Challenging an arbitral award An arbitral award may be recognized as violating public order only if, as a result of its execution, actions are committed that are either directly prohibited by law or that damage the sovereignty or security of the State and affect the interests of large social groups.

LLP "Sh", referring to the inconsistency of the Arbitration Award with public policy, appealed to the court with a request for its cancellation. By the ruling of the specialized interdistrict Economic Court of Almaty dated March 14, 2018, the petition was denied. By the ruling of the Judicial Board for Civil Cases of the Almaty City Court dated April 25, 2018, the ruling of the court of first instance was canceled with the resolution of the issue on the merits. The arbitration award has been cancelled. The Judicial Board for Civil Cases of the Supreme Court overturned the ruling of the appellate instance, upholding the ruling of the court of first instance on the following grounds. According to paragraph 1 of Article 53 of the Law of the Republic of Kazakhstan "On Arbitration" (hereinafter referred to as the Law), a request for annulment of an arbitration award is filed with a court in accordance with the civil procedure legislation of the Republic of Kazakhstan. Part 1 of Article 464 of the Civil Procedure Code of the Republic of Kazakhstan (hereinafter referred to as the CPC) stipulates that a request for annulment of an arbitral award may be filed by the parties to the arbitration proceedings, third parties not involved in the case, but in respect of whose rights and obligations the arbitration has decided on the grounds provided by law, within one month from the date of receipt of the award. The Court of First instance, in rejecting the request, proceeded from the absence of legal grounds for the annulment of the Arbitral Award. The Appeals board, canceling the ruling of the court of first instance and resolving the petition on the merits, motivated its conclusions by the fact that the Arbitration Award contradicts public policy. When resolving the LLP's petition for the appointment of a construction and technical expertise, the composition of the arbitrators did not issue a reasoned ruling. However, it is impossible to agree with such conclusions, since they are based on their inconsistency with the circumstances of the case and on the incorrect application of substantive and procedural law.

In accordance with Part 3 of Article 465 of the CPC, the court's duty when considering such petitions is to establish the existence or absence of grounds for annulment of the award by examining the evidence submitted to the court in support of the stated claims and objections. At the same time, the party filing a motion for the annulment of an arbitration award, by virtue of subparagraphs 1) - 6) of paragraph 1 of Article 52 of the Law, is required to provide evidence that: - it contains a decision on an issue not provided for by the arbitration agreement or not subject to its terms, or contains rulings on issues beyond beyond the limits of the arbitration agreement, as well as due to the non-jurisdiction of the dispute to arbitration. If arbitral awards on issues that are covered by an arbitration agreement can be separated from decisions on issues that are not covered by such an agreement, then only that part of the award that contains decisions on issues not covered by the arbitration agreement can be set aside; - one of the parties to the arbitration agreement has been declared legally incompetent by the court or the arbitration agreement is invalid according to the law to which the parties have subordinated it, and in the absence of such an indication – according to the legislation of the Republic of Kazakhstan.; - the party was not properly notified of the appointment of an arbitrator or of the arbitration proceedings, or for other reasons recognized by the court as valid, could not provide its explanations; - the composition of the arbitration or the arbitration procedure did not comply with the agreement of the parties; - there is an effective ruling on a dispute between the same parties on the same subject and for the same reasons, a court decision or an arbitration award or a ruling by a court or arbitration court on the termination of proceedings in connection with the plaintiff's rejection of the claim; - the arbitration award does not meet the requirements for writing and signature provided for in article 47 of this Law.

Contesting an arbitration award An arbitration award may be recognized as violating public order

Meanwhile, such evidence was not provided in the LLP's request for the annulment of the Arbitration Award. The Board agrees with the arguments of the petition that the court of appeal has applied a law that is not applicable. The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is not applicable in the case in question, since: - it is not relevant to the subject matter of the claim of the case under consideration; - According to paragraph 1 of article 1, the Convention applies to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where recognition and enforcement of such decisions is sought. The Partnership and the LLP are residents of the Republic of Kazakhstan. An arbitration award made in the Republic of Kazakhstan will be executed on its territory. The conclusions of the court of appeal that public order was violated during the issuance of the Arbitration Award are not based on the norms of the law. Article 6 of the Law establishes that a party who knows that any provision of this Law or any requirement of the arbitration agreement has not been complied with, and nevertheless continues to participate in the arbitration proceedings without objecting to such non-compliance within the time limit set by the rules of arbitration for this purpose, is considered to have withdrawn waive your right to object. After the rejection of the submitted application for the appointment of an expert examination, the LLP had the opportunity to refuse to continue participating in the arbitration proceedings, but did not exercise its right. This circumstance, according to the above-mentioned rule of the Law, is recognized as a waiver by the party of the right to object. The board recognizes as untenable the conclusions of the court of appeal that the violation of public order is the indication in the Arbitration Award of the concept of "debt" instead of the concept of "losses" specified in the claim. Subitems 1), 2) of paragraph 2 of Article 52 of the Law stipulates that an arbitration award is annulled by a court in the event that it is determined that: - the arbitration award contradicts the public policy of the Republic of Kazakhstan; - the dispute on which an arbitration award has been made cannot be the subject of arbitration proceedings under the legislation of the Republic of Kazakhstan. The specified list of grounds for annulment of the award is exhaustive and is not subject to extensive interpretation.

According to subparagraph 1) of Article 2 of the Law, the concept of public order of the Republic of Kazakhstan is defined as the basis of the rule of law enshrined in the legislative acts of the Republic of Kazakhstan. Based on the analysis, meaning and content of the above legal norms, it should be stated that the public order of the Republic of Kazakhstan should be understood as the fundamental fundamental principles and norms on the economic and social structure established by the state, the main foundations of the rule of law, enshrined in the Constitution and national legislation of the Republic of Kazakhstan. Thus, an arbitration award can be recognized as violating the public order of the Republic of Kazakhstan only if, as a result of its execution, actions are committed that are either directly prohibited by law or that damage the sovereignty or security of the State and affect the interests of large social groups. A different interpretation of legal terms in the absence of the above circumstances cannot be considered a violation of public order. 

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