Posco Co. Ltd. v Republican State Enterprise on the Right of Economic Management “National Centre for Complex Processing of Mineral Raw Materials of the Republic of Kazakhstan”
AIFC Court declines jurisdiction over a Zurich ICC award
The AIFC Court dismissed Posco Co. Ltd.'s claim to recognise and enforce a Zurich-seated ICC award against a Kazakhstan state enterprise. Posco had already tried the Almaty court route, where the court returned its applications on proof and translation grounds. Justice Sir Rupert Jackson held that the AIFC Court could not become an alternative enforcement forum because neither the parties nor the dispute fell within Article 13 of the AIFC Constitutional Statute, and Article 14.4 did not extend the Court's jurisdiction to foreign non-AIAC awards.
Quick Answers
What did the AIFC Court decide?
It dismissed Posco's claim to recognise and enforce the ICC award because the Court had no jurisdiction.
Why did jurisdiction fail?
Article 13 supplied no jurisdictional basis:
- the defendant was not an AIFC participant,
- the dispute did not arise from AIFC activity, and
- the parties had not agreed to AIFC Court jurisdiction.
Did Article 14.4 give the AIFC Court power to enforce any foreign arbitral award?
No. The Court confined Article 14.4 to AIAC awards.
Which authority did the Court use for the jurisdiction route?
It relied on Michael Wilson & Partners Ltd v Kazsubton for the point that Article 13 is exhaustive.
What is the limit of the decision?
The decision concerns the AIFC Court's jurisdiction. It leaves ordinary Kazakh court enforcement untouched for foreign awards, subject to local procedure.
Background
Posco and the Republican State Enterprise on the Right of Economic Management "National Centre for Complex Processing of Mineral Raw Materials of the Republic of Kazakhstan" entered into a loan agreement on 5 July 2013. The agreement provided for ICC arbitration seated in Zurich. On 28 October 2022, the tribunal ordered the defendant to repay USD 25 million plus interest. A costs addendum followed on 14 December 2022, but the defendant did not pay.
Posco first applied to the Almaty Specialised Interdistrict Economic Court. The Almaty court returned the applications, including for want of the original arbitration agreement or a certified copy, proof that the debtor had received the award, and certified translation material. The AIFC judgment reports the appellate rejection date as 12 February 2025, although that appears inconsistent with the later 2025 events described in the same chronology.
In the AIFC Court, Posco sought recognition and enforcement of the award, including USD 25 million in principal, accrued interest, arbitration costs, legal costs, further interest, and post-judgment interest. The defendant objected that it had not received the award, that the matter had already gone through the Almaty court, that it did not qualify as an AIFC participant, and that the AIFC Court had no jurisdiction.
The Court's Decision
The Court started with Article 13.4 of the AIFC Constitutional Statute. That provision gives the AIFC Court jurisdiction over disputes between AIFC participants and certain AIFC bodies, disputes relating to activities in the AIFC under the acting law of the AIFC, and disputes transferred by agreement. None applied. The defendant was not an AIFC participant, the loan and ICC arbitration did not arise from AIFC activity, and the parties had not agreed to use the AIFC Court.
Posco relied instead on Article 14.4, which concerns recognition and enforcement of arbitral awards. Justice Jackson held that Article 14.4 covers AIAC awards only and gives no general worldwide enforcement jurisdiction over foreign awards. He read the provision in context: Article 14 concerns the International Arbitration Centre, the surrounding subparagraphs concern AIAC arbitration, and non-AIAC parties do not accept AIFC Court jurisdiction merely by choosing another arbitral institution and seat.
The Court relied on Michael Wilson & Partners Ltd v Kazsubton for the principle that Article 13 is exhaustive and that the AIFC Court cannot exercise jurisdiction outside the Constitutional Statute. It also held that subordinate AIFC instruments, including the AIFC Arbitration Regulations and AIFC Court Regulations, could not enlarge jurisdiction beyond the statute.
That reasoning put the judgment in direct tension with earlier first-instance AIFC decisions. Justice Jackson declined to follow Roads Department v Todini, Pacific Trade House v Altai Polymetals, Pacific Trade House v Terekty Ken Bayytu, and Naftogaz v Gazprom. He treated those decisions as wrongly decided on this point because the jurisdiction argument had not been fully tested there.
Result
The Court dismissed the claim for lack of jurisdiction. It left Posco's criticisms of the Almaty proceedings unresolved. The same was true of the defendant's notice objections and limitation. The judgment leaves ordinary Kazakh court enforcement as the relevant route for non-AIAC foreign awards unless Article 13 independently gives the AIFC Court jurisdiction.