GILS Construction and Infrastructure: Kazakhstan

KAZAKHSTAN

1. What types of design and construction work require a license in your country?

In accordance with the Law of the Republic of Kazakhstan "On Permits and Notifications" dated May 16, 2014, No. 202-V in the Republic of Kazakhstan, the following types of project and construction activities require a license:

A license for survey activities is granted for:

• Engineering and geodetic work.
• Engineering-geological and engineering- hydrogeological work.

A license for design activities is granted for:

• Urban planning design (with the right to design for urban rehabilitation of areas with historical buildings, excluding scientific restoration work on historical and cultural monuments) and planning.
• Architectural design for buildings and structures (with the right to design for architectural restoration work, excluding scientific restoration work on historical and cultural monuments), including master plans of facilities, engineering preparation of the territory, landscaping, and terrain organization.
• Construction design (with the right to design for major repairs and/or reconstruction of buildings and structures, as well as strengthening structures for each of the works listed below) and engineering.
• Design of engineering systems and networks.
• Technological design (development of the technological part of construction projects) for residential and civil buildings.
• Technological design (development of the technological part of construction projects) for industrial facilities.
• Technological design (development of the technological part of construction projects) for infrastructure facilities in transport, communication, and communications.
• Technological design (development of the technological part of transport construction projects).
• Technological design (development of the technological part of projects) for the construction of agricultural facilities, excluding processing industry enterprises.

A license for construction and installation work is granted for:

• Special works in soils.
• Erection of load-bearing and/or enclosing structures of buildings and structures (including bridges, transport overpasses, tunnels, and overpasses, as well as other artificial structures), including major repairs and reconstruction of facilities.
• Special construction and installation work for laying linear structures, including major repairs and reconstruction.
• Installation of engineering networks and systems, including major repairs and reconstruction.
• Construction of roads and railways, including major repairs and reconstruction.
• Installation of technological equipment, commissioning works.

2. Can legal entities registered in foreign countries obtain a license for design or construction?

In accordance with Article 20, paragraph 2, of the Law of the Republic of Kazakhstan "On Permits and Notifications" dated May 16, 2014, No. 202-V, foreigners, stateless persons, and foreign legal entities obtain permits and submit notifications on an equal basis with citizens and legal entities of the Republic of Kazakhstan, unless otherwise provided by the laws of the Republic of Kazakhstan and international treaties.

3. Which foreign licenses and permits in the field of construction and design can be recognized in your country?

According to paragraph 2 of Article 2 of the Law of the Republic of Kazakhstan "On Permits and Notifications" dated May 16, 2014, No. 202-V, if an international treaty ratified by the Republic of Kazakhstan establishes rules different from those provided by this Law, the rules of the international treaty shall apply. According to the first paragraph of Article 2 of the Agreement "On Mutual Recognition of Licenses for Construction Activities Issued by Licensing Authorities of the Member States of the Commonwealth of Independent States" (Moscow, March 27, 1997), hereinafter referred to as the Agreement, the licensing authorities of the Parties to the Agreement mutually recognize the licenses they issue for certain types of construction activities, for which their licensing procedures are equivalent, by issuing the licensee the corresponding national license. The Agreement applies to the following states: the Republic of Belarus, the Republic of Uzbekistan, the Republic of Tajikistan, Ukraine, the Republic of Armenia, the Republic of Azerbaijan, the Republic of Kazakhstan, the Kyrgyz Republic, and the Republic of Moldova. In this regard, if a foreign company is not a resident of the aforementioned states or if the conditions of the Agreement are not met, obtaining a license in the Republic of Kazakhstan shall be carried out in the general manner.

4. Is it necessary to register a legal entity in your country to carry out design or construction work?

No, there is no such requirement. However, if the company carries out its activity on the territory of the Republic of Kazakhstan for more than 180 consecutive days, it will lead to a permanent establishment, which is subject to taxation on the territory of Kazakhstan.

5. What requirements are imposed on construction contracts and design and survey contracts, including when one of the parties is a non-resident of your country?

The legislation of the Republic of Kazakhstan primarily regulates construction contracting relationships through the provisions of the Civil Code of the Republic of Kazakhstan, Chapter 32. The main requirements for construction contracts are outlined in Article 616 of the Civil Code, which states that the contractor must perform the work and deliver it to the client, who is then obligated to accept the result and make payment. General provisions for construction contracts are described in Article 651 of the Civil Code. Project and cost documentation play a crucial role in construction contracts. According to Articles 654-655 of the Civil Code, the contractor is required to perform the work in accordance with the project documentation and cost estimate. The contract must also specify the contract amount, deadlines for completion, payment terms, party obligations, conditions for performance and acceptance of work, quality control, warranties, consequences of contract violations, conditions for addressing deficiencies, as well as termination conditions and dispute resolution procedures. The acceptance and delivery of completed work are formalized by an act signed by both parties, as stated in Article 663.

6. In what cases should construction contracts and design and survey contracts be concluded following a special procurement procedure?

In accordance with the Law of the Republic of Kazakhstan dated December 4, 2015, No. 434-V "On Public Procurement" (hereinafter referred to as the Law), construction contracts and design and survey contracts must be concluded following a special procurement procedure when the acquisition of goods, works, and services is necessary to ensure the functioning and fulfillment of state functions or the statutory activities of the customer.

Moreover, there are special procedures for procurements for subsoil users, as well as national companies.

7. What are the features of hiring local and foreign personnel in the implementation of construction and design and survey activities?

All conditions for hiring employees in Kazakhstan are regulated by the Labor Code of the Republic of Kazakhstan dated November 23, 2015, No. 414-V (hereinafter referred to as the Code). It should be noted that according to Article 26, Paragraph 1 of the Code, an employment contract with foreigners and stateless persons temporarily staying in the Republic of Kazakhstan cannot be concluded until the employer obtains permission from the local executive authority to attract foreign labor or until the foreign employee receives a certificate of qualification compliance for independent employment, or a work permit issued in the manner defined by the authorized migration authority. An employment contract also cannot be concluded without complying with the restrictions or exceptions established by the laws of the Republic of Kazakhstan. Furthermore, an employment contract with foreigners cannot be concluded if the foreigner does not have a medical insurance contract covering primary health care and specialized medical care under the conditions established by the laws of the Republic of Kazakhstan, as well as in some other cases specified by the legislation.

It is also necessary to consider the Rules and conditions for issuing or extending permits to employers for attracting foreign labor and for intra-corporate transfers and other relevant legislation.

EAEU citizens can work in the Republic of Kazakhstan without obtaining a permit, based on an employment contract.

The work permit is issued for up to 3 years, and it can be extended for up to one year.

8. Is it possible to use foreign standard construction contracts?

The legislation of the Republic of Kazakhstan does not prohibit the use of foreign standard contracts in the construction sector. However, it is important to ensure that such contracts comply with all local legal requirements, including the Civil Code of the Republic of Kazakhstan, the Law on Architecture, Urban Planning, and Construction Activities, as well as other relevant legislative acts and regulations.

9. Is it possible to use foreign law and foreign courts when concluding construction contracts and design and survey contracts?

According to the Civil Code of the Republic of Kazakhstan, Article 1112, a contract is governed by the law of the country chosen by the parties’ agreement, unless otherwise specified by the legislation of the Republic of Kazakhstan. The parties' agreement on the choice of applicable law must be explicitly stated or directly inferred from the terms of the contract and the circumstances of the case considered as a whole. The parties may choose the applicable law for the entire contract or for specific parts of it. The choice of applicable law can be made by the parties at any time, both at the conclusion of the contract and subsequently. The parties may also agree to change the applicable law at any time.

Foreign courts and arbitration also may be chosen by the parties as dispute resolution procedures.

Please note that the above provisions apply in case one of the parties is a non-resident of Kazakhstan.

Author: Darya Zhanysbayeva (Partner)