Building Confidence: Thomas Krummel’s insights on building trust and stability in Kazakhstan’s arbitration landscape

— You have had a distinguished career spanning several decades, including your involvement in complex commercial arbitration cases. In your experience, how has arbitration proved to be a popular alternative to formal court litigation and what role does arbitration play in building trust with investors?

Arbitration is an alternative to litigation in state courts due to several aspects that are of increasing importance to all parties, not just investors. One is the duration of proceedings. Parties want to resolve disputes quickly. They want to continue their normal business dealings rather than spend years in court.

The second aspect is the unpredictability of the outcome. Now, of course, nobody can guess what a court or an arbitral tribunal will decide, but problems can arise when you do not know if the judge in charge of a case fully understands the facts at issue, especially if this plays in a technological, IT or an industrial context. That, of course, makes litigation in state courts unpredictable and raises the issue of judicial expertise. Not all judges are experts in matters outside the law. By contrast, arbitrators are chosen by the parties themselves, and that choice can be determined by their degree of expertise in the subject matter of the dispute.

Another problem is the enforceability of judgments. You can get a nice judgment, but you may not be able to do anything with it except pin it to the wall, because the chances of enforcing it can be difficult, depending on where you need to enforce it. In many constellations, enforcing an arbitral award may be much easier, as is the case with awards made under the IAC Rules to be enforced here in Kazakhstan.

— Returning to your career, is there a pivotal moment or case from your career that significantly shaped your approach to arbitration and the law?

No, there is not one pivotal moment or case. But I am quite experienced in litigation in state courts. That is what we normally do in Germany. We do not distinguish between barristers and solicitors. Every lawyer in Germany goes to court regularly — I have spent 35 years litigating in state courts. The pivotal moment you mention comes every time I am asked this question, often by long-time clients I have worked with for 30 years.

They always ask, ‘Where is this litigation actually going — and how long until I have a result that I can actually use? ‘ In arbitration, there are many more ways of promoting proceedings than in state courts—by influencing the choice of arbitrators, bringing yourself and your skills and your client’s case directly to the decision-making body, by acting time-efficiently, and, of course, being able to count on the tribunal’s impartiality. This is a significant advantage, especially for big corporations with high-value disputes. So, those are the pivotal moments, and they come every two or three weeks—they never stop.

— How do you see the IAC contributing to the stability and predictability of Kazakhstan’s legal environment, and what steps will be taken to ensure foreign investors feel confident in the AIFC dispute resolution system?

I believe that a modern state can hardly do a more generous or noble deed than to create, on its own territory but free from its own influence, an institution where parties from all over the world can seek impartial, fair and independent dispute resolution for global litigation or disputes. The mere existence of the IAC is a major contribution to the stability and predictability of Kazakhstan’s legal environment. We have investors—and not just one—and their lawyers telling us that the ability to include arbitration in the IAC in their contracts is a deal-breaker factor in their decision to invest.

If you look at what we have achieved so far, you may know that we have been operating since 2018. To date, we have resolved more than 3,000 arbitration and mediation cases under the IAC rules. The majority were mediation settlements, but there have been around 650 arbitration awards. If you compare that to the early stages of any other arbitral institution in the world, it is an outstanding achievement.

Steps taken to maintain this include constant improvement in how we handle cases, the use of modern technologies, and testing AI for transcriptions and translations, for example. We also focus on the ongoing training of our excellent staff. We have the AIFC Court and IAC Training Centre, which not only trains judges, lawyers, and arbitrators but also legal staff. All of our staff members are completely up to date on the latest legal requirements and possess the necessary skills.

Another great feature for parties to disputes are our international offices. We do not only operate from Astana; we have a fully-fledged office in Almaty at Narxoz University, equipped with full video technology and a hearing room. We have similar setups in eight countries in the Eurasia region, from Turkey to Georgia to Azerbaijan, with our latest office in China, of which we are particularly proud, as it is expected to significantly increase our business. Chinese investors are looking for dispute resolution mechanisms outside of China in relation to Kazakhstan. As you probably know, we operate within a second jurisdiction. The state of Kazakhstan has taken an innovative and commendable step by creating a second jurisdiction available to international investors on its own territory, but within the legal framework of the AIFC.

Our case numbers are increasing; we have had 718 decisions, awards, and mediation settlements just in 2023. As we speak, we have reached 880, and we are confident that we will crack the 1,000 mark by the end of this year.

— Drawing on your extensive experience in Germany, what practices or principles do you practice at the IAC to align it with global standards of dispute resolution?

In our IAC rules, which apply to arbitral proceedings at the International Arbitration Centre, we have a basic law—a fundamental provision at the beginning: ‘The Overriding Objective, ‘ as we call it. It is the determining factor for everything: the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense. Your arbitrators must be independent and impartial, and the staff of your institution must be well-trained. Efficiency is crucial—there should be no wasted time or resources. Everything else follows naturally from these principles.

— How important are local legal professionals’ education and training in enhancing Kazakhstan’s overall investment climate?

Extremely. When Kazakhstan began its journey as an independent state, many legal professionals, especially in terms of legal education, were not yet what they need to be today. I am not just referring to judges; I am also talking about enforcement officers, legal clerks, and legal staff. Modern, up-to-date training—especially the ability to adapt to the demands of a fast-growing and dynamic international trade and business environment—is absolutely decisive.

— What do those who want to enter the field of arbitration need to know right now to keep up with the trends and changing environment—not only in artificial intelligence and technology but in many other areas?

I could answer with one word: work. Do not so much rely on the fantastic tools of modern communication or fancy artificial intelligence. While those are important, the priority must be hard work. An arbitrator, whether young or older, must understand that becoming and being an arbitrator requires actual hard work, regardless of the electronic or other assistance you may use.

The essential qualities of an arbitrator are not defined by the equipment and infrastructure they use. Here at the IAC, we offer world-class services — including cutting-edge technical support for arbitrators, but an arbitrator must be someone who inherently possesses the urge, the need, and the pleasure to help others resolve their disputes. Another very practical aspect: I don’t know if you are aware, but it can be quite difficult to become an arbitrator simply because successful arbitrators worldwide often are rather watchful not to open their well-earning circles to aspiring newcomers.

— Reflecting on your career journey, what advice would you offer young lawyers and arbitrators aspiring to achieve similar heights in their legal careers?

Again, work, work, work—this is the key to everything. Do not overinflate your own importance; concentrate on the fact that you are a service provider. You are cancellable and revocable at any time. You may be wrong; you do not own the keys to the secrets of the world. You do not need all those status symbols to be a truly good lawyer. What you need to do is listen to people, work diligently on each case—not superficially—and never forget to follow your heart and intuition.

— What long-term impact do you hope the IAC will have on Kazakhstan’s global standing as a hub for international finance and trade?

It is more than a hope; it’s an expectation. I expect us not only to be firmly established on the world map of international dispute resolution but also to remain there and grow. We are looking forward to being among the 10 most important international arbitral institutions and the only one of that quality and size in Central Asia.

— What can you say about the investment climate in Kazakhstan right now, as a cure to those prejudices, for example?

How do we convince international investors that Kazakhstan offers them good opportunities, rather than being a destination with uncertain risks? Well, there really is more than one answer to that. First of all, Kazakhstan is, among other things, extremely attractive to foreign investors because of its natural resources, such as uranium, mineral oil or natural gas, or rare-earth elements. Just having all these on offer—I’m not even talking about the country’s excellent human resources—makes Kazakhstan an extremely attractive economic destination.

Secondly, I think the Kazakh government, the Kazakh state take many measures to attract investors, crucially among them, however, to enable the IAC and the AIFC Court to exist and operate on Kazakh territory. To increase confidence in investors, the only thing you need to do is direct them our way and show them the opportunities that our dispute resolution services offer. The more investment we at the IAC are helping to get to the country and the more international we become, the more parties will spread the word that we are a Kazakh-established dispute resolution institution, which operates on world-class level but in robust independence from the Kazakh state. If we continue our hard work, as we are decided to do, the IAC and the AIFC Court will be key elements to turning any prejudices into many opportunities.