The Kyrgyz Republic v Stans Energy Corporation and Another

JurisdictionEngland & Wales
JudgeMr Simon Bryan
Judgment Date13 October 2017
Neutral Citation[2017] EWHC 2539 (Comm)
Docket NumberCase No: CL-2017-000115
CourtQueen's Bench Division (Commercial Court)
Date13 October 2017
Between:
The Kyrgyz Republic
Claimant
and
(1) Stans Energy Corporation
(2) Kutisay Mining LLC
Defendant

[2017] EWHC 2539 (Comm)

Before:

Simon Bryan QC

(SITTING AS A DEPUTY JUDGE OF THE HIGH COURT)

Case No: CL-2017-000115

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF

ENGLAND AND WALES

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

IN THE MATTER OF THE ARBITRATION ACT 1996

AND

IN AN ARBITRATION CLAIM

Royal Courts of Justice

Rolls Building, Fetter Lane

London, EC4A 1NL

Tom Montagu-Smith QC (instructed by KWM Europe LLP) for the Claimant

Ben Juratowitch QC and Belinda McRae (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendant

Hearing dates: 24 and 25 July 2017

Judgment Approved

Mr Simon Bryan QC (Sitting as a Deputy Judge of the High Court):

A. Introduction and Preliminary Observations

1

The parties appear before the Court on the hearing of an application on the part of the Kyrgyz Republic ("the Republic") under section 67 of the Arbitration Act 1996 to challenge the substantive jurisdiction of the arbitral tribunal and to set aside specific paragraphs of an arbitral award dated 25 January 2017 ("the Award"), rendered by Professor Karl-Heinz Böckstiegel (President), the Hon. Colin L. Campbell Q.C. and Mr Stephen Jagusch Q.C. ("the Tribunal") under the 1976 UNCITRAL Arbitration Rules, so as to provide that the Tribunal has no substantive jurisdiction.

2

That Award was rendered in proceedings brought by Stans Energy Corp ("Stans") and Kutisay Mining LLC ("Kutisay") (together, "the Defendants") under Article 18(2) of Law No. 66 on investment in the Kyrgyz Republic of 27 March 2003 ("the 2003 Investment Law"), in which the Defendants seek compensation for the Republic's alleged violations of Kyrgyz and international law in respect of their investments in the Republic's mining sector. In that Award, the Tribunal dismissed each of the Republic's five objections to jurisdiction that the Tribunal had decided to resolve at that stage. This application concerns only the fifth of those objections.

3

This matter comes before the English courts because, after the arbitration had been commenced, the parties agreed that it be seated in London. In consequence this application is a re-hearing of an issue which turns entirely on the proper interpretation of the Kyrgyz statute on which the Tribunal founded its jurisdiction, the 2003 Investment Law, and whether the Tribunal has jurisdiction under the 2003 Investment Law.

4

It might be helpful to the reader to know what the 2003 Investment Law is concerned with. However, as will appear, even a general characterisation of the purpose of that law is not the subject of agreement between the parties, and (at least says the Republic) any reliance on the purpose of the law is fraught with danger for the Court tasked with finding, on the basis of the expert evidence that is before the Court, the meaning of the particular provision of the 2003 Investment Law upon which the Tribunal's jurisdiction is based.

5

At its most anodyne, however, (and hopefully at this level uncontroversially) the 2003 Investment law is a law on investments in the Kyrgyz Republic. Whilst the Republic objects to what an English lawyer would describe as the "preamble" to the 2003 Investment Law being used as an aid to interpretation (the merits or otherwise of such objection being addressed in due course below), an (informal) translation from Russian into English of the preamble is in these terms:

"This Law sets forth the main principles of the national investment policy aiming at improving the investment climate in the republic and promoting the flow of local and foreign investment by providing investors with a fair and equitable legal regime and guaranteeing protection of their investments made into the economy of the Kyrgyz Republic."

6

Again (at its most anodyne), and not as part of the exercise of interpretation itself, the 2003 Investment Law is concerned with a wide variety of "investments" (defined in Article 1) with the aim of deriving a profit or achieving a beneficial result in the form of, amongst other matters, money, licences or other permits, concessions, and profits and income derived from investments. Chapter II provides for various types of investor protection including a right to repatriate income derived from investments (Article 5) and prohibiting unlawful expropriation (Article 6). Article 18 (the dispute resolution provision) is concerned with settlement of "investment disputes". It is common ground that Article 18(2) permits investors to ask for an "investment dispute" to be referred to ad hoc arbitration under the 1976 UNCITRAL Rules.

7

"Investment dispute" is defined in Article 1(6). It is the proper interpretation of Article 18 and the definition in Article 1(6) as a matter of Kyrgyz law which is at the heart of the jurisdictional challenge. As is common ground between the experts on Kyrgyz law, the 2003 Investment Law was adopted and published in two languages, the "official" language, Russian, and the "state" language Kyrgyz, in accordance with Article 10 of the Kyrgyz Constitution.

8

The definitional provision in Article 1(6) reads as follows in Russian, "??????????? ??? ?????????? ??????????". It is not in dispute between the parties that the meaning of these words in Russian, expressed in English, is a dispute, "arising in the course of the implementation of investments" or "arising in the process of investments" (on either form of words it is accepted the Tribunal has jurisdiction). The words in Kyrgyz are "??????????????? ??????? ????? ??????? ??????????????". The Republic submits that the meaning of these words in Kyrgyz, expressed in English, is a dispute, "arising in the course of the sale of the investments" (the Republic submits that claim advanced in the arbitration does not include such a dispute so the Tribunal has no jurisdiction).

9

The dispute between the parties arises in the context of the use of the word " pea?u?a?u?" in Russian, which the Republic accepts can mean "implementation" though they say it can also mean "sale", and the use of the word "ca???" in Kyrgyz which the Republic submits literally means, and is to be interpreted in Article 1(6), viewed in whatever context is permissible, as meaning "sale" so that it is only disputes "arising in the course of sale" to which Article 18(2) applies.

10

The Defendants' primary case is that on its true interpretation the Kyrgyz version of Article 1(6) means the same as the Russian version, and investment disputes are those "arising in the course of the implementation of investments". The Defendants' alternative case (if it is wrong in its primary case) is that the present dispute does arise "in the course of the sale of the investment."

11

The Republic submits that the Kyrgyz version (if it differs from the Russian version and means what it submits it means) prevails praying in aid a provision of Kyrgyz law, Article 6(3) of the Law on Normative Legal Acts 2009, which provides:

"… in the event of an inconsistency between the text of the Constitution and other normative legal acts of the Kyrgyz Republic in the state language and the text in the official language, the text in the state language shall be deemed to be original."

For their part the Defendants submit that Article 6(3) is either not triggered or does not assist on the basis that it cannot replace or terminate the interpretative process applying applicable Kyrgyz principles of statutory interpretation.

12

In order to consider whether the Tribunal has jurisdiction, it is my task to make findings as to Kyrgyz law on the basis of the evidence that has been put before me on Kyrgyz law which includes the applicable Kyrgyz principles of statutory interpretation. For such matters I am dependent on the expert reports as to Kyrgyz law that are before me, about which more in due course.

13

There is no authentic English version of the 2003 Investment Law. There has not been adduced in evidence before me, a translation into English, by a professionally qualified translator, of either the Russian or the Kyrgyz language versions of the 2003 Investment Law, still less one agreed between the parties. Nor has either party adduced expert evidence on linguistics from a suitably qualified expert on linguistics.

14

There are, however, no less than six translations into English of the 2003 Investment Law (or parts thereof) that are before me. Four originate from the Republic and two come from the Defendants. I asked the parties whether these translations were based on the Russian version or the Kyrgyz version. Mr. Montagu-Smith QC, who appears for the Republic, informed me that the answer, so far that he could see, was that there was no express statement based on the versions on which they were based, but he submitted that "there was nothing to suggest that they were translations of the Kyrgyz version". Two of the translations originating from the Republic were published on the websites of Kyrgyz Government Agencies, namely the State Agency for Investment Promotion under the Ministry of Economy of the Kyrgyz Republic (the "Investment Promotions Authority") and the Consul-General of the Kyrgyz Republic of Pakistan. All of these translations (i.e. including those published by Kyrgyz Government Agencies), translate an investment dispute as defined in Article 1(6), into English, as a dispute "arising in the course of the implementation [or process] of investments and not "arising in the course of the sale of investments".

15

However, it is to the expert evidence before me, and the identified principles of statutory interpretation under Kyrgyz law identified by those experts, that I have had regard, and only had regard, in the findings that I make in due course. Accordingly, I have put out of my mind any translations of Article 1(6) into English save to the extent...

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3 cases
  • WWRT Ltd v Serhiy Tyshchenko
    • United Kingdom
    • Chancery Division
    • 21 April 2021
    ...issues of foreign law was discussed extensively in the judgment of Simon Bryan QC in The Kyrgyz Republic v Stans Energy Corporation [2017] EWHC 2539 (Comm), §44 et seq which I referred to in AM Holdings v Batten and Le Page [2018] EWHC 934 (Ch), §§41–44. While in both of those cases it was......
  • WWRT v Serhiy Tyshchenko
    • United Kingdom
    • Chancery Division
    • 25 January 2023
    ...they are to be proved by expert evidence: see the discussion of Simon Bryan QC in The Kyrgyz Republic v Stans Engergy Corporation [2017] EWHC 2539 (Comm), [2018] 1 Lloyd's Law Rep 66, §44 et 49 As I noted in AM Holdings v Batten and Le Page [2018] EWHC 934 (Ch), §§43–44, that does not prev......
  • WWRT Ltd v Serhiy Tyshchenko
    • United Kingdom
    • Chancery Division
    • 2 August 2023
    ...by expert evidence: see e.g. the discussion in the judgment of Simon Bryan QC in The Kyrgyz Republic v Stans Energy Corporation [2017] EWHC 2539 (Comm), §44 et seq. That does not however mean that the determination of the question of foreign law falls outside the jurisdiction of the Englis......

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