Winning an award is not the same as finding a court with jurisdiction to enforce it: the AIFC Court saga, resolved (or not)

Over the past two months, our dispute resolution team has been closely following a rare situation: two judges of the same court reaching opposite conclusions on the same fundamental question — can the AIFC Court enforce foreign arbitral awards at all?

The question matters to anyone holding an ICC, LCIA, SCC or any other foreign arbitration award against a debtor with assets in Kazakhstan. Unlike the UAE’s recent approach confirmed by the Dubai Conflicts of Jurisdiction Tribunal, which reaffirmed the DIFC Courts’ jurisdiction to recognize foreign arbitral awards irrespective of their seat, the position in Kazakhstan remains considerably more restrictive. Here is how the story unfolded, what we concluded when the outcome was still uncertain, and why the final answer confirms a cautious approach to enforcement planning.

How the split emerged

On 15 May, Justice Andrew Spink KC granted Naftogaz’s without-notice application to enforce a US$1.37 billion ICC award against Gazprom, taking the preliminary view that the AIFC Court had jurisdiction over foreign awards. The ruling made headlines — and prompted a public statement by Kazakhstan’s Minister of Justice that the judgment would not be enforced in Kazakhstan.

Twelve days later, Justice Sir Rupert Jackson, deciding Posco v National Centre, reached the opposite conclusion, against what appears to be a similar factual background. He rejected the Korean steelmaker’s application to enforce a US$43 million Zurich-seated ICC award and found that the preceding cases, including Naftogaz, had been “wrongly decided”.

What we concluded — before the outcome was known

When we discussed the two rulings internally, our team’s view was that Jackson’s position was the stronger one, for a reason that goes beyond the translation and interpretation debate around Article 14(4) of the Constitutional Statute that dominated earlier cases.

The AIFC Court is a creature of statute. Its jurisdiction is exhaustively defined by Article 13(4): disputes between AIFC participants, disputes relating to operations conducted in the AIFC, and disputes the parties have expressly agreed to submit to the court. The analysis must therefore start with jurisdiction — not with the AIFC Court Regulations and Arbitration Regulations, which describe the enforcement process. Subordinate AIFC acts cannot expand the court’s jurisdiction beyond what the Constitutional Statute confers: Article 4(1) of the Statute itself says AIFC acts must not contradict it. The Naftogaz order, granted ex parte and expressly preliminary, had simply never tested that first step against an objecting respondent.

The confirmation

On 7 July, Lord Faulks set aside the Naftogaz enforcement order and adopted the reasoning in Posco. The AIFC Court may act only where one of the Article 13(4) gateways is open — and a foreign arbitral award does not, by itself, open any of them. The intra-court divergence is resolved, and in the direction our analysis anticipated.

Notably, last week Mr. Justice Sir Rupert Jackson granted permission to appeal in Posco. The case will now proceed to the AIFC Court of Appeal. It will be interesting to see whether the Court upholds the first-instance decision or revisits its reasoning. We will be following the appeal closely.

What this means in practice

• Grounds for refusing recognition are expressly set out in the New York Convention and the applicable domestic law, but courts still examine them substantively. Parties should be prepared to establish the original or duly certified award and arbitration agreement, a properly certified translation, and proof that the debtor received notice of the proceedings, among any other applicable requirements. Posco is a cautionary tale here — its application failed twice in Almaty before it ever reached the AIFC Court.
• The AIFC Court is not a fallback. It is not an appellate instance for the Almaty court, and it cannot be used to cure a refusal by the state courts.
• There is a drafting solution. Parties are not forced to choose IAC arbitration to keep the AIFC Court available. You can retain ICC or LCIA arbitration and expressly submit enforcement disputes to the AIFC Court in the contract — the parties’ consent opens the Article 13(4) gateway. For new contracts with a Kazakhstan enforcement scenario, this clause is worth serious consideration.

Outlook

The possible fix would be legislative: an amendment to the Constitutional Statute expressly conferring enforcement jurisdiction over foreign awards. Unless and until that happens, the rule for award creditors is simple — in Kazakhstan, jurisdictional analysis comes first, ideally at the contract drafting stage, not after the award is in hand.

If you are assessing enforcement options against assets in Kazakhstan or any other jurisdiction, our team is happy to discuss your specific situation.