Appeal of arbitration decisions by the Appeals Board violations were committed, which are significant and gross, which led to a violation of the competence of the arbitration jurisdiction of the dispute established by the Law of the Republic of Kazakhstan "On Arbitration", which is defined by the parties in the Contract.

Individual entrepreneur V. (hereinafter referred to as the sole proprietor, plaintiff, applicant) filed a claim with arbitration against Sole Proprietor S. (hereinafter referred to as the defendant), M. on the invalidation of the integrated business license agreement dated March 31, 2017 and the application of the consequences of the invalidity of the transaction. The decision of the Adilet Arbitration Court dated September 27, 2018 (hereinafter referred to as the Arbitration Award) satisfied the plaintiff's claims against the defendant regarding the recognition of the integrated business license agreement dated March 31, 2017 (hereinafter referred to as the Agreement) as invalid and the application of the consequences of the invalidity of the transaction. By the ruling of the Almaly District Court No. 2 of Almaty city dated March 11, 2019, the defendant's petition for the annulment of the Arbitral Award was denied. By the ruling of the Judicial Board for Civil Cases of the Almaty City Court dated May 16, 2019, the ruling of the court of first instance was canceled. The defendant's motion to set aside the Arbitral Award has been granted. The Judicial Board for Civil Cases of the Supreme Court overturned the ruling of the appellate instance, upholding the decision of the court of first instance on the following grounds. It follows from the case file that on March 31, 2017, an Agreement was concluded between IP V. and IP S., represented by a representative of M. acting on the basis of a power of attorney dated March 30, 2017, under which the defendant undertook to grant the plaintiff the right to use a set of exclusive rights, including the right to use a trademark or service mark TM B, the exclusive right to open and operate a Barbershop men's style salon under the TM B brand.

The plaintiff, in turn, undertook to pay remuneration in accordance with the terms of the Contract. Clause 8.5 of the Agreement stipulates that in case of non-settlement of disagreements in the claim procedure, as well as in case of non-receipt of a response to the claim within the period specified in clause 8.4 of the Agreement, the dispute is referred to the arbitration court at the location of the defendant in accordance with applicable law. IP V. appealed to the Adilet Arbitration Court with a claim for invalidation of the Contract concluded due to a misconception and the application of the consequences of the invalidity of the transaction, indicating that IP S. at the time of signing the Agreement, she did not have exclusive rights to the trademark "TM B". According to an extract from the State Register of Trademarks of the Republic of Kazakhstan, the trademark "TM B" was registered on December 4, 2017. The plaintiff's claims were satisfied by the arbitration award. The court of first instance, refusing to annul the Arbitration Award to the defendant, proceeded from the fact that the arbitration court had not committed significant violations, and the decision did not contradict the principle of legality and public order of the Republic of Kazakhstan. The Appellate Judicial Board motivated the cancellation of the ruling of the court of first instance and the adoption of a new decision to cancel the Arbitration Award by the fact that, contrary to paragraph 1 of Article 897-1 of the Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Code), the complex business license agreement was not registered in accordance with the established procedure, therefore it has no legal force. In this regard, I came to the conclusion that the arbitration clause provided for in clause 8.5 of the Agreement is not applicable, and this dispute is beyond the jurisdiction of arbitration. Meanwhile, the conclusions of the court of appeal do not comply with the norms of substantive law. According to paragraph 1 of Article 8 of the Law of the Republic of Kazakhstan "On Arbitration" (hereinafter referred to as the Law), a dispute may be submitted to arbitration if there is an arbitration agreement concluded between the parties. According to paragraph 1 of Article 9 of the Law, the arbitration agreement is concluded in writing. An arbitration agreement is considered concluded in writing if it is contained in the form of an arbitration clause in a document signed by the parties, or concluded through the exchange of letters, telegrams, telephone messages, faxes, electronic documents or other documents defining the subjects and content of their will. In this case, an arbitration agreement has been concluded between the parties, which is set out in clause 8.5 of the Agreement signed by the parties. In accordance with paragraph 1 of article 20 of the Law, the arbitral tribunal independently decides whether or not it has the authority (jurisdiction) to consider a dispute submitted for its resolution, including in cases where one of the parties objects to arbitration proceedings due to the invalidity of the arbitration agreement.

Appeal of arbitration decisions by the Appeals Board

For this purpose, the arbitration clause, which is part of the contract, is interpreted as an agreement independent of other terms of the contract. Thus, the procedure for concluding an arbitration agreement is regulated by the Law. By the terms of the Agreement, the parties determined the jurisdiction of this dispute specifically to arbitration, and therefore the conclusions of the appeals board on the absence of grounds for the application of the arbitration clause, with reference to the norms of Article 897-1 of the Civil Code, do not correspond to the factual circumstances of the case and the norms of substantive law. Subitems 1), 2) of paragraph 2 of Article 52 of the Law provide that an arbitral award is annulled by a court if it is determined that: - the arbitral award contradicts the public policy of the Republic of Kazakhstan; - the dispute on which the arbitral award was made cannot be the subject of arbitration under the legislation of the Republic of Kazakhstan. The specified list of grounds for annulment of the award is exhaustive and is not subject to extensive interpretation. There are no such grounds in this case. In such circumstances, the board concluded that the arguments of the petition were justified. The violations committed by the appeals board led to an incorrect resolution of the dispute. They are significant and gross, since they led to a violation of the jurisdiction of arbitration established by Law and the jurisdiction of the dispute, which is determined by the parties in the Contract. These circumstances entail the unconditional cancellation of the contested judicial act, while the ruling of the court of first instance remains in force. 

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