Force majeure according to the Supreme Court of Kazakhstan

FORCE MAJEURE ACCORDING TO THE SUPREME COURT OF KAZAKHSTAN

Recently, the Supreme Court of Kazakhstan published its clarifications regarding the force majeure issues in connection with the state of emergency in Kazakhstan (hereinafter – Emergency ).

The local courts will use such Supreme Court’s clarifications in the court proceedings.

We have therefore decided to share with you the brief conclusions from the Supreme Court's clarifications:

1. The Emergency introduction in Kazakhstan is considered as a force majeure event.

2. There is no need to prove in the court that the Emergency is a force majeure event. Because the Supreme Court recognizes this fact to be well-known.

3. 1. If a party to the contract could not fulfill its obligations due to the Emergency, then such party could fulfill its obligations after the Emergency.

4. The Party is released from liability (not to be confused with an obligation) for failure to perform an obligation during the Emergency.

In other words, if the party could not fulfill its obligations due to the Emergency, the other party cannot apply the following sanctions:

• claiming damages;

• charging a penalty;

• collecting a fine;

• recognizing the party as an unfair supplier.

5. The parties can terminate the contract in accordance with the general procedure specified in chapter 24 of the Kazakhstan Civil Code .

6. The parties can extend the limitations period 5. and other procedural time limits for the period of Emergency.

7. The courts may not accept the claim if the parties did not attempt to settle the dispute before the court proceedings.

The contract priority

If you or your counterparty did not fulfill the obligations due to the Emergency, we recommend that you first review the contract.

If your contract does not contain conditions for force majeure, then you can refer to the Supreme Court’s clarifications.

We believe that the courts will apply the Supreme Court's clarifications only if the contract does not specify the specific conditions of force majeure.

Since according to the article 359.2 of the Kazakhstan Civil Code, the contract may provide other grounds for liability or release from it (force majeure) .

Practical conclusions

1. For the period of the Emergency, no penalty should be charged.

2. For the period of the Emergency, the obligations under the contract are postponed for another period, but they do not terminate.

3. It is impossible to recover damages from the other party, since such a party could not fulfill its obligations due to the Emergency.

4. You cannot terminate the contract just because the other party failed to fulfill its contractual obligations during the period of the Emergency.

Our recommendations

After the Emergency is terminated, the parties shall continue to fulfill their obligations under the contracts, as explained by the Supreme Court of Kazakhstan. However, due to the quarantine and the Emergency, many supply chains were interrupted, and some goods, for example, may not be available. Therefore we recommend to make appropriate amendments to the contracts and negotiating with counterparties, since the litigation process is very long and unprofitable. We believe that it is better not to spoil the business relationships, but to strengthen and clarify the contracts.

This legal insight was prepared by Synergy Partners litigation lawyers - Mr. Ali Dautalinov and Ms. Anar Kubeyeva. .