Litigation in international courts can be costly to Kyrgyzst Litigation in international courts can be costly to Kyrgyzstan
Portal EurasiaNet.org remembered the main claims of investors.
8/10/14 7:42
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Tendency of the government of Kyrgyzstan to revise agreements with foreign investors may turn to the authorities serious financial consequences. A number of angry investors turned to international arbitration, hoping to receive compensation for a total of nearly $ 1 billion, says EurasiaNet.org .
The main subject of concern for investors - not the validity of their claims to Kyrgyzstan; most are wondering how it will be possible to reclaim already awarded or expected amount of compensation from the insolvent state, having virtually no foreign assets, which would be possible to withdraw on account of payment of sums owed to the plaintiffs.
Under pressure from nine in international affairs in the production of various kinds of claims - on revoked licenses for the development of mineral resources to the selected hotel - Bishkek, established in February of legal representation of the Government Center, which will coordinate the protection of the interests of the state in the courts. Representatives of the center are reluctant to communicate with the press, forcing local media guessing about the size of litigation costs, which the authorities are paying in Moscow, Ontario, Paris, The Hague and other cities. Media representatives also want to know where are the money. According to the Ministry of Justice, the total amount claimed by foreign companies in the Kyrgyz Republic is at the moment (without payment of court costs) $ 925 million (about 13 percent of GDP).
Bishkek will have the unenviable choice of two possibilities: either to pay outstanding claims for losing money (which, for the most part, given the low complexity of the country, is a matter difficult to implement), or do not comply with court decisions (with serious reputational costs). Based on preliminary data, the authorities are inclined to the latter, and offended investors turned their gaze to the only serious foreign asset of the state - the shares in the company Centerra Gold, which operates one of the key industrial enterprises.
July 2, a Moscow court ruled that the payment of the mining company Stans Energy, listed on the Toronto Stock Exchange, the $ 118 million in the action against the Kyrgyz Republic in connection with an active Bishkek license to develop the field of rare earth metals "Kutesay-2." Bishkek, who failed to contest in Moscow eligibility requirements of companies, once again ignores attempts Stans Energy to enforce the court's decision. Moreover, a few weeks after the decision rendered by the court in Moscow Bishkek ruled that the extradition of Stans Energy in 2009, was originally a license unlawful.
In the same ill-fated mining sector matures another lawsuit with potentially far more serious consequences for the government: the Kazakh company Visor Group has a license to develop the second-largest 80-tonne gold deposit "Djerui" through partly owned by her daughter Kyrgyz "Jerooyaltyn" until November 2010, when the license was suddenly withdrawn by the authorities. In March 2013 the company turned to the Visor Washington International Centre for Settlement of Investment Disputes of the World Bank, demanding to recover from the republic more than 400 million dollars. Undertaken in the spring Bishkek attempt to hold a tender for a controversial field failed.
Stans Energy Company ponders how to get the amount claimed from the government, which still refuses to recognize it. "At the moment there is not no sign of willingness to hand [the government] to any constructive steps" - told EurasiaNet.org email Vice President of Corporate Development Stans Energy David Vinokurov. - We can claim for the payment of not only [located abroad] assets, but also the means for both outgoing and incoming transactions. The only thing that we have no right to withdraw, it is the property of a foreign sovereign (the embassy) and military equipment. Everything else is completely legal. "
One of the ways to address the issue of Stans Energy could be the presentation of the rights of the shares of Kyrgyzstan in the Toronto company Centerra Gold, which owns gold mine "Kumtor". Long-standing confrontation over ownership between Bishkek and the Canadian company means that it may not be easy, but the experience of the Turkish company Sistem already proved that all achievable. Claim of Sistem in connection with the seizure in 2005, the luxury hotel in Bishkek was much smaller amount than that of Stans Energy, namely 11 million dollars. But the Ontario Court ruled in 2012 the decision to block the actions of Kyrgyzstan on the Toronto Stock Exchange on the required amount in favor of the company Sistem.
Almost all of the litigation, including the fields "Kutesay-2" and "Djerui", are the result of contracts signed in the corrupt presidency of Kurmanbek Bakiyev, Kyrgyzstan to the officials abut everywhere and at every opportunity. "Do not think that Kyrgyzstan will lose in lawsuits in international courts. In many cases there is involvement [Bakiyev's son] Maxim Bakiyev," - said on July 7 of the Kyrgyz service of Radio Free Europe / Radio Liberty, Justice Minister Almambet Shykmamatov.
What effect this will have an argument in court, will show two trials, persons involved are former partners Bakiyev Jr.. After the April 2010 revolution that toppled Bakiyev's administration, the new authorities were nationalized bank "Manas", owned by the Latvian oligarch Valery Belokonju and "Asia Universal Bank", Chairman of the Board of Directors of which he was a native of Russia, Mikhail Nadel. The authorities justify their actions by saying that these financial institutions allegedly used to launder money stolen from the state in favor of the family of Bakiyev.
As noted in a telephone conversation with EurasiaNet.org Mikhail Nadel, who now lives in Italy, at the end of last year, the team of his lawyers decided to abandon the litigation with the government on an adjacent one case that Bishkek raised to the skies as a victory. The trial is the second claim in the amount of $ 240 million personally in his favor lasts.
"I have no reason to believe that I lose this lawsuit. Legally [nationalization AUB] was pure expropriation - said Nadel. - The government has no money, and I do not expect that it will meet its obligations under international law, but I will do my best to make him pay me to drop for the rest of life. "
Local media can only guess how much litigation on data and another six smaller claims cost the budget of the republic. As previously reported, "WB" director of the Center for legal representation at the government Timur Shambet, quotations of foreign lawyers are "500-600 dollars an hour" (without specifying how many hours of legal advice is required the country). (The Center of legal representation refused to talk with EurasiaNet.org). In December last year, the then Prime Minister of Kyrgyzstan Jantoro Satybaldyev told the media that the attorneys' fees only in litigation to arbitration with the Turkish company Sistem cost the state $ 2 million