Dutch court sides with Kazakhstan and denies recognition of $530 million arbitral award

On January 9, 2023, the Amsterdam District Court denied the request by Anatolie Stati, Gabriel Stati, Ascom Group S.A. and Terra Raf Trans Traiding Ltd. for exequatur of a $530 million arbitral award, according to the Ministry of Justice of the Republic of Kazakhstan.

On 24 December 2021, the Supreme Court quashed an earlier decision of the Amsterdam Court of Appeal granting the exequatur and referred the matter to the Amsterdam District Court. After an interim judgment from the Amsterdam District Court on 3 May 2022, Kazakhstan was given the opportunity to further substantiate its claim that the arbitral award had been procured by procedural fraud based on new evidence.

«The Republic was able to uncover the fraud by submitting correspondence between the Statis and their auditor KPMG that shows that the financial statements the Statis had relied on during the arbitration were materially misstated and that subsequently KPMG effectively withdrew the audit of those statements,» the ministry said in the statement.

Moreover, Kazakhstan was able to uncover large unlawful extractions of funds by the Statis after obtaining and analyzing the bank statements of multiple entities covertly controlled by the Statis.

«After being presented with the full scope of the fraud, the Amsterdam District Court today ruled that the Statis indeed procured the arbitral award by procedural fraud and denied the request for exequatur on that basis,» the agency noted.

This is the fourth time that a court has considered Kazakhstan’s case and confirmed that the Statis committed fraud, according to Kazakhstan’s Minister of Justice Azamat Yeskaraev.

The Amsterdam District Court confirmed that «Stati committed material fraud by withdrawing large sums from KPM and TNG (Kazpolmunay and Tolkynneftegaz, two Kazakhstani companies that were under the control of the Statis) when selling crude oil and then using those sums for unusual and personal expenses through Hayden, a company they fully controlled; by extracting tens of millions of dollars from TNG in the construction of the LPG plant by means of improper transactions with the secretly controlled entity Perkwood; and by hiding personal expenditures in their annual accounts as ‘assets’ and ‘costs.’ As a result, these annual accounts contained material misstatements.»

On 16 November 2021, the Brussels Court of Appeal rejected the recognition and enforcement of the arbitral award in Belgium. In its judgment, the Brussels Court of Appeal ruled that the Statis committed fraud before, during and after the arbitration. The National Bank of Kazakhstan and the country’s Ministry of Justice managed to lift the arrest from foreign assets of Kazakhstan’s National Fund.

In the summer of 2022, the Hague Court of Appeal lifted an attachment of the KMG Kashagan B.V. stocks that belong to the National Welfare Fund Samruk-Kazyna. This attachment was a result of the activity of Anatolie and Gabriel Stati, who tried to execute an arbitral decision against the Republic of Kazakhstan.

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