Kyrgyz Republic

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General Context

The Kyrgyz Republic is a constitutional republic. Pursuant to the principle of the Separation of Powers the state power is represented by Legislative, Executive, and Judicial branches cooperating under the rule of the President of the Kyrgyz Republic:

  • The President is the head of state and the top official of the Kyrgyz Republic elected for the period of 5 years.
  • The Jogorku Kenesh – Parliament of the Kyrgyz Republic – is a representative body in charge of legislature. The Jogorku Kenesh of the Kyrgyz Republic consists of 90 Parliamentarians elected for the term of 5 years on the basis of political party slates.
  • The executive power of the Kyrgyz Republic is represented by the Government of the Kyrgyz Republic, line ministries, state committees, other executive authorities and bodies of local state administration subordinate to the Government.
  • In the Kyrgyz Republic judicial power may only be administered by the courts. In the cases and pursuant to the procedure provided by law, all citizens of the Kyrgyz Republic have a right to participate in the implementation of justice.

The legal system of the Kyrgyz Republic belongs to Romano-Germanic family, the civil law legal system.

Regulation of Alternative Dispute Resolution

Pursuant to Kyrgyz legislation there are two mechanisms of non-judicial dispute resolution: out-of-court and pre-trial dispute settlement. Below is a detailed overview on both mechanisms of alternative dispute resolution (“ADR”) in the Kyrgyz Republic.

Out-of-Court

Out-of-court procedure is a pure non-judicial dispute resolution mechanism, which includes arbitration, mediation and conciliation.

Arbitration

A right to resolve civil disputes through arbitration for the first time has been introduced by Article 38 of the Constitution of the Kyrgyz Republic. [1]. Arbitration is governed by the Law of the Kyrgyz Republic “On Arbitration in the Kyrgyz Republic” (“KR Arbitration Law”). [2]. and is generally used for settlement of commercial disputes [3] . Since December 18, 1996 the Kyrgyz Republic is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards dated June 10, 1958 [4].

Mediation and Conciliation

Unlike arbitration, mediation and conciliation are not defined and regulated by the Kyrgyz legislation. In our practice we have not encountered with the mediation and/ or conciliation cases in the Kyrgyz Republic.

Pre-trial

According to Article 4.3 of the Civil Procedural Code where mandatory pre-trial procedure is required (either by law or pursuant to agreement) a right to litigate can be exploited only after the pre-trial dispute resolution procedure is exhausted. For instance, the following categories of disputes are subject to mandatory pre-trial resolution by law:

  • Disputes between employer and employee on issues of injury compensation

Articles 258 and 259 of the Kyrgyz Labor Code [5] stipulate mandatory pre-trial dispute settlement with the Inspectorate of Labor or Trade Unions for issues of injury compensation. In case employer or employee is dissatisfied with the decision of the Inspectorate of Labor or Trade Union, the decision can be challenged in court.

  • Appeal by tax payers the decisions of tax authorities, as well as their actions and omissions

Pursuant to Articles 146 and 152 of the Kyrgyz Tax Code [6] decisions of tax authorities, their actions and omissions can be challenged before the competent superior tax body (State Tax Inspectorate). The decision of the State Tax Inspectorate can be appealed in court if tax payer is dissatisfied.

  • Disputes between the National Bank of the Kyrgyz Republic (“NBKR”) and commercial banks or other financial institutions or their affiliates concerning the decisions of the NBKR on imposition of fines or on taking other measures

In accordance with Article 39-2.2 of the Kyrgyz Law “On Banks and Banking Activities” [7] the decisions of the NBKR on imposition of fines or on taking other measures can be appealed before the Management Board of the NBKR. The decision of the NBKR can be challenged in court.

The legal implication of non-compliance with mandatory pre-trial procedure is a dismissal of claim by the court without consideration [8] Yet, the claim may be filed again after the completion of pre-trial procedure [9]

Besides mandatory pre-trial dispute resolution, Kyrgyz legislation has stipulated optional pre-trial procedure of dispute settlement for appeals of decisions on administrative cases by stakeholders [10].

Practice of Alternative Dispute Resolution

Arbitration is the most popular form of ADR. Investment disputes are commonly resolved by arbitration. Commercial entities often resort to arbitration.

The International Court of Arbitration, residing in Bishkek, is a permanent institution which administers arbitration procedure under its Arbitration Rules.[11]

It is the only local institution handling the administration of arbitration in the Kyrgyz Republic. However some disputes, in particular investment disputes, are commonly referred to ad hoc arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law, or to foreign arbitration institutions such as the Arbitration Institute of the Stockholm Chamber of Commerce and London Court of International Arbitration.

Although the general perception is that arbitration is costly, it may be that using the courts (first instance court, appellate court, and review by the Supreme Court) is considerably more expensive (given, for example, lawyer’s fees). Pursuant to the Regulation on Arbitration Fees and Charges of the International Court of Arbitration [12] adopted by the board of directors of the International Court of Arbitration, fixed arbitration fees and certain percentages have been established depending on the amount of claim: [13].

  • Arbitration fee for a claim of $1000 is $150;
  • Arbitration fee for a claim of more than $1000 but less than 5000 is $310 plus 4% of the sum exceeding $1000.

Arbitration is recognized to be effective due to the comparative speed with which disputes are often resolved. Fairness is another advantage of arbitration. Parties, especially foreign entities and individuals running business in the Kyrgyz Republic, find arbitration fairer and more impartial, and so frequently resort to it.

Information concerning arbitration is publicly available both in databases of legal frameworks and on the website of the International Court of Arbitration. Public perception with regard to arbitration is quite positive; the business community prefers arbitration to litigation in many instances.

The Social and Environmental Regulation of Business

In general, there is no special state initiative to promote stakeholder engagement and dialogue with business. Since December 20, 2007 each legal act is subject to analysis of regulatory impact and monitoring of implications on entrepreneurship and society [14]. Major social and environmental regulation of business by state can be described as follows.


  • The protection of human rights by businesses

Human rights protection is ensured through individual claims with ombudsmen and law enforcement bodies. The Law of the Kyrgyz Republic “On the Protection of Environment” [15] is a legal safeguard against environmental abuses, delinquencies and crimes.


  • Regulation of the impact of businesses on the environment

Pursuant to Kyrgyz legislation environmental impact assessment, which can be either state or public, is carried out in order to ensure environment-friendly business activities by enterprises [16]. The State Agency on Environmental Protection and Forestry under the Government of the Kyrgyz Republic is a competent state body for environmental impact assessment, which conducts, among others, uniform state environmental policy, control over the environment, keeps record and assessment of mineral resources, and informs state bodies, businesses and public of the environmental conditions [17].


  • The dialogue between businesses and their external stakeholders (communities, employees or consumers)

The dialog between businesses and employees is established through the Trade Unions and Labor Inspectorates that handle certain labor disputes.


  • Fair commercial treatment between companies and clients/consumers

The Law “On Consumer Protection” [18] governs the relationship between producer/retailer and consumers guaranteeing the state protection of consumers’ interests. The State Agency on Antitrust Policy and Development of Competition under the Government of the Kyrgyz Republic (“State Antitrust Agency”) ensures consumer protection, including fair commercial treatment between companies and clients/consumers. It handles complaints from individuals and legal entities concerning the unfair competition [19]. The State Antitrust Agency may also conduct investigation regarding the unfair competition on its own motion [20].


Specialist ADR Mechanisms

The following specialist ADR mechanisms exist in the Kyrgyz Republic:


  • Human rights ombudsmen

An institute of Ombudsmen, which is a state body, handles complaints on human rights violations [21].


  • Community engagement processes used by companies to manage conflict

We have encountered with the practice of mining companies in managing conflicts through the community engagement process in which a person with a recognized reputation is involved.


  • External/company complaints mechanisms for communities/consumers/employees, consumer complaints systems

There is a widespread practice of keeping complaints and visitors books by companies rendering services, which allows companies to be aware of the level and quality of services they provide, work over and remove drawbacks. Furthermore, there are hotlines for different complaints from individuals, through which an opportunity to inform public authorities anonymously about certain violations has been provided.


  • Non-judicial labour dispute resolution mechanisms?

As has been described above in Section I there is a pre-trial mechanism of labor dispute resolution by the Inspectorate of Labor and Trade Unions.

Relevant Mechanisms

Relevant Websites

Keywords

Author

Original Author(s) Kalikova & Associates Law Firm http://www.k-a.kg/

References

  1. ↑ Adopted on May 5, 1993 as amended by the Law N 157 dated October 3, 2007.
  2. ↑ Adopted on June 30, 2002
  3. ↑ Yet, theoretically, except for certain cases, provided that arbitration agreement has been concluded, parties in labor disputes may resort to ADR, since it is not de jure prohibited in the Labor Code or Arbitration Law.
  4. ↑ The Convention is effective since March 18, 1997
  5. ↑ Adopted on August 4, 2004.
  6. ↑ Adopted on October 17, 2008.
  7. ↑ Adopted on July 29, 1997.
  8. ↑ Articles 223.1, 390.1.2, Civil Procedural Code.
  9. ↑ Ibid., Article 224.2.
  10. ↑ Article 44.1, Law of the Kyrgyz Republic “On Administrative Procedures” dated March 1, 2004.
  11. ↑ Adopted on July 1, 2007.
  12. ↑ Adopted on January 15, 2003.
  13. ↑ Article 3, Regulation on Arbitration Fees and Charges.
  14. ↑ Article 19, Law “On Normative Legal Acts” dated July 20, 2009. Procedure of Analysis of Regulatory Impact and Monitoring of Implications of Normative Legal Acts on the Entrepreneurial Activities dated December 20, 2007. Decree of the President of the Kyrgyz Republic “On Certain Measures of Optimization of Resolving-Regulation System in the Kyrgyz Republic” dated July 23, 2007.
  15. ↑ Adopted on June 16, 1999.
  16. ↑ Law of the Kyrgyz Republic “On the Environmental Impact Assessment” dated June 16, 1999.
  17. ↑ Article 7, Regulation “On the State Agency on Environmental Protection and Forestry” dated April 10, 2008.
  18. ↑ Adopted on December 10, 1997.
  19. ↑ Order of Consideration of Cases about Unfair Competition dated April 13, 2004.
  20. ↑ Ibid.
  21. ↑ Article 10, Law of the Kyrgyz Republic “On Ombudsmen” dated July 31, 2002
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Contributor(s): This article was modified by 87.85.82.18 (5), K-A (3), Ejfturnbull (2), and Kyle (1).