thwarted by the Kazakh State, which has demonstrated unprecedented levels of bad faith and recalcitrant conduct aimed at endlessly delaying the matter while deploying its substantial financial, political, and diplomatic resources to avoid a lawfully-entered court judgment."
Stati added: "Kazakhstan's conduct should send a clear and unfortunate message to other international investors in Kazakhstan that they cannot trust the country to honor its treaty commitments when faced with an arbitral award in favor of the investors. We hope that this U.S. court ruling sends a clear signal to Kazakhstan that its delay tactics will no longer be tolerated in the U.S."
The U.S. court's ruling is the latest development in the Stati Parties' long-running battle to enforce an arbitral award issued in December 2013 for Kazakhstan's violations of the investor protection provisions of the Energy Charter Treaty. A tribunal constituted under the auspices of the Stockholm Chamber of Commerce found that Kazakhstan violated its international obligation to treat the Stati Parties' investments fairly and equitably and awarded the Stati Parties more than US$500 million in damages, legal costs, and interest. The award has since been fully upheld by two tiers of the Swedish judiciary, including the Swedish Supreme Court.
Courts in the Netherlands, Belgium, Sweden, and Luxembourg have already attached Kazakh State assets in aid of judgments they entered on the arbitral award.
The claims originally arose out of Kazakhstan's seizure of the Stati Parties' petroleum operations in 2010. The Stati Parties acquired two companies in 1999 that held idle licenses in the Borankol and Tolkyn fields in Kazakhstan. They invested more than US$1 billion over the ensuing decade to turn the companies into successful exploration and production businesses. By late 2008, the businesses had become profitable and had yielded considerable revenues for the Kazakh state. Just as the Stati Parties expected to start receiving dividends, more than half a dozen government agencies carried out a number of burdensome inspections and audits of the companies' businesses that resulted in false accusations of illegal conduct directed at the Stati Parties and their Kazakh companies, including criminal prosecutions of their general managers on false pretenses. Kazakhstan's actions challenged the Stati Parties' title to their investments, subjected them to hundreds of millions of dollars in unwarranted tax assessments and criminal penalties, and ultimately led to the seizure and nationalization of their investments by Kazakh authorities in 2010.
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SOURCE The Stati Parties
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