Estonia’s Windoor To File Claim Against Kazakhstan In Washington Arbitrage Court

Fraudulent Arbitral Awards - Anatolie Stati and others v Republic of Kazakhstan [2017] EWHC 1348 (Comm)

Since the state-owned Kazakh company has still not recognized the decision made by the Stockholm arbitration court in favor of the Estonian construction company Windoor at the beginning of last year, the latter is to submit a claim in the Washington arbitration court against the Republic of Kazakhstan, writes LETA/BNS.

“The public prosecutor of Kazakhstan protested against the decision made in our favor, saying that fulfilling the Stockholm court’s decision jeopardizes the economic security and territorial integrity of the Republic of Kazakhstan,” Windoor owner and chairman of the supervisory board Mailis Lintlom told LETA/BNS on Wednesday.

“The Supreme Court of Kazakhstan reviewed the case and said that the 23-million-euro claim of Windoor clearly jeopardizes all that and they did not recognize the decision of the Stockholm arbitration court which the Kazakhs themselves had contested in the appeal stage and lost,” Lintlom said.

At present Windoor is preparing to submit a claim to the Washington arbitration court and is holding talks with international advisors. She added that the company is planning to submit the claim in the first quarter of 2017.

Pursuant to a Bilateral Investment Treaty signed between Estonia and Kazakhstan, Windoor informed the Republic of Kazakhstan that it is ready to negotiate regarding the claim, but the latter did not react to it and the six-month deadline was reached at the end of 2016, Lintlom said.

According to Lintlom the proceeding in the Washington arbitration court might take around three years.

Windoor concluded in October 2012 an agreement with the Kazakh company Baltiiski Dom under which it was to design and supply glass-aluminium structures worth 25 mln euros for an international business and conference center under construction in the Kazakh capital Astana.

The building situated next to the building of the Kazakh Foreign Ministry was to be used also by the ministry to accommodate guests and officials. The Diplomat Stroi Servis company that manages the ministry’s real estate issued a guarantee in the amount of 25 mln euros for the project and Windoor was provided with credit insurance by Kredex, for whose benefit Diplomat Stroi Servis established a mortgage on the building.

Under the construction agreement Baltiskii Dom was to execute the payment in two years. When the deadline arrived in 2014 the invoices were not paid and Windoor had to terminate the agreement as a result, Lintlom earlier said.

Windoor then referred the claim to Diplomat Stroi Servis in accordance with the letter of guarantee. The Kazakh state-owned company has not met the obligation and a court in Kazakhstan has suspended a bankruptcy proceeding initiated to have the obligation fulfilled. Besides a court in Kazakhstan has decided to terminate the mortgage established for the benefit of Kredex.

In addition a litigation has started in Kazakhstan to annul the guarantee provided to Windoor. Windoor finds this kind of activity especially surprising and unusual because the disputes arising from the guarantee have been referred to the Stockholm arbitration court.

Estonia and Kazakhstan signed an agreement on the mutual protection and advancement of investments in 2011. Under the said accord, signed by Estonia’s then Minister of Economic Affairs and Communications Juhan Parts and Kazakhstan’s Foreign Minister Yerzhan Kazaykhanov, the countries commit themselves to ensuring the full protection and security of investments by investors from the other party in their territory.

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