The coronavirus outbreak has spread to many countries, including Kazakhstan, thus prompting WHO to label the NCOVD-19 as a pandemic. Afterwards, the Republic of Kazakhstan proclaimed a state of emergency. Apart from the increasing number of infected people and the number of deaths occurring since it was first detected in Kazakhstan, the virus has also affected the Kazakhstan’s economy, increasing the rate of unemployment and negatively affected businesses including tourism, airline companies and entertainment enterprises. Due to this state emergency, various regulations have been put into effect.
Kazakhstan was not prepared
As Ncovid-2019 was confirmed as pandemic by WHO ,the president of the Republic of Kazakhstan began to take actions and in order to prevent its further spread. He/she signed the decree bringing the state of emergency into effect on March 16th at 08:00 and it will last until April 15th. As the number of infected has been skyrocketing , the government of the Republic of Kazakhstan introduced a quarantine in large cities such as Almaty and Nur-Sultan. The quarantine will begin on March 19 and last until April 15, though it could be prolonged. Kazakhstan’s economy faced immediate consequences such as a drop in the price of oil and increased the rate of the dollar to tenge (Kazakhstan local currency). Dmall and private enterprises have also been affected. These measures were introduced to limit the interaction between infected and healthy people . Despite the limitations and cancellations of airlines, the number of people infected is still rising and apart from the number of infections, another problem which arose has also had a huge impact on the economy in Kazakhstan. Due to the coronavirus outbreak, a series of measures were implemented such as calling employees to work from home, restricting the operation of large malls ,cinemas and theaters, causing a huge unemployment rate in the country. The tourist and entertainment industries are facing big losses as people are not allowed to attend different activities .
Due to the state of emergency many public holidays and their celebrations have been cancelled. Many enterprises havesent their employees to the forced quarantine. Entrepreneurs and numerous of businesses deals were stopped or cancelled because of the coronavirus outbreak, such as cinemas and shopping malls.
What is 「force majeure」 in Kazakhstan law ?
The Kazakhstan civil code has the definition of force majeure. According to Kazakhstan civil code, Article 359, a force majeure is an unpredictable circumstance that impedes the normal outcome of commitments.
Force majeure is an unpredictable circumstance that impedes the normal implementation of the obligations assumed, due to which the parties to the obligation are exempted from liability. Signs of force majeure are extraordinary and inevitable circumstances that contribute to the impossibility of fulfilling contractual and other obligations.
Force majeure circumstances include: natural and man-made disasters, natural disasters, epidemics, pandemics, military operations, legislative acts, etc. The concept of force majeure was established in Article 359 of the Civil Code of the Republic of Kazakhstan (hereinafter - the Civil Code of the Republic of Kazakhstan). At the same time, the list of force majeure is not exhaustive; it can be supplemented by other legislative acts as well as by the parties to named in the contract itself.
The coronavirus pandemic, as well as the declaration of regulatory acts from authorized bodies aiming to reduce the spread of this virus, contain a number of prohibitions. Pandemic situation is used an excuse not to perform the contract. In this case, a person who has previously assumed an obligation but is unable to properly fulfill it, is exempted from liability.
At the same time, force majeure, by virtue of the fact of its existence, does not mean that the entrepreneur is not obliged to take any steps to resolve the situation on whichthe obligation undertaken.
As a rule, the entrepreneur and his client / counterparty prescribe the force majeure circumstances in the contract, including the period they must communicate with each other, etc. However, if such a condition is not in the contract or the contract itself does not exist, then the parties to to whom the obligation must be made, will be guided by the current legislation of the Republic Kazakhstan. Thus ,under the civil law of the Republic of Kazakhstan ,article 361 「If in a bilateral agreement execution for one party has become impossible due to a circumstance for which neither party is responsible, then neither of the parties, unless the legislative act or agreement provides otherwise, shall not be entitled to demand the execution of the agreement. Each of the parties has the right to demand in this case the return of everything that they has performed without having received an appropriate counter-performance. 」
The content of the aforementioned article means that if you believe you are unable to fulfill your obligations in accordance with the contract, then you must contact your agent and file an application and notify them about the occurrence of the force majeure obstacles. Then, if there is no further negotiation, then the only option is to fulfill obligations, for example, to pay off the loan etc.
Legal basis
Article 359. The Grounds of Responsibility for Violating an Obligation
1. A debtor shall be responsible for the failure to execute and (or) improper execution of an obligation if guilt exists, unless it is otherwise stipulated in legislation or agreement. A debtor shall be recognized as innocent, if they can prove that they adopted all the remedies under their control for a proper execution of the obligation.
2. A person who has failed to execute or improperly executed an obligation when carrying out entrepreneurial activities, shall bear the financial liability, unless they can prove that proper execution became impossible as a result of force majeure, that is, extraordinary and unpreventable under given circumstances (natural calamities, military actions, etc.). However, a lack in the market place of the goods, work or services which are required for the execution, shall not be referred to as such circumstances.
Legislation or the agreement may provide for other grounds for liability or release there from.
3. An agreement settled beforehand on the elimination or limitation of liability for intentional violation of the obligation shall be void.
Where to get an official notification of force majeure obstacles in Kazakhstan ?
According to Article 359 of the civil law of the Republic of Kazakhstan, in the case of the inability to fulfill a contract’s obligations, in the case of an impossibility of proper execution, the debtor is obliged to immediately notify the creditor.
How to correct and issue force majeure
According to Art. 349 of the Civil Code of the Republic of Kazakhstan, in the case of an impossibility of proper execution, the debtor is obliged to immediately notify the creditor.
Therefore, first of all, it is necessary to send a notice to the counterparty, concerning the obligation which cannot be fulfilled. The notification is made in written form and shall describe all of the obstacles that have lead to the inability to fulfill the obligations according to the contract. In the case of the inability to perform the contract due to the decree of the prime minster of the Republic of Kazakhstan 「On the measures on prevention and the spread of the coronavirus infection on the territory of the Republic of Kazakhstan」 and the decree of the president 「On state emergency」 from March 16th ,2020 and where the parties are unable to perform the contract as a result of these decrees the both parties have the following alternatives to the problem solution :
• Conducting a mutual return of all received from the transaction, termination of the contract and termination of relations;
• Fulfillment of obligations after force majeure circumstances cease.
In order to terminate the contract because it is impossible to execute it due to force majeure circumstances, you may need these documents: • Proposal to terminate the agreement by agreement of the parties (cover letter to the Agreement on termination of the contract) • Termination Agreement • Notification of the contractor about the refusal to fulfill obligations under the contract and the terms of full compensation to the customer for losses caused by the termination of the contract.
Where to get official confirmation of force majeure in Kazakhstan?
It is important and necessary to refer to the regulatory legal acts that served as the cause of force majeure, but that by itself is not enough. In order to fully record the occurrence of such circumstances, those who need to submit the application for the force majeure should get an official supporting document. Such a document is a certificate issued by the Chamber of Commerce of Kazakhstan NPP Atameken free of charge. Obtaining a certificate takes 5-15 work days.