28 March 2018

King & Wood Mallesons represents the Kyrgyz Republic to settle US $75 million investor-state claim by Kazakhstan’s BTA Bank, with no admission of liability and no payment by the Kyrgyz Republic

BTA Bank, Kazakhstan's major bank, commenced the US $75 million UNCITRAL arbitration claim in 2011 in respect of an alleged corporate raid on BTA Bank’s subsidiary in the Kyrgyz Republic.  BTA Bank alleged that the Kyrgyz Republic’s conduct resulted in the expropriation of BTA Bank’s 71% shareholding and other investments in BTA Bank’s subsidiary bank in the Kyrgyz Republic.   

BTA Bank claimed that its investments in its Kyrgyz subsidiary were seized by the Kyrgyz Republic on the basis of a series of court decisions prior to the popular uprising against President Bakiev’s regime in April 2010.  BTA Bank asserted that the conduct of the Kyrgyz Republic violated the fair and equitable treatment standard under the Kazakhstan-Kyrgyzstan BIT and amounted to an unlawful expropriation under the BIT.  

Seven years on, in March 2018, the parties concluded a settlement agreement providing for no admission of liability and no payment to be made by the Kyrgyz Republic.  The arbitration proceedings have been terminated.

The KWM team drew lawyers from across its London, Dubai, Sydney and Beijing offices to work on the case.  The KWM team was led by partners Andrei Yakovlev and Daisy Mallet and included associates Wilson Antoon, Alexis Namdar, Marco Toracca and Vladislav Zinovyev. 

Andrei Yakovlev said - “We are pleased to have achieved this outstanding result for our client.  The commercial settlement reflects the way investor-state disputes should be resolved.  BTA Bank, one of the largest banks in Kazakhstan, will continue to operate in the Kyrgyz Republic”. 

In addition to numerous other investment arbitrations, just in the past three years KWM has acted for the Kyrgyz Republic in over ten investment arbitration matters in the U.K., Canada, New York, Russia, France, Belarus and Kazakhstan.  These representations earned the Kyrgyz Republic a win in an investment treaty interpretation case named by Global Arbitration Review as among the ten 'most important decisions' of 2014 globally, as well as a landmark judgment by which the Paris Court of Appeal set aside an arbitral award against the Kyrgyz Republic on the grounds of public policy, an extremely rare occasion in the French legal practice.  

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