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Conciliatory Procedures and Simplified (Written) Proceedings
In accordance with Part 2 of Article 174 of the Civil Procedure Code (CPC), the parties may settle the dispute in full or in part by entering into a settlement agreement, an agreement on dispute (conflict) resolution through mediation, or an agreement on dispute resolution through a participatory procedure, or by using other means as provided by this Code.
An analysis of the cases submitted for generalization showed that, in this category of cases, the parties most commonly conclude agreements on dispute (conflict) resolution through mediation.
Such agreements are concluded in claims seeking to invalidate a damage assessment report or to recover insurance payments, where the plaintiff waives their claims challenging the appraisal report, and the parties agree on the amount of the insurance payment (e.g., Decision of the Semey City Court of Abai Region).
They are also concluded in insurance companies’ claims for recovery of insurance payments by way of recourse, where the parties agree on installment payments (e.g., Decision of the Balkhash City Court of Karaganda Region).
Similarly, such agreements are concluded in insurance companies’ claims for recovery of losses by way of subrogation, where the parties agree on installment payments (e.g., Decision of the Atbasar District Court of Akmola Region), among others.
When approving mediation agreements, courts comply with the requirements of civil procedural legislation.
Cases of this category are also considered under the simplified (written) proceedings procedure, in compliance with the requirements set forth in Chapter 21-1 of the CPC.
Insurance is carried out based on an insurance contract.
Under an insurance contract, one party (the insured) undertakes to pay an insurance premium, and the other party (the insurer) undertakes, upon the occurrence of an insured event, to make an insurance payment to the insured or another person (the beneficiary) within the amount specified in the contract (the insurance amount).Forms of insurance are as follows:
By the degree of obligation: voluntary and compulsory insurance;
By the object of insurance: personal and property insurance;
By the basis for making an insurance payment: accumulative and non-accumulative insurance.
An analysis of the cases submitted for generalization showed that the following types of disputes were considered by the courts:
disputes over challenging the results of damage assessment to a vehicle;
claims for the recovery of insurance payments;
appeals against the insurer's refusal to make an insurance payment;
claims for the recovery of insurance payments from the insured by way of recourse (reverse claim);
claims for the recovery of paid insurance amounts from the tortfeasor by way of subrogation;
claims seeking to declare insurance contracts invalid;
claims for recovery of penalties for untimely insurance payments;
claims for recovery of insurance premiums, among others.
Jurisdiction
Cases of this category are considered according to the general rules of jurisdiction established by Chapter 3 of the CPC — at the location of the defendant.
A claim against an insurance organization may also be filed at the location of the branch or representative office that concluded the insurance contract.
However, cases of unjustified return of claims due to alleged lack of jurisdiction have been observed.
Thus, by a ruling of the Specialized Interdistrict Economic Court (SIEC) of East Kazakhstan Region dated May 17, 2023, the claim of LLP "Z" against JSC "Insurance Company "E" (hereinafter — JSC "IC "E") for recovery of an insurance payment was returned.
The reason for the return was the alleged lack of jurisdiction of the SIEC of East Kazakhstan Region, as the defendant — the insurance company — was located in Almaty city.
However, as mentioned above, under Part 3 of Article 30 of the CPC, a claim arising from the activities of a branch or representative office of a legal entity may also be filed at the location of such branch or representative office.
According to the claim and the attached documents, the plaintiff’s location was indicated as the city of Ust-Kamenogorsk, the traffic accident (hereinafter — the “accident”) occurred in Ust-Kamenogorsk, and the insurance claim was accepted by the branch of JSC "IC "E" located in Ust-Kamenogorsk.
This ruling was not appealed and entered into legal force.
In accordance with Part 11 of Article 30 of the CPC, a claim for the recovery of an insurance payment under an insurance contract may be filed either at the plaintiff's place of residence or at the defendant's location.
Paragraph 2 of the Normative Resolution provides the following clarification — the term "place of residence" means that this provision applies to plaintiffs who are natural persons; therefore, legal entities must file claims according to the general rules — at the defendant’s location.
Analysis has shown cases of incorrect interpretation of this provision.By a ruling of the Interdistrict Civil Court of Shymkent city dated June 13, 2023, the claim of JSC "IC "N" against D. for recovery of a recourse amount was returned based on subparagraph 2) of Article 152 of the CPC (the defendant did not reside in Shymkent) and with reference to Part 11 of Article 30 of the CPC.
The plaintiff — the insurance company — was advised to file the claim at its own place of registration, Almaty city.The appellate court upheld the ruling, also stating that the plaintiff could file the claim at its place of residence.
However, the courts failed to take into account that Part 11 of Article 30 of the CPC grants the right of choice only to plaintiffs who are natural persons and only with respect to claims for recovery of insurance payments. In this case, the plaintiff was a legal entity asserting a reverse claim against the insured.
Furthermore, by a ruling dated February 27, 2024, the Balkhash District Court of Almaty Region transferred the case filed by JSC "IC "E" against M. for recovery of debt to the Military Court of the Almaty Garrison, without considering that the plaintiff's claims were not related to the interests of military service and were not directly connected to the defendant’s military service.The ruling was not appealed.
State Duty
The rates of state duty for cases of this category are determined in accordance with Article 610 of the Tax Code.
According to subparagraph 19) of Article 616 of the Tax Code, insurers and insured parties are exempt from paying state duty in courts for claims arising from compulsory insurance contracts.
Thus, the article refers only to compulsory insurance contracts, and the exemption from paying the state duty applies solely to insurers and insured parties; beneficiaries are not entitled to this privilege.
Accordingly, if a beneficiary files a claim against an insurer for the recovery of an insurance payment under a compulsory insurance contract, they must pay the state duty in the amount provided by Article 610 of the Tax Code (unless exempted on other grounds).
In such cases, the allocation of court costs between the parties must follow the general rules stipulated in Article 109 of the Civil Procedure Code (CPC).
Thus, if a judgment is rendered in favor of the claimant (the beneficiary), the court shall recover court costs, including the paid state duty, from the defendant (insurance company) in favor of the claimant.
Local courts have repeatedly proposed extending the exemption provided by subparagraph 19) of Article 616 of the Tax Code to beneficiaries (injured parties).
This proposal was submitted to Parliament by the Supreme Court based on a 2017 review but was not supported.
Statute of Limitations
Claims for insurance payments are often referred to as claims for compensation for damage caused to life or health.
However, according to subparagraph 3) of Article 187 of the Civil Code, the statute of limitations does not apply to claims for compensation for harm caused to a citizen’s life or health. Nevertheless, the legal relationship between the beneficiary and the insurer arises not from the causing of harm but from the insurance contract.
The purpose of insurance is not to compensate for damage but to protect the property interests of the insured (insured person, beneficiary), meaning that insurance protection is offered as a product (service) in the insurance market.
Therefore, insurance payments are not considered compensation for damage, consistent with the provisions of Article 2 of the Law "On Insurance Activities," under which insurance is classified as a type of entrepreneurial activity.
Accordingly, claims arising from insurance contracts are subject to the general statute of limitations — three years.
An important and frequent issue in judicial practice concerns when the three-year limitation period begins for filing claims against an insurance company.
According to paragraph 4 of the Regulatory Resolution, this period is calculated from the moment the beneficiary or insured party became aware of the violation of their rights — specifically, upon receiving a decision to deny the insurance payment or to reduce its amount, or, if no decision was made, from the end of the period prescribed by law or the contract for the payment of insurance compensation.
Thus, until the insurer accepts the documents regarding the occurrence of the insured event, reviews them, and issues a decision either granting or denying compensation, the beneficiary cannot know that their rights have been violated.
In this case, the limitation period starts from the date the insured party receives a denial or a decision awarding insufficient compensation for repairing the damaged vehicle.
Case Example
J., born in 2001, filed a lawsuit against two insurance companies seeking to declare their denial decisions illegal and to compel them to make insurance payments.
She argued that, while still a minor, she suffered injuries in a traffic accident on July 23, 2018, and was recognized as disabled on January 15, 2019. The liability of the drivers responsible for the accident was insured by the defendant companies.
She submitted applications for insurance payments to the companies in February and March 2023.
By decision of the Almalinsky District Court No. 2 of Almaty City dated August 14, 2023, upheld by the Almaty City Court on October 30, 2023, the claim was denied due to the expiration of the limitation period (more than three years had passed since the insured event).
However, by decision of the Supreme Court of the Republic of Kazakhstan dated May 22, 2024 (Case No. 3gp/200), the lower court acts were amended, and a new judgment was rendered partially satisfying the claim against one of the insurance companies.
The Supreme Court relied on paragraph 4 of the Regulatory Resolution, stating that the plaintiff learned of the violation of her rights in February and March 2023.
Subrogation and Statute of Limitations
A change of parties in an obligation under subrogation, as per Article 181 of the Civil Code, does not affect the statute of limitations or the method of its calculation, meaning the debtor may invoke the expiration of the limitation period as if the original creditor were acting.
The statute of limitations for an insurer to file a subrogation claim against the party responsible for the harm is calculated from the date of the insured event, not the date of the insurance payment.
In cases where there is a dispute over the identification of the liable party, the limitation period begins from the date the judicial act identifying the liable party enters into force.
Case Example
Insurance Company "X" filed a lawsuit on April 20, 2023, against S. seeking recovery in subrogation.
The claim stated that a voluntary vehicle insurance contract was concluded between the plaintiff and P. On January 17, 2020, due to the fault of driver S., an accident occurred, causing damage to P.'s vehicle amounting to 2,149,095 KZT.
The insurance company "S.", insuring S.'s civil liability, paid 1,837,800 KZT to the plaintiff.
The remaining unpaid amount of 304,795 KZT was claimed against S. by the plaintiff through subrogation.
By decision of District Court No. 2 of the Әлихан Бөкейхан District of Karaganda City dated June 26, 2023, upheld by the Judicial Panel of the Karaganda Regional Court on September 18, 2023, the claim was denied.
The courts reasoned, citing paragraph 4 of the Regulatory Resolution, that the limitation period was three years, starting from January 17, 2020, and expiring on January 17, 2023; thus, the claim was time-barred.
Claims of Insurers Against Insured Parties
For insurers' claims against insured parties under the right of recourse, the three-year limitation period is calculated from the date of payment of the insurance indemnity (Article 28 of Law No. 446).
Pre-Trial Dispute Resolution
The Insurance Ombudsman has operated in Kazakhstan since 2007.
By the Law of May 7, 2007, No. 244, Law No. 446 was supplemented with Articles 30-1, 30-2, 30-3, and 30-4 regulating the activities of the Insurance Ombudsman.
By the Law of July 2, 2018, No. 166-VI, a new Chapter 15, "Insurance Ombudsman," was added to the Law on Insurance Activities.
Corresponding amendments were made to Law No. 446, Law No. 444, and other laws on compulsory insurance, allowing insured parties (beneficiaries) to either submit a written claim to the insurer or file an application with the Insurance Ombudsman or the court for dispute resolution.
However, under the Law of July 12, 2022, No. 138-VII, amendments were made making it mandatory to first apply to the Insurance Ombudsman before going to court.
Paragraph 5 of Article 90 of the Law on Insurance Activities was amended to state:
"Parties specified in the second part of paragraph 1 of Article 86 of this Law, namely insured parties (insured persons, beneficiaries) and insurers, have the right to file a lawsuit in accordance with the legislation of the Republic of Kazakhstan only after obtaining a decision from the Insurance Ombudsman.
At the same time, execution of the decision of the Insurance Ombudsman is not mandatory for the insured party (insured person, beneficiary)."
Relevant changes were made to laws on compulsory insurance as well.
By Resolution No. 60 of the Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan dated September 12, 2022, the Rules for the Election and Activities of the Insurance Ombudsman were approved.
Thus, starting from January 1, 2024, application to the Insurance Ombudsman is a mandatory step before filing a lawsuit for resolving insurance disputes.
According to the second part of paragraph 1 of Article 86 of the Law on Insurance Activities, the Insurance Ombudsman resolves disputes between insured parties (insured persons, beneficiaries) and insurers arising from insurance contracts.
However, not all disputes are subject to consideration by the Insurance Ombudsman — the Law differentiates applicants based on the type of insurance and the amount of their claims.
Thus, physical persons and/or small business entities, acting as insured parties (insured persons, beneficiaries), have the right to apply to the Insurance Ombudsman for dispute resolution if the claim falls within certain limits.
Regulatory Framework
The main regulatory legal acts applicable in the consideration of cases of the summarized category are:
The Constitution of the Republic of Kazakhstan;
The Civil Code of the Republic of Kazakhstan (hereinafter – "Civil Code");
The Civil Procedure Code of the Republic of Kazakhstan (hereinafter – "CPC");
The Labor Code of the Republic of Kazakhstan (hereinafter – "Labor Code");
The Code of the Republic of Kazakhstan "On Taxes and Other Mandatory Payments to the Budget (Tax Code)" dated December 25, 2017, No. 120-VI ZRK (hereinafter – "Tax Code");
The Code of the Republic of Kazakhstan "On Administrative Offenses" dated July 5, 2014, No. 235-V ZRK (hereinafter – "Administrative Offenses Code" or "AOC");
The laws of the Republic of Kazakhstan:
Law "On Insurance Activities" dated December 18, 2000, No. 126 (hereinafter – "Law on Insurance Activities");
Law "On Mandatory Insurance of Civil Liability of Private Notaries" dated June 11, 2003, No. 435;
Law "On Mandatory Insurance of Civil Liability of Auditing Organizations" dated June 13, 2003, No. 440;
Law "On Mandatory Insurance of Carrier's Civil Liability to Passengers" dated July 1, 2003, No. 444 (hereinafter – "Law No. 444");
Law "On Mandatory Insurance of Civil Liability of Vehicle Owners" dated July 1, 2003, No. 446 (hereinafter – "Law No. 446");
Law "On Mandatory Insurance of Tourists" dated December 31, 2003, No. 513;
Law "On Mandatory Insurance of Civil Liability of Owners of Facilities Whose Activities are Associated with the Risk of Harm to Third Parties" dated July 7, 2004, No. 580;
Law "On Mandatory Insurance of Workers Against Accidents in the Performance of Labor (Service) Duties" dated February 7, 2005, No. 30;
Law "On Mandatory Social Health Insurance" dated November 16, 2015, No. 405-V;
Law "On the Insurance Payments Guarantee Fund" dated June 3, 2003, No. 423;
The Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated October 6, 2017, No. 8 "On Judicial Practice in Disputes Arising from Insurance Contracts" (hereinafter – "Regulatory Resolution");
The Rules for Determining the Amount of Damage Caused to a Vehicle, approved by Resolution of the Board of the National Bank of the Republic of Kazakhstan dated January 28, 2016, No. 14 (hereinafter – "Rules"), and other regulatory legal acts.
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