Energy

International Internet Magazine. Baltic States news & analytics Friday, 14.08.2020, 11:45

Who benefits from judicial dispute over uranium…

Nataly Krumina, BC, Astana/Riga, 26.12.2018.Print version
Kazakhstan was discussed in the global political and business circles again in October of this year. The fact is that the national atomic company of the country Kazatomprom announced that the company planned to put its stocks on the London Stock Exchange (IPO procedure). In the case of success, the company would be able to move to a new level of development confidently.

However, there is the one interesting fact. Not known to the general public, but the famous in Kazakhstan Canadian businessman Paul A. Carroll expressed a positive assessment of this decision of Kazatomprom. The reason for his positive assessment was his desire to receive the compensatory damages from the sale of the company’s stocks.

 

Why Kazakhstan lawyers drew attention to the citizen of Canada? That was a terrific story. We would like to remind the readers the essence of the story in a few words.

 

In 1995-1997, World Wide Minerals (WWM) led by Paul A. Carroll invested in the development of the largest uranium mining in Kazakhstan. The project was of great importance because it dealt with such strategic raw materials as uranium, and therefore, was under the control of Kazakhstan government. WWM pledged to invest at least 100 million US dollars in the nuclear industry in Kazakhstan. But the company went bankrupt, all her production was curtailed, and the assets and property were sold. The Canadians blamed Kazakhstan for the bankruptcy of the profitable uranium mines.

 

The Canadians didn’t mention that with the advent of WWM in Kazakhstan, the uranium industry declined. The Canadians also didn’t pay any attention to the fact that Tselinny Mining and Chemical Complex had losses of 9 million US dollars, and a level of production increased by almost 60 percent after a half year of WWM presence in the country. They didn’t care about the workers of the factories, who were sitting without wages for a long time, and about the abandoned social facilities, which the Canadian company undertook to maintain. You may ask why? Possible, all activity of WWM was aimed at the resale of raw materials and making a profit.

 

Under such circumstances, the Kazakhstan side canceled the contract with the Canadians and accused WWM of violating local laws and causing damage to the enterprises as well as the environment. The company that expected to get rich due to Kazakhstan uranium went bankrupt.

 

Mr. Carroll perceived the failure of the project in Kazakhstan painfully, and he made a claim to the government of the country, and then brought the case of Kazatomprom before the International Court of Arbitration in Stockholm and the American courts.

 

The litigation between WWM and Kazatomprom is a ridiculous and strange story. All WWM’s attempts to return the assets or receive compensation were unsuccessful. All courts (except Canadian) endorsed the notion of Kazakhstan invariably. The Canadian company openly broke the rules in Kazakhstan, and their mistakes were evident. Soon, the company lawyers understood the hopelessness of the litigation on this flank and moved the attack to the other. According to Mr. Carroll’s words, the main factor of the company’s bankruptcy was Kazakhstan’s rejection to issue a license for the export of uranium to the United States. In his opinion, it was a flagrant violation of international law.

 

The “Other flank” is a bilateral treaty of investment between Canada and the USSR dated 1989, which guaranteed the protection of Canadian investments. The Canadian side decided to refer to this agreement. However, Kazakhstan cannot be considered as the successor of the Soviet Union. It is sad that such litigation didn’t characterize Canada as a reliable and honest partner. But, we will talk about it later.

 

The company understood that it would be difficult to pass their incompetence and inefficiency in conducting atomic affairs to the government of Kazakhstan and arrange the situation in the way that nobody in the world noticed the traces of ruin and decay of the uranium industry in Kazakhstan. Then, the WWM’s lawyers decided to prove that Kazakhstan inherited the rights of the USSR and bore responsibility for the agreement between the two countries. Even the most authoritative US judicial authorities (where the case was considered) were in perplexity from this case. And the Appeal Court of Columbia district reminded to Mr. Carroll that the decision to issue or not to issue an export license is the sovereign right of Kazakhstan based on the domestic laws and decrees of the Republic.

 

One thing remains unclear. Why the government of Canada was supportеd the WWM’s claims on Kazakhstan? This judicial dispute complicates the bilateral regulations of the countries. By being involved in losing situations, Canada explodes the reputation on the country. The responsible people understand that such litigation discredits the authority of Kazakhstan among foreign investors. As a result, the country may counterclaim. Regardless this judicial dispute finishes successfully or no, Kazakhstan government does not want that ordinary Canadian taxpayer pays for the wrong decisions of one businessman and Canadian politics. The cost of such cases may reach a significant amount of money, but the reputation costs more.

 






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