In Kyrgyzstan: “Justice is our goal, arbitration is our means”

When a justice system is hampered by corruption, settling civil and commercial disputes through private arbitration offers an alternative to the courts, but change rarely comes easy.

In common with its Central Asian neighbours, Kyrgyzstan inherited a Soviet-style judicial system. Corruption remains a big problem and changing the system is a long, difficult process. The development plan of the President of Kyrgyzstan – ‘Strategy on Sustainable Development of the Kyrgyz Republic 2018 – 2040’ – identifies how corruption has penetrated into almost all fields of state activity, becoming a major impediment for development.

Hannepes Taychayev, a John Smith Trust Fellow since 2019, believes that access to arbitration – a legally binding way of resolving disputes without going to court – offers a shorter-term solution.

“I’m putting out the idea that arbitration should be an institution for private dispute settlement in the country. I want to explain it to the public, that the state is not the only institution that could settle their disputes and problems,” he says.

Local investors at a disadvantage

Foreign investors in Kyrgyzstan already have good access to arbitration. This right is recognised in several international agreements Kyrgyzstan has ratified and is written into the country’s domestic law. “International investors in Kyrgyzstan have almost unhindered access to arbitration,” says Hannepes. “Usually, they settle their disputes outside the country, in the UK, Sweden or the United States.”

Mining company Centerra and telecoms giant MegaCom are two foreign investors who have recently turned to international arbitrators to resolve disputes with the Kyrgyzstan state. However, local investors and ordinary citizens access to arbitration is not as unconditional as it is for foreign ones when it comes to disputes between the state and private entities.

Hannepes says: “Local investors are stuck with the courts of the country, which are corrupt and failing to deliver justice to the people. This is illustrated in the situation with Ak-Keme Hotel where the international investors had access to international arbitration and managed to present their case. While the local ones did not have this option and have no clear prospects for recovering their money.”

Improving access to justice

At the time of Hannepes’ fellowship, he was working as a lecturer in law at the American University of Central Asia in Kyrgyzstan. His action plan was to build on his research into the country’s investment law and recommend legal changes to the dispute settlement clause of the investment law of the country.

“I was trying to improve access to justice in the country by institutionalising arbitration as a means of civil self-governance,” says Hannepes. “My idea was to have unhindered access to arbitration in the country, for any investors, local or international.”

While in the UK, Hannepes had a series of meetings with experts in arbitration and international law. Among them was Professor Loukas Mistelis, Professor of Transnational Commercial Law and Arbitration at Queen Mary University, London and Maurice Mendelson QC.

Insights from the fellowship

Hannepes says: “I had a very good impression of everyone I met. I really enjoyed talking to them and meeting them in person. Usually, I would only see them in chapters in textbooks or at conferences. They provided me with a lot of insights into dispute settlement.

“Professor Mistelis gave me lots of textbooks to take back to Kyrgyzstan. Meeting him and the others and being able to refer to their authority, helped me develop heavy-hitting papers and make them much more persuasive and presentable to the community in Kyrgyzstan.”

On his return to Kyrgyzstan, Hannepes consolidated his ideas around private arbitration, with support from Natalia Alenkina, another professor at the American University of Central Asia. Together, they co-authored a research paper: ‘Access to justice for domestic and international investors under the investment law regime of Kyrgyzstan’.

Research and recommendations

One of the key points of Hannepes’ research is that the government itself recognises the issue of corruption in state institutions and that one solution is for private institutions to deal with civil cases. Ultimately, he argues, everyone in the country should have access to arbitration to resolve civil disputes and that the courts should be reserved for criminal cases.

He says: “I was trying to present the experiences of other countries, where arbitration as means of dispute settlement was successful. My argument was that private institutions would be much better at it because they were less susceptible to corruption than the state institutions in their present form.”

In September of 2021, Hannepes submitted his research and recommendations to the Ministry of Economy. He says: “They said they appreciated my work and that they would take it into consideration next time they submit the draft law on investment to the parliament.” He has also presented his research at a conference at the Graduate School of Law in Riga, Latvia, and it has featured on the University of Columbia’s blog.

Changing mindsets

According to Hannepes, the biggest challenge is changing people’s mindset. “It’s persuading the people that private arbitration as a means of improving good governance is a viable solution,” he says. “Because of the Soviet-style and state-centred mentality people have in the region, they think that state institutions should deal with these sorts of things. It’s challenging that mentality.”

In September 2022, Hannepes plans to start an LL.M degree in International Arbitration and Business Law at Erasmus University Rotterdam in the Netherlands. “It’s a logical continuation of my previous project on access to justice. One of the reasons I’m doing the masters is that I’m hoping that I can go back and start my own arbitration practice in the region.

“First, I want to get certain legal qualifications and experience in law firms or arbitral institutions in the UK, US or another country.” he says. “I would say that curiosity keeps me going. I have this belief that I can succeed in becoming an arbitrator.”

As well as arbitration, Hannepes is interested in the broader application of international law and human rights law in Kyrgyzstan. He firmly believes that people in all sections of society should understand their rights when it comes to accessing justice. He says: “I want people to understand these things for themselves. I don’t want them to be dependent on anyone. Justice is our goal, arbitration is our means.”

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