Kazakhstan: Litigation In Central Asia And The Caucasus And MWP's Dispute Resolution Practice

Last Updated: 14 September 2016
Article by MWP Dispute Resolution Team

Uncertain times

The Kazakh economy retains a positive long-term outlook, with vast energy and mineral wealth that will remain in global demand in the decades to come, and a history of strategic investment by the state that is beginning to bear fruit in diversifying Kazakhstan's economy away from reliance solely on primary resources. That said, while demand remains healthy in the energy and mining sectors, since 2014 there has been a significant drop in prices and, correspondingly, in earnings, which is inevitably having an effect on the level of commercial and consumer demand in the economy as a whole. Added to this has been the equally inevitable devaluation of the Kazakh tenge since it was floated against world currencies in August 2015. Although the floatation has had the hoped-for positive impact on exports, GDP is forecast to be only 0.5% in 2016, well down from the 4.1% of 2014, and 6% of 2013. This has added to the sense of uncertainty in the business community and increased the frequency of breaches in commercial contracts and reluctance to enter into them in the first place.

The region's legal markets today

In times of economic uncertainly, full-service law firms will typically shift the focus of their resources away from financing and transactional work towards litigation, debt recovery, restructuring and insolvency. This partly reflects a reaction to the greater volumes of such work coming through their doors, but also the strategic decisions taken at management level to go out and get more of it. Apart from this somewhat knee-jerk survival reaction, however, legal actors in Kazakhstan and Azerbaijan have also been able to take advantage of their countries' positions as leading members of the CIS, not affected by any of the sanctions currently imposed against Russian and Ukrainian individuals and entities by Western states.      

MWP's region-leading expertise

Michael Wilson & Partners, Ltd. (MWP) was established in Almaty in 1998, building on the experience of its director, Michael E. Wilson, an English and Australian-qualified solicitor who rose to be a leading partner at Baker & McKenzie, having established B&M's Major Project Practice Group globally and all of B&M's offices in the Central Asia and Caucasus Region. In 2003 MWP established an additional office in Baku, from which it has been able to focus on work generated in Azerbaijan, but also other projects in the Caucasus and Ukraine. With over 30 fee-earners, MWP is able to offer a personalised service across a broad range of services and sectors, including: banking, finance, tax, corporate and commercial, disputes, employment, foreign investment, intellectual property, mergers and acquisitions, real estate, mining and subsoil use, energy and infrastructure projects, and telecoms. MWP's existing and past clients include AXA, Bentley International Oil, BP, Bloomberg, Berkshire Hathaway, Bank of America Merrill Lynch, Citigroup, Credit Suisse, Dell Computers, Deutsche Bank, ENI, Falck Group, Goldman Sachs, Eurasian Bank, HSBC Holdings,  JSC NC Kasmunaigas, MasterCard Europe, Motorola, Marsh & McLennan, Nokia, Rio Tinto, Tele2 and the Governments of Kazakhstan and Kyrgyzstan. In addition to its legal services, MWP provides many companies with strategic and tactical consultancy services.

MWP's Dispute Resolution Practice

MWP's Dispute Resolution Practice has expanded in recent years to encompass a diverse range of curial and arbitral work around the globe. Expertise is offered in the areas of traditional commercial litigation, international and regional arbitration under the ICC, UNCITRAL, LCIA, AAA, ICE, ICSID and ad hoc rules, international and regional mediation, and IP anti-counterfeiting and enforcement. MWP's expertise extends to associated areas of asset-tracing and asset recovery. Its disputes practice draws on years of experience in the leading common law jurisdictions of the world, including the UK, the US, Australia, New Zealand and Canada, as well as offshore in the BVI and Bahamas. The disputes team includes English, Russian, Kazakh and Kyrgyz-qualified lawyers with rights of audience in several jurisdictions, many of whom hold master degrees from leading Western universities. MWP also has substantial experience litigating in the Kazakh courts, including hearings in the Supreme Court of the Republic of Kazakhstan, and is able to advise both regional and international clients on using these forums. 

Disputes work leaving the region

MWP believes that the Central Asian and Caucasus legal markets are ripe for the expansion of its disputes practice. This reflects not only the strained economic times, but also the fact that such a high volume of work arising in the region continues to go 'offshore' to be managed by teams in London, New York, Moscow and elsewhere. Sending work offshore in this way has a number of disadvantages for businesses operating and involved in disputes in the region. First, there are the prosaic problems of preparing for litigation or alternative forms of dispute resolution at distance, which, given the time-zone differences, even with the aid of modern communications means the problems associated with document assessment and transmission, conferencing and negotiation and other procedural meetings will be significant and costly. More importantly, the work often also ends up being directed by partners and teams with no particular regional expertise or feel for the subtleties of business relations in the region, including an appreciation of the need for face-to-face contact with business and government. While the ultimate venue for the resolution of many disputes will remain London, New York, Washington, Paris, Singapore, Stockholm, Geneva, Dubai and similar leading legal centres, there are multiple advantages to be gained from the advice and preparation relating to hearings – which in commercial disputes constitutes by far the largest portion of the costs - being done in situ.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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