After nearly 20 years from the termination of the contract, in 2016, Gold Pool initiated a United Nations Commission on International Trade Law (UNCITRAL) arbitration proceedings against Kazakhstan based on the Canadian-Soviet bilateral investment treaty. The treaty was signed two years before Kazakhstan claimed its independence – allegedly making it the legal successor to the treaty. The Kazakh Ministry of Justice press service reported that on July 30 the International Arbitration Tribunal issued a unanimous decision on the immunity and dismissal of the case initiated in 2016 by Gold Pool, a Canadian junior mining company, against Kazakhstan.
The plaintiff claimed $917 million regarding the agreement on trust management of the Kazakhaltyn national gold mining and processing enterprise.
“The Gold Pool lawsuit is another attempt by so-called ‘investors’ to make money on arbitration, based on doubtful facts. The decision of the arbitration tribunal is a confirmation that Kazakhstan is forming a modern legal system that is capable of withstanding such hostile corporate actions,” said Kazakh Minister of Justice Marat Beketayev.
According to the statement, Gold Pool received management of Kazakhaltyn in March 1996 to pay off the company’s debts, restore and modernize production, create a favorable financial environment and an effective market strategy. The Canadian company, however, failed to follow its contractual obligations.
Kazakhstan terminated the contract in August 1997 after repeated systematic violations. Gold Pool responded with a lawsuit against the Kazakh government in international commercial arbitration under a management agreement. The case did not take any procedural steps and expired in 2000.
The Kazakh side strengthened its position on the absence of any obligations under the treaty after a scrupulous analysis of interstate agreements archival documents, among other documents. One of the key contributing papers was the legislative framework of the 1990s, which had undergone significant changes at the time of the filing of the arbitration claim.
The tribunal ordered the plaintiff to reimburse Kazakhstan for all the costs incurred in the arbitration process.
The Kazakh Ministry of Justice and Curtis, Mallet-Prevost, Colt & Mosle international law firm represented Kazakhstan’s interests in this case.