From 1999 to 2022: A forced nationalization in Kazakhstan, an award under the Energy Charter Treaty in Sweden, and a subsequent multijurisdictional strategy designed to frustrate the payment of the Award.
Tristan Oil Owners' Original Investment in Kazakhstan
Moldovan businessmen Anatolie Stati and Gabriel Stati (together, the Statis) begin investing in Kazakhstan by acquiring shares in the Kazakh oil companies Tolkynneftegaz LLP (TNG) and Kazpolmunay LLP (KPM), which subsequently became the guarantors of Tristan Oil Notes.
Tristan Oil Issues Eurobonds
Tristan Oil issues Eurobonds to fund capex projects onshore. The notes were guaranteed by TNG and KPM. The intention was for these bonds to be paid from cash flows generated by these companies. One of the largest of the bondholders was a US-based fund called Black River Asset Management, from which later Argentem Creek Partners spun out from.
Eight companies, including KMG, place indicative offers on KPM and TNG
KazMunaiGas (KMG), the state-owned Kazakh energy company, try to buy KPM and TNG. They offer an amount which under-values the company, at US$ 754 million. Eight other companies, including Korean National Oil Corporation (KNOC), also place indicative bids. KNOC place the highest bid at $1.55 billion (twice what KMG are prepared to pay), while the average for all bids received stands US$ 1.05 billion. The Kazakh-owned KMG bid is 25% less than this.
Moldovan President Asks Kazakh President to Investigate Statis
Moldovan President Vladimir Voronin sends a letter (later leaked to Moldovan media) to Kazakhstan’s President Nursultan Nazarbayev asking the Government of Kazakhstan to thoroughly investigate the Statis’ business activities in the country.
President Nazarbayev Orders Investigations of the Statis’ Businesses in Kazakhstan
President Nazarbayev issues an order, including the phrase “at the request of the Moldovan party,” instructing Deputy Prime Minister Umirzak Shukeyev and the Head of the Financial Police Sarybai Kalmurzayev to “thoroughly investigate” the Statis’ businesses in Kazakhstan. Kazakhstan later disputes the significance of this document and argues that President Nazarbayev was following standard diplomatic protocol in responding to the Moldovan request.
Several Government Agencies Begin Inspections and Tax Audits of KPM and TNG
Instructed by the Financial Police, the Ministry of Energy and Natural Resources, the National Bank of Kazakhstan, the Tax and Customs Committees and several further government agencies conduct inspections and tax audits of the Statis’ oil and gas companies KPM and TNG. The Swedish arbitration panel later accepts that the cumulative effect of these audits was “co-ordinated harassment.”
Kazakhstan’s Financial Police Allege That KPM and TNG Do Not Have the Correct Licenses
The Financial Police claim that KPM’s and TNG’s pipelines are of a particular category – “main/trunk” pipelines – for which the necessary licenses were not obtained. Subsequently, the Financial Police ordered a new audit to determine the income from the operation of these pipelines. Whether KPM and TNG were indeed operating main/trunk pipelines or another category of pipeline (“field pipelines”) becomes a key pretext for harassment of KPM and TNG. The Swedish Arbitral Panel later concludes that the two companies’ use of the pipelines did not constitute a crime and that Kazakh authorities who claimed otherwise had been “compelled” by the Financial Police to make these statements.
Tax Authorities Determine the Amount of “Illegal Profit” from KPM’s and TNG’s Pipeline Operations
The Tax Committee calculates that the “illegal profit” from the operation of the supposed main/trunk pipeline exceeded 78.7 billion Tenge for KPM and TNG (c. US$ 662 million at the time).
Financial Police Open a Criminal Investigation Against KPM
The Financial Police open a criminal investigation against KPM arguing that KPM has been operating a main/trunk pipeline and is doing so without the correct license. The Swedish arbitration panel later finds that this is false, and that the “discovery” by the Financial Police about this nature of this pipeline should instead be described as a “reclassification” by the Kazakh authorities.
Financial Police Interrogate KPM’s and TNG’s Senior Management and Employees
On December 24th, the Financial Police begin interrogating KPM and TNG employees, and issue a summons for Anatolie Stati. In the following days, KPM’s General Manager, Sergiu Cornegruta and the Deputy Manager General for Finance for KPM and TNG, Veaceslav Stejar, are questioned. Cornegruta claims to have been denied the right to legal counsel, which Kazakhstan disputes. He is released later that day.
Other Kazakh Agencies Dismiss Financial Police Findings About the Type of Pipeline
Experts at the Ministry of Justice, Ministry of Energy and the state-owned KazMunaiGaz (KMG) conclude that KPM’s and TNG’s pipelines are not main/trunk pipelines as alleged by the Financial Police.
Fitch Issues a Rating Watch and Moody’s Downgrades Tristan Oil
Fitch issues a rating watch for Tristan’s long-term default rate and Moody’s reports a downgrade of Tristan Oil. Both agencies cite the ongoing dispute with the Kazakh authorities and the criminal investigation against KPM.
TOTAL shows interest in purchasing KPM and TNG
TOTAL demonstrates an interest in the purchase of KPM’s and TNG’s assets. Later, following discussions with the Kazakh authorities, TOTAL withdrew from the bid process, allegedly for technical reasons.
Kazakhstan Presents KPM And TNG With US$ 62 Million in Unpaid Taxes and Penalties
After comprehensive tax audits, KPM and TNG are presented with approximately US$ 62 million in back taxes and penalties, based on well drilling costs for 2005 to 2007.
The Statis Meet with Kazakhstan’s Ministry of Energy to Discuss a Solution to the Dispute
The Statis attend a meeting chaired by the Ministry of Energy’s Executive Secretary, Askar Batalov to discuss Kazakhstan’s actions against KPM and TNG. The Statis say that they were assured that the ongoing investigations would be cancelled, and the operating pipelines would be correctly classified as so-called “field pipelines” rather than main/trunk pipelines. Kazakhstan disputes that this happened, but the Swedish arbitration panel later finds that as Kazakhstan had made commitments to allow the Stati businesses to continue to operate at this meeting, and then broke their promise, the authorities were in breach of the ECT.
Independent Russian Experts Contradict Kazakh authorities on Categorization of KPM’s and TNG’s Pipelines
A team of five experts from the Russian Science and Research Institute for the Construction and Operation of Pipelines and Energy Facilities state that the KPM and TNG pipelines in question are not main/trunk pipelines as Kazakhstan’s Financial Police claims.
Financial Police Arrest KPM’s General Manager
KPM’s General Manager Cornegruta is arrested and interrogated for a second time by the Financial Police. Criminal proceedings are opened against him for supposed “illegal entrepreneurial activity”.
KPM And TNG Employees File Complaints Against the Financial Police
900 KPM and TNG employees sign a letter to the Governor of the Mangystau Region expressing their concerns about the Financial Police’s harassment of their companies.
KPM’s and TNG’s Assets Are Frozen and Subsoil Licenses Withdrawn
Amid efforts by the Statis to sell their Kazakh operations, KPM’s and TNG’s subsoil licenses are withdrawn and their other assets frozen, including the shares of both companies, KPM’s field oil pipeline, TNG’s field gas pipeline and TNG’s condensate pipeline. The arbitration panel in Sweden later finds that “the evidence that Kazakhstan’s conduct interfered with [the Statis] ability to sell their investments in KPM and TNG is overwhelming.”
Financial Police Conduct Twelve Hour Search of KPM’s and TNG’s Offices
The Financial Police arrive at KPM’s and TNG’s offices at 4:20 pm on May 6 looking for KPM’s and TNG’s senior management since criminal proceedings have been initiated against them. By this time, most senior managers of KPM and TNG had decided to leave Kazakhstan having been charged and fearing arrest. The search of the premises ends at 4:15 a.m. on May 7.
Anatolie Stati Asks Nazarbayev to Release KPM’s General Manager and End the Dispute
Anatolie Stati writes a letter to President Nazarbayev requesting the release of KPM’s General Manager, Cornegruta, the protection of KPM’s and TNG’s former and current staff, as well as an end to the ongoing dispute. The release of Cornegruta was not granted. He later escapes Kazakhstan’s jail and flees the country. Stati also states his intention to begin arbitration proceedings, although Kazakhstan denies this happened.
Kazakh Authorities Consider a Buyout of KPM and TNG
Documents show that in early June 2009, Kazakhstan’s Prime Minister Karim Massimov, the Ministry for Energy, the Ministry of Justice, the Ministry of Finance, and Samruk-Kazyna, Kazakhstan’s sovereign wealth fund are considering a buyout of KPM and TNG. Kazakhstan disputes this document’s reliability.
Financial Police Announces Prosecution of KPM’s and TNG’s Managers
The Financial Police announces that four former and current managers of KPM and TNG will be prosecuted for making “illegal profits” of 147 billion Tenge (c. USD 980 million).
Kazakh Expert on Energy Law Also Confirms KPM Pipelines Are Not Main/Trunk
Kazakh energy law expert Professor Medet Suleymenov issues an expert legal opinion that KPM’s pipelines are not main/trunk pipelines.
Financial Police Begin Harassing Wife and Attorney of KPM’s General Manager
Cornegruta’s wife as well as his lawyers are chased from their car and filmed by a Financial Police Officer. Kazakhstan does not dispute this.
Russian Experts Confirm Once Again that Financial Police Have Misidentified the Pipelines
The Russian Science and Research Institute for the Construction and Operation of Pipelines and Energy Facilities confirms for a second time that KPM’s pipeline is not a main/trunk pipeline, stating that the report of the Kazakh Ministry of Justice is unfounded and “cannot serve as a ground to consider KPM’s pipeline as a main pipeline”.
The Statis Receive Multiple Offers to Sell KPM and TNG
Several companies demonstrate an interest in the purchase of KPM and TNG as the Statis decide to attempt selling their businesses in Kazakhstan due to the increasing tensions with the authorities. One of these companies is Kazakh-owned Starleigh which initially bids US$ 450 million before shortly thereafter dropping the bid first to US$ 350 million and then to US$ 50 million including a buyout of the noteholders. The Statis refuse the latest offer. Another company, Grand Petroleum, presents an offer to purchase KPM and TNG for US$ 1.15 billion. Grand Petroleum is owned by the wealthy and politically connected Assaubayev family.
KazMunaiGaz Presents Offer to Statis and Tristan Noteholders to Buyout Interests
The Statis meet KMG representatives in Amsterdam, where they are also presented an offer of US$ 20 million for their equity interests related to Tristan Oil. The Statis refuse the offer. Prior to the meeting, the Statis meet with Tristan’s main noteholders, who tell the Statis that KMG has now offered them just 25 cents on the dollar to purchase their interests. The offer is declined.
Kazakh Court Orders Freeze of KPM’s Bank Accounts and Warns of Criminal Action
The Chief of the Aktau Territorial Department of Judicial Executors issues a court order to freeze several of KPM’s bank accounts and sends a formal warning to KPM of criminal responsibility if they fail to comply. The seized accounts include two accounts with Kazkommertsbank, forty one accounts with Kazkommertsbank, and nine accounts with Halyk Bank of Kazakhstan.
Cliffson Company Agrees to Buy TNG and KPM
The Statis and Cliffson Company S.A. agree on the sale of 100% of the shares and interests in TNG and KPM. The total value of the agreement, including the buy-out of the companies’ noteholders, exceeded US$ 920 million. The deal with Cliffson, a company owned by the Assaubayev family, originated out of the offer made by Grand Petroleum in November 2009. One condition of the agreement is that Kazakhstan’s Ministry of Oil and Gas grants permission and waives the State’s pre-emptive right to purchase TNG and KPM.
The Ministry of Oil and Gas Requests Further Documents on Statis’ Application for the Cliffson Sale
The Ministry responds to an application made by the Statis for the waiver of pre-emptive purchase rights for the Cliffson sale by requesting additional information regarding the terms of the transaction and the financial and technical abilities of Cliffson. The Ministry highlights that based on Kazakhstan’s seizures of TNG’s and KPM’s assets, transfers of their shares are forbidden and concluded that the transaction would only be approved if TNG and KPM satisfied the requirements necessary to release the attachment of their shares.
The Statis Submit Requested Information on the Cliffson Sale to the Ministry and are Informed That Cliffson Had Already Backed out of the Sale
The Statis respond to the information requests by the Ministry of Oil and Gas regarding the Cliffson sale by submitting further documentation. At this point however, the Statis learn that Cliffson already submitted a letter to the Ministry stating that it will refuse to purchase TNG’s and KPM’s interests as set out in their 13 February agreement (see above).
Kazakhstan’s Prime Minister Orders Multiple Unscheduled Inspections of KPM and TNG
On the order of Kazakhstan’s Prime Minister Massimov, at least seven further government agencies conduct unscheduled inspections of KPM and TNG together with the Financial Police. Ostensibly, the purpose of these inspections is to determine whether KPM and TNG are in compliance with subsoil use legislation, environmental protection legislation and immigration legislation. The Statis and Kazakhstan dispute various aspects of these inspections.
Statis Ask KPM and TNG Management to Leave Kazakhstan as Concerns about Further Arrests Grow
Following a further inspection of KMG/TNG premises conducted by the Financial Police, the Statis recommend that KPM’s and TNG’s middle management now leave Kazakhstan as concerns of further arrests grow.
Kazakhstan Cancels KPM’s and TNG’s Subsoil Licences and Seizes Tristan Oil Assets
Kazakhstan strips KPM and TNG of their Subsoil Licences, and without compensation transfers their assets to Kazakhstan’s state-owned oil and gas company KazMunaiGaz. The ECT arbitration panel later finds that “it is indisputable that Kazakhstan directly expropriated [the Statis] investments.”
The Stati Parties Launch a Legal Battle in Stockholm under the ECT
In an effort to recover their substantial losses suffered as a result of the expropriation of their assets, the Stati Parties file a claim against the Republic of Kazakhstan under the auspices of the Energy Charter Treaty (ECT) before an international arbitration tribunal constituted under Swedish arbitration rules.
Sharing Agreement between the Stati Parties and the Bondholders
A sharing agreement between Tristan Oil’s bondholders and the Stati Parties is signed.
This agreement stipulates that any future recovery under the then pending ECT arbitration shall be split with approximately 70% of the future award proceeds going to the bondholders, and the remaining 30% to the Stati Parties. The Stati Parties agree to take the lead in enforcing the future award.
The Stati Parties Secure an Arbitral Award Requiring Kazakhstan to Pay Compensation of More Than US$ 500 Million
The Tribunal holds that Kazakhstan has violated its obligations under the ECT and awards the Stati Parties damages of approximately US$ 500 million, plus costs and interest.
“[Kazakhstan’s] measures, seen cumulatively in context to each other and compared with the treatment of the Claimants’ investments before the Order of the President of the Republic [Nursultan Nazabayev] on 14/16 October 2008, constituted a string of measures of coordinated harassment by various institutions of [Kazakhstan]. These measures must be considered as a breach of the obligation to treat investors fairly and equitably, as required by Art 10(1) ECT”.
The Award is Upheld by a Swedish Appellate Court
The Svea Court of Appeal in Sweden upholds the award in full by dismissing all of the challenges (including based on the fraud allegations) brought by Kazakhstan against the award and refuses the right to appeal its judgment to the Swedish Supreme Court.
Pre-Judgment Attachments Levied on Kazakhstan’s Property in Luxembourg
The bailiff in Luxemburg places a freeze on Kazakhstan’s 40% stake in Eurasian Resources Group, formerly publicly listed company ENRC, which was taken private in 2013 valued at £3.1 billion. In addition, dividends owed to Kazakhstan by ERG in the sum of US$ 48 million are frozen as a result of this attachment.
Swedish Court Grants Attachment of Kazakh State Assets in Sweden
The Stockholm District Court allows the Stati Parties to attach any Kazakh state assets on Swedish soil as an enforcement measure under the award.
Dutch Court Grants a US$ 5.2 billion Attachment of Kazakhstan’s Stake in the Kashagan Oil Field
The Amsterdam District Court grants a US$ 5.2 billion asset attachment of Kazakhstan’s stake in the Kashagan oil field, held via the sovereign wealth fund JSC Samruk-Kazyna’s (Samruk-Kazyna) 50% shareholding in the Dutch entity KMG Kashagan B.V., as an enforcement measure under the award.
The Kashagan oil field is one of the largest offshore oilfields in the Caspian Sea. The international consortium that has developed the field includes Eni, Royal Dutch Shell, Total, ExxonMobil, China National Petroleum Corporation, and Inpex.
Brussels Court Sanctions an Attachment Order Targeting National Fund Assets Held by BNY Mellon
The Brussels Court of First Instance makes an attachment order as sought by Stati Parties. The said order was served on BNY Mellon as global custodian of Kazakhstan’s National Fund assets leading to BNY Mellon freezing US$ 22.6 billion in assets of the National Fund (comprising about 40% of the Fund’s entire portfolio).
This attachment is believed to be the largest in legal history.
The Swedish Supreme Court Upholds the Award
The Swedish Supreme Court upholds the Award for the first time and rejects Kazakhstan’s extraordinary review application against the Svea Court of Appeal judgment from December 9, 2016.
Dutch Court Upholds the Kashagan Shares Attachment
Swedish Court Confirms Attachment of Kazakh State Assets in Sweden
The Stockholm District Court upholds its previous decision from August 21, 2017 allowing the Swedish bailiff to levy attachments on Kazakh state property on Swedish soil by dismissing Kazakhstan’s challenges to the original ruling.
U.S. Federal Court Confirms the Award
The federal district court in Washington, D.C. rules that the Award is valid and enforceable as a binding U.S. judgment following an application by the Stati Parties to confirm the award on U.S. soil. In doing so, the U.S. court rejects the fraud allegations brought forward by Kazakhstan.
Kazakhstan Loses Appeal Against the Belgian Attachment Order
The Brussels Court of First Instance rejects Kazakhstan’s and NBK’s appeals against the original attachment order with respect to the National Fund assets held by BNY Mellon granted on October 11, 2017. With the Stati Parties’ consent, the Court reduces the attachment value from US$ 22.6 billion to US$ 530 million given the then size of the award.
The Stati Parties Discontinue the Award Recognition Proceedings in England
The Court of Appeal in England allows the Stati Parties to discontinue the English award proceedings for recognition of the award, after the High Court had initially granted Kazakhstan’s application for a trial based on the fraud allegations.
The Rome Court of Appeal Recognizes the Award
The Rome Court of Appeal recognizes the Award in Italy, dismissing all of Kazakhstan’s challenges to the award (including based on the fraud allegations).
U.S. Federal Court Tosses Kazakhstan’s RICO Complaint
The federal district court in Washington, D.C. dismisses Kazakhstan’s complaint against the Stati Parties filed pursuant to the U.S. Racketeer Influenced and Corrupt Organizations (RICO) Act by describing this lawsuit as “ill-advised” and “an improper use of the auspices of this Court to revive and prolong a dispute that is over”.
U.S. Appellate Court Confirms the Award
The U.S. Court of Appeals for the District of Columbia Circuit confirms the previous court ruling from March 23, 2018 that the award is valid and enforceable as a binding U.S. judgment. The ruling states that: “We find that it was not an abuse of discretion for the District Court to deny Kazakhstan’s motion because the District Court based its ruling on multiple valid grounds. We further agree with the District Court that Kazakhstan improperly presented new facts in its motion for reconsideration that it had not introduced in its original motion to supplement.”
As a result of this ruling, any non-state immune Kazakh state assets on U.S. soil become amenable to attachment and foreclosure by the Stati Parties.
Dutch Appellate Court Confirms the Kashagan Shares Attachment for a Second Time
Swedish Court Dismisses Appeals Against US$ 93 Million Attachment Made by the Swedish Bailiff
A District Court in Stockholm dismisses Kazakhstan’s and NBK’s separate appeals against various attachment orders made by the Swedish bailiff concerning Kazakh state property in Sweden.
The assets in question represent proceeds of shareholdings and related economic rights in various Swedish listed companies owned by Kazakhstan as part of the savings portfolio of the National Fund. These proceeds are currently blocked in the Swedish bailiff’s escrow account in the sum of SEK 790,284,526 (approximately US$ 95 million) pending final resolution of the Swedish award enforcement proceedings before the Swedish Supreme Court.
The Stati Parties Ask the U.S. Court to Sanction Kazakhstan
The Stati Parties file a motion for sanctions and contempt before the federal district court in Washington, D.C. given Kazakhstan’s repeated breaches of its discovery obligations stemming from previous U.S. court orders in the local award enforcement proceedings.
This matter is currently stayed pending Kazakhstan’s compliance with its discovery obligations.
The Luxembourg Court of Appeal Grants Recognition of the Award
The Luxembourg Court of Appeal grants recognition with respect to the award. The Court finds that Kazakhstan has failed to prove the existence of any fraud. This decision is binding and enforceable as a matter of Luxembourg law notwithstanding any further appeals.
Belgian Court Grants Recognition of the Award
The Brussels Court of First Instance grants recognition with respect to the Award, dismissing all of Kazakhstan’s challenges to the award (including based on the fraud allegations).
Swedish Appellate Court Rejects Second attempt by Kazakhstan to Re-litigate the Award
The Svea Court of Appeal in Sweden dismisses Kazakhstan’s second challenge of the award filed on the basis of alleged new evidence. The award is therefore again confirmed to be final, binding and non-appealable for all intents and purposes.
U.S. Appellate Court Confirms Dismissal of the RICO Claim
English Court Rejects National Bank of Kazakhstan’s (NBK) Debt Claim Against BNY Mellon
The High Court of Justice in London rejects NBK’s US$ 530 million debt claim against BNY Mellon for the latter’s refusal to release the National Fund assets frozen as a result of the parallel Belgian enforcement proceedings, by agreeing with the Stati Parties that the decision with regards to BNY Mellon is to be determined by the Belgian courts in due course.
The Swedish Supreme Court Dismisses Kazakhstan’s second application to overturn the Award
The Swedish Supreme Court upholds the award for the second time, dismissing Kazakhstan’s application to overturn the December 9, 2016 ruling of the Svea Court of Appeal filed on the basis of alleged new evidence. The award is therefore once again confirmed to be final, binding and non-appealable for all intents and purposes.
Kazakhstan Files a Civil Complaint in New York Against Argentem Creek Partners and Its CEO
Kazakhstan files a civil complaint in New York against Argentem Creek Partners and its CEO, alleging that they had been involved in a criminal conspiracy together with the Stati Parties.
Dutch Appellate Court Grants Recognition of the Award
The Amsterdam Court of Appeals grants recognition with respect to the award, dismissing all of Kazakhstan’s challenges to the award (including based on the fraud allegations).
U.S. Federal Court Rebukes Kazakhstan for Non-Compliance with Court Orders
The federal district court in Washington, D.C. compels Kazakhstan once again to provide discovery of its assets on a worldwide basis – including assets of various Kazakh state instrumentalities such as NBK and Samruk-Kazyna.
The Judge also rebukes Kazakhstan and its legal counsel for the breaches of the previous U.S. court orders regarding discovery:
“Don’t get me wrong, the Republic of Kazakhstan had every right to litigate the petition to confirm the arbitral award, and they had every right to appeal my decision. But those proceedings are over. These are post-judgment proceedings. And the Republic of Kazakhstan and its counsel needs to get that into their heads because the level of intransigence that we’ve seen to date is not acceptable and it officially ends today.”
Kazakhstan Files a Further Case in Gibraltar Countering the Award through TNG
Kazakhstan induces TNG’s bankruptcy manager to file a further claim in Gibraltar against the Stati Parties in a renewed attempt to dispute the award decision. In this claim, Kazakhstan again alleges conspiracy, fraud and deceit; similar allegations which had already been dismissed by multiple courts in Europe and the USA.
The Dutch Supreme Court Refers Kashagan Field Asset Freeze to Lower Court for Re-Examination
The Supreme Court of the Netherlands sets aside the Amsterdam Court of Appeal’s decision on the attachment of Kazakhstan’s stake in the international consortium developing the Kashagan oil field, held via Kazakhstan’s sovereign wealth fund Samruk-Kazyna, and refers the case back to a lower court (the Hague Court of Appeal) for further consideration. Meanwhile, the Kashagan shares attachment, valued at $5.2 billion, remains fully in place.
Outrider Management joins Kazakhstan as plaintiff against Argentem Creek
Kazakhstan amends its civil complaint in New York against Argentem Creek Partners and its CEO, adding Outrider Management as a plaintiff to the case. Outrider, a small distressed-debt investor based in California, had purchased Tristan Notes with a face value of nearly US$ 48 million between 2009 and 2014 and sold the last of its notes in 2016.
Luxembourg Court Stays Local Attachment Proceedings
The Luxembourg District Court stays proceedings on the validity of the attachments of various Kazakh state assets obtained by the Stati Parties pending the outcome of the criminal proceedings initiated by Kazakhstan in Luxembourg. The attachments in question are estimated to be worth US$550 million and include Kazakhstan’s 40% shareholding in Eurasian Resources Group (ERG) and frozen dividends owed by ERG to Kazakhstan among further receivables. In the meantime, the attachments continue to remain fully in place as a security measure under the award.
Magistrate Judge finds that US asset manager for Kazakhstan’s National Fund should be compelled to produce documents detailing Kazakh holdings
Magistrate Bowler of the United States District Court in Boston has affirmed her Report and Recommendation which finds that State Street Corporation, asset manager for one of Kazakhstan’s sovereign wealth funds, should be compelled to produce certain documents, emails, details of SWIFT payments and other financial records relating to the management and custodianship of Kazakhstan National Fund assets.
The Magistrate’s Report and Recommendation was originally issued in November 2020, but State Street did not immediately comply and instead sought clarification and reconsideration.
Luxembourg Court of Cassation Refers Award Enforcement to Lower Court
The Court Of Cassation of Luxembourg concludes that the lower court incorrectly examined evidence in the award enforcement proceedings, and decides that the case should be re-heard by a different panel of judges at the Luxembourg Court of Appeal. The attachments of Kazakhstan’s assets in Luxembourg remain in place.
A U.S. District Judge declines a bid to halt Kazakhstan’s suit in New York
A Judge in the U.S. District Court for the District of Columbia declines a bid to halt Kazakhstan’s litigation initiated in New York against Argentem Creek and its CEO last year, finding that a court in New York may be better positioned to determine whether Kazakhstan’s claims are precluded.
The Judge previously enforced the arbitral award in 2018 and confirmed again that Kazakhstan is still subject to this valid and binding arbitration award in the United States, and that Kazakhstan’s previous complaint alleging fraud and RICO violations had failed even to state claim, and so had been dismissed.
Argentem Creek Partners Request Dismissal of Kazakhstan’s Complaint
In a letter, lawyers acting for Argentem Creek Partners request dismissal of Kazakhstan’s civil complaint filed in the Supreme Court of the State of New York against the firm and its CEO. They argue that the case is part of Kazakhstan’s continuing attempts to re-litigate the SCC award despite the rejection of its fraud allegations by courts around the world, including the U.S. District Court for the District of Columbia.
Argentem Creek Partners’ lawyers file motion to dismiss “improper collateral attack” on binding award and compel Outrider into arbitration
Lawyers acting for Argentem Creek Partners filed a motion in the United States District Court for the Southern District of New York seeking to dismiss Kazakhstan’s suit, as well as a separate motion to compel Outrider to submit its claims to arbitration.
The motion to dismiss is available here.
The motion to compel arbitration is available here.
National Bank of Kazakhstan Loses Claim for Damages After $22.6 Billion Asset Freeze
The Amsterdam District Court denied a $118 million damages claim brought by the National Bank of Kazakhstan (NBK) against the Stati Parties.
NBK claimed it had suffered severe losses after rulings in a Dutch court and a Belgian court in 2017 led to the attachment of sovereign assets held by BNY Mellon worth $22.6 billion.
The court dismissed the claim in its entirety, arguing that “in this case there is no question of an unlawful attachment leading to risk liability,” and that “it cannot be held that the Stati parties abused their powers”. It also ordered NBK to cover the Statis’ legal costs.
Kazakhstan Suffers Double Defeat in Struggle to Avoid Payment of Tristangate Award
The Brussels Court of Appeal has rejected Kazakhstan’s challenge to a $530 million attachment of assets held via its National Fund with BNY Mellon in Brussels.
The asset attachment, originally at a value of $22.6 billion, is an enforcement measure against Kazakhstan’s continued failure to pay more than $500 million awarded to the Stati Parties by a Swedish arbitral tribunal in 2013. The Stati Parties later agreed to limit the attachment to $530 million, reflecting the approximate value of the Energy Charter Award at the time. The attachment value has since grown with interest to over $540 million.
Lawyers for Argentem Creek Partners re-file a motion to dismiss
Lawyers for Argentem Creek Partners have today re-filed a motion to dismiss, following Republic of Kazakhstan’s decision to amend their original complaint last month.
Kazakhstan’s Former Embassy Property at Risk Over Tristangate
The Stati Parties petitioned the Washington D.C. federal district court for an emergency attachment of the former residence of the Republic of Kazakhstan’s ambassador in the District of Columbia, arguing that it is now used for commercial rather than diplomatic purposes.
The motion asks for an order that the property cannot be sold for the next 180 days and, if the property were to be sold that the proceeds are paid into a designated court escrow account.
Kazakhstan Risks Second Energy Charter Claim over its Refusal to Honour Tristangate Award
The Stati Parties warn Kazakhstan of their intent to initiate a fresh Energy Charter claim against the country over its refusal to honour a fully adjudicated Award. Instead of honouring its obligations under international law, Kazakhstan is pursuing an ‘international strategy of frivolous and abusive litigation’ the notice letter says. The Stati Parties claim that Kazakhstan should be held responsible for the ‘dozens of millions of dollars’incurred over the years in legal fees and expenses related to enforcement of the Award.
The Brussels Court of Appeal upholds challenge brought by Kazakhstan
The Brussels Court of Appeal issued a decision upholding the challenge brought by Kazakhstan against the enforcement of the $545 million Energy Charter Treaty Award in Belgium. The ruling is limited to the Belgian jurisdiction only and does not affect the validity of the award in Sweden.
Swedish Supreme Court upholds $90 million freeze on Kazakhstan National Fund’s assets in Sweden
The Swedish Supreme Court upheld a $90 million freeze on Kazakhstan National Fund’s assets in Sweden. The court ruled that the seized assets representing part of Kazakh National Fund are not protected by sovereign immunity as a matter of international and Swedish law. The Swedish Supreme Court remanded the case to the Svea Court of Appeal for further consideration with respect to other outstanding questions.
Italian Supreme Court Decision Makes Tristangate Award Final, Binding & Non-Appealable
The Supreme Court of Italy rejected an appeal brought by Kazakhstan against recognition of the $544 million Award on the grounds that it was procured by ‘fraud’. Kazakhstan had argued that the Swedish arbitration panel making the original Award and subsequent appeals heard by Swedish judges had not considered its fraud allegations.
The Italian Supreme Court confirmed the appeal court’s finding that this was not the case and that “it appears ex actis that both the Stockholm Court of Appeal and the Swedish Supreme Court were aware of the appeal against the Award for reasons that substantially resemble those that have now been brought before the Court.”
New York District Court Compels Arbitration Of Claims By Outrider Management Against Argentem Creek
A federal judge in New York grants the Argentem parties motion to compel arbitration against plaintiff Outrider thereby dismissing them from Kazakhstan’s vexatious litigation against U.S. investors. The claim was part of Kazakhstan’s efforts to enlist Outrider in its efforts to obstruct payment of the ECT Award.
Stati Parties Challenge Belgian Court Ruling In Defense Of Tristangate Award
The Stati Parties file an appeal against the November 16, 2021 Brussels Court of Appeal decision which upheld a challenge, brought by Kazakhstan, against the enforcement of the $544 million Energy Charter Treaty Award. The cassation appeal is based on the grounds that the Belgian Court of Appeals exceeded its legal authority and failed to give proper recognition under Belgian law to the binding effect of the Swedish court judgments.
Lawyers for Argentem Creek Partners file a motion to dismiss Kazakhstan’s complaint in New York Supreme Court
Lawyers for Argentem Creek Partners and its CEO Daniel Chapman filed a motion to dismiss the claims brought by Kazakhstan in its Third Amended Complaint in the Supreme Court of New York.
The motion argues that New York law provides the Court with multiple, independent grounds to dismiss Kazakhstan’s frivolous lawsuit with prejudice.
The filing suggests the suit is a further attempt by Kazakhstan to relitigate the underlying arbitral award and “downplays or ignores” the decisions of several courts, including in Sweden, the US, the Netherlands, and Italy, which have rejected its arguments.
The motion notes the role of Karim Massimov, Kazakhstan’s former Prime Minister, and Timur Kulibaev, the son-in-law of Kazakhstan’s First President, in initiating “a sham criminal investigation of the Statis… resulting in Kazakhstan developing a pre-textual and arbitrary reason to expropriate the Statis’ assets and causing hundreds of millions of dollars in damages.”
Hague Court Of Appeal cancels attachment of Samruk-Kazyna Jsc’s shares In KMG Kashagan BV
The Hague Court of Appeal cancels the attachment of shares worth around $5.2 billion held by Kazakhstan’s sovereign wealth fund JSC Samruk-Kazyna in KMG Kashagan BV.
The Hague Court of Appeal reversed its previous finding that the shares were not immune from attachment on the basis that they did not have an immediate public purpose. The Stati parties state their intent to appeal the judgement.