On the recognition of the illegal refusal to issue a permit for the transfer of the right of subsurface use

No. 6001-24-00-6ap/3235 dated April 24, 2025

Plaintiff: "E" LLP (hereinafter referred to as the Partnership)

Respondent: The Ministry of Industry and Construction of the Republic of Kazakhstan (hereinafter referred to as the Ministry)

The subject of the dispute: on recognizing as illegal the refusal to grant permission for the transfer of the right of subsurface use and (or) objects related to the right of subsurface use dated April 26, 2024, recognizing as illegal actions to violate the terms and procedure for considering applications and appeals, on forcing to make a new decision on the permission to transfer the right of subsurface use and (or) objects related to the right of subsurface use

Review of the plaintiff's cassation complaint PLOT:

On February 11 and May 23, 2022, "S" LLP was granted licenses for exploration of solid minerals.

On November 17, 2023, LLP "C" transferred the right of subsurface use to LLP "E".

On November 27, 2023, "E" LLP applied to the Ministry for a permit to transfer the right of subsurface use.

On November 30, 2023, the Ministry sent a request to the National Security Committee of the Republic of Kazakhstan (hereinafter referred to as the National Security Committee) to verify the application's compliance with national security requirements.

On February 27, 2024, "E" LLP filed a complaint with the Minister of Industry and Construction, stating that the application was under consideration beyond the time limits set by law and no response had been provided.

On March 5, 2024, the Ministry re-sent a request to the National Security Committee with a request to provide a response to the previously sent request.

On March 16, 2024, the National Security Committee sent a reply to the Ministry stating that there were no comments or suggestions on the application of LLP "E" for the transfer of the right of subsurface use.

On March 26, 2024, the Ministry responded to the complaint of "E" LLP, informing that the application would be considered at the next meeting of the expert commission on subsoil use.

On March 28, 2024, a meeting of the expert commission under the Ministry was held, during which it was decided to postpone consideration of the application with reference to the resolution of the President of the Republic of Kazakhstan dated February 28, 2023.

On April 4 and 11, 2024, the expert commission held meetings, at which a similar decision was made to postpone the meeting, also with reference to the specified document.

On April 8, 2024, "E" LLP filed a second complaint with the Minister of Industry and Construction, pointing out a violation of the deadlines for reviewing the application and requesting that it be submitted to the expert commission without delay.

On April 18, 2024, the expert commission recommended refusing to grant LLP "E" permission to transfer the right of subsurface use under licenses dated February 11, 2022 and May 23, 2022, owned by LLP "C", with reference to subparagraph 1) of paragraph 10 of Article 45 of the Code of the Republic of Kazakhstan "On Subsoil and Subsurface Use" (hereinafter - The Code).

 The reason for the refusal was the order of the Prime Minister of the Republic of Kazakhstan dated February 28, 2023.

On April 22, 2024, the Ministry re-sent a request to the National Security Committee for compliance of the application of "E" LLP with the requirements of national security.

On April 25, 2024, the National Security Committee confirmed its earlier position that there were no comments or suggestions.

On April 26, 2024, the Ministry sent a reply to LLP "E" about the refusal to grant permission for the transfer of the right of subsurface use and (or) objects related to the right of subsurface use, in accordance with subparagraph 1) paragraph 10 of Article 45 of the Code.

Judicial acts:

1st instance: the claim is partially satisfied.

The refusal to grant permission to the Partnership for the transfer of the right of subsurface use and (or) objects related to the right of subsurface use, dated April 26, 2024, was declared illegal.

The Ministry is forced to resume and end the administrative procedure initiated at the request of the plaintiff on November 27, 2023, taking into account the legal position of the court.

The rest of the claim was denied.

Appeal: the decision of the court of first instance has been changed.

Regarding the satisfaction of the claim for declaring illegal the refusal to grant the Partnership permission to transfer the right of subsurface use and (or) objects related to the right of subsurface use dated April 26, 2024 and forcing the Ministry to resume and end the administrative procedure initiated at the request of the plaintiff on November 27, 2023, taking into account the legal position of the court, it was canceled and a new decision was made in this part. the refusal to satisfy the claim.

Cassation: the decision of the appeal in this case is upheld.

Conclusions: the court of appeal, changing the decision of the court of first instance and making a new decision to dismiss the claims in the previously satisfied part, proceeded from the following circumstances:

the presence of a response from the national security authorities does not exclude the possibility of refusal based on the decision of the competent authority.;

The Ministry lawfully refused to issue a permit for the transfer of the right of subsurface use on the basis of subparagraph 1) of paragraph 10 of Article 45 of the Code. Such a transition may lead to non-compliance with the requirements of the country's national security, including the concentration of subsoil use rights.;

The transfer of the right is carried out exclusively with the permission of the competent authority represented by the Ministry. Without registration of the transaction with the registration authority and obtaining permission from the authorized body, the plaintiff cannot acquire the right to use the subsoil;

 The study of the documents marked "DSP" confirmed the validity of the Ministry's refusal to issue a permit for the transfer of subsoil use rights.

Paragraph 1 of Article 44 of the Code stipulates that the transfer of the right of subsurface use (a share in the right of subsurface use) arising on the basis of a contract for subsurface use, a license for exploration or extraction of solid minerals, as well as the transfer of objects related to the right of subsurface use, is carried out with the permission of the competent authority, issued in accordance with the established procedure.

Paragraph 6 of Article 45 of the Code establishes that the expert commission on subsurface use is an advisory body under the competent authority in order to develop recommendations when considering applications for permission to transfer the right of subsurface use and (or) objects related to the right of subsurface use, as well as in other cases provided for by the Code.

Subparagraph 1) of paragraph 10 of Article 45 of the Code provides that the competent authority refuses to issue a permit if the transfer of the right of subsurface use (a share in the right of subsurface use) and (or) objects related to the right of subsurface use entails non-compliance with the requirements for ensuring the national security of the country, including the concentration of subsurface use rights.

It follows from the case file that the specified grounds for refusal to issue a permit are supported by a set of documents collected and received as part of the administrative procedure.

The decision to grant a permit for the transfer of the right of subsurface use is solely the prerogative of the competent authority, which bases its decision on the recommendation of the expert commission.

As part of this procedure, the expert commission has the right to request information from various authorities. At the same time, responses to such requests are subject to a comprehensive and thorough assessment within the commission's competence, but they are not an absolute basis for making decisions or guiding the commission's actions.

At the same time, both the commission's recommendations and the contested decision were made within the framework of existing competencies and are based on an objective and comprehensive study of the collected data.

The fourth part of Article 155 of the CPC stipulates that the court refuses to satisfy the claim if, upon its consideration, it finds that the contested action (inaction) has been committed, the decision was made in accordance with the competence and legislation of the Republic of Kazakhstan.

Consequently, the conclusions of the court of appeal correspond to the factual circumstances of the administrative case.

Considering that the court of appeal took the necessary measures to comprehensively, fully and objectively clarify the circumstances relevant to the case, and there were no violations of substantive and procedural law, the judicial board did not find any grounds for canceling the contested judicial act and satisfying the cassation appeal.

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