Investment protection is key for growing EU-Kazakhstan cross-border trade

The Central Asian state, celebrating 30 years of independence this year, is championing the rule of law to take their international partnership to the next level
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By Marat Beketayev

Marat Beketayev is the Kazakhstan Minister of Justice

01 Dec 2021

This December, the Republic of Kazakhstan will celebrate its 30th anniversary since gaining independence in 1991. This milestone is not only a joyous occasion for Kazakhstan’s people but also a significant moment for EU-Kazakhstan relations, as it marks three decades of close cooperation in the areas of cultural exchange, trade, investment, and – most important of all – justice.

The EU is Kazakhstan’s largest trading partner, accounting for some 40% of Kazakhstan’s external trade. Even in a year as complex as 2020, the total trade in goods between the EU and Kazakhstan amounted to approximately €18.6 billion. In addition, the EU is also the biggest foreign investor in Kazakhstan.

The importance of this relationship is encapsulated by the Enhanced Partnership and Cooperation Agreement (EPCA) – the first such agreement between the EU and a Central Asian country – which came into force in 2020. This new agreement aims to take the EU-Kazakhstan partnership to the next level by tackling barriers to trade, improving legislation, and streamlining regulations.

This focus on strengthening EU-Kazakhstan relations is in line with Kazakhstan’s wider goals of economic diversification. The Government recognises that improving trade requires a two-pronged approach. It is not enough to simply invest in infrastructure and better connect Kazakhstan to the rest of the world; it is also essential to foster international cooperation and maintain a pro-business investment environment built upon solid legal foundations.

“This new agreement aims to take the EU-Kazakhstan partnership to the next level by tackling barriers to trade, improving legislation, and streamlining regulations”

Investment protection is critical for achieving this – cross-border trade cannot be strengthened if foreign investors lack the confidence to build their businesses in Kazakhstan. To further progress in this area, the Republic launched a common law court and an International Arbitration Centre – both of which are independent of the state’s court system – within the Astana International Financial Centre in 2019, demonstrating the Government’s steadfast commitment to upholding the rule of law and meeting its international obligations towards investors and all businesspeople.

Indeed, Kazakhstan has an excellent track record when it comes to resolving international arbitration investment disputes. As Meg Kinnear, Vice President of the World Bank and Secretary-General of the International Centre for Settlement of Investment Disputes (ICSID), pointed out in May 2021, of the relatively few such cases brought against Kazakhstan, it has successfully resolved all except one.

That case was brought against Kazakhstan by the fraudsters Anatolie and Gabriel Stati, whom the Ministry of Justice has now proven were at the heart of an illegal scheme that defrauded investors and falsified financial statements to unlawfully secure an arbitral award against the Republic.

The EU’s 2021 Rule of Law Report makes clear that combatting fraud and corruption is paramount to protecting and promoting the rule of law. Kazakhstan is committed to doing its part in this fight. By exposing the Statis’ misrepresentations and fraud, Kazakhstan is safeguarding the country’s investment environment and ensuring the future of cross-border trade.

Recently, the country secured a major victory in the long-running dispute, when the Belgian Court of Appeal ruled that the Statis’ arbitral award was obtained by fraud and therefore could not be legally enforced “because of the Statis inaccurate and fraudulent statements and the fact they concealed numerous pieces of evidence during the arbitration proceedings.”

“Kazakhstan aspires to deepen cross-border trade as part of the EPCA partnership and continue to invest time in learning from the EU’s extensive legal expertise in the area of investment protection”

This ruling – which has taken four years of legal proceedings to secure and confirms a 2017 ruling by The High Court of England and Wales that the Statis’ obtained the arbitral award by fraud - serves as a poignant example of Kazakhstan successfully challenging corruption and fighting for the rule of law on a European playing field.

Going forward, Kazakhstan aspires to deepen cross-border trade as part of the EPCA partnership and continue to invest time in learning from the EU’s extensive legal expertise in the area of investment protection. For example, the EU’s proposed Investment protection and facilitation framework – announced by President Ursula von der Leyen in September 2020  – offers the Republic a fine benchmark for improving the effectiveness of dispute resolution mechanisms within Kazakhstan.

Through continued dialogues, bilateral agreements like the EPCA, and commitment to addressing common challenges together, Kazakhstan hopes that the future of EU-Kazakhstan relations will be even more productive than the first thirty years of partnership.


This article reflects the views of the author and not the views of The Parliament Magazine or of the Dods Group

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