On the recognition of illegal actions to reject an application for participation in an electronic auction, the protocol on the auction results
No. 6001-24-00-6ap/1148 (2) dated February 06, 2025
Plaintiff: LLP "O" (hereinafter – LLP)
Respondent: State Institution "Ministry of Energy of the Republic of Kazakhstan" (hereinafter – the Ministry)
The subject of the dispute: on the recognition of illegal actions to reject an application for participation in an electronic auction, the protocol on the auction results
Review of the defendant's cassation complaint PLOT:
On April 26, 2023, the Ministry announced an electronic auction on the electronic trading platform for hydrocarbons of the site: deposit J. (the object of sale is Hydrocarbons; site: deposit J.; type: Subsurface use; type 2: Hydrocarbons; site
No. 178; Area 4.48 sq. km; Exploration period: the duration of the production period at the conclusion of the production contract is not more than twenty-five years) bidding (hereinafter referred to as the auction).
The deadline for submitting applications for participation in the auction is set until June 26, 2023 inclusive.
The auction date is July 12, 2023.
On June 23, 2023, the LLP sent application No. 279175-472785 for participation in the auction with the necessary documents attached.
On July 7, 2023, the Ministry rejected the LLP's application due to the inconsistency of the plaintiff's application for participation in the auction.
By the protocol on the auction results dated July 12, 2023, LLP "V" was recognized as the winner of the auction.
Judicial acts:
1st instance: the claim is satisfied. The defendant's actions to reject the LLP's application to participate in the electronic auction for hydrocarbons of the site: deposit J. (the object of sale is hydrocarbons; site: deposit J.; site: deposit J.; type: Subsurface use; type 2: Hydrocarbons; site No. 178; area
4.48 sq.km; the auction was declared illegal and the protocol of July 12, 2023 on the auction results was canceled.
Based on the results of the consideration of this case, a private ruling was issued on the identified violations of the law committed by officials of the Ministry, bringing them to the attention of the Minister of Energy of the Republic of Kazakhstan for appropriate measures.
Appeal: the decision and the private ruling of the court of first instance are left unchanged.
Cassation: judicial acts in this case are upheld.
Conclusions: in accordance with paragraphs 1 and 2 of Article 97 of the Code of the Republic of Kazakhstan "On Subsoil and Subsurface Use" (hereinafter referred to as the Code), an application for participation in an auction for granting the right to subsurface use of hydrocarbons is subject to consideration within ten working days from the date of its receipt by the competent authority. Based on the results of the examination of the application, the competent authority accepts the application and allows the applicant to participate in the auction or refuses to accept the application.
The competent authority refuses to accept the application if: the application does not meet the requirements established by
by this Code.
By virtue of paragraphs 1 and 2 of Article 96 of the Code, a person interested in participating in an auction for granting the right to subsurface use of hydrocarbons sends to the competent authority an application for participation in the auction in the form of an electronic document certified by means of an electronic digital signature by using the informatization facility of the operator of electronic auctions for granting the right to subsurface use of hydrocarbons.
The application for participation in the auction must contain:
for legal entities – the name of the applicant, his location, information on state registration as a legal entity (extract from the commercial register or other legalized document certifying that the applicant is a legal entity under the legislation of a foreign state), information about managers, information about all (any) legal entities, individuals, states and international organizations that directly and (or) indirectly control the applicant.
The only reason for rejecting the plaintiff's application was the incorrect indication in the documents provided to the application of the position of the head and founder A.G., not as director of the Partnership, but as President of the organization, which does not comply with its Charter.
At the same time, according to the certificate attached to the application from the NAO
"Government for Citizens" dated June 23, 2023, A.G. is the sole founder and head of the Partnership.
In accordance with article 14 of the CPC, an administrative body or official is prohibited from refusing to implement, restrict,
terminate the right of a participant in an administrative procedure, as well as impose an obligation on him in order to comply with requirements not established by the legislation of the Republic of Kazakhstan (prohibition of abuse of formal requirements).
In the case under consideration, the administrative authority abused formal requirements by rejecting the plaintiff's application on grounds not provided for by law, which resulted in a violation of his legitimate interests.
Canceling the results of the auction, the local courts, reasonably applying the provisions of part three of Article 155 of the CPC, proceeded from the fact that an unlawful refusal to allow the plaintiff to participate in the auction entails the cancellation of the auction results and its re-holding.
The arguments of the defendant's cassation appeal, with reference to paragraph 1 of Article 102 of the Code, stating that the plaintiff does not have the right to appeal the auction results due to not being allowed to participate, cannot be taken into account. The task of administrative legal proceedings is to restore the violated rights of the participant in the administrative procedure, which can be achieved only by canceling the results of an auction held without the participation of a person whose application was rejected due to the fault of the administrative authority, and by re-conducting it. A different approach to resolving this issue completely eliminates the process of appeal by the subjects of the actions of the auction organizer to reject the application for participation in the auction and judicial control over the activities of the authorized body.
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