Kazakhstan Says Arbitration Cannot Halt Enforcement of Kashagan Fine
Photo: NCOC
Kazakhstan will continue efforts to collect an environmental fine from the operator of the Kashagan oil field despite an international arbitration order. The Ministry of Justice said commercial arbitration cannot restrict the state’s sovereign authority or automatically override decisions by Kazakh courts, Orda.kz reports.
A fine of 2.3 trillion tenge was imposed on North Caspian Operating Company (NCOC) and its contractors for exceeding permitted sulfur-storage limits. The Ministry of Justice stressed that Kazakh courts had confirmed the legality of the penalty.
On June 19, 2026, the Atyrau Regional Court upheld the fine. NCOC has until July 20 to comply voluntarily. After that, the authorities may begin compulsory enforcement and impose an additional enforcement fee of 10%, or around 230 billion tenge.
Earlier, the Kashagan operator said that a tribunal operating under UNCITRAL rules had temporarily prohibited Kazakhstan from collecting the fine while arbitration proceedings remained pending.
The Ministry of Justice called NCOC’s interpretation of the order unfounded. It emphasized that the case involves commercial arbitration rather than investor-state arbitration. The tribunal’s jurisdiction is therefore limited, according to Kazakhstan’s position.
The ministry also said an interim measure issued by a foreign arbitration tribunal does not automatically take effect in Kazakhstan. NCOC would have to apply to a Kazakh court for the order to be recognized and enforced.
Environmental penalties fall within public law and cannot be restricted by commercial arbitration decisions in a private-law dispute,the ministry said.
The ministry also expressed concern that NCOC had publicly disclosed the interim order. It said publishing details of the order was inconsistent with the confidential nature of the ongoing arbitration proceedings.
Original author: Alexander Zhdanov
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