One uranium strange history

One uranium strange history

By Kim Stern

An example of absurd proceedings was the litigation between Kazakhstan and Canada under the terms of the agreement on the development of the uranium deposit, concluded by official Ottawa back with the Soviet Union almost 30 years ago. To understand the whole background of this story, it is worth starting with the events of the later.

Already after the collapse of the USSR, namely in 1996, the Canadian company World Wide Minerals Ltd concluded an agreement with the Government of the already independent Republic of Kazakhstan on the development of uranium deposits, the exploitation of the uranium mining complex and the mining and chemical combine. In exchange, the Canadians promised to invest at least $ 100 million in the development of the industry, promised new contracts in the future and assured that they would restore and maintain in due form the entire social infrastructure around the complex, including kindergartens and heating systems of the neighboring city. In addition, the company's representatives undertook to quickly develop a restructuring plan for the enterprises received for management and assured that at the same time, Kazakh employees not only will not lose their jobs, but will also be sent to improve their skills in Canada.

For Kazakhstan, then still recovering from the collapse of the previous economic system and not having the financial capacity to independently develop a strategically important sector of the country, the proposal seemed very tempting. The agreement was signed and the Canadian company, as a priority investor, received maximum tax benefits and opportunities to attract foreign labor.

After only six months, it became clear that Canadian investors are not going to fulfill their promises. Production volumes of the mining and chemical combine were reduced by 60%. The enterprise incurred colossal losses. The sum for those times was astronomical - $ 9 million. Workers did not receive salaries for months, and all the social facilities that the Canadians took under their care were simply abandoned. Here it is important to note that before the arrival of investors, the combine made a profit. Not the greatest profit, given the reserve of opportunities, but still brought. And then it suddenly became unprofitable. And for a record short term. The explanation for this is very simple. Canadians did not intend to invest in the development of the Kazakh uranium industry and even those enterprises that they received in management. The company's activities were aimed corny for the resale of raw materials and the extraction of profits.

The Kazakh authorities after that, for obvious reasons, broke the agreement. "World Wide Minerals Ltd" was ruined, and its property was sold. It seemed a logical outcome of the case. It is unclear why, but the Canadians for some reason offended and filed a petition with the court demanding to recover from Kazakhstan compensation of 1 billion dollars.

The basis was found by Canadian lawyers in a bilateral agreement on investment between Canada and the USSR of 1989. This treaty guaranteed the protection of Canadian investments. And in Ottawa it was felt that Kazakhstan, being, in their opinion, the legal successor of the USSR, had to provide such a guarantee. And therefore must pay.

But after all, the legal successor of the Soviet Union was officially Russia. As evidenced by numerous international treaties. Including the agreement between Russia and Kazakhstan. And up to the present moment, none of the countries of the world has officially challenged this rule.

The arbitration tribunal of Canada in October 2015 considered and granted the claim of "WWM" to Kazakhstan and yet recognized Astana as the legal successor under the investment treaty of Canada and the USSR. Representatives of "WWM", taking advantage of the case, increased the amount of the claim by another billion dollars and assessed their losses and lost profits already in two billion.

The next hearing should be held in the near future. The case will already be considered by the International Court of Arbitration of London. Time will tell whether it enters into the history of judicial precedents. While it is clear the degree of absurdity of this case.

08.06.2018

  
 

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