Debt collection in Kazakhstan

The debt collection procedure in Kazakhstan begins with an assessment of the financial capabilities of the debtor, his field of activity, the history of the enterprise, the availability of documentary evidence of the debt, current court cases and initiated enforcement procedures, as well as the possibility of challenging this debt. This analysis serves as the basis for developing a strategy to be used on behalf of the client to recover the debt.

In the absence of current litigations against the debtor or outstanding court decisions regarding debt collection, and provided that the debtor is active, amicable debt collection becomes the preferred approach. This stage is based on active negotiations with the debtor to reach an agreement regarding payment of the creditor’s claims or other settlement options, such as return of goods, transfer of debt to a third party, exchange of services or goods.

Interaction with the debtor usually begins with a written notification sent by mail, email or other communication channels used by the parties. At this stage, it is important to keep the communication documented, identify the debtor’s decision makers and offer a realistic settlement mechanism, such as full payment, instalments, return of goods, transfer of debt or another commercially acceptable solution. The purpose of amicable collection is not to create unlawful pressure, but to obtain a clear response from the debtor and determine whether the debt can be recovered without court proceedings.

The duration and practical result of out-of-court debt collection usually depends on debtor’s response, the quality of the documents, the existence of a real dispute, the debtor’s solvency and whether the contract requires a mandatory claim procedure or mediation before going to court. If the debtor ignores the demand, disputes the debt without sufficient grounds, hides assets or if the initial analysis shows that amicable collection is not suitable, the creditor should proceed to judicial debt recovery.

The general statute of limitations in Kazakhstan is three years, and the procedure for calculating limitation periods cannot be changed by agreement of the parties. As a rule, the limitation period starts from the moment when the creditor learned or should have learned about the violation of its right, for example from the payment due date or from another date when the debtor’s obligation became overdue. The creditor may still file a claim after the limitation period has expired, but if the debtor applies to the court for the consequences of limitation to be applied, the claim may be dismissed.

The limitation period may be interrupted by filing a claim in the prescribed procedure, by concluding a mediation agreement or by actions of the debtor confirming recognition of the debt or another obligation. After such interruption, the limitation period begins to run again, which makes written acknowledgements of debt, payment schedules, partial payments and other debtor’s confirmations important evidence in debt collection cases.

Before going to court, it is important to check the dispute resolution procedures agreed by the parties in the contract. If the contract provides for a mandatory claim procedure, mediation, arbitration clause or another pre-trial mechanism, these conditions should be followed before filing a lawsuit. Failure to comply with the agreed dispute resolution procedure may create procedural obstacles for the creditor and delay the consideration of the claim.

The legislation of Kazakhstan provides three options for debt collection through the court: court order, general legal proceeding and simplified proceeding.

The procedure for issuing a court order is applicable to debt collection claims that are undisputed and supported by documents confirming the debtor’s obligation. To use this procedure, the creditor submits an application to the court together with evidence showing that the debt is clear and not genuinely disputed. If the statutory requirements are met, the court order may be issued without a full trial and then sent to the debtor; under the court order procedure, the relevant procedural time limits are calculated in working days. After receiving the court order, the debtor may file objections within the procedural period established for this type of proceeding. If the debtor submits objections showing that there is a dispute regarding the claim, the court order procedure cannot be used as a final recovery mechanism and the creditor should proceed through ordinary claim proceedings. If no objections are filed, the court order enters into force and may be submitted for compulsory enforcement.

The general legal proceeding is carried out by filing a statement of lawsuit in court. In total, the period for consideration of the case in the court of first instance is three months from the date of filing the statement of lawsuit. In exceptional cases, the court may extend this period by another month. In practice, the specified review period is much longer. During the judicial consideration of a case, it is permitted to use conciliation procedures in the form of concluding a settlement agreement, an agreement to resolve a dispute (conflict) through mediation, or an agreement to resolve a dispute through a participatory procedure. If the court has approved one of these agreements, then the parties are obliged to fulfill it voluntarily. If the debtor does not execute with it, the creditor has the right to enforce such an agreement within the framework of enforcement proceedings. Dispute resolution through conciliation procedures allows one to avoid subsequent appeal or cassation appeals against the court decision by the interested party. If conciliation procedures were not used or were not approved by the court, then as a result of consideration of the case, the court makes a decision on the merits of the stated claims. The decision of the court of first instance comes into force within one month from the date of its adoption, unless it is appealed.

Simplified written proceeding may be applied to monetary claims where the value of the claim does not exceed two thousand monthly calculation indices for legal entities or one thousand monthly calculation indices for individual entrepreneurs and individuals. It may also be used regardless of the claim value when the creditor’s claim is based on documents confirming the debtor’s monetary obligation or debt under the contract. After accepting the claim, the court notifies the parties that the case will be considered under the simplified written procedure. Parties who do not agree with simplified written consideration may file a petition for the case to be considered under the general procedure within fifteen working days after receiving the relevant court notification. If no such petition is filed, the court considers the case on the basis of written materials, without holding a court hearing, without summoning the parties and without hearing oral explanations. The simplified written proceeding is designed for document-based claims, so the quality of invoices, contracts, delivery documents, reconciliation acts, correspondence and other written evidence is especially important. The court decision comes into force within a month from the date of its adoption, unless it is appealed.

An appeal against a court decision is considered within two months from the date of its receipt by the court. At the appeal stage, the use of conciliation procedures is also allowed. As a result of consideration of the complaint, the appellate court adopts a decision, which comes into force from the moment of its announcement.

Each of the parties to the case has the right to file a cassation appeal with the Supreme Court of the Republic of Kazakhstan within six months from the date of entry into force of the decision of the appeal court. In this case, the interested party may file a petition to suspend the effect of the decision of the court of first instance and/or the decision of the court of appeal that has entered into legal force. The Chairman of the Supreme Court of the Republic of Kazakhstan, if there are strong arguments, has the right to suspend the execution of a court decision for verification in cassation for a period of not more than three months.

Cassation review is not allowed in cases considered through summary proceedings, cases completed by a settlement agreement, an agreement to resolve a dispute (conflict) through mediation or an agreement to resolve a dispute through a participatory procedure, as well as in cases with a claim price of less than thirty thousand monthly calculated indicators.

At the stage of cassation review, the use of conciliation procedures is also allowed. A cassation appeal is considered within a month from the date of appointment for consideration of the complaint in court proceedings.

Foreign creditors should also distinguish between debt collection based on a new claim in Kazakhstan and enforcement of an already existing foreign judgment or arbitral award. If the creditor already has a foreign court judgment or an arbitral award against a debtor with assets in Kazakhstan, the usual practical step is to apply to the competent Kazakh court for recognition and enforcement and, after receiving the enforcement order, submit it for compulsory enforcement.

Recognition and enforcement of foreign arbitral awards in Kazakhstan is connected with the New York Convention, to which Kazakhstan acceded on 20 November 1995, with entry into force on 18 February 1996. In practice, the creditor should prepare the arbitral award, the arbitration agreement, evidence of proper notification of the debtor and certified translations into the language required for court proceedings. The court may refuse enforcement where there are procedural defects, invalid arbitration agreement, lack of proper notice, excess of jurisdiction, violation of public policy or other grounds recognized under the applicable rules.

Foreign court judgments are treated differently from arbitral awards. Their enforcement in Kazakhstan usually depends on whether there is an applicable international treaty, legal assistance agreement or another recognized legal basis for enforcement. For foreign creditors, this means that before starting enforcement in Kazakhstan it is necessary to identify the country of origin of the judgment, the type of decision, whether it requires compulsory enforcement, whether the debtor was properly notified and whether the documents are legalized or apostilled where required.

Documents issued abroad may require consular legalization or an apostille unless an international treaty provides otherwise. If the document is in a foreign language, a certified translation into Kazakh or Russian may be required for court use. These formal requirements are not technical details: in cross-border debt recovery, incorrect legalization, missing translation, lack of evidence of proper notice or an unclear arbitration clause may delay recognition and enforcement even when the creditor has already won the case abroad.

The AIFC Court should not be confused with the ordinary state courts of Kazakhstan. It has a special status and is not part of the judicial system of the Republic of Kazakhstan. Therefore, if the contract contains an AIFC-related jurisdiction or dispute resolution clause, the creditor should analyze this separately from ordinary proceedings before Kazakh state courts.

After the court decision enters into legal force, provided that the debtor refuses to comply with it voluntarily, a writ of execution should be obtained from the court and presented to the bailiff for forced execution. There is an institute of private bailiffs in the Republic of Kazakhstan. The creditor has the right to present a writ of execution to the court executive within three years from the date of its issue.

According to the law, the period for compulsory execution is two months from the date of commencement of proceedings. In reality, cases handled by state bailiffs take much longer to complete than those of private bailiffs. The law provides for the possibility for the creditor to agree with a private bailiff on another deadline, but not more than six months.

When choosing enforcement strategy, the creditor should also take into account the role of private bailiffs in Kazakhstan. A private bailiff is a licensed professional authorized to execute enforcement documents, and the official contact details of private bailiffs are available through the AIS BEP system. The fee rates for private bailiffs in monetary enforcement matters depend on the amount recovered, which means that enforcement costs should be assessed together with the debtor’s assets, bank accounts, receivables, movable property and real estate.

If enforcement of the writ of execution or court decision does not lead to recovery and the debtor shows signs of insolvency, bankruptcy may become a separate legal scenario rather than a standard continuation of ordinary enforcement. In such a situation, the creditor should assess whether the debtor is unable to satisfy monetary obligations, whether there are assets available for bankruptcy proceedings and whether the debtor’s management or controlling persons performed actions that worsened the debtor’s financial position or prevented creditors from receiving payment. 

Intentional bankruptcy and subsidiary liability should be considered when there are indications that the debtor’s controlling persons alienated assets, concealed property, created artificial debts, transferred business activity to affiliated entities or otherwise acted to avoid payment to creditors. This mechanism requires evidence of the relevant conduct and causal connection with the debtor’s inability to satisfy creditors’ claims, so it should be used as a targeted insolvency-related remedy rather than as a routine debt collection step.

Failure to execute a court decision or an enforcement document may also create criminal law risks for responsible persons under Article 430 of the Criminal Code of the Republic of Kazakhstan. This should not be presented as an ordinary substitute for civil enforcement, but it may become relevant when a court decision or enforcement document on the recovery of funds remains unexecuted for more than six months and the debtor’s conduct shows signs of deliberate non-compliance. This block is especially important where the debtor has assets or management capacity but avoids execution of a binding judicial act.

If you need assistance with debt collection in Kazakhstan, Grandliga can help assess the debtor’s position, choose an appropriate pre-trial or court strategy, prepare the necessary documents and coordinate enforcement steps. In cross-border cases, support may also include analysis of foreign judgments, arbitral awards, debtor’s assets in Kazakhstan and practical obstacles that may affect recovery.

# DEBT COLLECTION AGENCY KAZAKHSTAN

06.02.2022

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