Refusal to issue a writ of execution for the enforcement of an arbitral award

Application of the provisions of Part 1 of Article 255 of the CPC, Article 57 of the Law

The court issues a ruling on the refusal to issue a writ of execution for the enforcement of an arbitral award if the party against whom the arbitral award was made submits to the court evidence that:

The arbitration agreement is invalid according to the laws of the state to which the parties have subordinated it, and in the absence of such an indication according to the law of the country where the decision was made.;

The arbitration award was made on a dispute that is not provided for by the arbitration agreement or does not fall under its terms, and contains rulings on issues beyond the scope of the arbitration agreement, as well as due to the non-jurisdiction of the dispute to arbitration;

one of the parties to the arbitration agreement was declared legally incompetent or with limited legal capacity.;

The party against whom the decision was rendered was not properly informed about the appointment of an arbitrator or about the arbitration proceedings, or for other reasons recognized by the court as valid, could not submit its explanations to the arbitration.;

there is a court decision that has entered into legal force, rendered in a dispute between the parties on the same subject and on the same grounds, or an arbitration decision or a court or arbitration ruling on the termination of proceedings in connection with the plaintiff's rejection of the claim.;

The composition of the arbitration or the arbitration procedure were inconsistent with the agreement of the parties or, in the absence of such agreement, were inconsistent with the laws of the country where the arbitration was conducted.;

The decision has not yet become binding on the parties or has been annulled, or its execution has been suspended by the court of the country in accordance with the law of which it was rendered.

Thus, in the ruling, the court must specify the specific reasons why it came to the conclusion that it refused to issue an executive list. The list of grounds is provided for by the norms of law, therefore, it is not subject to an extended interpretation.

The literal content of subparagraph 1) of Part 1 of Article 255 of the CPC makes it possible to conclude that in order to refuse to issue a writ of execution, the party against whom the arbitration decision was made is obliged to provide evidence of the existence of such grounds.

At the same time, there are judicial acts when the courts mistakenly consider that applicants should submit such documents to the court and for this reason refuse to satisfy the application for the issuance of a writ of execution, which is unacceptable, since such conclusions do not comply with subparagraph 1) of part 1 of Article 255 of the CPC.

For example: ID Collect Collection Agency LLP applied to the court for the replacement of the recoverer and the issuance of a writ of execution for the enforcement of the arbitration award to recover debts and arbitration fees from Grebennikova E.V., arguing that the defendant did not execute the decision arbitrarily.

By the ruling of the District Court No. 2 of the Auezovsky district of Almaty dated June 21, 2021, it was refused to replace the claimant and issue an enforcement list, motivated by the lack of information about the proper notification of the debtor about the arbitration proceedings.

In this case, the court of first instance refused, since the recoverer failed to provide evidence of proper notification of the debtor about the arbitration proceedings, whereas by virtue of the direct instruction of the law, such evidence must be provided by the debtor.

Therefore, the Court of appeal correctly disagreed with such conclusions. The Court of Appeal, examining the materials of the arbitration case, found that the debtor had been duly notified by the arbitration of the arbitration proceedings.

In addition, it was established that in 2019, Grebennikova's debtor filed a petition with the court for the annulment of the arbitration award, which was returned.

These circumstances served as the basis for the cancellation of the ruling of the court of first instance.

Similarly, in the case where ID Collect Collection Agency LLP applied to the court of first instance for the replacement of the recoverer and the issuance of a writ of execution for the enforcement of an arbitration award to recover the amount of debt and arbitration fee from Karshigin A.J.

By the ruling of the district court No.2 of the Auezovsky district of Almaty on June 21, 2021, this application was refused.

The court, referring to part 1 of Article 255 of the CPC, indicated as the basis for refusing to issue a writ of execution that there was no information in the application for the issuance of the writ of execution about proper notification of the defendant, receipt of an SMS notification, or sending a notification to his electronic mail.

The court of appeal did not agree with such conclusions, pointing out that the court of first instance distorted the requirements of the law, moreover, in order to verify the debtor's arguments, the arbitration case was not requested.

The Court of Appeal requested an arbitration case, the materials of which do not include Karshigin's presentation of evidence of improper notification, appointment of an arbitrator, or arbitration proceedings.

Moreover, the court did not consider the claim of ID Collect Collection Agency LLP to replace the recoverer.

Therefore, the appeals board came to the conclusion that the ruling should be overturned with the transfer of the issue for a new hearing to the court of the first instance.

There are judicial acts when the court has assumed the burden of proving the documents referred to in paragraph 1) of Part 1 of Article 255 of the CPC.

An analysis of judicial practice indicates that, if the debtor's participation was not secured in the arbitration proceedings, the court clarifies the issues of proper notification and the reasons for the debtor's failure to appear at the arbitration proceedings independently in the absence of statements from the debtor's side, and in the absence of evidence of proper notification of the appointment of an arbitrator and the conduct of arbitration proceedings, refuses to issue a writ of execution, which is inconsistent with the provisions of subparagraph 1) of Part 1 of Article 255 of the CPC, when the time of proof falls on the party, against which an arbitration decision has been rendered.

However, this would not be considered a violation of the law and such an approach would exclude the formal role of the court (part 4 of Article 15 of the CPC).

For example, by the ruling of the District court No. 2 of the Kazybekbiysky district of Karaganda city dated December 28, 2021, the application of Microfinance Organization Everest Finance LLP (hereinafter referred to as LLP) for the issuance of a writ of execution for the enforcement of an arbitration decision to recover debts and arbitration fees from Vorvul N.E. was denied.

The court reasoned its conclusions by the fact that the debtor had not been notified of the arbitration proceedings. This conclusion was drawn from the explanation of the debtor, N.E. Vorvul, who claimed that she had not received an SMS notification, a summons for arbitration on October 25, 2021, and no evidence had been provided to the court by the recoverer.

By the ruling of the judicial board for Civil Cases of the Karaganda Regional Court dated March 16, 2022, the court's ruling was overturned, and the application was sent for reconsideration.

The Court of Appeal from the Central Kazakhstan Permanent Arbitration LLP requested the case materials.

A study of the case established that an arbitrator of Berdysheva A. K. 22 Oct 2021 from the mobile number +7-747-xxxxx nanomer mobile phone debtor 8-777-xxxxx was upravlencheskoe SMS call notification to an arbitration meeting on 25 октября2021 year 09-30 hours. This message was delivered on October 22, 2021 at 11 a.m.

The party to the arbitration proceedings against whom the arbitration decision was made, that is, the debtor Vorvul N.E., was not presented to the court with evidence of non-receipt of this message.

Thus, the court of appeal concluded that the court of first instance unreasonably, without checking the debtor's explanations, refused to issue a writ of execution to the recoverer only on the basis of unsubstantiated allegations.

Therefore, in this case, the court independently established the circumstances necessary for the case in order to issue a lawful and fair judicial act. Improper notification by the arbitral tribunal of the appointment of an arbitrator or of arbitration proceedings is the basis for refusal to issue a writ of execution and cancellation of the award.At the same time, the court is obliged to verify the arguments of the party on the existence of such grounds and the compliance of the actions of the arbitration on notification of persons participating in the dispute with the requirements of the Law.

It is necessary to dwell in more detail on some of the grounds that were most often the grounds for refusing to issue an enforcement list, and on which there are different interpretations of the provisions of the procedural legislation.

1) The party against whom the award was rendered was not duly notified of the appointment of an arbitrator or of the arbitration proceedings, or for other reasons deemed by the court to be respectful, could not submit its explanations to the arbitration.

Here we are talking about ignorance and lack of participation in the arbitration proceedings due to several circumstances:

Improper notification by the arbitral tribunal of the appointment of an arbitrator or arbitration proceedings.

At the same time, the court is obliged to verify the arguments of the party and the compliance of the actions of the arbitration court to notify the persons involved in the case with the requirements of the Law.

The party was notified of the appointment of an arbitrator and the arbitration proceedings, but could not provide its explanations due to objective circumstances.

In this case, the party against whom the arbitration decision was made is obliged to provide evidence of a valid reason preventing the submission of explanations. At the same time, an explanation is understood not only as the presentation of a response, since the speech is not only about the defendant, but it is about the party against whom the decision was made, moreover, explanations can be oral, which are carried out at a court hearing.

2) Incorrect application of paragraph 7 of subparagraph 1) of part 1 of Article 255 of the CPC

When examining judicial acts, it was found that the courts incorrectly refuse to satisfy applications for the issuance of writ of execution on the grounds that "the decision has not yet become binding on the parties."

According to paragraph 7 of subparagraph 1) of Part 1 of Article 255 of the CPC, the issuance of a writ of execution for the enforcement of an arbitration award may be refused if the decision has not yet become binding on the parties.

A similar rule of law is included in the content of paragraph 8 of subparagraph 1) of paragraph 1 of Article 57 of the Law.

For example, Kdryz Loans LLP applied to the court for the issuance of a writ of execution for the enforcement of the decision of the International Arbitration Court for the West Kazakhstan region dated April 21, 2020 on debt collection from Atymai Zh.E.

The debtor did not agree with the statement at the court hearing, explaining that she had not received the arbitration decision, she was hearing about the recovered amount of debt in the amount of 340 000 tenge for the first time, she wanted to challenge the decision, since she actually received a loan in the amount of 170 000 tenge.

In the case materials submitted to the court, there were no documents confirming the fact that Atymai Zh.E. had handed over a copy of the decision to the debtor, there was only information about its direction.

The court checked the SPY code of the postal item, according to Kazpost JSC, the postal notification was not delivered to the addressee.

Thus, Atymai Zh.E. 's arguments about not receiving a decision were confirmed.

The court came to the conclusion that it refused to satisfy the application for the issuance of a writ of execution. The court motivated its conclusions by the fact that the arbitration decision had not yet become binding on the parties.

In this case, the court had to refuse to satisfy the application on the grounds provided for in paragraph 6 of subparagraph 1) of part 1 of Article 255 of the CPC and paragraph 7 of subparagraph 1) of paragraph 1 of Article 57 of the Law (the composition of the arbitration or the arbitration procedure did not comply with the agreement of the parties or, in the absence thereof, did not comply with the laws of the country where the arbitration was conducted).

Thus, by virtue of paragraph 1 of Article 45 of the Law, after examining the circumstances of the case, the arbitral tribunal makes a decision by a majority vote of the arbitrators who are members of the arbitration.

Unless otherwise provided by the rules, the decision is announced at the beginning of the arbitration. The arbitration has the right to announce only the operative part of the decision. In this case, a reasoned decision must be sent to the parties within ten calendar days from the date of the announcement of the decisive part of the decision, unless another deadline is established by the regulations or agreement of the parties.

Failure to send an arbitration award to the parties by the courts should be regarded as non-compliance with the arbitration procedure.

Therefore, the court's conclusions in this case that the arbitration decision has not yet become binding on the party are illegal, since the court has applied a law that should not be applied to the legal relations that have arisen.According to the concept of the Law, an arbitration award is inconclusive and cannot be reviewed on its merits by either a court or arbitration, which is explicitly provided for in paragraph 3 of article 52 of the Law.

In accordance with paragraph 3 of article 45 of the Law, an arbitral award is deemed to have been accepted at the place of arbitration and becomes effective on the day when it is signed by the arbitrator(s), and according to paragraph 1 of article 54 of the Law, it is binding, which is expressly provided for in the specified rule of law.

Thus, on such grounds as "the decision has not yet become binding on the parties", the court cannot refuse to enforce the arbitration award rendered by the Kazakh arbitration.The specified ground for refusal may be applied only in relation to foreign arbitral awards and only if this decision has not yet become final or binding on the parties.

The enforcement of an arbitration award is contrary to the public policy of the Republic of Kazakhstan

In order to apply the provisions of subparagraph 2) of Part 1 of Article 255 of the CPC, evidence is not required from the debtor, the court is sufficient to establish that the enforcement of the arbitral award is contrary to public policy of the Republic of Kazakhstan or that the dispute to which the arbitral award is made cannot be the subject of arbitration proceedings in accordance with the Law.

In judicial practice, judicial acts were not pronounced by the courts on this basis.

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