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International Arbitration Forum

200.224.067/01

Case summary

At a glance

Parties
Two individual petitioners (names anonymised), Ascom Group S.A. (Moldova) and Terra Raf Trans Traiding Ltd. (Gibraltar) v. the Republic of Kazakhstan (including the National Fund of the Republic of Kazakhstan) and Samruk-Kazyna JSC; the National Bank of Kazakhstan appeared as an interested party
Case no.
Gerechtshof Amsterdam, No. 200.224.067/01 (ECLI:NL:GHAMS:2018:4155; ECLI:NL:GHAMS:2020:2032)
Court
Gerechtshof Amsterdam (Court of Appeal of Amsterdam), civil and tax law division, team I
Forum and rules
Recognition and enforcement under Article 1075 of the Dutch Code of Civil Procedure (Rv) and the New York Convention 1958
Underlying award(s)
SCC arbitration awards rendered in Stockholm on 19 December 2013 and 17 January 2014 (supplementary award), under Article 26(3) of the Energy Charter Treaty
Treaty
Energy Charter Treaty (underlying arbitration); New York Convention
Court
D. Kingma, W.H.F.M. Cortenraad, A.M.A. Verscheure
Sector
Oil and gas (oil fields and LPG plant)
Outcome
The court recognised the awards and granted leave to enforce them against Kazakhstan. It refused the request as far as it was directed against Samruk-Kazyna and the National Fund.
Amount
Arbitral award: USD 497,685,101 (net of debts), including USD 199 million for the LPG plant. Court costs: Kazakhstan pays the petitioners EUR 716 in disbursements and EUR 3,222 in fees. The petitioners pay Samruk and, separately, the National Fund EUR 726 in disbursements and EUR 3,222 in fees each.

The dispute

Between 1999 and 2004 the petitioners indirectly acquired two Kazakh companies, Kazpolmunay LLP (KPM) and Tolkynneftegaz LLP (TNG). The companies held the rights to the Borankol and Tolkyn oil fields and the Tabyl Block, and TNG was to build an LPG plant at Borankol. The rights ended in 2010 after a dispute. In an SCC arbitration based on the Energy Charter Treaty, the tribunal found that Kazakhstan had breached the ECT and awarded USD 497,685,101. Swedish courts rejected Kazakhstan's challenges to the awards. In September 2017 the petitioners asked the Amsterdam Court of Appeal to recognise and enforce the awards against Kazakhstan, its National Fund and the sovereign wealth company Samruk-Kazyna. Kazakhstan objected that the court lacked jurisdiction, that the awards had been obtained by fraud (inflated construction costs for the LPG plant, undisclosed related parties such as Perkwood and Azalia, and misleading statements about liquidity and the Laren transaction), that the SCC had wrongly appointed its arbitrator, and that the ECT cooling-off period had not been observed. Samruk and the National Bank argued that they were not parties to the arbitration.

Key holdings

  1. The court has jurisdiction. The transitional rules in Article IV of the 2014 Arbitration Law Modernisation Act, which keep the old law for pending arbitrations, do not apply to foreign arbitrations. The request, filed on 26 September 2017, is therefore governed by the current Articles 1075 and 1076 Rv. Having only one factual instance for foreign awards is not a substantially more onerous condition under Article III of the New York Convention. 2018 Interim Decision, ¶¶ 2.2–2.7
  2. The request against Samruk-Kazyna and the National Fund is refused. Neither was a party to the arbitration agreement or the awards, and Samruk had no notice of the arbitration. Whether assets of Samruk or the National Fund can be seized concerns the manner of enforcement, which falls outside exequatur proceedings. 2018 Interim Decision, ¶¶ 2.11–2.14
  3. The court adjourned the case so that Kazakhstan could study the 70,000 documents disclosed in the English High Court enforcement proceedings and file the High Court's judgment. The court relied on its case-management powers and found that the adjournment did not breach Article III or Article VI of the New York Convention. 2018 Interim Decision, ¶¶ 2.19–2.20
  4. Procedural fraud as a public policy ground (Article V(2)) requires at least that the award creditor intentionally misled the tribunal and that this had a material influence on the awards. The Swedish set-aside court's rejection of the fraud allegation is a strong indication that there was no fraud. The High Court's prima facie finding of 6 June 2017 was only provisional. 2020 Decision, ¶¶ 3.5–3.7
  5. No fraud was established. The tribunal valued the LPG plant on the 2008 bids, notably KMG's bid of USD 199 million, and not on the claimed investment of USD 245 million. Kazakhstan's own expert GCA had treated comparable costs as reasonable, and Kazakhstan had controlled the plant and TNG's records during the arbitration. The documents on the liquidity shortfall, the Credit Suisse loan and the Laren transaction did not go to the core of the tribunal's findings on causation. 2020 Decision, ¶¶ 3.11–3.23
  6. The SCC Board validly appointed the arbitrator Lebedev under Article 13 of the SCC Rules 2010. The deadline for Kazakhstan's answer under Article 5 was also the deadline to nominate an arbitrator, and Kazakhstan had proper notice of the appointment. Failure to observe the three-month cooling-off period in Article 26(2) of the ECT does not deprive the tribunal of jurisdiction. 2020 Decision, ¶¶ 3.26–3.33
  7. The grounds for refusal in the New York Convention are exhaustive, so an alleged breach of the duty of truthfulness in Article 21 Rv is not a ground for refusal. The document production request under Article 843a Rv is rejected for lack of a specific legitimate interest. The awards are recognised and declared enforceable against Kazakhstan, with costs. 2020 Decision, ¶¶ 3.35–3.41 and operative part

Procedural history

  1. 5 August 2010The SCC Secretariat sent the request for arbitration to Kazakhstan. The SCC Board appointed the arbitrator Lebedev for Kazakhstan on 15 September 2010.
  2. 19 December 2013SCC award issued in Stockholm. It was supplemented by an award of 17 January 2014.
  3. 9 December 2016The Svea Court of Appeal (Svea Hovrätt) rejected Kazakhstan's action to set aside the awards. The Swedish Supreme Court rejected an extraordinary remedy on 24 October 2017.
  4. 6 June 2017In parallel enforcement proceedings, the English High Court found a prima facie case of fraud. The English proceedings were later withdrawn.
  5. 26 September 2017The petitioners' request for recognition and enforcement was received by the Amsterdam Court of Appeal.
  6. 6 November 2018Interim decision: the court upheld its jurisdiction, refused the request against Samruk and the National Fund, and adjourned the rest of the case. It allowed an interim appeal in cassation.
  7. 27 August 2019Continued oral hearing.
  8. 14 July 2020Final decision: the awards were recognised and declared enforceable against Kazakhstan.

Tribunal, counsel and experts

Decided by
For the claimant
King & Spalding LLP · G.J. Meijer · M. van de Hel-Koedoot · K.J. Krzeminski · T.R. Vaal
For the respondent
M.A. Leijten · A.W.P. Marsman · M. Gerrits · I.S. Timman · R.W. Ledeboer · A. Madaliyen · J. van den Brande · H.F. van Druten · M. Mukhametzhano
For other participants
A.K. Zirar
Experts
Cline & Associates Gaffney (respondent)

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Keywords

Summary generated with AI from the published documents — refer to the award for the authoritative text.

Case ID
Gerechtshof Amsterdam (Court of Appeal of Amsterdam), No. 200.224.067/01
Country
Claimant
200.224.067/01
Section

Court: Netherlands, Gerechtshof Amsterdam (Court of Appeal of Amsterdam)
Date of decision: 14 July 2020
Case number: 200.224.067/01
New York Convention provisions: III | IV | V | V(1) | V(1)(a) | V(1)(b) | V(1)(c) | V(1)(d) | V(2)
Source: New York Convention case law case database.