Summary

The Republic of Kazakhstan Won a Multimillion Arbitration Brought by Canadian Company "Gold Pool": Arbitral Tribunal Confirms that Kazakhstan is Not Bound by the Soviet Treaty with Canada

On July 30, 2020, an international Arbitral Tribunal rendered a unanimous Award dismissing for lack of jurisdiction the arbitration initiated in 2016 by the Canadian company Gold Pool JV Ltd. against the Republic of Kazakhstan in relation to a trust management contract to operate the "Kazakhaltyn JSC" enterprise.

The total amount of the arbitration claims were US$917 million.

In March 1996, Gold Pool was entrusted with management of Kazakhaltyn JSC with the goals to discharge the company's debts, restore and modernize production, create a favorable financial environment and an effective marketing strategy. Gold Pool failed to meet its obligations under the contract. The debt to the employees of the enterprise's town-forming facilities for wages were not paid for a long time and were steadily increasing. The functioning of the gold mines (Aksu, Zholymbet and Bestobe) was not well organized, and they were mostly idle. The enterprise's other gold mines were abandoned and flooded. The enterprise's production facilities were not upgraded, the necessary geological exploration work was not being conducted, the ore processing and gold production was not properly organized. The debts of the enterprise to the workers and contractors continued to increase. The management company demonstrated that it lacked financial capacities and became practically bankrupt. As a result of the operational failures, the mining towns were not made ready to be heated in the winter season and their citizens were suffering.

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The Tribunal ordered that Claimant pay the full costs incurred by the Republic in the Arbitration.

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