The press service of the Ascom Group S.A. company has recently announced that the US Columbia District Court did not change the main arbitrage decision on the dispute between Stati and Kazakhstan made in December 2013 in Stockholm that benefited the Moldovan businessmen. The sensation was immediately retranslated in the Kazakhstan internet-resources. Then, followed the reaction of the Ministry of Justice and its head Marat Beketayev.
Here is the official statement of the Ministry (text in bold – Kazakhstan 2.0).
“On March 23, 2018, the Washington District Court, USA, reached a verdict on A. Stati’s claim on the enforcement of the arbitration award. The Republic of Kazakhstan respects the court’s decision but does not agree with the denial to present all the arguments in its defense in accordance with the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards as well as with the recognition of the arbitration decision.
The Republic of Kazakhstan states that the arbitration award was obtained with the employment of a large-scale fraudulent scheme. Such fraud does not allow for the recognition of the arbitration award on the US soil.
During the same kind of trial in the UK, the British High Court, after hearing a number of arguments, acknowledged the presence of the conclusive evidence of Stati’s foul play and scheduled a separate trial to deal with the matter. Unfortunately, the US District Court did not allow the Republic of Kazakhstan to present this fact in support of its defense. The Republic of Kazakhstan intends to appeal the verdict and defend its legal rights. Regarding the facts of the fraud, the Republic of Kazakhstan has initiated a separate trial against the plaintiffs at the Washington District Court in accordance with the US law on fighting organized crime and corruption. The trial is currently under way.
It is important to mention that, currently, the court’s decision is enforceable only in Washington. Apart from that, to impose a court-enforced collection of the Kazakhstan property in the US, Stati must prove that the said property does not have the sovereign immunity in accordance with the US law on the immunity of the states”.
Talking to the press, Marat Beketayev also emphasized that Statis cannot use the yet another court decision in their favor (this time, in the US) to receive $520 mln from Kazakhstan as a compensation for the expropriated assets. Here is a quote from the Tengrinews internet-resource (text in bold – Kazakhstan 2.0).
“Minister of Justice Marat Beketayev calls “senseless” the arrest of the Kashagan share commenting on Kazakhstan’s intentions to appeal the Washington court decision on Stati’s claim, reports Tengrinews.kz correspondent.
On March 23, the Washington District Court, USA, made a decision on A. Stati’s claim to forcibly execute the arbitration award. “This decision does not give Stati a possibility to directly collect the money belonging to the republic. To achieve this result, he must complete several procedural steps. At each one of these steps, we will express our point of view, resist, and declare the counter demands”, said the Minister on the sidelines of the Government session.
He announced that the Washington court decision will be appealed at an appellate court. In his words, there are reasons to believe that Kazakhstan’s appeal may be supported. “The arrest of the Kashagan share is senseless. If, theoretically, the enforcement agent will want to sell this share and pay the sum demanded by Stati, to complete this deal, he, first, will need the Kazakhstan Government’s approval since it is a strategic facility and, second, the Ministry of Energy’s approval as the authorized body. Without these approvals, the deal will be considered void, therefore, the arrest is nonsensical”, noted Beketayev.
In his words, Kazakhstan has evidence that Stati had been moving the money out of the country and drove up the price of his assets. “The assets are safe for now. We have a feeling that our evidence is strong, and the London Court supported us. The compensation sum should be significantly lower. If he was embezzling while living in Kazakhstan, he is a dishonest investor who should not enjoy the support of the Investment Protection Agreement. This is the basic principle”, said he”.
Thus, the score in the longstanding legal war of Anatol and Gabriel Statis against Kazakhstan has evened up in favor of the Statis. Moreover, it seems the Ministry of Justice of the Republic of Kazakhstan has, finally, realized that as well – hence Beketayev’s statement that the size of the compensation should be significantly lower that contradicts his previous announcement on how strong Kazakhstan’s counter arguments are.
Of course, the legal battle between the Statis and Kazakhstan does not stop here. It will continue for a long period of time. However, after the US District Court’s decision of March 23, 2018, the process is likely to speed up and even more so – it may assume a form that is even less desirable for Kazakhstan. The matter is that the plaintiffs may try to sell their rights for the KazMunayGaz national company’s share in Kashagan not to a strategic investor who will indeed need to have the Kazakhstan authorities’ approval but to some US legal firms that specialize in this kind of trials that are, let us say, extremely complicated and of an ambiguous legal rationale.
It would be an ideal outcome for Anatol and Gabriel Statis. And then, Kazakhstan would have to engage in the legal war with the professional litigants with an enormous experience in such trials on the US soil. With that, the plaintiffs will be not so much interested in winning the trial as in wearing out the opponent, causing a huge damage to its image, keeping the Kazakhstan assets (including the NFRK money) frozen for as long as possible to finally make the opponent pay them more than it gave to the Statis.
Of course, the possibility of this turn of events is not high, but it still exists since Kazakhstan keeps the NFRK money outside the country. Apart from that, the US courts may seize not only the property of a state but also the properties of the quasi-state structures including that same KazMunayGaz National Company. And then, Kazakhstan will be forced to defend itself and not to attack as it has done the previous years.