The AIFC’s International Arbitration Centre: Objectives and Reality
The Astana International Exchange (AIX), an entity within the Astana International Financial Centre (AIFC), held its first trading session in mid-November, a memorable occasion which included the partial privatization of the state-owned Kazatomprom, the world’s biggest producer of uranium. Similarly, there is another AIFC entity which should be monitored closely for what it could accomplish in the coming years regarding commercial arbitration in Kazakhstan and the rest of Central Asia: the International Arbitration Centre (IAC).
The IAC at a Glance
The International Arbitration Centre aims to present itself to potential clients as a 21st-century international standard arbitration and alternative dispute resolution entity. Hence, it comes as no surprise that its new headquarters will be located in what was once the Expo 2017 centre in Astana. In an interview with the authors, the Registrar and Chief Executive of the IAC, Mr. Christopher Campbell-Holt, explained that the Centre’s brand new headquarters will cover nine thousand square metres of space, with 15 or more meeting rooms, in addition to private conference rooms, as well as state-of-the-art technology including video conferences so that IAC arbitrators and staff can easily communicate with clients around the world.
The AIFC is intended to assist Kazakhstan to become the “hub” for business in Central Asia, in addition to attracting business from European and Asian markets. Any geographical challenge for businesses in dispute from distant markets will be overcome by the IAC’s state-of-the-art technology, including an eJustice Project which was launched in late February 2019. This is “an online portal that enables parties to file cases at the AIFC Court and IAC electronically from anywhere around the world without having to be physically present in Astana. It can assist with the management of full end-to-end electronic processing of legal documents and administration in cases.”
The IAC’s chairman, Barbara Dohmann QC, is an internationally renowned arbitrator and commercial litigator with professional experience at the ICSID, LCIA, the London Metal Exchange (where she is a member of the Arbitration and Arbitration Appeals Panel), the Paris International Chamber of Commerce, and the Hong Kong International Arbitration Centre.
As for the arbitrators themselves, they consist of more than 30 professionals from across the world. Mr. Campbell-Holt explained that this is a multinational team of legal professionals by design, as the IAC wants to send a clear message that its services are available to both a Central Asian and extra-regional clientèle. Thus, it is important that the IAC’s arbitrators have different cultural backgrounds and languages so they will be more in tune with the customs and traditions of the IAC’s clients. Moreover, the multinational composition of the IAC’s arbitrators sends a message to potential clients that this is an arbitration centre that will serve all parties impartially and neutrally independent of the Kazakhstani state.
In addition to the IAC Chairman who is a woman, out of the 28 arbitrators at the IAC, 23 are men and five are women. Mr. Campbell-Holt explained that the arbitrators were chosen because they are all professionals that can offer world-class service, and there are plans to expand this list in the near future. He also highlighted that its staff includes six Kazakhstani citizens, five of whom are female.
A Modern and Efficient Arbitration Centre
It is important to stress that with the establishment of the AIFC’s IAC, Kazakhstan has created a unique centre for dispute resolution in Central Asia, given how this new entity provides a more efficient forum for dispute resolution than anything else the region currently possesses. This is best demonstrated by the fact that the IAC’s arbitration regulations are based, among others, on the United Nations Commission on International Trade Law (UNCITRAL) with some influence from the English Arbitration Act. The combination of these two models creates a predictable legal framework that can provide confidence to parties considering arbitration as to the efficiency of the proceedings, should they choose to utilize the IAC’s services. Moreover, Kazakhstan acceded to the New York Convention on 20 November 1995.
Furthermore, the IAC offers parties flexibility in choosing the rules and procedures which they wish to utilize to resolve their disputes. For example, parties may agree that the IAC will administer their arbitration according to the IAC’s own Arbitration and Mediation Rules (2018). These rules include procedures for the resolution of investment treaty disputes and expedited arbitrations for disputes with amounts of less than $5 million and amounts of lower value at the discretion of the parties, according to Mr. Campbell-Holt.
Additionally, while only a limited number of arbitration rules (such as the ICC, the ICSID, the ICDR, and the SCC Rules) deal with the parties’ need to obtain urgent protective measures before the constitution of the tribunal, the AIFC’s international arbitration rules have adopted rules concerning Interim Relief through Emergency Arbitration, along with other up-to-date rules and procedures.
The enforcement of arbitral awards as well as of interim relief once ratified by the AIFC Court, an independent entity headed by the Rt. Hon. The Lord Woolf CH, a former Lord Chief Justice of England and Wales, and staffed by former English common law judges and lawyers, will be subject to a writ of execution order issued by the Court itself. The decisions of the AIFC Court are to be enforced in the Republic of Kazakhstan in the same way and on the same terms as decisions made by other courts in Kazakhstan. Additionally, the jurisdiction of the Court will extend to civil and commercial matters. Again, this makes the AIFC, as a whole, as something unique to the region, as we are not talking about just an arbitration centre, but a conglomerate of complementary entities that can help each other to resolve disputes impartially and expeditiously at minimum cost.
While it is true that Kazakhstan is a unitary state and its sovereignty extends to its entire territory, an amendment dated March 2017, subsection 3-1, stipulates that a special legal order relating to financial matters (e.g. the AIFC) may be established within the territory of Astana in accordance with constitutional law. The constitutional amendment ensures the highest international standards of legal procedure, thus providing certainty, predictability, and efficiency.
Astana Is Betting (Heavily) on the IAC
The AIFC enjoys significant support from the Kazakhstan government. It is expected that the IAC will in time be very busy given how Astana is focused on attracting international investors – case in point, the aforementioned partial privatization of Kazatomprom and the planned privatization of several subsidiaries of Kazakhstan Engineering. Hence, the diversity and experience of the IAC’s arbitrators will be a critical factor to ensure that potential clients regard this entity as neutral and professional.
A final factor that will influence the success of the IAC beyond Kazakhstan’s borders has to do with the country’s foreign policy. Astana enjoys good relations with other Central Asian states – including Uzbekistan. Kazakhastani foreign policy will, ideally, contribute to a greater IAC involvement in arbitration cases in neighboring states.
The AIFC’s IAC’s goal is straightforward: to become the arbitration system of choice not only for Kazakhstan, but for all of Central Asia, and maybe beyond. We have highlighted the major areas of interest relating to the IAC: it aims to be as flexible as possible in order to adapt to the needs of its clients, this includes the e-filing of cases; the AIFC has adopted English Common Law although the parties may agree to apply any law, civil or common, at the IAC; and it has a multinational list of arbitrators. As this is a new international arbitration centre, potential clients must be reassured that they will receive just and professional treatment.
As the AIFC commences its second year of operations, it will be important to monitor how potential clients look at this new Central Asian financial hub, and the confidence they have on its many entities and interests, including the International Arbitration Centre.
The views expressed in this article are those of the authors alone and do not necessarily reflect those of any institutions with which the authors are associated.
If you're interested in writing for International Policy Digest - please send us an email via firstname.lastname@example.org