English law is the gold standard in Kazakhstan in Central Asia – InsideSources
Nur-Astana Mosque, Kazakhstan, Astana, Nur-Sultan
One of the great challenges for countries seeking global investment is to be able to ensure that their legal systems are transparent, reliable and free from political influence.
Kazakhstan, an ambitious country in Central Asia, took up this challenge with the Astana International Financial Center (AIFC).
Established in July 2018, AIFC, based in Nur-Sultan, the capital of Kazakhstan, imported a gold-plated civil legal system for litigation and dispute resolution. It installed English law, which is the preferred applicable law for business transactions around the world.
These courts may sit in the capital Nur-Sultan, formerly known as Astana, but they were fully established under the administration of Lord Harry Woolf, the retired Chief Justice of England and Wales. The courts are now headed by its Chief Justice Lord Jonathan Mance, former Deputy President of the Supreme Court of the United Kingdom, and 10 other English judges. This is a big step forward for a former Soviet republic where the USSR sent millions of political prisoners to some of the most notorious camps in the Gulag.
Kazakhstan has adopted English law as a source of reliable and well-known case law for its financial center and enshrined its applicability in a constitutional amendment. The Court also made English the only language it used. Elsewhere in Kazakhstan, Kazakh and Russian are the official languages.
By conceiving the idea of a financial center, the country wanted to make it user-friendly and attract investments from neighbors of China, Russia, the Caucasus, Uzbekistan, Iran, Turkey and – beyond Europe, the Middle East, Singapore and the United States. He wants neighborhood commerce and that of the world.
The strategy is working. The AIFC has attracted 750 companies from 53 countries and its newly created stock exchange recorded 61 issues.
Kazakh officials tell me that they want to play on the country’s unique location as a traditional crossroads of Europe and Asia. Kazakhstan is the ninth largest country in the world, but has around 18 million inhabitants. It is landlocked, located right on the way to the ancient Silk Road and the modern China Belt and Road Initiative.
The AIFC is a building block of Kazakhstan’s aspiration to become one of the world’s leading countries by 2050. It offers investors a tax holiday – from corporate taxes to income earned from the provision of services financial and other, as well as capital gains – until 2066.
Kazakhstan is located in a potentially turbulent area on the border of Russia, China, Kyrgyzstan, Uzbekistan and Turkmenistan, and is close to Turkey and Iran. But it is also an asset when looking to build a financial center. These are the same neighbors who seek financial services.
An added strength for the AIFC is that it has a substantial interest in the world of Muslim finance. It requires a distinct set of skills and practices and the AIFC has them. Billions of dollars are involved.
Kazakhstan is constitutionally secular. Islam is the majority religion in Kazakhstan and practiced in moderation. Other religions know the freedom of worship. I know this from having interviewed both the Chief Rabbi and the Roman Catholic Archbishop a few years ago.
Financial centers appeal to global fund managers for a variety of reasons. This may be due to monetary advantages, fiscal favor, low political risk, avoidance of sanctions, and new direct investment opportunities.
Transparent, predictable and efficient dispute resolution is one of the main attraction points as demonstrated by Hong Kong (in the past), Singapore and, of course, London and The Hague.
The AIFC also plays a key role in promoting foreign investment in Kazakhstan, according to Kairat Kelimbetov, governor of the AIFC and chairman of the Agency for Strategic Planning and Reforms. He is a senior official in the country’s economic policy.
Kazakhstan’s drive to become a major player in international finance comes at a time of realignment, with the traditional financial centers of New York, London, Frankfurt and Hong Kong giving in to new international realities, such as Brexit and Western sanctions against Russia. and Iran.
Since gaining independence in 1991, Kazakhstan has relied on its vast oil and gas deposits in the Caspian Sea region for its prominence and wealth. However, like many fossil fuel rich countries, it hedges against a declining role of hydrocarbons in the future and encourages finance, green energy and new technologies. Kazakhstan, which sits astride the Eurasian steppe, has one of the largest wind resources in the world.
And English law brings the wind of fortune to Kazakhstan.