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DEBT COLLECTION IN KAZAKHSTAN. PRODUCTION IN THE COURT OF FIRST INSTANCE, ORDER AND TERMS OF CONSIDERATION.

Contents:

Debt s collection terms and stages.

I.                  Introduction;

II.               Pre-trial order of debt collection;

III.           Trial order of debt collection;

IV.            Order (writ) proceedings;

V.               Simplified (written) proceedings;

VI.            Claim proceedings per standard procedure.

VII.        Conclusion.

 

I.    The meaning of Entrepreneurship, in general, and in other words “business” is always connected with risks, such as financial crisis, increased competition, bad faith of counterparties, which undoubtedly leads to debt formation, so entrepreneurs often have to apply for legal assistance to collect debts from counterparties. At nowadays, at the practice of both district and economic courts, the collection of debts is of the most common category of cases.

At the same time, it should be noted that the very concept of "Debt collection" includes not only the recovery of the principal debt from the debtor, but also the recovery of penalties (fines and penalties) for the failure of the debtor or non-fulfillment of its obligations provided under the contract, and recovery of penalties for the misuse of illegal use of monetary funds (other people’s money), recovery of punitive damages and losses of profit, restitution and other rights recovery mechanisms provided by the norms of Civil law of the Republic of Kazakhstan.

 

II.So, debt collection includes several stages:

1. Pre-trial order of debt collection;

2. Trial order of debt collection.

Debt collection

 

Trial order

 

Pre-trial order

 

 

                                                                                    

 

 

Pre-trial order of debt collection.

Pre-trial procedure is mandatory when it is expressly provided in legislative acts or in agreements concluded between the parties.

Usually in practice, the pre-trial order of debt collection is carried out in the following order: the creditor sends a claim letter to the debtor, in which he sets out his claims on the merits, their grounds, justification for the debts that have arisen and the due date.

In the event, if the debtor has ignored the claim and has not repaid the debt voluntarily within the specified time limits or has refused to recover the debt, the creditor has the right to initiate enforcement of the debt via court proceedings.

Note: Failure to comply with the pre-trial order may result on the Creditor (Claimant) having consequences such as refusal to accept the statement of claim or leaving the claim without consideration.

 

Enforced collection of debts under the contract includes several stages, one of which is the claims proceedings in courts, that is, the collection of debts via court.

Thus, the collection of debts is carried out within claims proceedings by the courts of general jurisdiction (regular courts), if the agreement concluded between parties provides for settlement of disputes in referees (arbitration) court, the collection of debts is carried out by referees court and / or arbitration courts.

In order for the statement of claim is to be accepted by the court and the procedure for collecting the debt in court, it is necessary to correctly compose a statement of claim, clearly define the claim demands and the debt that has arisen, correctly calculate the amounts of punitive damages (penalties and fees) which are to be recovered, as well as correctly calculate and pay the amount of state fee.

The documents confirming the arguments of the Claimant may be a civil contract signed between the Claimant and the Debtor, the annexes to this agreement, as well as all other documents resulting from the legal relations of the Parties: transfer acts, acceptance of work acts/mutual settlements acts, invoices, payment orders, letters, including letters of guarantee and other documents, depending on the type of civil legal relationship.

 

III.           Trial order of debt collection

In accordance with the norms of the Civil Procedure Code of the Republic of Kazakhstan, the proceedings in the court of first instance have several sub-sections, main of them are: simplified proceedings and claim proceedings.

In turn, simplified proceedings in Kazakhstan are divided into two types: writ proceedings and simplified (written) proceedings.

IV.           Writ proceedings

Thus, a court order (writ) is issued by a judge at the request of the Creditor (Claimant) to collect monetary funds or demand for movable property from the Debtor (Defendant) for undisputed statements of claim, without summoning the Debtor and the Creditor to hear their explanations and without trial hearings.

Otherwise, the Creditor (Claimant) should be aware that the court order is issued only on the requirements expressly provided by the Civil Procedural Code of the Republic of Kazakhstan, namely according to the requirements:

1

on fulfillment of an obligation based on a notarized transaction;

2

on fulfillment of the obligation based on a written transaction, the due date of which has come and the failure to fulfill the obligation is recognized by the Debtor, including the response to the claim sent to the Creditor in the manner of pre-trial settlement of the dispute;

3

on fulfillment of an obligation based on the protest of a bill in default, non-acceptance and non-dating of  acceptance, done by a Notary;

4

on recovery of alimony for the maintenance of minor children, not related to the establishment of paternity (motherhood) or the need to attract third parties;

5

on recovery from physical persons of arrears in taxes and other mandatory payments to the budget and penalties, as well as debts in customs payments, taxes and penalties;

6

on collection of salaries and other payments accrued but not paid to the employee, including the transfer of mandatory pension contributions to the Unified Accumulative Pension Fund;

7

on reimbursement of expenses for the search for a Debtor, Defendant and (or) a child, declared by authorized bodies;

8

on demanding the subject of leasing in accordance with the leasing agreement or laws of the Republic of Kazakhstan;

9

on foreclosure on the subject of the pledge upon the expiration of the repayment period of the loan presented by the pawnshop to the Debtor-Pledgor;

10

on recovery of debts from owners of premises (apartments) evading participation in mandatory expenses for the maintenance of the common property of the condominium object approved by the Statute of the Republic of Kazakhstan “On Housing Relations”, with the exception of claims for recovery of additional expenses;

11

on collection of debts on the basis of public contracts for actually consumed services (electricity, gas, heat, water and others), as well as other contracts for services in accordance with the established tariffs, the due date for which has come;

12

on recovery of a one-time monetary compensation stipulated in the contract for military service, in the event of early termination of the contract on the initiative of a military man;

13

on recovery of the amounts spent for training cadets of educational institutions that have stopped at their own request training or the passage of service, as well as those dismissed or dismissed on the grounds provided for by the legislation of the Republic of Kazakhstan, before the expiry of the contractual period;

14

on collection of state grants from persons who have ceased their education or who have not returned to the Republic of Kazakhstan after graduation from an educational institution in a foreign country or have violated a contractual obligation to return a grant;

15

on recovery of state grants, lifts, allowances from young professionals sent to the countryside, in case of failure to perform or improper performance of their obligations under the treaties;

16

on recovery of a lump sum payment paid to the budget in connection with the adoption of an orphan and (or) a child left without parental care in the event of the cancellation of the adoption;

17

on recovery of lease payments due to their non-payment within the terms established by the lease agreement;

18

on recovery of procedural costs for criminal cases discontinued by the criminal investigative body.

 

Hence, if the demand of the Creditor is within the scope of the mentioned above, Creditor has a right to comply an application for issuing a court order. The court order is issued by the judge within three working days from the date of receipt of the application to the court.

On the other hand, the Debtor has the right to file objections to the asserted claim within ten working days from the date of receipt of a copy of the court order or from the day when it became aware of its decision.

In case, if the Debtor sends an objection to the asserted claim within ten days or the application of another physical person whose rights and obligations are affected by the court order, the judge should cancel the court order by issuing of court ruling. After that, the asserted claim can be presented by the Creditor in the order of the claim proceedings.

However, if no objection or statement is received from the Debtor within a specified period, the judge issues a court order certified by the seal of the court to bring it to enforcement. The court order has the force of the executive document, and therefore the writ of execution due to court order is not subject to be written out.

V.               Simplified (written) proceedings.

Cases in the simplified (written) proceedings are considered by the judge within one month from the date of acceptance of the application. This period is not renewable. The statement of claim is filed under the general rules.

 

Thus, in the simplified (written) procedure, the following cases are subject to review:

1

on claims for recovery of money, if the price of the claim does not exceed seven hundred monthly calculation indices for legal entities, for individual entrepreneurs, citizens - two hundred monthly calculated indicators;

2

irrespective of the amount of the claim for claim statements based on the documents submitted by the Plaintiff, establishing the Defendant's monetary obligations, and (or) on documents confirming the debt under the contract;

3

on the implementation of agreements on the settlement of disputes (conflicts) in the order of mediation, concluded in the manner of pre-trial settlement in cases established by law or provided for by the contract;

4

on the implementation of agreements on settlement of the dispute, certified by a notary in the procedure of pre-trial settlement in cases stipulated by the Statute of the Republic of Kazakhstan "On Notary" or stipulated by the contract;

5

on the implementation of agreements on the settlement of disputes concluded with the participation of an advocate under a contract of commission of parties or lawyers and parties in accordance with the procedure of participatory procedure in accordance with the Statute of the Republic of Kazakhstan "On Advocacy";

6

on the execution of agreements on disputes related to entrepreneurial and investment activities concluded in the manner of pre-trial settlement in cases established by law or envisaged by the contract;

7

on the execution of agreements on insurance disputes and disputes arising from bank loan agreements concluded in the manner of pre-trial settlement in cases stipulated by law or stipulated by the contract;

8

on the implementation of agreements on disputes in the field of consumer protection, concluded in the manner of pre-trial settlement in cases established by law or envisaged by the contract;

9

on the implementation of agreements on disputes in the field of protection of intellectual property rights, concluded in the manner of pre-trial settlement in cases established by law or provided for by the treaty;

10

on the implementation of agreements on disputes in the sphere of marriage and family relations, concluded in the manner of pre-trial settlement in cases established by law or envisaged by the contract;

11

on the implementation of agreements on disputes on the publication of a refutation of information discrediting the honor, dignity or business reputation of a citizen and the business reputation of a legal entity, or a response in a mass medium;

12

on the execution of other agreements concluded in the manner of pre-trial settlement of disputes in cases, networks or an agreement.

 

In the determination of the acceptance of the statement of claim for the proceedings, the court shall refer to the case in a simplified (written) proceeding, which shall be notified by the parties, and also specifies a period of fifteen working days during which the Debtor (Defendant) must submit a response (objection) to the statement of claim with the attachment documents and evidence by which it is based. To the response (objection), the Debtor (Defendant) must attach a document confirming the direction of his copy to the Claimant (Creditor).

The issued case according to simplified (written) proceedings is considered by the judge without calling the parties after the expiration of the terms established by the court for the submission of the recall, evidence and other documents.

In a case considered in the simplified (written) procedure, a short decision is made, consisting of introductory, motivational and resolutive parts.

The Debtor (Defendant) has the right to file an application with the court for the cancellation of this decision within five working days from the date of receipt of his copy. Such an application is filed if the defendant was not properly notified of the receipt of the claim and its examination in a simplified (written) proceeding and was unable to provide a response, as well as evidence that could affect the content of the decision.

The decision of the court may be appealed by the parties or appealed by the prosecutor on appeal after the deadline for submitting an application for cancellation of this decision, and in the event that the application is filed, - within a month after the court passes a ruling on refusal to satisfy this application.

Consequently, if the claims of the Creditor (Claimant) fall under the category of cases that are subject to consideration by order or simplified (written) proceedings, the Creditor (Claimant) has the right to solve problems with dishonest counterparties in one of the specified procedures for the consideration of cases in court. These orders can also be called accelerated and convenient: firstly, the time for consideration of cases for an order is 3 working days, and for simplified production, one month; Secondly, the Creditor (Claimant) does not need to go to litigation every time, which is a great time saving for the Creditor.

 

VI.            Claim proceedings per standard procedure.

First of all, during the drafting period of a statement of claim, it is necessary to correctly determine the legal position, indicate the necessary norms of the current civil and civil procedural legislation, correctly calculate the amount of the principal debt, penalties (fines), punitive damages costs, fines for using other people's monetary funds, indicate pre-trial settlement of the dispute, and to attach all the documents justifying the Claimant's demands.

As a rule, the statement of claim is submitted to the court of first instance in written form, with a copy of the statement of claim and the documents attached to it, according to the number of defendants and third parties; a document confirming payment of the state fee; power of attorney or other document certifying the authority of the representative; documents confirming the circumstances on which the plaintiff bases his claims; documents confirming compliance with the pre-judicial order of settlement of the dispute, if this procedure is established by law or provided for by the contract; copies of the statute, certificate or certificate of state registration (re-registration), if the claim is filed by a legal entity, as well as the petition of the Creditor to claim evidence if the evidence is held by the Debtor or a third party.

Secondly, along with the statement of claim, a petition is filed to secure the claim for seizing the Debtor’s property, which significantly simplifies the procedure for the subsequent forcible collection of the debt from the Debtor in favor of the Creditor.

However, in case of compliance of the claim with the requirements of the Civil Procedural Code of the Republic of Kazakhstan, the judge within five working days from the date of receipt of the statement of claim, decides the issue of its adoption in court proceedings.

Subsequently, acceptance of the application in the court proceedings after and the initiation of a civil case, the judge prepares the case for trial in order to ensure its timely and correct resolution.

Also, on the day of the determination of initiating a civil case, the court reviews and resolves the application for securing the claim if it was appended to the statement of claim or indicated in the statement of claim itself. In other cases, the application for securing the claim is resolved by the judge on the day of his entering the court. Preparation of civil cases for trial should be conducted no later than fifteen working days from the date of acceptance of the statement of claim in the court proceedings.

Based on the results of the preparation of the case for trial, a preliminary hearing is held, the time and place of which the parties are notified. During the preliminary meeting, the circumstances of the case are discussed with the parties, the nature of the disputable legal relationship and circumstances facilitating the reconciliation of the parties are determined.

Upon completion of the training, the judge issues a ruling on his appointment to trial in a court session, this must be commenced no later than ten working days from the date of completion of the training.

In accordance with the norms of the civil procedural legislation of the Republic of Kazakhstan, the period for consideration of civil cases is up to two months from the date of completion of the preparation.   

The judicial act of the court of first instance, by which the case is resolved on its merits, is rendered in the form of a decision, consisting of introductory, descriptive, motivational and resolutive parts.

Hence, the decision in the final form must be made no later than five working days after the announcement of the operative part of the decision. The decision of the court comes into force within one month from the date of the decision in the final form, in cases of non-participation of the parties in the trial, from the date of sending a copy of the decision to them.

Generally, when collecting debts from counterparties, different situations may arise; requiring individual consideration and approach, and therefore, the procedure for collecting debts should always be accompanied by qualified and preferably experienced lawyers.

VII.   In conclusion, Specialists of our Company have extensive experience in litigation related to recovery of debts from counterparties, which includes the following actions:

• Consultation and legal analysis of the submitted documents on the issue of debt collection;

• Pre-trial settlement of the dispute;

• Negotiations with the debtor;

• Development and submission of a justified and motivated claim letter to the Debtor;

• Elucidation of the debtor's financial position;

• Collection of evidence required to recover debt in court;

• Development of a claim for debt collection;

• Developing a response (objection) to the statement of claim;

• Representing the Client's interests in the court of first instance, the appellate and cassation instances;

• Development of an appeal, cassation complaint, as well as withdrawal (objection) to appeal, cassation complaint;

• Presentation of the writ of execution for execution;

• Representing the Client's interests at the stage of enforcement proceedings, working with Private Bailiffs.

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