When difficult to answer and to understand the motives

By Alina Kantor

The Canadian mining company World Wide Minerals Ltd. ( «WWM») intends to sue Kazakhstan, accusing him of default under the state of the USSR disappeared.

 

In 1996-1997, the company has invested in the development of the largest uranium reserves in Kazakhstan, but in the end all of its operations were curtailed, the company went bankrupt and its assets and the property sold. At the same time, the blame for the failure of a financial company is trying to impose on Kazakhstan. But the Kazakh side in response pointed out that the World Wide Minerals allowed serious violations of national laws and has not complied with the obligations under the agreements.

 

In particular, the company «WWM» took over the management of the Northern uranium mining complex of virgin and Mining and Chemical Combine (TSGKH). In 1997, the Canadian company appealed to the Government of Kazakhstan for the purpose of obtaining a license for the sale of uranium to the United States, in response to the same was refused due to the fact that the exclusive right was granted to the American company Nukem inc.

 

But «WWM» stopped production, citing their actions lack of uranium sales opportunities, although the world market, of course, not limited to the United States. Naturally, Kazakhstan has terminated the contract with the Canadian company because of the failure their obligations, and the heavy financial and economic position of the mining and chemical plant. At that time, the company was on the verge of bankruptcy, was formed large arrears of wages, growing social discontent workers.

This story continues is not the first year. World Wide Minerals repeatedly sued the government of Kazakhstan and "Kazatomprom" in international arbitration in Stockholm and American courts. But previous attempts to return the assets, or to obtain compensation have been unsuccessful. Themis has consistently held the position of Kazakhstan.

 

In particular, Colombia (US) District Court of Appeal pointed decision to issue or not issue an export license ... is a sovereign action of Kazakhstan, based on domestic laws and decrees of the Republic.

 

Note that the fact that Canada did not have an agreement on encouragement and mutual protection of investments with Kazakhstan and the United States this was. The relevant document came into force in 1994. And that is why the promotion of the American company Nukem inc from Kazakhstan, gave her the exclusive right to trade in uranium, looks quite understandable.

 

However, the company World Wide Minerals on this has not calmed down. And then, there was another round of confrontation. January 28, 2016 the Arbitration Tribunal of Canada reviewed and upheld the claim of Canadian mining companies in Kazakhstan. At the same time, the amount of claims has increased significantly. In 2001, World Wide Minerals estimated loss of investment in the US $ 25 million, and the loss of $ 1 billion, but today the amount in dispute exceeds $ 3 billion.

 

What hopes «WWM»? Oddly enough, the Canadian side refers to the Bilateral Investment Treaty between Canada and the USSR of 1989, which guarantees the protection of Canadian investments. But what is most interesting, that position is not only upheld the Arbitral Tribunal, and the Government of Canada, said that Kazakhstan succeeded to all the investment commitments of the USSR.

 

Canada's interests are represented by the law firm Jones Day's Global Disputes. And her senior attorney Bayzhu Bashan, in charge of the process, told the Canadian press that this historic decision in the field of international law. For the first time any other country apart from Russia will be considered as a legal successor of the international investment agreement concluded USSR. But Astana does not understand why an agreement signed by the Chairman of the USSR Council of Ministers must take precedence over the national interests of the Republic. In fact, the document was signed by unauthorized officer for an independent state. Kazakhstan can not be considered the legal successor of the USSR also because the role took over Russia.

December 21, 1991, when the Russian Federation was launched, and the decision of the CIS Heads of State Council supported the idea of ​​the state - successor to the fact that Russia "continued the Soviet Union membership in the United Nations, including a permanent seat in the Security Council and other international organizations."

 

From the point of view of international law, this meant that in contrast to other former Soviet republics, declared themselves the new states (the exception was the Baltic republics Latvia, Lithuania and Estonia), the Russian Federation remained the same state - successor of the rights and obligations of the former USSR and existed before him RSFSR and the Russian Empire.

 

And the international community almost immediately after the collapse of the Soviet Union took the position with regard to Russia as a state - successor. Well, after the Russian Federation has paid its debts to the Paris Club all countries belonging to it, according to the country and the only legal successor of debts and assets of the former USSR.

 

On this occasion, international affairs experts say the following: "If, after the collapse of the country to change national statehood in the international legal sense, the international legal interrupted." And this fully applies to Kazakhstan.

 

There are several important aspects. Company «WWM» did not work in the conditions of the USSR and has for that reason alone can not appeal to this agreement.

 

Fundamentals of the market economy in the Soviet Union began to be put only in the late 80s. Investors did not yet exist, as there was no experience with them. During 1989 the Soviet Union signed an agreement on encouragement and mutual protection of investments with eight economically developed countries of the West. The first partner of the Soviet Union in the field of mutual protection of foreign investments was Finland. If we talk about large countries, the same in 1989 its example was followed by Great Britain, Germany, Canada and Italy. Next, in 1990 similar bilateral agreements were concluded with four more economically developed countries (Austria, Spain, Switzerland, South Korea), and later with China and Turkey.

 

Naturally, the USSR did not have experience in preparing this type of bilateral treaties. And there were other targets. And therefore the regulatory framework established at the time, could not be automatically prolonged. None of the former Soviet republic not recognized at that time signed the international treaty, if they are contrary to the national interest.

In particular, such rules exist in the legislation of Ukraine. It would be foolish to demand today from Kiev old Soviet performance of obligations which, for example, prevent the integration with Europe. The geopolitical situation has changed. Each state has its own independent policy, which used to be dictated from the center. That is why Canada, recognizing «WWM» requirement, in fact, encourages Kazakhstan to return to the Soviet past. And it is impossible to agree.

 

 

Naturally, Kazakhstan today is not recognized as a liability, which at one time took the Union of Soviet Socialist Republics. After all, the Soviet Union often acted against the interests of the national borderlands. Moreover, roughly violated them. Suffice it to recall the story of the Semipalatinsk test site in Kazakhstan. Military-industrial complex of the USSR did not want in any case to give up its nuclear ambitions. But when the republic declared the sovereignty, accepted the loss of the strategic facility. The first decision of the President of independent Kazakhstan was the decree on closing the landfill. The legitimacy of this decision, no one disputes. After all, the presence of the landfill, as well as its own nuclear weapons (by the way, the fourth largest in the world), contrary to the national interests of this country. But then why, in the economic security issues Kazakhstan denied sovereignty, believing that decisions taken by the Soviet Union should remain prevalent for the new independent state? Most interesting is that this right Astana does not refuse anybody, except Ottawa. At least, among the above-mentioned states signed an agreement on encouragement and mutual protection of investments with the USSR only Canada does not renew the contract with Kazakhstan.

 

The rest felt it necessary to build a relationship with a clean slate, realizing a non-legitimate legal framework of the Soviet Union. Recall, the new Agreement on promotion and mutual protection of investments was signed by Kazakhstan and entered into force - with Finland (2008), Great Britain (1997), Germany (1995), Italy (1996), Austria ( 2012), Spain (1995), Switzerland (1998), South Korea (1996), China (1994), Turkey (1995). These states, the most actively investing in Kazakhstan. And none of them, we note does not refer to the contract for a bygone era. Before investing in Kazakhstan, they formed konretno bilateral legal framework. And they really appreciate the investment climate of the country.

 

In a recent interview (29/04/2016) Prime Minister of the Netherlands Mark Rutte said the favorable investment climate in Kazakhstan. - The latest report on "Doing Business", published by the World Bank shows that Kazakhstan has risen by 12 points - on 41-th place in 2014-2015. This is a significant achievement, and I am sure that Kazakhstan will maintain this pace - he said.

 

What does the Government of Canada, supporting the claim «WWM» in Kazakhstan? First of all, it can greatly complicate the bilateral relations between the two countries. Second - engaging in a losing business, Canada involuntarily harms himself and his image. The third stage of the proceedings on the manifest desire to attempt to undermine the authority of Kazakhstan in foreign investment environment. And it can cause a counterclaim. So, it is possible that the incompetence of the decision, will pay an ordinary Canadian taxpayer. After legal costs in such cases, as a rule, reach significant amounts.

 

Who knows, maybe there is corruption and the time? After all, the amount «WWM» claims to Kazakhstan grow exponentially. It is difficult to answer this question, as well as to understand the motives that guide the Canadian government.

 

 

27.05.2016

 

 

 
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