Return of claims (applications) for compensation of damage caused to the environment

By the rulings of the specialized judicial board, 8 claims of large investors were returned without being accepted into court proceedings. Of these, 6 were returned due to the lack of jurisdiction of the case, 2 due to the non-compliance of the claim with the requirements of the CPC. For example: the claim of the Russian State Institution "Department of Ecology for the West Kazakhstan region" against JSC "K" for compensation for damage caused to the environment in the amount of 1,264,189,637 tenge was returned due to lack of jurisdiction. It is not possible to determine from the materials attached to the application whether the defendant is a major investor. Moreover, the State Institution "Department of Ecology for the West Kazakhstan Region" justified the statement in violation of the environmental legislation of the Republic. Since the dispute does not arise from contractual obligations, it does not fall under the concept of an investment dispute. 4 claims (applications) of a major investor were refused – on the basis of subparagraph 1) of Article 151 of the CPC, applications are not subject to consideration in civil proceedings. LLP "Zh" filed a lawsuit against the State Revenue Administration for the Zelenovsky district of the Department of State Revenue for the West Kazakhstan Region to declare illegal the notification of the elimination of violations and the Department's decision to dismiss the complaint. It follows from the materials attached to the claim that on December 2, 2015, the State Revenue Department sent a notification to the Partnership based on the results of the desk inspection. On January 13, 2016, the Partnership filed a complaint with the State Revenue Department, which refused to satisfy it by letter dated January 27, 2016. Thus, in connection with the taxpayer's sending a complaint to a higher tax authority, the appealed notification is considered executed on the basis of subparagraph 3) of paragraph 2 of Article 587 of the Tax Code and, as a result, terminated.

Return of claims (applications) for compensation of damage caused to the environment

The requirement to declare illegal the decision of the State Revenue Department to dismiss the complaint, set out in the response dated January 27, 2016, is also not subject to consideration in civil proceedings, since it does not entail legal consequences for the Partnership and does not impose obligations by virtue of part 1 of Article 293 of the CPC. Based on the results of the consideration of claims (applications) of the Supreme Court of the Republic of Kazakhstan for 2016, 2 cases were considered with a decision in favor of a large investor. 1) A large investor, Zh LLP, filed a lawsuit against the State Revenue Department of the West Kazakhstan Region to declare illegal and cancel the notification of the results of the tax audit dated December 31, 2015 No. 554. The application was satisfied by the decision of the specialized judicial board dated April 27, 2016. The notification of the results of the tax audit on the additional assessment of the amount of CIT in the amount of 1,211,983,835 tenge and penalties in the amount of 153,959,190 tenge was declared illegal. The state duty of 13,659,430 tenge was collected from the state body. Thus, the investor carries out activities for the extraction and exploration of hydrocarbons on the basis of a Subsoil Use Contract concluded with the State Investment Committee of the Republic of Kazakhstan. The terms of the contract establish the stability of its provisions and the inapplicability to it of legislative changes that worsen the situation of the plaintiff. When issuing a notification on the additional assessment of the CPN amount, the state body indicated that the taxpayer had unlawfully deducted the costs of his own construction from the total annual income. However, during the trial, it was established that when concluding a Subsurface Use Contract, the state granted the investor the right to deduct the costs of its own construction as an investment benefit, which was the basis for satisfying the claim. The Supreme Court of the Republic of Kazakhstan issued a private ruling to the Chairman of the State State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan on violations of legislation by the Department of the State Revenue Committee for the West Kazakhstan Region in order to take response measures. The said decision and private definition were left unchanged by the Judicial Board for Civil Cases of the Supreme Court of the Republic of Kazakhstan. 2) JSC "M" filed a lawsuit against the State Institution "Department of the Committee for Regulation of Natural Monopolies and Protection of Competition in the Almaty region" on the recognition of illegal and cancellation of the act on the results of an unscheduled inspection, regulations. The application was partially satisfied by the decision of the specialized judicial board dated July 27, 2016. The regulations on the cessation of violations of the legislation on natural monopolies and the electric power industry and on the elimination of identified violations were declared illegal and canceled. The dispute was based on an appeal by a major investor against the instructions of a government agency on the issue of non-fulfillment of the terms of the investment agreement and the return of undeveloped amounts. During the consideration of the case, the investor's arguments about the illegality of the actions of the state body were partially confirmed. It was established that the instruction on the investor's failure to comply with the investment program regarding the construction of individual facilities and the return of undeveloped amounts did not correspond to the actual circumstances of the case, since the investment program approved by the state body (with amendments) did not provide for the construction of such facilities.

Return of claims (applications) for compensation of damage caused to the environment

The said court decision was upheld by the Judicial Board for Civil Cases of the Supreme Court of the Republic of Kazakhstan. In 2017, the Supreme Court of the Republic of Kazakhstan reviewed 2 cases with decisions to dismiss investor claims. By the decision of the specialized judicial board dated December 20, 2017, satisfaction of the claim of LLP "A" to the State Institution "Ministry of Investment and Development of the Republic of Kazakhstan" on recognition as illegal and cancellation of the order on early termination unilaterally of the contract was denied. On November 30, 1998, a contract was signed between A LLP and the State Investment Committee of the Republic of Kazakhstan for exploration and subsequent production at identified commercial discoveries in the Akmola region. Initially, the exploration period was defined within five consecutive years. Subsequently, the partnership has repeatedly extended the exploration period. Addendum No. 6 dated April 3, 2015 defined the production period from 2015 to 2020. The total planned volume of financial obligations of the subsurface user under the contract amounted to USD 350,649,900.  The authorized body has repeatedly sent notifications to the applicant about the elimination of violations of contractual obligations. These notifications were based on numerous facts of violations by the partnership of its financial obligations to support research, scientific, technical and experimental design work, training of Kazakhstani personnel, contributions to the liquidation fund, violations of the procurement procedure and documentation, and other deviations from the terms of the contract.

The above violations were the basis for the issuance by the authorized body of an order dated May 26, 2017 on termination of the contract. Rejecting the claim, the court proceeded from the fact that the decision of the authorized body was made on the basis of subitems 1), 4), paragraph 3, Article 72 of the Law "On Subsoil and Subsoil Use", providing for the right of the competent authority to terminate the contract if the subsoil user fails to eliminate more than two violations of obligations established by the contract within the period specified in the notification of the competent authority. subsurface use, as well as when fulfilling less than thirty percent of the financial obligations established by the subsurface use contract for two consecutive years. From the information provided by the authorized body on the volume of fulfillment of financial obligations under the contract, prepared on the basis of the partnership's reports, it follows that of the planned amounts of financing, the actual fulfillment in 2015 was 5%, and in 2016 1.24%. The court also established the existence of outstanding tax debts as of November 3, 2017 in the amount of 58,657,371 tenge. Thus, the arguments of the partnership about the illegality of termination of the contract were found by the court to be unfounded. 

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