Recognition as an unscrupulous procurement participant
On July 23, 2024, No. 6001-24-00-3GP/322 Judicial Board for Civil Cases of the Supreme Court of the Republic of Kazakhstan, consisting of: Chairman – judges T., judges, and the plaintiff's representative, K.J. Oserova, having considered in open court via videoconference the civil case on the claim of the joint‑stock company (hereinafter referred to as JSC) "K" to the limited liability partnership (hereinafter referred to as LLP) "A" on recognition as an unfair participant in the procurement, received on the cassation petition of JSC "K" for the revision of the rulings of the specialized interdistrict Economic court of the Kyzylorda region dated March 6, 2024 and the judicial board for civil cases of the Kyzylorda Regional Court dated April 30, 2024,
The plaintiff appealed to the court with the specified requirement.
By the ruling of the specialized interdistrict Economic Court of the Kyzylorda region dated March 6, 2024, which remained unchanged by the ruling of the Judicial Board for Civil Cases of the Kyzylorda Regional Court dated April 30, 2024, the proceedings were terminated on the basis of subparagraph 1) of Article 277 of the Civil Procedure Code of the Republic of Kazakhstan (hereinafter - CPC).
In the petition, the plaintiff, referring to violations of the law committed by local courts, asks to cancel the contested judicial acts and send the case for a new hearing.
After hearing the explanations of the plaintiff's representative, who supported the arguments of the petition, having studied the cassation petition and materials, the judicial board comes to the following conclusion.
In accordance with part 5 of Article 438 of the Civil Procedure Code of the Republic of Kazakhstan (hereinafter referred to as the CPC), the grounds for cassation review of judicial acts that have entered into force are significant violations of substantive and procedural law that led to the issuance of an illegal judicial act. In the present case, such violations have been committed.
It follows from the materials that the dispute is related to the defendant's violation of obligations under the contract for the purchase of services concluded by the parties on October 27, 2023. In the claim, the applicant indicated that this agreement was concluded on the basis of the Procurement Procedure by Joint Stock Company "C" and legal entities, fifty or more percent of the voting shares (participation interests) of which are directly or indirectly owned by JSC "C" by right of ownership or trust management (hereinafter referred to as the Procedure).
The court reasoned the conclusion that the case could not be considered in civil proceedings with the provisions of article 26 of the Procedure providing for the procedure and conditions for including the supplier in the list of unreliable potential suppliers (suppliers) of the Fund by the decision of the first head of the Fund operator. Referring to the fact that a supplier who violated obligations under a contract concluded on the basis of the above Procedure is subject to inclusion in the list, the court issued a ruling on termination of proceedings.
The plaintiff's cassation petition is based on the application of article 10 of the Law "On Procurement of Certain Quasi‑Public Sector Entities" (hereinafter referred to as the Law), which provides for the obligation of the customer to file a lawsuit to recognize the supplier who violated the obligations as an unfair participant in the procurement.
Based on the results of consideration of the cassation petition, the board comes to the conclusion that the acts of the local courts are unjustified. As mentioned above, article 10 of the Law establishes both the procedure for maintaining a register of unscrupulous procurement participants and the obligation of the customer to file a relevant claim with the court. Thus, the conclusions of the local courts in the contested acts that the case of recognizing a supplier as an unscrupulous participant in the procurement is not subject to consideration in civil proceedings, directly contradicts this provision of the Law.
At the same time, paragraph 2 of article 11 of the Law stipulates that the procurement procedure is determined by the procurement rules. By virtue of subparagraph 15) of Article 2 of the Law, the procurement rules, depending on the scope of regulated relations for the Fund and the organizations of the Fund, represent the above-mentioned Procurement Procedure by the Fund and the organizations of the Fund.
In turn, paragraph 2 of article 26 of the Rules establishes that in case of violation of the procurement contract, a potential supplier (supplier) is subject to inclusion in the List of unreliable potential suppliers (suppliers) of the Fund in the presence of a court decision (resolution) that has entered into force, establishing the fact of non-fulfillment or improper fulfillment of the procurement contract.
Accordingly, the board considers that the court, in the presence of the above-mentioned norms on the obligation of the customer to file a claim with the court, should have considered the dispute on its merits.
As mentioned above, the cassation review of judicial acts is aimed at verifying the correctness of the application of legal norms by lower courts. The significant violations that, in accordance with part five of Article 438 of the CPC, allow judicial acts that have entered into force to be reviewed in cassation include violations of procedural law listed in article 247 of the CPC. Incorrect application of substantive law norms can be attributed to a material violation only if, as a result, the court incorrectly resolved the case.
According to Part 1 of Article 6 of the CPC, when considering and resolving civil cases, the court must strictly comply with the requirements of the Constitution of the Republic of Kazakhstan, this Code, and other regulatory legal acts.
Paragraph 5 of the regulatory resolution of the Supreme Court of the Republic of Kazakhstan "On Judicial Decision" dated July 11, 2003 No. 5 clarified that, according to Article 224 of the CPC, the court's decision must be lawful and justified.
Article 412 of the CPC stipulates that the court of appeal, based on the materials available in the case and submitted in accordance with the requirements of part two of Article 413 of this Code, verifies the correctness of establishing the factual circumstances of the case, the application and interpretation of substantive law, as well as compliance with the norms of the civil procedure law when considering and resolving the case.
Part 1 of Article 413 of the CPC stipulates that when considering a case on appeal, the court verifies the legality and validity of the decision of the court of first instance in full.
The study of the civil case allows us to conclude that the contested judicial acts do not comply with the specified requirements of the law. In this regard, the contested judicial acts are subject to cancellation with the referral of the case to the court of first instance for consideration on the merits.
When considering a case, the court should create conditions for the parties to exercise their procedural rights to a full and objective investigation of the circumstances of the case. Based on part 3 of Article 15 of the CPC, the Court explains to the persons participating in the case their rights and obligations, warns of the consequences of committing or not completing procedural actions, clarifies their legal positions and arguments, discusses with them the circumstances of the case and, in cases provided for by this Code, assists them in exercising their rights.
Guided by subparagraph 5) of the second part of Article 451 of the CPC, the judicial board DECIDED:
The rulings of the specialized interdistrict Economic Court of the Kyzylorda region dated March 6, 2024 and the judicial board for Civil Cases of the Kyzylorda Regional Court dated April 30, 2024 in this case should be canceled.
The case should be sent for consideration on the merits to the specialized interdistrict economic court of the Kyzylorda region.
To satisfy the petition of JSC "K".
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