Challenging the auditor's report and the auditor's report based on the results of the internal state audit 

The plaintiffs challenged the audit report and the auditor's report based on the results of the internal state audit, and the courts reasonably concluded that such claims were returned. It should be noted that for a short time questions arose about the jurisdiction of these disputes due to repeated amendments to Article 19 of the Law on State Aviation and Physical Culture.

Thus, from July 1 to July 6, 2021, this article provided that the SAiFC bodies shall recognize the results of the state audit conducted by other SAiFC bodies, with the exception of documents of the internal audit services, in accordance with paragraphs 2, 3, 4 and 5 of this article, if they are not recognized by the court as illegal in accordance with the legislation of the Republic of Kazakhstan on administrative proceedings.

From July 6, 2021, this provision has been amended with the transfer of disputes to civil procedural jurisdiction, which, in the opinion of the authors of this Analysis, is justified from the point of view of legal logic, since the auditor's report2 and the auditor's report, in the first case, contain the conclusions and recommendations of the auditors, in the second, the results of the audit.

At the same time, these documents do not have the mandatory criteria of an administrative act.

At the same time, the courts should note that according to subparagraph 1) of paragraph 2 of Article 5 of the Law on State Aviation and Physical Culture, one of the measures of response of financial control is the issuance of an order binding on all state bodies, organizations and officials to eliminate the identified violations and to consider the responsibility of the persons who committed them.

In addition, paragraph 7 of Article 58-4 of the same Law provides for the right to appeal against the decisions of the appeal commission of the authorized body in the field of State Aviation and Physical Culture.

Challenging such instructions and decisions of the appeal commission is carried out in administrative proceedings, as well as challenging the actions (inaction) of the SAiFC bodies and (or) their officials, if they meet the criteria of an administrative act, action (inaction). 

Pre-trial dispute resolution procedure

In accordance with paragraphs 6, 7 of Article 47 of the Law on Civil Defense, based on the results of consideration of a complaint received within the time limits established by paragraph 2 of this Article, the authorized body shall make a decision in accordance with subparagraph 6) of Article 16 of this Law or on refusal to satisfy the complaint.

In case of disagreement with the decision of the authorized body taken in accordance with paragraph 6 of this Article, the potential supplier shall have the right to appeal it to the appeal commission in the manner provided for by the legislation of the Republic of Kazakhstan on state audit and financial control.

It follows from the meaning of this provision of the Law that in case of disagreement of a potential supplier with the decision of the authorized body, when appealing against actions (inaction), decisions of the customer, public procurement organizer within five working days from the date of posting the protocol on the results of public procurement by means of a tender (auction), appealing against its decision to a higher body is the right of a potential supplier.

However, paragraph 9 of the Law regulates that the pre-trial dispute resolution procedure provided for by this article is mandatory.

According to paragraph 2 of Article 58-6 of the Law "On State Audit and Financial Control", appellate settlement of disputes in cases provided for by this Law is mandatory.

By virtue of Clause 33 of the Rules for In-House Audit, in case of disagreement with the decision of the department of the authorized body and (or) with the notification of the territorial subdivision sent in accordance with subparagraphs 2 and 3) of part two of Clause 26 of these Rules, the potential supplier who has submitted an application for participation in the relevant tender (auction) and (or) the object of state audit shall file a complaint with the Appeal Commission through publicly available information systems,  including through the web portal in the form in accordance with Appendix 7 to these Rules, or apply to the court.

JURISDICTION OF ADMINISTRATIVE CASES

In accordance with Part 2 of Article 102 of the APC, the courts have jurisdiction over disputes arising from public law relations provided for by this Code in administrative proceedings.

Clause 2 of the NPVS No4 clarifies that the challenges to the results of the CD, the decisions of the authorized body on the inclusion of a potential supplier in the RPD, as well as the decisions, conclusions, instructions, notifications of the authorized body based on the results of the inspection of the PP are carried out in accordance with the procedure provided for by Part 3 of Article 106 of the CAPP, at the place of residence (location) of the claimant.

If the plaintiff, along with the claim to recognize the results of the tender as illegal, demands on this basis to recognize the concluded contract on civil defense as invalid, then such claims are subject to joint consideration in the SIAC taking into account the requirements of Part 3 of Article 84, Part 3 of Article 155, Part 2 of Article 156 of the APC.

NPVS No4 also provides that in this case, in the part of the claim for invalidation of the contract, the plaintiff is not required to comply with the procedure for pre-trial settlement of the dispute provided for by the contract.

Claims of a potential supplier against actions (inaction), decisions of the customer, organizer, single organizer of civil defense, commissions, expert, single operator in the field of civil defense, as well as actions (inaction), decisions of the authorized body and bodies of the State Aviation and Physical Culture are subject to consideration by the SMAS.

Claims of CD organizers, customers related to the application of subparagraphs 1) and 3) of part one of paragraph 4 of Article 12 of the Law on CD, as well as claims arising from the performance of CD contracts, are subject to consideration by the SIEC.

Claims to challenge the decision of the authorized body to recognize a potential supplier as an unscrupulous CD participant, recognized as such in accordance with subparagraph 2) of part one of paragraph 4 of Article 12 of the Law on CD, are subject to consideration by the SMAS. 

PROCEDURAL TIME LIMITS IN COURTS

In accordance with Parts 1 and 2 of Article 9 of the CAPP, everyone has the right, in accordance with the procedure established by this Code, to apply to an administrative body, an official or a court for the protection of violated or disputed rights, freedoms or legitimate interests.

Waiver of the right to appeal to an administrative body, an official or a court is invalid. Participants of the CD have the right to apply to the court within the time limits established by the APPC.

Potential suppliers challenge the decisions of the authorized bodies, decisions, actions (inaction) of the customer, organizers of the tender in the field of public procurement in accordance with Article 132 of the CAPP.

At the same time, Article 136 of the APC establishes preclusive terms for filing a claim with the court.

Claims for contestation, for coercion are filed with the court within a month from the date of delivery of the decision of the body considering the complaint based on the results of the consideration of the complaint.

In the event that the law does not provide for a pre-trial procedure or there is no body considering the complaint, the claim shall be filed within one month from the date of delivery of the administrative act or from the date of notification in the manner established by this Code and the legislation of the Republic of Kazakhstan.

A missed deadline for filing a claim for a valid reason may be restored by the court in accordance with the rules of the Civil Procedure Code.

The reasons for missing the deadlines for filing a claim with the court and their importance for the correct resolution of the administrative case are clarified by the court at the preliminary hearing.

Failure to meet the deadline for filing a claim with the court without a valid reason, as well as the impossibility of restoring the missed deadline for filing a claim with the court, are grounds for returning the claim.

The court finds out the reasons for missing the deadline at the preliminary hearing and resolves the issue of restoring the missed deadline.

In case of refusal to restore the missed deadline by the court, the claim is returned. 

REGULATORY FRAMEWORK

- Constitution of the Republic of Kazakhstan;

- Civil Code of the Republic of Kazakhstan (CC);

- Civil Procedure Code of the Republic of Kazakhstan (CC)

- Administrative Procedural Code of the Republic of Kazakhstan (APPC); - Budget Code of the Republic of Kazakhstan;

- Tax Code of the Republic of Kazakhstan;

- Law of the Republic of Kazakhstan "On Public Procurement" (Law on Civil Procurement);

- Law of the Republic of Kazakhstan "On State Audit and Financial Control" (Law on State Audit and Financial Control);

- Law of the Republic of Kazakhstan "On Legal Acts";

- Law of the Republic of Kazakhstan "On the National Welfare Fund";

- Law of the Republic of Kazakhstan "On Procurement of Certain Entities of the Quasi-Public Sector";

- Rules for public procurement, approved by Order No. 648 of the Minister of Finance of the Republic of Kazakhstan dated December 11, 2015 (Rules No648);

- Rules for the Formation and Maintenance of Registers in the Field of Public Procurement, approved by Order No. 694 of the Minister of Finance of the Republic of Kazakhstan dated December 28, 2015 (Rules No694);

 - Rules for conducting in-house audits, approved by Order No. 598 of the Minister of Finance of the Republic of Kazakhstan dated November 30, 2015 (Rules No598);

- Rules for Internal State Audit and Financial Control, approved by Order No. 392 of the Minister of Finance of the Republic of Kazakhstan dated March 19, 2018 (Rules No. 392);

- Special Procedure for Public Procurement, approved by the Decree of the Government of the Republic of Kazakhstan dated March 20, 2020 No127 (valid until December 31, 2020)

- Rules for public procurement using a special procedure, approved by the Decree of the Government of Kazakhstan dated December 31, 2015 No1200 (Rules No1200);

- Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated April 21, 2022 No4 "On the Application of Public Procurement Legislation by the Courts" (NPVS No4);

- Procurement Management Standard of the Fund, approved by the decision of the Board of Directors of the Fund No31/19 dated September 3, 2019; - other regulatory legal acts of the Republic of Kazakhstan.

REDUCE

admakt – administrative act

CD - public procurement;

RPD – Register of Unscrupulous Participants in Public Procurement;

SIAS – Specialized Inter-District Administrative Court;

SCAD – Judicial Chamber for Administrative Cases of the Regional Court;

SCAD of the Supreme Court of the Republic of Kazakhstan – Judicial Chamber for Administrative Cases of the Supreme Court of the Republic of Kazakhstan;

SIEC – Specialized Inter-District Economic Court;

Ministry of Finance - Ministry of Finance of the Republic of Kazakhstan;

Treasury – the Treasury Committee of the Ministry of Finance of the Republic of Kazakhstan;

KVGA – Internal State Audit Committee of the Ministry of Finance of the Republic of Kazakhstan;

DVGA – Department of Internal State Audit of the Internal State Audit Committee of the Ministry of Finance of the Republic of Kazakhstan;

State Audit and Financial Control;

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