Recognition as an unscrupulous participant in public procurement and inclusion in the register of unscrupulous participants            

             Prior to the start of the trial, the judge performs all actions and orders that are necessary to resolve the dispute, if possible during one court session.

In the preliminary hearing, the court resolves the issue of the composition of the participants in the administrative process.

An interested party is a person whose rights, freedoms and legitimate interests are affected or may be affected by a judicial act.

Interested persons may be involved in an administrative case on the initiative of the court or at the request of participants in the administrative process.

At the same time, the court ruling is not subject to appeal and revision at the request of the prosecutor. A study of cases in this category has shown that by some local courts, the operator of the Center for Electronic Finance JSC (CEF JSC) is involved as an interested party, whereas the above-mentioned legal norms do not assign any authority to this person to adopt an administrative act (order) and form a register, conduct tenders and to determine the winner.

The register is formed by the authorized body (paragraph 1 of Article 12 of the Law). Other courts limit themselves to sending a request to TSEF JSC within the framework of the court's active role to clarify issues: about the presence of a malfunction on the web portal of public procurement, about the commission of actions by a potential supplier on the web portal during the signing of the contract (part 2 of Article 130 of the CPC).

In this case, this person is not involved as an interested party. The latter position is supposed to be more correct.

By virtue of subparagraph 2) of Part 7 of Article 3 of the CPC, cases whose procedure is provided for by the criminal procedure, civil procedure legislation of the Republic of Kazakhstan and the legislation of the Republic of Kazakhstan on administrative proceedings are not subject to consideration in administrative proceedings.

As for the disputes about the challenge of Samruk Kazyna Contract LLP to be included in the List of unreliable potential suppliers of the Holding in the electronic procurement information system, the following should be noted.

Prior to the entry into force on January 1, 2022 of the Law of the Republic of Kazakhstan "On Procurement from Quasi-Public Sector Entities" dated June 8, 2021, such disputes were not subject to consideration in administrative proceedings.

In this regard, the opinion of the local courts is erroneous that the legal relations related to challenging the order of Samruk Kazyna Contract LLP are of a public-law nature.

In accordance with the legislation in force at that time, Samruk Kazyna Contract LLP is not an administrative body, it is not authorized to adopt an administrative act or perform an administrative action in public relations.

Consequently, the contested orders of Samruk Kazyna Contract LLP are not administrative acts, and the relationship between the Holding's entities and Samruk Kazyna Contract LLP is of a private legal nature.

Conclusions and suggestions: The analysis showed that there are common approaches in the consideration of disputes about challenging the actions of the authorized body for inclusion in the RNU. During the trial, the court must check whether the limits of administrative discretion have been exceeded and their compliance (proportionality) with the objectives of the adoption of an administrative act established by the legislation of the Republic of Kazakhstan.;

According to article 13 of the Entrepreneurial Code of the Republic of Kazakhstan, the prevention of offenses and the motivation of a business entity to comply with the requirements established by the laws of the Republic of Kazakhstan have priority over the application of state coercion measures in the process of entrepreneurial activity.

State enforcement measures for an offense committed by a business entity must correspond to its nature and severity; the courts mistakenly involve JSC "CEF" as an interested party in this category of disputes.

             Jurisdiction of administrative cases in the field of public procurement        

             According to the second part of Article 102 of the CPC, the courts have jurisdiction in administrative proceedings over disputes arising from public law relations provided for by this Code.

Paragraph 2 of the NPS No. 4 clarifies that challenging the results of the GZ, decisions of the authorized body on the registration of a potential supplier in the RNU, as well as decisions, conclusions, instructions, notifications of the authorized body based on the results of the audit of the GZ, is carried out in accordance with the procedure provided for in part three of Article 106 of the APPC, at the place of residence (location) of the plaintiff.

If the plaintiff, along with the claim for recognition of the results of the tender as illegal, requires that the concluded GZ agreement be declared invalid on this basis, then such claims will be subject to joint consideration by the SMAS, taking into account the requirements of part three of Article 84, part three of Article 155, part two of Article 156 of the CPC.

The authors of the analysis draw attention to the fact that the above provision of the NPS has been repeatedly pointed out at operational meetings and seminars held for judges of administrative jurisdiction. However, there are cases of refunds of claims regarding the recognition of GZ agreements, whereas they are filed jointly with claims for appealing the results of the GZ.

NPVS No. 4 also provides that in this case, regarding the claim for invalidation of the agreement, the plaintiff is not required to comply with the pre-trial dispute settlement procedure provided for in the contract.

Claims of a potential supplier against actions (inaction), decisions of the customer, the organizer, the single organizer of the GZ, commissions, an expert, a single operator in the field of GZ, as well as actions (inaction), decisions of the authorized body and GAiFK bodies are subject to review by the SMAS.

Claims of the organizers of the GZ, customers related to the application of subitems 1) and 3) of the first part of paragraph 4 of Article 12 of the Law on GZ, as well as claims arising from the execution of contracts on GZ, are subject to consideration by the Council of Economic Cooperation.

Claims challenging the decision of the authorized body to recognize a potential supplier as an unscrupulous participant in the GZ, recognized as such in accordance with subparagraph 2) The first part of paragraph 4 of Article 12 of the GZ Law is subject to review by the SMAS.

Refunds of administrative claims in the field of public procurement    

The main reason for the returns due to lack of jurisdiction was that the contested administrative act was issued in electronic form and therefore should be considered at the location (residence) of the plaintiff.

This rule was introduced in the APPC and at the initial stage of judicial practice influenced the increase in the number of refunds.

A large number of lawsuits were returned by the court of first instance of Astana city due to the fact that the central administrative authorities are located in the capital.

In accordance with the first and second parts of Article 3 of the CPC, it regulates relations related to the implementation of internal administrative procedures, as well as the procedure for administrative proceedings.

The participants in the relations regulated by the Code are state bodies, administrative bodies, officials, as well as individuals and legal entities.

The subject of the legal regulation of the APPC is the activity of administrative bodies related to the adoption, cancellation, modification, and execution of a legally authoritative decision aimed at establishing, changing, or canceling the rights and obligations of specific persons, and performing legally significant actions.

Based on the meaning of paragraph 1 of the NPA No. 5, the courts should distinguish between disputes arising in the process of selecting a supplier and concluding a contract with him on GZ, the procedure for consideration of which is regulated by the rules of the CPC, and disputes arising from the contract on GZ, which are considered in civil proceedings.

The courts have received claims arising from the GZ agreement, in particular, for recognition as illegitimate and cancellation:

a) actions of the customer to send a notice of termination of the contract;

b) the defendant's failure to take measures to terminate the contract and the obligation to terminate it;

c) notification of termination prior to the negotiation unilaterally;

d) actions to send such notification.

The return of such claims by the courts is justified by the fact that disputes are not based on administrative or other authority or dependence of one party (supplier) to the other (customer) by virtue of the powers of administrative bodies established by regulatory legal acts.

In this case, the stated claims contain a dispute over the terms of the contract concluded between the customer and the supplier, which excludes public relations between them.

In such cases, the claims were lawfully returned under subparagraph 2) of part seven of Article 3 of the CPC, which states that cases whose procedure is provided for by the CPC are not subject to administrative proceedings.

The plaintiffs challenged the audit report and the audit opinion based on the results of the internal state audit, and the courts reasonably concluded that such claims had been returned.

It should be noted that for a short time there were questions about the jurisdiction of these disputes due to the repeated amendments to Article 19 of the GAiFK Law.

Thus, from July 1 to July 6, 2021, this article provided that the GAiFK bodies would know the results of the state audit conducted by other GAiFK bodies, with the exception of documents from the internal audit services, in accordance with paragraphs 2, 3, 4 and 5 of this Article, unless they were declared illegal by a court in accordance with the legislation of the Republic of Kazakhstan. about administrative proceedings.

Since July 6, 2021, this rule has been amended with the transfer of disputes to civil procedural jurisdiction, which, in the opinion of the authors of this analysis, is reasonable from the point of view of legal logic, since the auditor's report and audit report8, in the first case, contains the conclusions and recommendations of the auditors, in the second, the results of the audit.

Since July 6, 2021, this rule has been amended with the transfer of disputes to civil procedural jurisdiction, which, in the opinion of the authors of this analysis, is reasonable from the point of view of legal logic, since the auditor's report and audit report8, in the first case, contains the conclusions and recommendations of the auditors, in the second, the results of the audit.

However, these documents do not have the mandatory criteria of an administrative act.9 At the same time, the courts should pay attention to the fact that, according to subparagraph 1) of paragraph 2 of Article 5 of the GAiFK Law, one of the financial control response measures is to issue mandatory orders for all government agencies, organizations and officials to eliminate identified violations and to consider the responsibility of those who committed them.

In addition, paragraph 7 of Article 58-4 of the same Law presupposes the right to appeal against the decisions of the appeal commission of the authorized body in the field of GAiFK.

Challenging such orders and decisions of the appeals commission is carried out in administrative proceedings, as well as challenging the actions (inaction) of the GAiFK bodies and (or) their officials10 if they meet the criteria of an administrative act, action (inaction).

Abbreviations

             Administrative act – administrative act;

GZ - public procurement;

RNU – register of unscrupulous participants in public procurement;

SMAS – specialized interdistrict Administrative Court;

SKAD – judicial board for administrative cases of the regional court;

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

SMEC – specialized interdistrict Economic Court;

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

Treasury – 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;

GAiFK – State audit and Financial control;

CD – tender documentation;

PSD – design and estimate documentation;

SN RK – building regulations of the Republic of Kazakhstan.

Regulatory legal framework

          The Constitution of the Republic of Kazakhstan; the Civil Code of the Republic of Kazakhstan (CC);

The Civil Procedure Code of the Republic of Kazakhstan (CPC)

Administrative Procedural Procedure Code of the Republic of Kazakhstan (APPK);

Budget Code of the Republic of Kazakhstan;

The Tax Code of the Republic of Kazakhstan;

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

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

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

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

The Law of the Republic of Kazakhstan "On procurement of certain entities of the quasi-public sector";

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

Rules for the formation and maintenance of registers in the field of public procurement, approved by the Order of the Minister of Finance of the Republic of Kazakhstan dated December 28, 2015 No. 694 (Rules No. 694);

The rules of desk control approved by the Order of the Minister of Finance of the Republic of Kazakhstan dated November 30, 2015 No. 598 (Rules No. 598);

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

Special procedure for public procurement, approved by Resolution of the Government of the Republic of Kazakhstan dated March 20, 2020 No. 127 (valid until December 31, 2020) Rules for public procurement using a special procedure, approved by Resolution of the Government of Kazakhstan dated December 31, 2015 No. 1200 (Rules No. 1200);

Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated April 21, 2022 No. 4 "On the application of Legislation on public Procurement by Courts" (NPVS No. 4);

The Fund's Procurement Management Standard, approved by the decision of the Board of Directors of the Fund No. 31/19 dated September 3, 2019;

other regulatory legal acts of the Republic of Kazakhstan.

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