The Objective of Administrative Proceedings Is the Fair, Impartial and Timely Resolution of Administrative Cases

The objective of administrative proceedings is to ensure the fair, impartial and timely resolution of administrative cases with a view to effectively protecting and restoring the violated or disputed rights, freedoms and legitimate interests of individuals, as well as the rights and legitimate interests of legal entities in public-law relations.

Administrative proceedings are conducted on the basis of the active role of the court. This principle is based on the court's application of various mechanisms aimed at facilitating the proper resolution of the proceedings. All such actions are aimed at ensuring that the claimant has the opportunity to fully exercise his or her rights.

The active role of the court is manifested in determining the subject matter of the claim, and the court is not bound by the wording of the claims, the text of the statement of claim, or the documents attached thereto or submitted subsequently.

The court assists a party in formulating and/or amending the claims, after providing a preliminary explanation of the legal consequences thereof.

An analysis of cases reviewed under the cassation procedure requires that the courts of first instance pay attention to errors of the following nature.

1) The active role of the court also includes explaining to the claimant the need to clarify the claims. Incorrect formulation of the claims (the subject matter of the claim) by the claimant or his/her representative is permissible. The ultimate purpose of the person's application to the court is not properly ascertained. Such deficiencies should be remedied during the preparatory proceedings and the preliminary hearing.

2) The claimant should be advised to bring the claim against the proper defendant. This will prevent the unjustified joinder of several defendants in a case and save time and costs associated with the proceedings (sending SMS notifications, documents, etc.).

When bringing claims challenging the minutes of the results of a tender, claimants, along with the tender organizer, indicate the DGA — the authorized body — as a defendant, while not challenging its decision or actions (inaction).

3) There are instances of abuse by representatives of claimants who, despite the court's explanation regarding the need to clarify the claims and its indication of the existing deficiencies, refuse to change their position and continue to assert incorrect claims, the resolution of which will not result in effective protection or restoration of the violated rights.

As a result of the actions of such representatives, the claimant fails to obtain the desired result, while the time of other participants in the proceedings and of the court is also unnecessarily expended. In such cases, the provisions of Article 127 of the Administrative Procedural and Procedural Code (APPC) should be applied by imposing a monetary penalty on the person abusing procedural rights.

4) In claims challenging orders of an authorized body declaring a potential supplier to have evaded the conclusion of a contract and including the potential supplier in the Register of Unreliable Suppliers (RUS), JSC “Center for Electronic Finance” is erroneously involved as an interested party;

5) Interested parties whose rights and legitimate interests may be affected by a judicial act are not involved in the proceedings. Courts resolve issues concerning the rights and obligations of customers and potential suppliers who have not been involved in the proceedings;

6) In claims challenging the results of a tender, potential suppliers who subsequently ranked lower in the final results are involved as interested parties, although their results can no longer affect the outcome of the tender;

7) The tender documentation is not requested in full. Pursuant to Article 129 of the APPC, the burden of proof lies with the defendant. The defendant should be required to submit the complete tender documentation, starting with the potential supplier's application to participate in the tender.

8) Where the parties to public procurement proceedings have complied with the pre-trial dispute settlement procedure, the opinion of the Appeals Commission and the minutes of the meeting of the Appeals Commission should be requested. The minutes contain the voting results and the decision of the commission adopted on the basis of the vote;

9) A potential supplier's claim is unjustifiably returned with reference to Subparagraph 1) of Part 2 of Article 138 of the APPC on the grounds of failure to comply with the pre-trial dispute settlement procedure established by law for this category of cases. However, the claimant challenged the tender results before the DGA, while further application to a higher administrative body, in the event of disagreement with the decision of the authorized body, constitutes a right of the potential supplier pursuant to Paragraph 7 of Article 47 of the Law on Public Procurement.

10) Attention should be paid to the time limits for bringing a claim before the court.

Pursuant to Part 5 of Article 136 of the APPC, a person who did not participate in the administrative procedure, but whose rights, freedoms and legitimate interests are affected by an administrative act, may file a claim with the court within one month from the date on which the person learned or could have learned of the adoption of the administrative act, but no later than one year from the date of its adoption.

The one-year period specified in this provision is a preclusive period and is not subject to restoration.

Pursuant to Part 8 of Article 136 of the APPC, the impossibility of restoring the missed time limit for bringing a claim before the court constitutes grounds for returning the claim.

In such a case, consideration of the claim on the merits is unlawful due to the expiry of the time limit for filing the claim, and the claim is subject to return pursuant to the above-mentioned provision of the APPC.

11) When compiling an administrative case file, the case may become unnecessarily voluminous due to the inclusion of duplicate documents. Often, the parties to a case may simultaneously submit the same evidence and documents to the court. In such cases, the judge should return the duplicate documents to the party that submitted them.

By the Courts of Appeal:

1) the circumstances concerning the establishment of the mandatory characteristics of public-law relations and the identification of entities vested with authoritative powers over the other party are not taken into account (in claims brought by potential suppliers against LLP “Samruk-Kazyna Contract”);

2) the claimant is required to comply with a mandatory pre-trial dispute settlement procedure by applying to higher authorities, whereas such person has exercised his or her right by applying to the territorial body of the DGA;

3) pursuant to the second paragraph of Part 3 of Article 1 of the APPC, the provisions of the CPC shall apply in administrative proceedings unless otherwise provided for by the APPC.

Pursuant to Part 7 of Article 429 of the CPC, in cases established by this Code, rulings of the court of appeal that prevent the further progress of a case may be appealed and challenged by way of protest.

The second paragraph of Part 10 of Article 168 of the APPC provides that other rulings of the court of appeal that prevent the further progress of an administrative case may be appealed in cassation proceedings.

Pursuant to Part 3 of Article 138 of the APPC, the return of a claim does not prevent the claimant from filing a claim with the court again, except in the cases specified in Subparagraphs 3), 5), 9), 11), 12), 13), 14), 15) and 17) of Part 2 of this Article, against the same defendant, concerning the same subject matter and on the same grounds.

Based on the legal nature of the contested judicial acts, judicial acts that do not prevent the progress of a case do not fall within the category of judicial acts that prevent the further progress of an administrative case.

Pursuant to Part 2 of Article 169 of the APPC, participants in administrative proceedings have the right to appeal, in cassation proceedings, judicial acts that have not entered into legal force. The procedure, time limits and conditions for cassation appeals against judicial acts that have entered into legal force in administrative cases are provided for in Parts 3 and 6 of Article 169 of the APPC.

In this regard, cassation appeals against the above-mentioned rulings of the courts of first instance and appeal should be returned and may not be accepted for consideration in cassation proceedings.

RETURN OF ADMINISTRATIVE CLAIMS

The principal reason for returning claims for lack of jurisdiction was that the contested administrative act had been issued in electronic form and, therefore, the case was to be considered at the place of residence (location) of the claimant. This rule was introduced into the APPC and, at the initial stage of judicial practice, contributed to an increase in the number of returned claims. A larger number of claims were returned by the court of first instance of Astana, since the central administrative bodies are located in the capital.

Pursuant to Parts 1 and 2 of Article 3 of the APPC, the APPC regulates relations associated with the conduct of internal administrative procedures and administrative procedures, as well as the procedure for administrative proceedings. Participants in the relations regulated by the Code are state bodies, administrative bodies, officials, as well as individuals and legal entities. The subject matter of legal regulation under the APPC is the activity of administrative bodies related to the adoption, cancellation, amendment and execution of a legally authoritative decision aimed at establishing, amending or terminating the rights and obligations of specific persons, as well as the performance of legally significant actions.

Based on the meaning of Paragraph 1 of Regulatory Resolution No. 5, courts should distinguish between disputes arising in the process of selecting a supplier and concluding a public procurement contract with such supplier, the procedure for consideration of which is regulated by the provisions of the APPC, and disputes arising from a public procurement contract, which are considered in civil proceedings.

Courts received claims arising from public procurement contracts, in particular, claims for declaring the following unlawful and cancelling them:

a) the customer's actions in sending a notice of termination of the contract;

b) the defendant's failure to take measures to terminate the contract and the obligation imposed on the defendant to terminate the contract;

c) a notice of unilateral termination of the contract;

d) actions involving the sending of such notice.

The courts justified the return of such claims on the grounds that the disputes were not based on administrative or other authoritative subordination or dependence of one party (the supplier) on the other party (the customer) by virtue of the powers of administrative bodies established by regulatory legal acts. In the present case, the claims asserted concern a dispute over the terms of a contract concluded between the customer and the supplier, which excludes the existence of public-law relations between them.

In such cases, the claims were lawfully returned pursuant to Subparagraph 2) of Part 7 of Article 3 of the APPC, which provides that cases for which the CPC establishes a procedure for proceedings shall not be subject to consideration under the procedure for administrative proceedings.

The claimants challenged the audit report and the audit opinion issued following an internal state audit, and the courts reasonably concluded that such claims should be returned.

It should be noted that, for a short period of time, questions arose regarding the jurisdiction of these disputes due to repeated amendments to Article 19 of the Law on State Audit and Financial Control.

Thus, from 1 to 6 July 2021, this Article provided that the state audit and financial control bodies recognized the results of a state audit conducted by other state audit and financial control bodies, with the exception of documents of internal audit services, in accordance with Paragraphs 2, 3, 4 and 5 of this Article, unless they had been declared unlawful by a court in accordance with the legislation of the Republic of Kazakhstan on administrative proceedings. From 6 July 2021, this provision was amended, transferring such disputes to civil procedural jurisdiction. In the opinion of the authors of this Analysis, this is justified from the standpoint of legal logic, since an audit opinion², in the first case, contains the auditors' findings and recommendations, while an audit report³ contains the results of the audit. At the same time, these documents⁴ do not possess the mandatory criteria of an administrative act.

At the same time, courts should take into account that, pursuant to Subparagraph 1) of Paragraph 2 of Article 5 of the Law on State Audit and Financial Control, one of the measures of financial control is the issuance of a mandatory order requiring all state bodies, organizations and officials to eliminate the violations identified and to consider the liability of the persons who committed them.

In addition, Paragraph 7 of Article 58-4 of the same Law provides for the right to appeal decisions of the Appeals Commission of the authorized body in the field of state audit and financial control.

Challenges against such orders and decisions of the Appeals Commission are conducted under the procedure for administrative proceedings, as are challenges against actions (inaction) of the state audit and financial control bodies and/or their officials⁶, provided that such orders, decisions, actions (inaction) meet the criteria of an administrative act or action (inaction).

Конечно. Ниже — полный перевод на английский язык в официально-юридическом стиле, с сохранением структуры, нумерации и терминологии APPC, CPC и законодательства о государственных закупках.

JURISDICTION OF ADMINISTRATIVE CASES

Pursuant to Part 2 of Article 102 of the APPC, disputes arising from public-law relations provided for by this Code fall within the jurisdiction of courts under the procedure of administrative proceedings.

Paragraph 2 of Regulatory Resolution No. 4 explains that challenges to the results of public procurement, decisions of the authorized body to include a potential supplier in the Register of Unreliable Suppliers (RUS), as well as decisions, opinions, orders and notices of the authorized body issued following an inspection of public procurement, shall be carried out in accordance with the procedure provided for in Part 3 of Article 106 of the APPC, at the place of residence (location) of the claimant.

If, along with a claim seeking to declare the tender results unlawful, the claimant also seeks, on this basis, to invalidate the concluded public procurement contract, such claims shall be considered jointly by the Specialized Inter-District Administrative Court (SMAS), taking into account the requirements of Part 3 of Article 84, Part 3 of Article 155 and Part 2 of Article 156 of the APPC.

The authors of the Analysis draw attention to the fact that the above provision of the Regulatory Resolution has been repeatedly emphasized at operational meetings and seminars held for judges exercising administrative jurisdiction. Nevertheless, there have been instances where claims seeking invalidation of public procurement contracts have been returned, even though such claims were filed jointly with claims challenging the results of public procurement.

Regulatory Resolution No. 4 also provides that, in such cases, with respect to the claim for invalidation of the contract, the claimant is not required to comply with the pre-trial dispute settlement procedure stipulated by the contract.

Claims brought by a potential supplier challenging the actions (inaction) and decisions of the customer, organizer, single organizer of public procurement, commissions, expert, single operator in the field of public procurement, as well as actions (inaction) and decisions of the authorized body and the State Audit and Financial Control bodies, shall be considered by the SMAS.

Claims brought by public procurement organizers and customers related to the application of Subparagraphs 1) and 3) of Part 1 of Paragraph 4 of Article 12 of the Law on Public Procurement, as well as claims arising from the performance of public procurement contracts, shall be considered by the Specialized Inter-District Economic Court (SMES).

Claims challenging a decision of the authorized body declaring a potential supplier an unfair participant in public procurement pursuant to Subparagraph 2) of Part 1 of Paragraph 4 of Article 12 of the Law on Public Procurement shall be considered by the SMAS.

PRE-TRIAL PROCEDURE

The objectives of administrative procedures are: the full realization of the public rights, freedoms and interests of individuals and legal entities; achieving a balance between private and public interests in public-law relations; and strengthening the rule of law in the public-law sphere.

If the law establishes a pre-trial dispute settlement procedure, an application to the court may be filed only after compliance with that procedure (Part 3 of Article 9 of the APPC).

Pursuant to Paragraphs 1 and 5 of Article 91 of the APPC, a participant in an administrative procedure has the right to challenge an administrative act, as well as an administrative action (inaction) unrelated to the adoption of an administrative act, through the administrative (pre-trial) procedure.

Unless otherwise provided by law, an application to the court is permitted after the administrative act or action has been challenged through the pre-trial procedure.

Pursuant to Paragraph 6 of Article 12 of the Law on Public Procurement, if a potential supplier disagrees with the decision of the authorized body declaring it an unfair participant in public procurement as provided for in Part 2 of Paragraph 5 of this Article, such potential supplier has the right, no later than ten business days from the date on which it became aware of its inclusion in the RUS, to apply to the Conciliation Commission in accordance with the procedure determined by the authorized body.

The Conciliation Commission considers an application from a potential supplier that has evaded the conclusion of a public procurement contract and adopts a decision either to exclude or to refuse to exclude such potential supplier from the RUS.

If a decision is made to exclude the potential supplier from the RUS, the customer applies to the authorized body.

The authorized body adopts a decision to exclude the potential supplier from the RUS, taking into account the decision of the Conciliation Commission.

At present, the powers of the Conciliation Commission include consideration of applications from potential suppliers and clarification of the circumstances and validity of the reasons that served as the basis for issuing the order, which may subsequently eliminate the need to bring claims before the court.

Pursuant to Part 5 of Article 91 of the APPC, unless otherwise provided by law, an application to the court is permitted after the dispute has been challenged through the pre-trial procedure.

The Standard Regulation on the Conciliation Commission was approved by Order No. 176 of the Minister of Finance of the Republic of Kazakhstan dated 17 February 2022.

A preclusive period of 60 calendar days from the date of recognition of a person as an unfair participant in public procurement has been established for applying to the Conciliation Commission.

At the same time, there are cases where potential suppliers miss the deadline for applying to the Conciliation Commission and subsequently apply to the court, referring to the loss of the possibility of pre-trial dispute settlement.

Failure to comply with the time limit for applying to the Conciliation Commission gives the potential supplier grounds to believe that it may apply to the court without mandatory pre-trial settlement of the dispute.

The development of such practice may result in potential suppliers abusing their right to judicial protection, as well as an increase in the number of claims filed with the courts.

Part 2 of Article 92 of the APPC provides for the right of a participant in an administrative procedure to submit to the body considering the complaint a petition for restoration of the missed time limit for filing the complaint.

Pursuant to Subparagraph 2) of Paragraph 4 of Article 12 of the Law, the Register of Unfair Participants in Public Procurement is a list of potential suppliers determined as winners who have evaded the conclusion of public procurement contracts.

Paragraph 5 of the same Article provides that the Register of Unfair Participants in Public Procurement referred to in Subparagraph 2) of Part 1 of Paragraph 4 of this Article — namely, potential suppliers determined as winners (potential suppliers ranked second) who have evaded the conclusion of public procurement contracts — is formed on the basis of a decision of the authorized body declaring such potential suppliers unfair participants in public procurement.

Pursuant to Part 3 of Article 43 of the Law, a public procurement contract must be certified by the winner of the public procurement procedure conducted by way of a tender, auction or request for quotations by means of an electronic digital signature within three business days from the date on which a notice accompanied by the draft public procurement contract is received on the public procurement web portal.

Paragraph 1 of Article 44 of the Law provides that if a potential supplier recognized as the winner fails, within the time limits established by the Law, to submit to the customer a signed public procurement contract or, having concluded a public procurement contract, fails to provide security for the performance of the public procurement contract and/or the amount provided for under Article 26 of the Law (if applicable), such potential supplier shall be deemed to have evaded the conclusion of the public procurement contract.

Pursuant to Paragraph 22 of the Rules for the Formation and Maintenance of Registers in the Field of Public Procurement, approved by Order No. 694 of the Minister of Finance of the Republic of Kazakhstan dated 28 December 2015, if a potential supplier recognized as the winner or ranked second fails, within the time limits established by the Law, to sign the public procurement contract through the web portal, such potential supplier shall be automatically included in the Register of Unfair Participants in Public Procurement by a decision of the authorized body adopted through the web portal in the form set out in Annex 5 to these Rules.

Thus, a potential supplier may be recognized as an unfair participant in public procurement:

• if it fails to sign the public procurement contract within three business days from the date on which the notice accompanied by the draft public procurement contract is received on the public procurement web portal;
• if, after concluding the public procurement contract, the potential supplier fails to provide security for the performance of the contract.

The Order of the Authorized Body Is an Encumbering Administrative Act

The Regulatory Resolution explains that, when considering administrative claims challenging decisions of the authorized body to include a potential supplier (supplier) in the RUS due to evasion of the conclusion of a public procurement contract, courts should proceed from the requirements of Paragraph 3 of Article 43 of the Law, which establishes the obligation of the public procurement winner to sign the contract.

If the contract is not signed, the potential supplier must prove that it took all measures within its control to sign the contract but was unable to do so due to objective circumstances beyond its control.

It should be noted that, pursuant to Chapter 2 of the APPC, one of the principles of administrative procedures and administrative proceedings is the proportionality of an administrative act and an administrative action (inaction).

Pursuant to Article 10 of the APPC, when exercising administrative discretion, an administrative body and an official shall ensure a fair balance between the interests of the participant in the administrative procedure and those of society. At the same time, an administrative act and an administrative action (inaction) must be proportionate, that is, suitable, necessary and proportionate.

The provisions of Paragraph 5 of Article 12 of the Law do not establish that a decision of the authorized body declaring a potential supplier to have evaded the conclusion of a public procurement contract is adopted automatically.

Arguments that the contested orders are generated automatically do not comply with the principles of administrative justice, such as fairness and proportionality.

The authorized body is obliged, while maintaining objectivity and impartiality, to ensure that the potential supplier has equal opportunities and conditions for exercising its rights to a comprehensive and complete examination of the circumstances of the administrative case (Part 1 of Article 8 of the APPC).

REGULATORY LEGAL FRAMEWORK

Constitution of the Republic of Kazakhstan;

Civil Code of the Republic of Kazakhstan (CC);

Civil Procedure Code of the Republic of Kazakhstan (CPC);

Administrative Procedural and Process-Related Code of the Republic of Kazakhstan (APPC);

Budget Code of the Republic of Kazakhstan;

Tax Code of the Republic of Kazakhstan;

Law of the Republic of Kazakhstan “On Public Procurement” (Public Procurement Law);

Law of the Republic of Kazakhstan “On State Audit and Financial Control” (Law on State Audit and Financial Control);

Law of the Republic of Kazakhstan “On Legal Acts”;

Law of the Republic of Kazakhstan “On the National Welfare Fund”;

Law of the Republic of Kazakhstan “On Procurement by Certain Entities of the Quasi-Public Sector”;

Rules for Public Procurement, approved by Order No. 648 of the Minister of Finance of the Republic of Kazakhstan dated 11 December 2015 (Rules No. 648);

Rules for the Formation and Maintenance of Registers in the Sphere of Public Procurement, approved by Order No. 694 of the Minister of Finance of the Republic of Kazakhstan dated 28 December 2015 (Rules No. 694);

Rules for Conducting Desk Control, approved by Order No. 598 of the Minister of Finance of the Republic of Kazakhstan dated 30 November 2015 (Rules No. 598);

Rules for Conducting Internal State Audit and Financial Control, approved by Order No. 392 of the Minister of Finance of the Republic of Kazakhstan dated 19 March 2018 (Rules No. 392);

Special Procedure for Public Procurement, approved by Resolution No. 127 of the Government of the Republic of Kazakhstan dated 20 March 2020 (effective until 31 December 2020);

Rules for Public Procurement Using a Special Procedure, approved by Resolution No. 1200 of the Government of the Republic of Kazakhstan dated 31 December 2015 (Rules No. 1200);

Regulatory Resolution No. 4 of the Supreme Court of the Republic of Kazakhstan dated 21 April 2022 “On the Application by Courts of Legislation on Public Procurement” (Regulatory Resolution No. 4);

Procurement Activity Management Standard of the Fund, approved by Resolution No. 31/19 of the Management Board of the Board of Directors of the Fund dated 3 September 2019;

other regulatory legal acts of the Republic of Kazakhstan.

ABBREVIATIONS

Administrative Act – administrative act;

PP – public procurement;

RUS – Register of Unreliable Participants in Public Procurement;

SMAS – Specialized Inter-District Administrative Court;

Administrative Panel – Judicial Panel for Administrative Cases of the Regional Court;

Administrative Panel of the Supreme Court of the Republic of Kazakhstan – Judicial Panel for Administrative Cases of the Supreme Court of the Republic of Kazakhstan;

SMES – Specialized Inter-District Economic Court;

MF – Ministry of Finance of the Republic of Kazakhstan;

Treasury – Treasury Committee of the Ministry of Finance of the Republic of Kazakhstan;

CISA – Committee of Internal State Audit of the Ministry of Finance of the Republic of Kazakhstan;

DISA – Department of Internal State Audit of the Committee of Internal State Audit of the Ministry of Finance of the Republic of Kazakhstan;

SAFC – state audit and financial control. 

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