Disputes Kyrgyzstan Investor: advice from investment experts Disputes Kyrgyzstan Investor: advice from investment experts
Liz Johnson told how to Kyrgyz authorities to behave in court disputes over "Kumtor".
10.31.14 17:10
Marina Skolysheva
Canadian companies Stans Energy Corp. and Centerra Gold Inc. engaged in mining minerals on the territory of Kyrgyzstan. Both companies are now in a difficult relationship with the authorities of the country - one is litigation, the second holds intensive talks on changing stake. In light of these events online resource Kloop.kg published an interview with the Head of Investment Law and Policy Centre for Sustainable Investment at Columbia University, USA, Liz Johnson, who told how to Kyrgyz authorities to behave in all legal disputes around the "Kumtor" and what to do in the future to avoid litigation around the mining companies.
About disputes with Centerra on "Kumtor"
- How to Kyrgyz authorities to achieve the adoption of a new agreement on the "Kumtor", which is discussed in the last two years and in which the parties can not reach a consensus?
- It is very difficult to get the other side to participate in the negotiations, if that party considers that it has secured a favorable (Centerra now fully owns "Kumtor", Kyrgyzstan, in turn, owns 33% Centerra. - Kloop.kg ).
And despite the fact that the new government blames his predecessors in concluding unfavorable and unfair agreements and wants to conclude a new, it is obliged to fulfill the obligations under a previous contract. If only for the conclusion of the new agreement were not used corrupt practices.
The revision of the agreement can be conducted only if corrupt practices were used at the signing of the latest agreement (ie if Kyrgyzstan proves the use of corrupt practices for the signing in 2009, and only in that case, you can request a review of the agreement if the other party refuses revision of the contract. - Kloop.kg ).
Atambayev threatened decisive measures in the arrest of Centerra shares 28
- Can Kyrgyzstan nationalize "Kumtor"?
- The government has full authority to nationalize. However, in this case, the investor has the right to appeal to the Court of Arbitration, and there will be decided amount of payment, and will have to pay. The size of the payment may be more than the profit that the country will get to develop and field production.
If the government expropriates the company, it is, no matter what, should pay compensation. It can not be that the government nationalized something and not paid for it.
If the state refuses to pay compensation, then can be arrested all foreign assets owned by the country - similar to the attachment of property from a person who can not pay compensation to the other party under the judgment.
President Almazbek Atambayev said "drastic measures" if the controversy surrounding the Kumtor will not be solved in favor of KyrgyzstanPresident Almazbek Atambayev said "drastic measures" if the controversy surrounding the Kumtor will not be solved in favor of Kyrgyzstan
- Can Kyrgyzstan withdraw shares from a Canadian stock exchange?
- No, I think that this is impossible. The only solution: Kyrgyzstan side could use the legal issues where there is uncertainty, the uncertainty loopholes that could be investigated and cling to them.
About disputes with Stans Energy
- What should I do to Kyrgyzstan in litigation with Stans Energy?
- Firstly, Kyrgyzstan stands to challenge the decision of the Arbitration Court of the Moscow Chamber of Commerce. You also need to challenge the decision of the Supreme Court of Ontario in the arrest of shares of Kyrgyzstan in Centerra.
KR lost the lawsuit for $ 118 million in international arbitration Kutessayu 52
Another question is whether the jurisdiction of the Moscow Arbitration on cross-border litigation. First, members of arbitration in MTTP believed that had such a right, but the court said the CIS that such competences have no jurisdiction.
By agreement of the parties to arbitration under MTTP may be considered:
disputes from contractual and other civil law relationships arising in foreign trade and other forms of international economic relations;
disputes enterprises with foreign investment among themselves, disputes between their members, as well as disputes with other legal entities of the Russian Federation.
- Is it possible to challenge the decision of the Court of Arbitration?
- Kyrgyzstan can not challenge the decision of the court, but may seek a review of the amount of payments. Since Kyrgyzstan signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, he may apply for reconsideration amount of compensation to a court of that state or city, which decided to arbitration or to the courts of the State in which the prosecution demands compensation .
Simply put, Kyrgyzstan, for example, can refer to one of the Paris courts the decision of the Paris international arbitration in the payment of $ 16.5 million ex-owner of the "Manas Bank" Valery Belokonju to court revised the amount of compensation.
Or Kyrgyzstan can contact one of the Canadian courts for the revision of the compensation of Stans Energy, which needs to pay $ 118 million for the fact that it can not develop the field Kutessay.
The Kyrgyz government is obliged to pay $ 16.5 million Belokonju 36
Kyrgyzstan, according to article 5 th New York Convention may refuse to comply with the court's decision:
if the parties have entered into an agreement which does not comply with the legislation;
or if the party against whom the decision has not been duly notified of the appointment of the arbitrator or of the arbitration proceedings;
or if the award deals which are not covered under the arbitration agreement or clause in the contract, or not to dispute the jurisdiction of the court;
or if the decision was overturned by the competent authority of the country where it was issued
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Kyrgyz authorities have accused Stans Energy Corp. in obtaining mining licenses without production plan and forbade them to carry on the work at the field Kutesay. Who Stans Energy Corp. requires compensation of $ 118 millionKyrgyz authorities have accused Stans Energy Corp. in obtaining mining licenses without production plan and forbade them to carry on the work at the field Kutesay. Who Stans Energy Corp. requires compensation of $ 118 million
- Is it possible to auction the rights to develop the field, around which are continuing litigation?
- It would be better to wait for resolution of the dispute, because then the investor may apply to a court to challenge the outcome of the auction because of continuing disputes.
About dealings with investors
- How to conduct yourself in the future with investors, including those in the mining sector?
- There are many ways to control the various economic spheres. Equity partnership in which the state and the investor will own an equal number of shares in the company - this is not the best choice for the country. Because the state must invest in infrastructure. However, this option is often used by States, since on the one hand they want to earn income, and on the other - to control the company.
The government can save both income and control of the company through regulatory policies.
The Moscow Arbitration Court to consider the case on December 17 Kutessae 2
Income can be obtained through taxes, royalty rates (license fee). A control set by creating an environment where the government can regulate the activities of the management company.
Regulation in the mining industry should be carried out, taking into account the fact that the need to monitor the environment, taking into account the views of local people.
I understand that in order to attract investors need to introduce tax breaks - they love that. But sometimes they can not even invest with tax breaks. Much more important for foreign investors political stability, justice legislation, education level and economic sustainability.