The American Bar Association Rule of Law Initiative’s Kazakhstan Rule of Law program developed a video course called, "Civil Law of Kazakhstan: An Outside View" to provide law students, lawyers, and judges an opportunity for continuing legal education and professional development. In turn, it provides access to online education and strengthens users’ knowledge on the validity, verification, and conclusion of transaction cases brought before the courts in Kazakhstan. The topic of the video course was identified from the baseline assessment of the needs of judges in educational courses, and law enforcement practices.
The video course achieved a widespread viewership by nearly 3,000 legal professionals, university teachers, and students throughout Kazakhstan. It was made available on the websites of the Supreme Court and the Academy of Justice of the Republic of Kazakhstan, the educational platforms of seven universities of Kazakhstan (Turan University, Turan-Astana University, Academy of Justice under Supreme Court, West Kazakhstan University, Caspian University, Karaganda University of Kazpotrebsoyuz, Karaganda Buketov University), as well as the social media platforms of the American Bar Associations, Rule of Law Initiative, Kazakhstan International Arbitration, and the law news platform - ProSud.kz.
Associate Professor of the Department of International Economic and Comparative Law at Martin Luther University Halle-Wittenberg, Doctor of Laws, Azar Aliyev prepared the course, which consist of 61 lectures, practical exercises, including case-studies to consider the invalidation of contracts through methods derived from the European Court of Human Rights. The course offers examples of the application of the Chapter 4 of the Civil Code of Kazakhstan and best practices from Germany in resolving civil law cases.
In this blog, Professor Dr. Azar Aliyev provides answers to frequently asked questions:
1. The Kazakhstani civil legislation undergoes a stage of improvement periodically considered and not always consistent with the whole system of civil legislation. At one time there was even a draft Concept of the new Civil Code of the Republic of Kazakhstan. In your lectures you noted that the difference of legal systems is influenced by the difference of cultures (English, German law). In your opinion what direction should be chosen in Kazakhstan to improve or maybe to reform the civil legislation of the Republic of Kazakhstan?
I want to emphasize that I am not in favor of revolutionary reforms that would affect the foundations of the rule of law. Life today is already full of events that require adequate legal regulation, such as the development of digital technology. It seems to me that over the past 30 years Kazakhstan has formed a common understanding of the basic institutions of law, and this is a solid foundation for further development. On the other hand, this does not mean that there is no need to improve civil law. I think that in Kazakhstan, as in many other post-Soviet states, there is still a rethinking of the role of law, including civil law, as a regulator of the market economy. The socialist legal culture still has a very strong impact on law enforcement and there is still a very long way to go for reforms to establish a solid foundation for a market economy. It is a question of fundamental institutions, such as property or the concept of a legal person. The main work, however, lies in research and education, and it is only on the basis of the results of this work that the lawmaking process must begin. A qualitative legal discourse is necessary, which will allow to define precisely the needs of Kazakhstani law. But the qualitative discourse assumes deep knowledge, including the solutions found by other jurisdictions.
Along with the study of the experience of other jurisdictions, an understanding of how to implement the experience of other legal systems into one's own law without violating the integrity of the system itself is required. In this case, the question of which direction should be chosen becomes secondary, because all available experience is studied and the solution most suitable for the law of Kazakhstan, for public relations of Kazakhstan is developed. Reception of individual legal institutions is widespread in the world and certainly is not limited to one legal family. For example, the law of the securities market or bankruptcy law in most continental legal jurisdictions is strongly influenced by American law. However, this does not mean, of course, that the recipient countries, such as Germany, will become a common law country.
2. The video course was posted on university platforms. We received a positive response from both universities and students. What recommendations would you give to universities, to students for a better understanding and application of civil law, contract law?
I want to emphasize that a lot of work has been invested in the course and we very much hope that it will be perceived by the legal community of Kazakhstan. The main task of the course is to present a different perspective on the law of Kazakhstan, the perspective of an outsider. This is my main credo in education - to study the phenomenon from different perspectives, to actively seek other approaches. If one comes to understand that other solutions are possible, then the regulation adopted in one's own legal system is more clearly embedded in the overall context. The historical context of the emergence of this or that legal institution is also very important for a deeper understanding. By the way, it is the knowledge of the historical context that allows us to effectively adapt the law to new requirements.
And also, in my opinion, it is very important that during the training there was a constant feeling that you discovered something new and wanted to exclaim "Eureka". Such knowledge is never forgotten, because our memory is very closely linked to emotions. This kind of emotion is promoted by participating in various contests and tournaments, such as moot court, where each new argument contributes to the overall goal of the team. Another important aspect is education abroad, which allows a different perspective on one's law and especially the legal and educational culture.
3. In your opinion, what board books should a student beginning to study civil law have?
This is a very interesting and difficult question. I always advise my students to find a textbook that suits them, which presents the issues they are studying in a short and accessible way. This allows them to "get into the subject" without going into details that can be confusing, so as not to get into a situation where "you couldn't see the forest for the trees". And then deepen your knowledge from more specific sources. It is very useful, in my opinion, to work with examples from practice. The human brain is tuned in to solve practical problems that we encounter in life and therefore it is often much easier to comprehend the abstract through concrete examples. I would like to draw your attention to the fact that in all leading legal systems great attention is paid to the study of important decisions from judicial practice.
4. How does a graduate stay abreast of current and future trends in civil law after graduation?
Only a lazy person does not talk about the fact that the time of "half-life of knowledge" has significantly decreased in recent decades. This is, of course, primarily due to scientific and technological progress and, as a consequence, the rapid transformation of social relations. Let me cite just one example. In the middle and end of the last century, consumer protection was the focus of legal science and legal reforms, because the consumer was structurally the weaker party in comparison with the professional entrepreneur, especially because of asymmetries in information. With the emergence of digital platforms (Uber, Amazon, Airbnb) the situation has fundamentally changed. The platforms are interested in a large number of consumers, so demand is formed, and the supply side is automatically concentrated on the platform as well. As a consequence, the platforms, based on their interests, are very effective in protecting the rights of consumers. As a consequence, however, small and medium-sized businesses suffer (an Uber driver or a seller on Amazon). Thus, during the last decade there has been a lot of discussion and legislative activity to protect the interests of small and medium-sized businesses. For example, a whole array of documents has been adopted in the European Union.
That is, any lawyer engaged in the field of commercial law must study this new trend. And we are not talking about "technical changes in the law," but about changes in the interests and groups protected by law.
However, it should be noted that we have completely different access to information and opportunities for (self-)education. We have access to the latest content from the world's leading Universities from the comfort of our own homes, and more and more content is freely available (free). We can attend and watch conferences with the best experts or watch court hearings from different jurisdictions. All we need is curiosity and a desire for self-development.
5. What is the practice of invalidation of transactions in Germany, if there is such information is there any statistics? What is the difference between it and the practice of Kazakhstan?
When it comes to the recognition of invalid transactions in Germany, it must be noted that the approaches of German law differ from the law of Kazakhstan. The first feature is that voidable transactions become invalid from the moment of reception of the will of contestation of the transaction by other party to the transaction. That is, in case the contestation is not recognized by the other party, the court simply considers presence of three conditions of a contestation: the basis of a contestation (for example, conclusion of the transaction under the influence of delusion); presence of the will of a contestation; and, thirdly, whether the transaction is contested within the term provided by the law. If all three conditions are satisfied, the transaction will be considered invalid from the moment of its contestation. That is, the court merely states the fact, but does not change the legal situation with its decision.
In the case of null transactions, however, the court must apply the consequences of nullity on its own. Obviously, nullity must be provided directly by the legislation, as the basic principle is freedom of contract, that is, all contracts are valid if their invalidity is not provided by the legislation. If the nullity is stipulated as a legal consequence in a rule of law, no questions arise. There are, however, broad norms that need to be interpreted. These are the nullity of a transaction that contradicts the law and the nullity of a transaction that does not meet the requirements of morality. In these cases, the law enforcer must interpret the purpose of the law and find out whether the legislator intended to achieve exactly the nullity of the transaction. In many cases, it turns out that the purpose of the prohibiting norm is not the invalidity of the transaction. Sometimes it is enough only administrative responsibility, if it is stipulated by law, and sometimes only partial invalidity of the transaction. That is, one of the parties to the transaction, whose rights are protected by the norm of law, retains its rights from the transaction. This approach is shaped by judicial practice. In this regard, it is very interesting to examine Art. 3.3.1 of the UNIDROIT Principles of Commercial Contracts, which, in the case of unlawful transactions, do not provide as a consequence of their invalidity, but provide the parties only "proportionate instruments of legal protection". It is important to note that this approach has developed in most jurisdictions independently and has been adopted by the Principles relatively recently.
Thus, the German law treats transactions more carefully, as they are the basis of civil turnover and it is important not to get the opposite effect from the invalidity of the transaction, when the negative consequences will occur for the party in good faith. Soviet law treated private transactions more severely. Any violation of law led to the nullity of the transaction and even to the confiscation of property in favor of the state. The transaction itself had no high value for the legal system. The state economy was regulated by other institutions, and the protection of the interests of citizens was heavily shifted to the field of public law.
Although many countries have abandoned the approaches described in socialist law, certain elements remain. For example, the law of Kazakhstan provides, as a rule, for the contestability of unlawful transactions. That is, the majority of such transactions are not void as in Soviet law. However, in case of contestation of such a transaction, the courts recognize the transactions as invalid. That is, there is no flexibility of approach inherent in German law, as well as provided by the Principles. In this connection it is important to note that many legal systems have moved away from the automatic application of invalidity, contrary to the explicit direction of the law. For example, Austrian courts apply a flexible approach even though the Austrian Civil Code provides for the nullity of unlawful transactions.
6. Saima Abdrakhmanova, Technical manager of Objective 3 - Strengthening the independence and professionalism of judiciary, Rule of Law Program, ABA ROLI, asks a question: “In my LLM program, a classmate of mine from Japan once said in a presentation on contract law, “In Japan, we respect contracts”. Of course, in their country, too, there is the possibility of misrepresentation and deception in entering into a contractual relationship. How is respect for contractual obligations formed in Germany?”
I think the answer to this question should rather be sought in other social sciences - sociology, anthropology and even economics, since law actually covers only a very small part of the regulation of relations. In the context of your question, the norms of social behavior are more important. If breach of contract is not condemned by society, then the effect of the law will be very limited. Law is only one element of regulation. I also want to draw attention to the cultural component. So, in some traditions a contract is regarded only as a fixation of the beginning of cooperation and changing the contract according to changing circumstances is the norm. We are not talking about a substantial change in circumstances, but an adaptation of the contract to the usual change in circumstances. We cannot per se argue that this approach is wrong, but it will only work if there is an appropriate public perception.
7. What work is done in Germany to form legally acceptable patterns of behavior? In Kazakhstan high schoolers are taught the basics of law and the rest a person gets from school, family, street.
It is important to understand that no teaching of law in school will be able to make an average person a lawyer, otherwise there would be no need for lawyers. A completely different issue is the formation of models of lawful behavior and understanding of the basics of society and state institutions. As for the basics of the functioning of society, this can be quite effectively explained within the framework of the lessons of history, geography, and social science. The only question is in setting the right task. That is, if history is not taught as a set of dates and facts, but as a science about society, you can understand a great deal about the society in which you yourself live.
As for patterns of behavior, they are literally laid down in infant society-for example, the inevitability of punishment for a certain transgression. In this context, I want to express my point of view as a parent rather than as a lawyer. There are far fewer inhibitions in the upbringing process in Germany - children can soak in mud, eat ice cream or drink cold water with impunity. But those prohibitions that do exist, such as the prohibition against solving disputes by physical force, are very consistently enforced. This builds the understanding that not following the rules has negative consequences. The opposite approach - a lot of prohibitions, but inconsistency of application - leads to the opposite result. With so many rules, one way or another, we have to break them, and we just hope that no one will notice. That is, there is negative stimulation.
8. In Kazakhstan, there is a tendency that contractual structures are used for tax evasion, creation of financial pyramids, money laundering and other illegal phenomena. Are these phenomena widespread in Germany. What are the reasons for these phenomena and how can they be avoided?
The contract as the main type of transaction is the most widespread instrument for formalizing relationships between persons in the legal field. Accordingly, the contract will be widely used in all cases peculiar to this or that legal system. I think that the use of contractual structures in all spheres of life, including criminal activity, is inherent in all societies. As a consequence, the solution to the problem can only partly be in the sphere of contract law, in the part which regulates the private legal relations between the parties to the contract. All other issues are subject to the regulation of other areas of law. For example, the confiscation of property under an unlawful transaction cannot be a subject of private law, since in this case we are talking about relations with the state which confiscates the property. But even in this limited context, significant problems also arise in the area of contract law. If we remain on the example of invalidity of contracts, the example of Germany is illustrative, where the Supreme Court has changed its position several times over the past 20 years on the (non-)validity of tax avoidance transactions. For example, if the handyman charges the landlord less money for repairs because he will not pay taxes. Since both sides of the transaction are unscrupulous, any result will go in favor of one of the unscrupulous parties. If sometime later it turns out that the repair was carried out poorly, and the transaction will be declared invalid, the owner of the apartment will not be able to demand rectification of deficiencies. That is, we stimulate dishonest behavior of the master who does not pay taxes and still be exempt from liability for shoddy work. And just the opposite is also true. If the transaction remains valid, the risks of the landlord in connection with the contract bypassing taxation are significantly reduced.
I think there are no standard solutions in the regulation of social relations. Every problem requires thoughtful solutions, which are the result of extensive discussion, in order to obtain appropriate legitimization.
About Kazakhstan Rule of Law program
In 2020, ABA ROLI began implementing the USAID-funded KROL Program, which supports improvements to the investment and business climate, the legal framework for civil society organizations (CSOs), the modernization of the judiciary, and the elimination of real and perceived bias to increase judicial independence and professionalism. The program builds on a nearly three-decade partnership between Kazakhstan and the United States to modernize the judicial system, build public trust in the judiciary, and implement judicial reforms. The program supports judicial transparency and openness by providing opportunities for businesses, CSOs, lawyers, and other interested stakeholders to interact with one another and advocate for change.