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Zhumageldy Sakenovich Yelyubayev, Doctor of Law, MCIArb, President of the Kazakhstan Petroleum Lawyers Association, Chevron EBU Managing Legal Counsel _______________________________________________ (CIS Oil and Gas Summit, May 14 - 16, 2012, Paris)
Issues of Legal Regulation of Subsoil Use in the Republic of Kazakhstan: Concerns and Perspectives[1]
I. History of Development of Subsoil Law in the Modern History of Kazakhstan
Recently the Kazakhstan economy with the dominating natural resources sector is a reality and a basis for restructuring economic relations and making them innovative. This sector of economy is paid a particular attention because its inclusion in business operations in the conditions of tough international competition helped to maintain economic, political and social stability in the country. Hence the subsoil of Kazakhstan plays a leading role in the continuous development of the political system and economy of the country and forms a wide specter of international political and economic relations.
Historically up to 1990’s subsoil use as a sphere of business was owned by the state at the all-union level (the USSR Government). After the break of the Soviet Union and formation of independent Kazakhstan, a new system of political and economic administration and management was established and it allowed the transfer of the objects of subsoil use into the management of private companies with the participation of the state. Thus, international and national private entities as the business partners of the state obtained administrative and business freedom at the objects of subsoil use owned by the state, as well as the right to get profit and increase their assets. The state retained regulating and controlling functions, in particular establishing terms of subsoil use and control over subsoil users’ compliance with contractual commitments.
As it is known, the period of the modern history of Kazakhstan started from October 25, 1990 when the Resolution of the Kazakh SSR Supreme Soviet adopted the Declaration of State Sovereignty of the Kazakh Soviet Socialist Republic. The Declaration stated that “the territory of the Kazakh SSR within the existing borders is indivisible and inviolable, and cannot be used without its consent (Article 3). Further it was stated that “land and subsoil, water bodies, air space, flora and fauna, other natural resources, cultural and historical heritage, entire scientific and technical potential - the whole national wealth within its territory constitute the exclusive property of the Republic forming a basis for its sovereignty” (Article 9).
Thus, the new era of establishing of sovereign statehood and the political, legal and economic system began. On December 16, 1991 the Kazakh SSR Supreme Soviet adopted the constitutional law “On State Independence of the Republic of Kazakhstan” which declared (Article 11) that “land and its subsoil, water bodies, air space, flora, other natural resources and scientific and technical potential constitute the exclusive property of the Republic of Kazakhstan forming a basis for its state independence.”
After gaining by the Republic of Kazakhstan of sovereignty and independence and establishing market relations there appeared a necessity to develop an utterly different policy of the use of the natural resources potential. Political and legal reforms and formation of new financial and economic institutions provided a basis for an improved system of utilization of natural resources and development of high-tech industries. The established political stability, availability of trained personnel, a large scope of accumulated and verified geological data, as well as liberal legal base allowed creating a favorable investment climate in the country. All the above facilitated the attraction of significant international investments and execution of important subsoil use contracts for prospects containing rich deposits of oil, gas, coal and other minerals.
Also, this stage is characterized by an active law-making process. A number of important legislative acts aimed at regulating subsoil use relations were adopted. Thus, the RoK Code “On Subsoil and Processing Mineral Raw Materials” №1367а-XII adopted on May 30, 1992 stipulated an opportunity to grant the right to use subsoil both to Kazakhstani entities and entities with foreign participation and foreign legal entities and individuals under the terms of a contract or concession (Article 10). In addition, the right to use subsoil was granted to the said entities and individuals under the subsoil use contract which, in particular stipulated: terms and conditions of subsoil use, environmental requirements, annual quota for the use of natural resources; terms and amounts of payments for the use of subsoil; subsoil protection; special conditions for applied technologies and granted benefits (Article 14 of the Code) etc.
Subsequently within several years the RoK Cabinet of Ministers by its resolutions approved and adopted a number of subordinate acts: of July 29, 1992 No. 811 - “Provision on the State Control over Subsoil Protection and Use in the Republic of Kazakhstan”; of December 8, 1992 No. 1034 - “Provision on the Procedure for Realization (Transfer, Exchange and Sale) of the Information on Subsoil of the Republic of Kazakhstan”; of March 14, 1994 No. 269 - “Provision on the Specifics of Management of State Owned Facilities Developing Mineral Deposits (Subsoil) and Man-caused Deposits; of April 13, 1994 No. 377 - Resolution “On the Procedure for Granting Subsoil Resources for Geological Study, Production of Minerals and Use for other Purposes”.
On April 5, 1994, the RoK President issued Decree No. 1637 “On Additional Measures to Regulate the Utilization of the Subsoil for the Geological Exploration and Production of Useful Mineral Raw Materials”.
It is also important that the first Constitution of the Republic of Kazakhstan of January 28, 1993, and later the current Constitution of the Republic of Kazakhstan of August 30, 1995 stipulated at the legislative level the provision that “land, its subsoil, water bodies, flora and fauna, other natural resources are the exclusive state property”.
These legal acts gave new momentum to the development of subsoil and subsoil use legislation, and facilitated establishing a favorable climate а for investors making capital contributions to the development of rich subsoil of Kazakhstan.
Subsequently, pursuant to the Provision on the Procedure for Licensing Subsoil Use in the Republic of Kazakhstan approved by the Resolution of the RoK Cabinet of Ministers of August 8, 1994 No. 886, further pursuant to the Resolution with the similar title approved by the Resolution of the RoK Government of August 16, 1996 No. 1017, subsoil resources are granted on the license/contract basis. However such mixed form of granting subsoil use rights complicated the establishing relations between the state and subsoil users and resulted in the cancellation of the licensing system.
In 1995-1996, during the period of parliamentary and government crises, when both economy and political fate of the country were threatened, the President of Kazakhstan N.A. Nazarbaev, understanding the importance of development of subsoil use for the country and the people, and subject to the extraordinary authority granted to him issued a number of Decrees having the force of a law, which became a legal for regulating relations in the sphere of subsoil use in the new market conditions. These Decrees are: “On Licensing” of April 17, 1995 No. 2200, “On Oil” of June 28, 1995 No. 2350, “On Subsoil and Subsoil Use” of January 27, 1996 No. 2828, “On Taxes and Other Obligatory Payments to the Budget” of April 24, 1995 No. 2235 and other. Further, these Decrees were supplemented and acquired the status of the laws of the country; there were adopted a number of other legislative, governmental and departmental legal acts which regulate complex relations in the sphere of subsoil use.
In furtherance of the provisions of the laws in question, the RoK Government adopted a number of acts aimed at maintaining more efficient and systematic regulation of relations in the sphere of subsoil use, in particular there were approved: the Uniform Rules for Developing Oil and Gas Fields in the Republic of Kazakhstan of June 18, 1996 No. 745; the Uniform Rules for Subsoil Protection when Developing Deposits of Solid Minerals, Oil, Gas and Underground Water in the Republic of Kazakhstan of July 21, 1999 No. 1019; the Rules for Granting Subsoil Use Rights in the Republic of Kazakhstan of January 21, 2000 No. 108; the Rules for Carrying Tax Expert Review of Subsoil Use Contracts of December 26, 2001 No. 1705 etc.
Recently there were also adopted such key legislative acts as: the RoK Environmental Code (January 9, 2007), which allowed align relations in the sphere of environmental protection and special use of natural resources; the RoK Tax Code (December 10, 2008) which established a system of special subsoil use payments; the RoK Law “On Subsoil and Subsoil Use”, which caused the revision of many other subordinate acts regulating relations in the sphere of subsoil use.
Special legislative acts on subsoil use, together with key regulations such as: on objectives and principles of subsoil legislation; on the authority of state competent bodies; on the procedure and conditions of granting subsoil use rights, contained novels previously unknown in the soviet mining law. Thus, these legislative acts stipulated: a contractual procedure for granting subsoil use rights; preemptive (first priority) rights of the state to get minerals; guarantee of the subsoil user’s rights by ensuring the stability of contractual provisions regardless of changes and additions deteriorating their position; the rules for settling disputes by negotiations or in accordance with the procedures stipulated in a contract - in the state courts or international arbitration. These legislative novels were fixed in the subsequent RoK Law “On Production Sharing Agreements (Contracts) in Offshore Oil Operations” of July 8, 2005.
Thus, in fact during almost ten years, there was established a reliable basis for further systematic development of the legislation on subsoil use, which allowed to escalate publics forming in the sphere of subsoil development and attraction of investment in this sector of economy to a new level.
However, recently there exist objective prerequisites to move to the following stage of development of the legislation on subsoil and subsoil use, which would correspond to the new realities of sustainable development of the state and market economy. The transfer to a new stage of development of the legislation on subsoil and subsoil use is also connected with a need to implement the provisions of international legal acts and international agreements adhered to by the Republic of Kazakhstan in the national legislation.
II. Issues of Ensuring the Stability of Subsoil Use Contracts
Contemporary subsoil use in Kazakhstan applies several contractual forms of granting subsoil resources for development. The selection of whatever forms of agreement identified in the sphere of subsoil as a contract depends upon the type of mineral raw material, geological and other terms of subsoil use, as well as upon the scope and nature of the rights granted to a subsoil user. The detailed procedure for execution, revision and termination of contracts is stipulated in the applicable legislation on subsoil and subsoil use. However, in theory and practice there are many disputes regarding the nature and essential features of subsoil use contracts, the role and capacity of the parties to a subsoil use contract. The analysis of existing theoretical assumptions on this issue and applicable legislation and law enforcement practice allows asserting with certainty that subsoil use contracts executed in the sphere of subsoil use in the Republic of Kazakhstan are of civil nature regardless that one party to a contract is the state represented by the relevant competent authority.
To substantiate such position we would like to refer to the assumed characteristics of agreement in the theory of law. First, it is a voluntary agreement of the parties (based on their free will). Secondly, any agreement suggests the equality of the parties thereto; otherwise it is not agreement but power and subordination, i.e. public law relations. Thirdly, equitable relations in a contract are civil relations with all consequences. At the same time a subsoil use contract relating to one of civil contracts has its own specifics subject to the extent of the interference of the state in subsoil use relations, i.e. it contains more administrative elements caused by the state’s exclusive ownership of subsoil.
The state in Kazakhstan is the owner of subsoil; therefore it is entitled to dispose of subsoil resources in public interests, selecting relevant forms and methods. In a number of countries of the world subsoil resources are granted for use on the basis of a state act (license, permission etc.); in some states there exist a mixed license/contract form, as it was before in Kazakhstan, nevertheless the generally accepted and efficient form of granting subsoil for use is a contract, i.e. civil agreement. The fact that this form was selected by the Republic of Kazakhstan is considered to be a progressive step in subsoil management.
The applicable legislation regulates the procedure for executing and performing a contract, in particular a special law establishes that a potential subsoil user drafts a contract and submits it to the competent authority which negotiates the terms of the contract with the subsoil user. Such requirement of the law cannot be recognized as perfect and effective. Given that subsoil is in exclusive ownership of the state, the competent authority should draft a contract on which basis subsoil resources (specific subsoil blocks) are granted for the subsoil user’s holding and use. Such approach initially and prior to the agreement of contractual terms allows maximum protection of the interests of the state - the owner of subsoil resources - because none of subsoil users when drafting a contract would consider in detail the issues of protection of the economic interests of the state; the subsoil user would always mind its/his/her own priorities and would attempt to retain them in a contract. It suggests that such rule of the law is to be amended to ensure and warrant protection of the interests of the state with respect to subsoil relations.
The most important issue in these relations is the stability of contracts. The stability of contractual provisions is always an indication of a perfect and democratic legal system of any state, as without it a stable, mutually beneficial and effective cooperation between the parties to legal relations, including subsoil use, is impossible. Frequent and not always grounded changes to the legislation, in some cases for political reasons and resolving specific issues, as well as the lack of the uniform law enforcement practice are the main causes for disputes on the stability of contractual provisions. The existing issues pertaining to the stability of contractual provisions cause the lack of unity in the scientific community due to the different theoretical approaches (standpoints).
Thus, some legal scientists and practitioners assume that inclusion in the text of a contract of regulatory imperatives is wrong practice. This position allowed inferring that the priority of a contract to the legislation cannot exist.
Others believe that the state at some stage of its development reduce the extent of guarantee protection provided to investors in the sphere of subsoil use, specifically when considering the retroactive force of a law. There is a viewpoint that it is impossible to apply stability guarantee to the tax provisions of contracts.
Thus, the essence of the statements made is that the public law rules cannot be contractual provisions, and if they are included in the contract they cannot be subject to the rules of the law on stability of contractual provisions.
Such position cannot be considered ideal as to a certain extent it contradicts the general principles of contractual practice and the civil law rules, as well as the law on subsoil and subsoil use.
For example, pursuant to part 2 of Article 383 of the RoK CC, when after the conclusion of an agreement, legislation establishes for the parties the rules which are different from those that were effective when the agreement was concluded, the terms of the concluded agreement shall remain valid, except for the cases where legislation establishes that it applies to the relations which arose from the agreements concluded earlier. As we see, this rule does not define and limit a scope of issues and conditions which can be the subject of a contract. Moreover, it expressly guarantees the stability of contractual provisions, and allows changes to the terms of a contract only in the case where a new regulatory legal act specifically states and extends new provisions to the relations arising from the earlier agreements. The accuracy and clarity of this legislative rule does not allow a wide interpretation of its provisions.
The principle of freedom of contract is basic in the civil law and given that subsoil use contracts relate to the category of civil contracts, this principle should be fully extrapolated on all types of subsoil use.
Subsoil users in Kazakhstan are guaranteed protection of their rights pursuant to the legislation (Article 30). Amendments and additions to the legislation that deteriorate the results of entrepreneurial activity of a subsoil user under the contracts, shall not apply to the contracts concluded before the amendments and additions. The guarantees established by this Article shall not apply only to the changes to the legislation of the Republic of Kazakhstan in the sphere of ensuring national security, defense, environmental and health safety, taxation and customs regulation.
Pursuant to another rule of the law, amendments and additions to contract provisions are allowed by the parties’ agreement unless otherwise stipulated by the law. Amendments and additions to the terms of the contract by request of one of the parties are allowed strictly on the basis stipulated by the legislation. It is a specific and wide subject and I would enlarge on it.
Thus, based on the general principles of the civil law regarding the freedom of contract, equitability of the parties and the applicable rules of the civil law and subsoil law, one can argue that subsoil use contracts can be changed and amended only on the basis of free will of the parties, except for the cases expressly stipulated by the legislation. The law maker chose to include in the new Tax Code of the Republic of Kazakhstan a provision that guarantees the stability of earlier subsoil use contracts (part 2 of Article 308).
III. Subsoil Law and the Issue of Protecting Investors’ Rights
Currently the key objective is to strengthen the role of the State in the natural resources sector. The State should have its interest in all strategic assets in the country, specifically in the sphere of subsoil use; strategic deposits should not be in the possession of only private entities or foreign investors. The State should have, through its institutes (national companies, national holdings etc.), a blocking share holding and interests in the entities developing strategic mineral deposits; it is essential from the national security perspective. Kazakhstan is an active party to foreign trade relations, therefore it should be noted that the fundamental defect of world economy globalization is a very high involvement of transnational corporations and financial and industrial groups. They acquire more and more spheres of influence and try to dictate their terms compelling the country’s government surrender to the prejudice of national interests. Excessive confidence in investors needs to be balanced to bring their relations to meet the community’s interests, specifically in the sphere of subsoil use.
Development of competitive high-tech and knowledge intensive industries, specifically in the natural resources sector to ensure stable economic growth would require the high level of domestic and foreign investments. The current investment policy is characterized by a number of positive aspects, among which there should be noted the retaining of a favorable investment treatment to attract foreign investments, establishing and developing a financial market, formation of new institutional investors, strengthening the role of the national companies as commercial legal entities, but not the authorized state body. At the same time non-stabilized legislation, internal fight among the authorized state bodies for the sphere of influence in the investment and subsoil use sectors, corruption among government officials, inconsistent economic policy complicate the integration of investment processes into the economy of Kazakhstan.
Foreign capital does not sufficiently facilitate the development of the production sector, as practically it is directed to extractive industries, primarily oil production, and metallurgical industry. Further, the analysis of the investments structure shows that foreign investors, except for rare instances, contribute a fare amount into current assets and short term fixed assets. The former policy of encouragement of foreign investment placed national and foreign investments in the inequitable conditions. Moreover, national investors (in our country there appeared billionaires) contribute into the economy of the European developed countries where they kept their capitals and are afraid to bring them to make investments into the economy of their own country, as no transparent and reliable mechanisms of return of capital to the country exits. The outflow of their capital from the country continues and it is a negative symptom. In this connection a number of factors that prevent the increase of investments, including foreign investments, are to be identified, specifically:
- low business activity of Kazakhstani business entities in the market; - instability and ambiguity of the legislation and regulating economic mechanisms; - low liquidity of financial assets escalated by non-payment crisis; - lack of reliable and complete information on the status of economy; - high level of corruption; - ineffective monitoring of the activities of investors; - frequent change of managers of branch ministries which neither facilitates effective work of the central government authorities not provides continuity of decisions made.
Also it should be noted that appeals to reject foreign investments, reflecting certain public sentiments are not based on the awareness of the real situation in the country. As per state investments and the own capital of national investors, they are not sufficient for financing even vital projects in agriculture, processing, transportation etc. Therefore viewing foreign investments and investors as a vital source of capital, technologies, management and marketing experience, in the current decade Kazakhstan should not miss its chance to attract foreign investments to the development of the country’s economy and not only to the natural resources sector. In addition, the policy of the State, legal and administrative measures from the perspective of national interests should ensure conditions that meet the purpose of attracting foreign investments as well as the interest of investors per se. At the same time, there should be designed the mechanisms which allow to block or at least mitigate adverse consequences of foreign investors activities to the country’s economy. It seems that the improvement of the investment climate may require the following measures embodied in the respective legal forms:
1) provision of high level of development and stability of the legislation; 2) ensuring predictability of the state policy and continuity of investments decisions; 3) establishing effective, fair and uniform law enforcement practice, timely execution of court judgments and arbitral awards on investment disputes; 4) improvement of the investment legislation within the framework of international standards to the extent of express, transparent and unambiguous institutes and rules; 5) statutory and actual guarantees of protection of foreign investments, and the investors’ rights and legitimate interests; 6) exclusion of unpopular administrative actions pertaining to the unilateral waiver or termination of the contract.
Economic mechanisms and the opportunity to grant tax and customs benefits and preferences to investors, given that the stabilized and equitable tax treatment is not sufficient for investments inflow, are viewed as economic instruments of the state investment policy. The stabilized tax treatment, as a rule, is a characteristic of economically well developed countries. If the application of the general tax regime to all business entities, including investors engaged in subsoil use is the target, then tax and customs rates should be reduced and consistent with the profit gained.
The legal framework needs to be designed and established for reinvesting of income received in the sphere of subsoil use into other branches of economy, e.g. processing industries, agriculture, machine building and other socially oriented industries. This can be facilitated by comeback to the formation of free economic zones in the sphere of socially significant industries capable of increasing investment flows in this sector. The interest of foreign investments in the sphere of subsoil use needs to be directed to the solution of key state tasks to foster the entire economy. To achieve the effect subsoil use contracts should contain well-defined and specific terms of commitments of subsoil users in the placement of orders for supply of equipment and spare parts at the national entities, engagement of national personnel, allocation of funds for construction and maintenance of social facilities. These provisions should be stipulated in contracts and should depend upon imperative rules (mandatory law).
Flaws in the legislation of the Republic of Kazakhstan regulating relations in the sphere of subsoil use and investment activities, unlawful acts in the sphere of subsoil use and investment activities, unlawful acts and requirements by the competent government authorities and government officials are prerequisites for prioritizing the issues of protection of the rights and legitimate interests of subsoil users and investors. It is known that the protection of civil rights is the system of measures stipulated by the law to ensure the integrity and enforcement of the rights, their restoration in the event of their violation and elimination of the consequences of the violation. This civil law postulate is basic for the protection of the rights and legitimate interests of subsoil users and investors.
In accordance with the institutional law, the rights of investors are protected through the institute of dispute resolution. Thus, e.g. disputes regarding the violation of rights can be resolved by negotiations under the procedure agreed in advance, in the event of failure an investor may refer to the state court or international arbitration as determined by agreement of the parties and the subject of a dispute between an investor and the competent authority. Pursuant to the Law of the Republic of Kazakhstan “On Investments” (clause 5 of Article 1) disputes arising from contractual commitments of the investor and the government authorities in connection with investment activities are deemed “investment disputes”. Hence, all other disputes between the parties to an investment agreement should be resolved in the procedure established by the legislation of the Republic of Kazakhstan unless otherwise stipulated by the agreement.
The procedure for protecting the investor’s rights is regulated by the legislations of all countries in the world, but the methods and forms of protection are different. In some countries, in order to ensure the violated rights of investors, as a rule, material interests there are established compensation funds, a special system of insurance etc. E.g., in Australia there is functioning a special program of protection of outstanding contracts, in the UK - the program of protection from certain fraudulent acts.
IV. Issues of Performance of International Commitments by the Republic of Kazakhstan
Multi-vector international cooperation of the Republic of Kazakhstan with other countries in the sphere of subsoil use is one of the state priority areas. Dependence of many states on the supply of energy carriers as well as existing issues of legal regulation of such relations becomes more critical and at times lead to inter-state conflicts. Subsoil use is the area of maximum conjugacy of legal, economic and geopolitical interests, and the existence of territorial disputes the number of which is increasing each year, as a rule relate to the discovery of new mineral deposits.
Currently the relations in the sphere of subsoil use are placed in a different environment given that the collapse of the USSR and such trends as internationalization of the oil and gas sector, globalization of international economic relations, and strengthening of the position of transnational companies had an impact on the framework of legal regulation in subsoil use. International and legal cooperation of the states in the sphere of subsoil use resulting in the execution of international agreements, decisions of the international organizations and establishing of international legal practice, objectively relate to the appearance of a number of documents, specifically: the European Energy Charter of December 17, 1991; the Energy Charter Treaty of December 17, 1994; the Mining Charter of the CIS Member States of March 27, 1997; the Cooperation Agreement in the Field of Study, Exploration and Use of Mineral Resources of March 27, 1997; the Agreement between the Russian Federation and the Republic of Kazakhstan on Delineation of the Caspian Sea Bed for Exercising Sovereign Rights to Subsoil Use of July 6, 1998; the Cooperation Agreement in the Field of Study, Development and Protection of Subsoil of May 31, 2001; the Agreement between the Republic of Kazakhstan, the Azerbaijan Republic and the Russian Federation on Junction Point of Lines Delimiting Adjacent Zones of the Caspian Seabed of May 14, 2003.
It is known that the RoK Constitution (clause 1 of Article 4) refer the rules of international agreement to the applicable law. In addition, international agreements ratified by the Republic of Kazakhstan have a priority over its laws and apply directly, except for cases where an international agreement provides that its implementation requires the adoption of a law (clause 3 of Article 4 of the RoK Constitution). Further it should be noted that pursuant to Article 20 of the RoK Law dated May 30, 2005 No. 54 “On International Agreements of the Republic of Kazakhstan”, each applicable international agreement is subject to obligatory and in good faith compliance with by the Republic of Kazakhstan.
Pursuant to the principles of international law, states retain a sovereign right to operate their own resources in accordance with their own environmental protection, and are responsible for ensuring that the activities carried out within their jurisdiction would not cause damage to the environment of other states or regions outside their national jurisdiction. Multiple and bilateral international agreements regulating international cooperation in the field of geological study and subsoil rational use and protection stipulate the general principles of cooperation of the states in this sphere of the economy. Many international legal acts provide for: gradual drawing together legislative and other regulatory acts regulating subsoil use relations; establishing uniform systems of environmental monitoring of geological environment of the border districts; formation of the agreed policy in the field of standardization and certification of minerals and products of their processing.
One of the areas of international cooperation is the establishment of a single Eurasian energy space ensuring access to energy resources and their development, as well as access to sales markets; liberalization of energy trading, encouragement and protection of investments, provision of safety and environmental protection. These theses are based on the provisions of the international contracts (agreements) ratified by the Republic of Kazakhstan adhered to by signing or performing other legally significant acts.
Some important international legal acts are the Energy Charter Treaty of December 17, 1994 which became effective on April 16, 1998, and the Protocol to the Energy Charter on Energy Efficiency and Related Environmental Aspects ratified by the Decree of the President of the Republic of Kazakhstan of October 18, 1995 No. 2537. It should be noted that the key objectives of the Energy Charter Treaty constitute the establishing of conditions for liberalization and encouragement of investments into the energy sector and energy trading, dispute resolution in this sector by international arbitration, and reduction of environmental risks. The content of this Treaty is very complicated and its provisions may have different interpretations, therefore the practice of application of its rules requires a profound reasonable approach to avoid disputes between the parties to the treaty.
Though the said Treaty regulates to a greater extent the relations in the field of investments protection, nevertheless it covers subsoil use as well. Such conclusion is made given the interpretation of the term “Economic Activity in the Energy Sector” which means “an economic activity concerning the exploration, extraction, refining, production, storage, land transport, transmission, distribution, trade, marketing, or sale of Energy Materials and Products” (clause 5 of Article 1 of the Treaty). In its turn, the Energy Charter Treaty refers to “Energy Materials and Products” all types of minerals and their products which are sources of energy, including: uranium ores, all types of coal, peat, oil, gas (Annex ЕМ to the Treaty). The existence of the above provisions in the Energy Charter Treaty imposes on the Republic of Kazakhstan a number of obligations, specifically:
1) ensuring that within its jurisdiction it has and enforces such laws as are necessary and appropriate to address unilateral and concerted anti-competitive conduct in “Economic Activity in the Energy Sector” (clause 2 of Article 6);
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