Damage and losses recovery in courts

DAMAGE AND LOSSES RECOVERY IN COURTS

Kazakhstan courts practice regarding damage recovery

According to the Kazakhstan Civil Code, a damage includes actual damage to a property and losses. Unfortunately, Kazakhstan practice shows that the courts issue more decisions for damage recovery and less court decisions for losses.

Kazakhstan court proceedings legislation strictly stipulates that a court must issue decision based on:

1. The Plaintiff presented to a court written evidences;

2. The Defendant does not object to the Plaintiff's arguments and does not provide counter evidences.

For today it is quite difficult in Kazakhstan courts to prove and confirm losses. Usually, Plaintiffs provide their calculations for losses with assumption how much profit a company could earn if damages would happen. However Kazakhstan courts critically assess any losses calculations and as the result do not warded losses recovery.

In some cases, Kazakhstan courts awarded losses because a Plaintiff provided a valuation report prepared by an appraiser who has duly license or certificate. However, Kazakhstan courts could deny and reject any provided evidence. According to the rules of Kazakhstan Civil Procedural Code, no evidence has pre-established legal force for a court.

This means a court review each case on the basis of evidence and on all circumstances. Therefore, recovery of losses in Kazakhstan courts remains the most complex and challenging task.

Problem solving

We recommend to specify in a contract exact types of penalties for breach of obligations that would cover economic losses.

Examples

The Company A is engaged in construction work and the Company A needs to receive an equipment by the first of December 2020 in order to complete construction work by the end of the year. The Company A purchases an equipment from the Company B.

The contract may specify:

“If the Company B will not deliver the equipment in duly time and the delay in the delivery will be more than 5 days, then the Company A has the right to refuse from a contract implementation by notifying another party within 5 calendar days in advance, and the Company B must return to Company A all prepayment 50% and must pay a penalty for late delivery with 30% from contractual price of the equipment.”

Kazakhstan courts Position

Kazakhstan courts support the concept of contract priority over the legislation. Today for Kazakhstan courts it is much easier to follow the contract’s provisions rather than to award damages and losses based on legislation concept that is more abstract and not precise. Any court awards with losses assumptions may be subject of cancelation in the appeal courts. Kazakhstan courts try to avoid any cancelation of court decisions in appeal instances and try to issue decisions that could not be contested in the future.

Summarizing, for Kazakhstan damages recovery we recommend in contracts specify exact and precise provisions for penalties that will replace general law concepts about damages and losses.

This information was prepared by Synergy Partners dispute resolution and litigation lawyers: Mrs. Anar Dautalinova and Mr. Nurzhan Stamkulov.