On invalidation of the act on the results of an unscheduled inspection, regulations and their cancellation
No. 6001-22-00-6ap/2652 dated 07/13/2023
Plaintiff: JSC "KTG" Defendant: Russian State Institution "Department of the Committee for Regulation of Natural Monopolies of the Ministry of National Economy of the Republic of Kazakhstan for the region"
The subject of the dispute: the invalidation of the act on the results of an unscheduled inspection, regulations and their cancellation
Review of the cassation petition of the Prosecutor of the Turkestan region
PLOT: On March 30, 2022, an act of appointment of an audit was issued in relation to the Company. On April 13, 2022, the act on the results of an unscheduled audit of the Company's activities revealed a violation of subparagraph 6) of paragraph 2 of Article 26 of the Law of the Republic of Kazakhstan "On Natural Monopolies". On April 15, 2022, the Department ordered the Company to cease the practice of violating subparagraph 6) of paragraph 2 of Article 26 of the Law within 10 calendar days from the date of receipt of this instruction by issuing technical specifications for connection to gas supply networks in accordance with the Standard Form. On April 18, 2022, the Company filed a complaint with the Committee for Regulation of Natural Monopolies of the Ministry of National Economy of the Republic of Kazakhstan, whose preliminary decision on May 20, 2022 dismissed the Company's complaint.
The Company, disagreeing with the act and the order of the Department, appealed to the court with this claim.
Judicial acts:
1st instance: the claim was denied.
Appeal: the decision is overturned.
It was decided to declare illegal and cancel the act on the results of the unscheduled inspection dated April 13, 2022 and the order on the elimination of violations dated April 15, 2022.
Cassation: The decision of the appeal is overturned.
The claim regarding the contesting of the act on the results of the audit has been returned. Regarding the claim for invalidation and cancellation of the order, the court's decision remains in force.
Conclusions: The Court of First Instance, rejecting the claim, proceeded from the fact that the Company, when issuing technical specifications in Section 3, unreasonably included additional requirements and imposed on the applicant the obligation to provide technical information not specified in the Standard Form.
In this regard, the Department, within the limits of the current legislation, as well as within its competence, reasonably issued the contested act on the results of the unscheduled inspection.
The Court of first instance also concluded that the Department had lawfully issued the appealed order within the limits of its competence.
The Court of Appeal did not agree with such conclusions of the court of first instance, pointing out that the Department is not one of the state bodies endowed by the state with the functions of technical regulation of the activities of natural monopolies.
In this regard, the indication in the contested act and the order on the establishment by the Company of additional requirements not related to the regulated service provided seems to be unfounded. However, these conclusions of the court of appeal are untenable. The Court should have returned part of the Company's claim for invalidation of the act on the results of the unscheduled inspection.
According to the second part of Article 102 of the APPC, the courts have jurisdiction in administrative proceedings over disputes arising from public law relations provided for by the APPC.
In accordance with subparagraph 9) of the first part of Article 4 of the CPC, an administrative claim is a claim filed with a court in order to protect and restore violated or disputed rights, freedoms or legitimate interests arising from public law relations. Thus, the report on the results of an unscheduled inspection does not apply to administrative acts.
Consequently, the report on the results of the unscheduled inspection is not subject to challenge in court. In addition, according to the results of the disputed audit, the Company was brought to administrative responsibility under Article 164, part 2 of the Administrative Code, which provides for liability for non-compliance with restrictions by a natural monopoly entity, as well as non-fulfillment or improper fulfillment by a natural monopoly entity of obligations established by the legislation of the Republic of Kazakhstan on natural monopolies.
By the decisions of the interdistrict administrative court of the city of Nur-Sultan, which entered into force, the Company was held accountable under the specified article of the Administrative Code with the imposition of an administrative fine.
Circumstances that are not included in the subject of evidence in a case due to their widespread popularity in a certain territory, including the court and the persons involved in the case, are generally recognized as well-known.
In such circumstances, the decision of the appellate instance is subject to cancellation with the return of the Company's claim based on subparagraph 11) of paragraph 2 of Article 138 of the CPC. Also, the conclusions of the court of appeal on the cancellation of the order of April 15, 2022 are unfounded.
The norms of paragraph 18 of Article 4 of the Law "On Natural Monopolies" (hereinafter referred to as the Law) define that a natural monopoly is a state of the market for goods, works, and services in which the creation of competitive conditions to meet demand for a certain type of goods, works, and services is impossible or economically impractical due to the technological features of the production and provision of this type of goods, works, services.
In accordance with paragraph 1 of Article 8 of the Law, the authorized body carries out state regulation of the activities of natural monopoly entities in accordance with the Entrepreneurial Code of the Republic of Kazakhstan (hereinafter referred to as the PC), this Law and the legislation of the Republic of Kazakhstan.
In accordance with paragraph 7-1 of Article 8 of the PC, the authorized body develops and approves standard forms of technical specifications for connection to utility networks. The authorized body is the state body responsible for the management of the relevant areas of natural monopolies, which has the right to submit to the natural monopoly entity an order to eliminate violations of the legislation of the Republic of Kazakhstan on natural monopolies.
According to subparagraph 2 of paragraph 1 of Article 30 of the Law, when exercising state control in the areas of natural monopolies, the authorized body issues an order to eliminate violations of the legislation of the Republic of Kazakhstan on natural monopolies.
Thus, the Department has the right to issue an order to eliminate violations of the legislation of the Republic of Kazakhstan on natural monopolies.
The conclusions of the court of appeal that the defendant is not one of the state bodies endowed by the state with the functions of technical regulation of the activities of natural monopoly entities are untenable.
In this regard, the conclusions of the court of first instance that the Department lawfully issued the appealed order within its competence and in accordance with paragraph 1 of Article 31 of the Law are justified.
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