GILS Commercial contracts: Kazakhstan
GENERAL CONTRACT LAW REGULATIONS
KAZAKHSTAN
1. Is it mandatory for a commercial contract to be governed by local law?
According to Article 1112 of the Civil Code of the Republic of Kazakhstan (the “CC RK”) contract shall be regulated by the law of the country selected by agreement of the parties unless otherwise provided in the legislative acts of the Republic of Kazakhstan (RoK).
The above provision applies to contracts with a foreign element, i,e,, in the event if a commercial contract is executed between the resident and nonresident of the Republic of Kazakhstan. A commercial contract between the residents shall be governed by the law of RoK by default.
2. What language applies to commercial contracts on the territory of the Country? Is it possible to establish the prevailing language?
In accordance with the legislation, all transactions in the Republic of Kazakhstan executed in written form shall be presented in the state and Russian languages, with a translation into other languages provided where necessary. Transactions with foreign individuals and legal entities executed in written form shall be presented in the state language and in a language acceptable to the parties.
3. Is it possible to use electronic signatures for the execution of commercial contracts between private entities?
The Law of the Republic of Kazakhstan on Electronic Documents and Electronic Digital Signature (EDS) confirms that electronic documents authenticated by “electronic digital signatures” compliant with the law, are equal to handwritten documents.
Also, the CC RK allows the execution of contracts in the form of electronic documents using EDS.
Additionally, it is allowed to use facsimile when concluding contracts and special services such as DocuSign stating the relevant provision in the contract.
4. Are there any requirements to the form of a commercial contract? Are there any standard forms of commercial contracts?
The СС RK mandates that certain commercial contracts be concluded in written form. However, in general, there is no prescribed standard form for such contracts.
In the meantime, standard forms of commercial contracts might be used in the procurement procedures regulated by the relevant laws of the RoK.
5. Are there any types of preliminary agreement or “gentleman’s agreement” in the Country?
In the Republic of Kazakhstan, "gentleman's agreement" or other informal arrangements do not have legal force. Such agreements are not recognized by law as binding, and failure to comply with them does not entail legal liability. To make any agreement legally binding between the parties, a contract must be concluded in accordance with Kazakhstani legislation.
In the meantime, the CC RK states the possibility of executing a preliminary agreement, the subject of which is the conclusion of the main agreement in the future.
6. What currency is allowed to be used for commercial contracts in the Country?
According to the legislation, monetary obligations within the territory of the Republic of Kazakhstan must be denominated in tenge. However, they may be expressed in foreign currency if such currency transactions are permitted. The Law on Currency Regulation provides that residents may conduct transactions with non-residents in national and/or foreign currency by mutual agreement, in accordance with the currency legislation of the Republic of Kazakhstan.
7. Are there options for the limitation of liability of a party under the commercial contract?
Under the legislation of the Republic of Kazakhstan, certain limitations of liability may be applied to specific types of commercial obligations or activities. These limitations can take various forms, such as capping compensation to actual damages, setting a maximum amount recoverable for a breach, or allowing recovery of only liquidated damages while excluding other types of losses resulting from the breach.
However, limitation of liability options may apply depending on the type of contract as well as the breach itself.
8. Is the concept of release from liability or indemnity enforceable in the Country?
Kazakhstan laws do not envisage the principle of indemnity (including all associated provisions imposing an obligation on the party to release the other party from liability e.g. hold harmless, defend or indemnify the other party).
As a general rule, damages incurred by a person as a result of the violation of his/her right are subject to full compensation. However, as noted before, limitations of liability may apply.
9. Is there the concept of “consequential damages” in the Country? Can it be excluded from liability?
In the Republic of Kazakhstan, there is no specific legal definition of "consequential damages" in the legislation. The primary form of liability is compensation for damages resulting from a breach of obligation. According to the Civil Code of Kazakhstan, damages include both actual loss and lost profit. This means that compensation may cover both types of damages. In the meantime, the parties have the right to limit compensation for damages to actual losses and exclude lost profits.
10. Is the concept of “force majeure” recognized by the legislation and courts on the territory of the Country?
In general, the concept of "force majeure" is recognized by the legislation and courts in the Republic of Kazakhstan. It is considered a valid ground for exemption from liability under the current legislation.
11. Are export control provisions due to the economic sanctions specified by legislation and enforceable in the Country?
In the legislation of the Republic of Kazakhstan, such provisions are specified in the Law on Control of Specific Goods, which regulates export control. The provisions of this law are mandatory and enforceable.
However, there are no approved economic sanctions against any third country which is subject to export control rules.
12. Is there a mandatory dispute resolution regime in the Country for commercial contracts?
There is no mandatory dispute resolution regime in the Republic of Kazakhstan. The parties are free to choose either state courts or arbitration.
13. May the arbitration (local or foreign) be chosen by parties as a method of dispute resolution?
The parties may state in the contract that all commercial disputes arising thereof may be referred to arbitration, both local and foreign.
The arbitration award issued on the territory of a foreign state is enforceable based on the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Author: Darya Zhanysbayeva, Partner
