The 2.3 trillion tenge environmental penalty against North Caspian Operating Company, about $4.8 billion at 474.85 tenge to the dollar, fell due for voluntary payment on 20 July. It went unpaid. Restrictions on NCOC property and vehicles followed on 21 July, and the enforcement proceedings open the way to an execution charge of 10%, roughly 230 billion tenge on top of the fine.
The ministry named a person as well as a company. Managing director Giancarlo Ruiu was warned that he could face administrative and criminal liability over the unpaid sum.
An arbitral tribunal sitting under UNCITRAL rules issued interim measures on 16 July prohibiting enforcement. Kazakhstan’s justice ministry holds that a commercial arbitration order does not override the decisions of Kazakhstani courts.
The underlying claim is sulfur: more than 1.7 million tonnes accumulated at the field against a permit allowing no more than 730,000.
The shareholders are Eni, ExxonMobil, Shell and TotalEnergies with 16.81% each, KazMunayGas with 16.88%, CNPC with 8.33% and Inpex with 7.56%. The arbitral panel was due to be seated by the end of July, which is this week.
What is being tested here is narrow and practical. When a Kazakh bailiff’s order and an UNCITRAL interim measure point in opposite directions, a bank, a port authority and a vehicle registry each have to obey one of them. Every one of those choices is a precedent for the next investor who reads the fine print on dispute resolution.