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  • Deal or case news
  • 30-07-2020

After three years of litigation, NautaDutilh has secured another important victory for our clients, the Moldovan investors Anatolie Stati, Gabriel Stati, Ascom Group SA and Terra Raf Trans Trading Ltd, against the Republic of Kazakhstan. On 14 July, the Amsterdam Court of Appeal upheld the recognition and enforcement of the second-largest Energy Charter Treaty award in history, issued by a Stockholm-based arbitral tribunal in December 2013. NautaDutilh worked alongside King & Spalding on this matter. King & Spalding partner Egishe Dzhazoyan commented: “First class team – first class result!”

Aside from the high monetary value of the award, this victory is significant as it demonstrates that the Netherlands is an arbitration-friendly jurisdiction owing to its reliable court system and the ease of enforcement of arbitral awards. The judgment paves the way for realisation of the attached assets, i.e. shares in KMG Kashagan BV. In the words of NautaDutilh partner Kasper Krzeminski, “This decision effectively settles the fraud allegations and public policy objections put forward by Kazakhstan in its attempts to avoid and/or postpone enforcement of the award. It is an important step in the Statis’ efforts and since the shares in Kashagan BV are valued at USD 5.2 billion, the Statis can confidently look forward to satisfaction in full of their claim”.

On 19 and 20 December 2019, NautaDutilh’s Benelux Arbitration Team obtained leave to enforce the arbitral award in Belgium and Luxembourg (click here [link to website article]). In those countries, NautaDutilh successfully secured and maintained various attachments of Kazakh state assets. In Luxembourg, the attached assets comprised USD 48 million in dividends payable to Kazakhstan by Eurasian Resources Group S.a.r.l. as well as Kazakhstan’s 40% direct shareholding in that company, valued at USD 400 million. In Belgium, the attachment covered the National Bank of Kazakhstan’s custody accounts with the Bank of New York Mellon, relating to the savings portfolio of the Kazakh National Fund (valued at USD 530 million, excluding interest).

The arbitration dates back to Kazakhstan's seizure of the Stati parties' petroleum operations in 2010. In 1999, the Stati parties acquired two companies that held idle licences relating to the Borankol and Tolkyn oil and gas fields in Kazakhstan. Over the course of the next decade, they invested more than USD 1 billion, including in the construction of a state-of-the-art LPG plant, to turn the companies into a successful oil and gas exploration and production business. By late 2008, the business had become profitable and had yielded considerable revenue for the Kazakh government. Just when the Stati parties expected to start to receive dividends, more than half a dozen government agencies carried out multiple burdensome inspections and audits of the business which gave rise to allegations of illegal conduct by the Stati parties and their Kazakh companies and criminal prosecution of their managers on trumped-up charges. Kazakhstan challenged the Stati parties' title to their investments, claimed hundreds of millions of dollars in undue taxes and criminal penalties, and ultimately seized and nationalized their operations in July 2010.

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