GILS Dispute Resolution: China (2025)
CHINA
Gulnur Nurkeyeva, Managing Partner, Head of China office
Akzhan Sargaskayeva, Counsel
CASE №1:
With the expert assistance of GRATA Beijing lawyers, a leading construction enterprise in the People's Republic of China, being a member of Consortium agreement (Client) in the project for the reconstruction of a section of the road of the republican significance successfully overcame substantial legal challenges related to the failure of Bank CenterCredit JSC to fulfill its obligations to pay under the bank guarantee, following the non-fulfillment of contractual obligations by another consortium partner.
Due to the failure of one of the parties to the Consortium Agreement to fulfill its obligations under the agreement, the Client applied to the Bank with a request to pay the amount of the bank guarantee in the amount of approx. 9.5 million US dollars, to which the Bank refused.
GRATA Beijing has chosen the strategy of filing a non-monetary claim in court to recognize the refusal to perform obligations under the bank guarantee as illegal and to compel execution, and only in the event of (1) the satisfaction of non-monetary claims by the court, (2) and the Bank's failure to fulfill its obligations under a court decision on a non-monetary claim that has entered into legal force (3), to file a monetary claim in the court.
To address this issue, the Client, under the legal support of GRATA Beijing, initiated legal proceedings to challenge the Bank’s refusal as unlawful and to compel the performance of obligations under the bank guarantee. Despite the initial court ruling in our Client's favor, non-compliance by the Bank necessitated further legal action of a monetary nature to safeguard the Client’s rightful claims and interests.
In December 2023, the Specialized Interdistrict Economic Court of Astana ruled predominantly in our client’s favor. The bank appealed, but in March 2024, the Court of Appeal dismissed the challenge and ordered full payment under the guarantee. The total amount ordered for payment by the court is approximately 10 million US dollars. The Supreme Court of Kazakhstan upheld this decision in June 2024.
CASE №2:
This case centers around a dispute arising from a PPP contract for the construction and operation of a kindergarten in Astana entered into between the Public Partner and the construction company (“Client” or “Private Partner”).
The primary issue in the dispute was the lack of essential engineering infrastructure, specifically a transformer substation and an electricity power cable line, on the plot provided. This led to significant project delays, increased costs, and loss of profit.
In addressing this legal challenge, the Private Partner was represented by GRATA Beijing lawyers, whose expert legal representation was crucial in navigating the intricate legal landscape of the Republic of Kazakhstan, particularly in handling cases under the jurisdiction of the AIFC Court. The Court of First Instance of the AIFC, guided by the clauses of the PPP Contract and the laws of the Republic of Kazakhstan, undertook the consideration of the dispute.
The Private Partner, with the legal assistance of GRATA Beijing lawyers, argued that the land provided by the Public Partner for the construction of the kindergarten was deficient in critical engineering infrastructure as stipulated by the contract. This oversight by the Public Partner was deemed a breach of contract by the Private Partner, leading to increased Compensation of Investment Costs (CIC), additional investment costs, lost profits, and other losses due to non-performance.
The AIFC Court resolved that the Public Partner had failed to fulfill its obligations to provide the site within the stipulated time frame and to ensure the site was connected to the grid connection point.
GRATA Beijing’s representation was vital in securing a favorable outcome, which resulted in the AIFC Court upholding the claims of the Client, ordering the Public Partner to pay the Private Partner the sum of approx. 4 million US dollars.
