Kazakhstan Wins $50 Million Arbitration Case Over Almaty–Khorgos Road

Kazakhstan has successfully defended itself in a $50 million lawsuit filed by two Italian construction firms over the Almaty–Khorgos highway project. The International Arbitration Court in Paris ruled in favor of the Kazakhstan Committee for Highways, rejecting all claims brought by Todini Costruzioni Generali and WeBuild, Orda.kz reports.

According to the Ministry of Justice, the Italian companies Todini Costruzioni Generali S.p.A. and WeBuild S.p.A., together with the Kazakh company Kazakhdorstroy LLP, formed a joint venture — Todini Impregilo Kazakhdorstroy — to take part in the construction of the Almaty–Khorgos highway.

On May 15, 2020, Todini Impregilo Kazakhdorstroy filed for arbitration at the International Chamber of Commerce: 

The company filed an arbitration claim against the Committee for Highways of the Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan concerning disputes over the Almaty–Khorgos highway construction project. During the case review, the plaintiffs submitted claims totaling approximately 50 million US dollars (25.7 billion tenge at the current exchange rate).the Ministry of Justice explained. 

The foreign companies sought compensation for various expenses, including extended construction deadlines, customs duties and taxes, tenge inflation, cost adjustments, culvert backfilling, the cancellation of a road maintenance facility, and other financial losses.

The tribunal established under the ICC International Court of Arbitration in Paris issued a final ruling in favor of the Committee. All claims submitted by the plaintiffs were fully dismissed, the Ministry of Justice stated.  

The tribunal also upheld the Committee’s counterclaim, ordering the plaintiffs to return compensation previously paid for extended deadlines. Additionally, the tribunal ruled that the Committee, as the prevailing party, is entitled to full reimbursement of its legal and arbitration expenses.

The Ministry of Justice of Kazakhstan represented and defended the Committee’s interests in the proceedings, with legal support provided by the international law firm Curtis, Mallet-Prevost, Colt & Mosle LLP.

This is not Kazakhstan’s first successful road dispute case at the International Arbitration Court. In 2019, the country won a $32 million case against a Kazakh-Italian joint venture that failed to complete a road to Khorgos.

In 2020, Kazakh authorities also prevailed in a lawsuit against the Turkish-backed F&A Road Construction, a joint venture formerly registered in the Turkistan region, which has since been dissolved.

Original Author: Anastasia Prilepskaya