British firm fights Kazakstani court

The second round of a legal dispute between Kazakstan and Britain’s Trans World Group has begun in a London courtroom.

The dispute began in November 1998 when Kazakstan’s Supreme Court ruled that in 1996 and 1997 TWG had mismanaged a number of Kazakstani mines and plants resulting in a loss of US$373 million.

Blaming the company for inflicting “considerable damage to the country’s economic and financial interests,” the court blocked credit agreements and contracts between TWG and Kazakstani lenders and suppliers, and ruled that TWG should return US$11 million to the Yevraziisky Bank and pay US$190 million in shares to the metallurgical plants it managed.

In response to the decision, TWG charged that the highest court in Kazakstan ignored foreign court rulings, as well as existing contracts and shareholder agreements.

The London court proceeding was initiated by United Global Bank, which is affiliated with TWG, to recover undisclosed credits issued to the TWG-managed companies in Kazakstan.

TWG is not the first company to take Kazakstan to court for cancelled contracts. In a Washington, D.C., courtroom, uranium miner World Wide Minerals is seeking US$220 million in connection with Kazakstan’s cancellation in 1997 of a management contract and purchase option for the Tselinny Gorno-Khimicheskii Kombinat uranium project. Last year, Central Asia Goldfields and Kazakhstan Goldfields launched a US$28.6-million lawsuit in an international court in the Netherlands over the 1997 cancellation by the government of their contract to manage state-owned Kazakhaltyn, which operated the Bestube, Aksu and Jolimbet gold mines.

The Kazakstani judge who ruled against TWG says the outcome of the London proceedings will likely be in favour of the company “because of differing approaches to the case.”