London High Court: too late for Kazakhstan to challenge an award issued on Canada-USSR BIT

On 29 January 2019, by its Judgement, the High Court in London refused to allow Kazakhstan a time extension to pursue a challenge to an award on jurisdiction (Award). The High Court held that the fresh evidence obtained by Kazakhstan was not determinative that would justify reopening the jurisdictional matters of the case

The proceedings commenced on the 1989 Agreement between the Government of Canada and the Government of the Union of Soviet Socialist Republics (USSR) for the Promotion and Reciprocal Protection of Investments (Canada-USSR BIT). The challenged Award was issued in 2015 by the arbitral tribunal constituted in the case World Wide Minerals v Republic of Kazakhstan. The arbitration was conducted under UNCITRAL Rules and seated in London. The Award found that Kazakhstan as a successor of USSR which was bound by commitments made by the Socialists Republics of the Soviet Union in Canada-USSR BIT.

This article analyses the background of the underlying dispute, the rationale of the High Court judgement, and the issue of Kazakhstan’s succession of the obligations contained in Canada-USSR BIT.

Background of dispute

On 12 December 2013 World Wide Minerals initiated arbitration proceedings against Kazakhstan under the Canada-USSR BIT, alleging that Kazakhstan expropriated its assets in the uranium industry. Prior to December 1991, the Republic of Kazakhstan had been one of the constituent republics of the USSR. The tribunal comprised of William W Park (Chairman), Franklin Berman QC and John Crook. Jones Day represented the claimant whereas Reed Smith represented Kazakhstan.

World Wide Minerals filed its arbitration claims against Kazakhstan over investments made by the company between 1996-1997 while operating the country’s second-largest uranium processing facility in order to finance the development of mines and deposits, as well as to repair and modernize Kazakhstan’s uranium processing sites. According to World Wide Minerals, it entered into numerous agreements with the country’s government, which allegedly pledged full cooperation at the start, but subsequently breached its contract with the Canadian mining firm.

World Wide Minerals claimed bureaucratic restrictions imposed by Kazakhstan led to the suspension of operations at World Wide Minerals’ facility and the eventual bankruptcy, confiscation and forced sale of its assets. Also, The company says Kazakhstan later failed to grant a uranium export license which is needed to satisfy a uranium supply contract with another contractor, and which it had been led to believe would be granted. It contends that, following this failure, it was obliged to purchase replacement uranium in the spot market to fulfil the contract.

Kazakhstan contended that World Wide Minerals never made any treaty-protected investments in the country because the Canada-USSR BIT was no longer in force at the time, but the tribunal rejected those arguments. In this case, Canada intervened in the arbitration as a non-disputing party, stating that based on a review of documents it believed Kazakhstan consented to accede to the USSR’s obligations under the BIT. On 19 October 2015, the Tribunal released its Award fully sustaining its jurisdiction under the Canada-USSR BIT.

Challenge of the Award before the High Court

Kazakhstan’s belated challenge was prompted by information that emerged in a separate arbitration commenced under the same BIT by a different party. One of the exhibits submitted by the claimant in the second BIT arbitration was a letter written by that claimant to a minister of Canada. Believing it to be potentially relevant to the jurisdictional question, Kazakhstan made an application under Canada’s freedom of information laws for disclosure of any response to the letter.

While English law provides that an award may be challenged within 28 days, Kazakhstan argued an extension was justified as the minister’s letter was a game-changer.

World Wide Minerals argued that no such application should be entertained after a substantial delay of more than two years and seven months and that it would result in wasted costs. The company said Kazakhstan had not sufficiently justified the delay and that in any event, the fresh evidence was not transformational.

In his judgment, Sir Michael Burton QC said that the strength of the challenge to the Award must be one of the primary factors to consider when there has been a substantial delay. While it was “misguided” of Canada not to have included any reference to the minister’s letter in its submissions to the second tribunal, the judge said the arbitrators would nonetheless have reached the same conclusion on their jurisdiction.

The letter did not totally change the aspect of the case and the reasoning of the arbitrators would have remained unchanged. While Kazakhstan’s case was arguable, the judge said in the circumstances that the fresh evidence was not so strong that it would justify opening up the jurisdictional award after all this time. He concluded that

The Applicant’s case with the fresh evidence may be arguable but, in my judgment, in the circumstances of this case, the fresh evidence is not so strong that it would justify the opening up after all this time, after the colossal delay and expenditure of cost that has occurred in this arbitration, such as to allow the extension. It would need to be a game-changer, and it is not. The Arbitrators’ Award survives despite it and consequently stands as it is.

Is Kazakhstan a successor for the USSR’s obligations contained in Canada-USSR BIT?

The State succession is a notion that a break in legal continuity of a State has taken place which requires the application of bridging rules and which presumes that the new sovereign is bound by the obligations of the former sovereign over the territory in question. This presumption, however, can be overturned depending on the facts of the case. The Vienna Convention on Succession of States in respect of Treaties as of 1978 (VCSS) might give certain answers on this matter. However, in our particular case, VCSS would apply to the extent that it reflects custom since Kazakhstan have not ratified it.

VCSS envisages two rules in relation to whether a succeeding State is bound by the obligations of the predecessor State. This depends on whether the succeeding State is considered a “newly independent State” or a “Separating State”.
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In the case of newly independent States, Article 16 VCSS states a general rule that

A newly independent State is not bound to maintain in force, or to become a party to, any treaty by reason only of the fact that at the date of the succession of States the treaty was in force in respect of the territory to which the succession of States relates.

It must be noted, however, that this rule does not mean that the newly independent State is free to disregard customary international law or the general principles of international law.

In the case of “separating States”, article 34 VCSS establishes the principle of automatic continuity. This principle states that, in case of separation, any treaties in force continue to be in force with respect only of the part of the territory of reach successor State. This rule, however, does not apply if: (i) the States concerned agreed otherwise; (b) if it appears that the application of the treaty by the successor State would be incompatible with the object and purpose of the treaty or would radically change its conditions.

USSR was officially dissolved on 26 December 1991 when the Declaration of Alma-Ata was adopted. By the declaration, it was established the Commonwealth of Independent States.
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Article 12 of the Agreement on Creation of the CIS establishes that the contracting States guarantee the execution of the international obligations that derive from the agreement.

Therefore, the former Soviet states acknowledged their willingness to comply with all the international commitments undertaken by USSR. At the same time, not all previous rights and obligations of the USSR could reasonably be assumed by all CIS members on an individual basis. For example, the Council of Heads of State of the CIS unanimously endorsed Russia’s continuance of the membership of the USSR in the United Nations and other international organizations, including the USSR’s permanent seat in the UN Security Council.


The decision on jurisdiction in WWM v. Kazakhstan is the first publicly known case to consider whether any of the former Soviet Republics are successors to the BITs concluded by the USSR. In this case, Kazakhstan could argue that it did not truly consent to be bound by Canada-USSR BIT.

On the other hand, by virtue of Kazakhstan’s declarations by which it accepts the treaties concluded by USSR, the arbitral tribunal might have considered that Kazakhstan had by its conduct accepted to be bound by Canada-USSR BIT. Canadian investors may rely on such conduct, understanding that Kazakhstan remained bound by the BIT.

Although the Award was not disclosed, it certainly gives rise to the issues regarding the binding force of the investment agreements concluded by USSR for CIS countries and to what degree foreign investors can rely on respective agreements.

About the Author:

Sorin Dolea is a Moldovan lawyer, who obtained Geneva LLM in International Dispute Settlement-MIDS. He graduated with a bachelor degree and LLM in International Law from Moldova State University, Arbitration Academy in Paris and the Hague Academy of International Law (course on the international private law). He specializes in international commercial and investment arbitration and has experience working in a major Austrian law firm for two years.

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