On 24 October 2007, Kazakhstan’s President Nursultan Nazarbayev signed a law on amendments to the law on Subsoil and Subsoil Use.

The specified law seeks to protect national interests of Kazakhstan in the realm of subsoil use against subsoil users operations, which substantially impair economic interests of Kazakhstan and as such pose a threat to the national security.

1.    Application of the amendments will be limited to oil blocks and oil fields, where results of a subsoil user’s operations could lead to emergence of a threat to the national security through substantial impairment of the economic interests of Kazakhstan. The Government shall specify such oil blocks (oil fields) in a special list.

Thus, if a contractual territory is not included in the said list of strategic oil blocks, if impairment of economic interests is not substantial, if substantial impairment of economic interests does not pose a threat to the national security, there are no grounds for application of this legislation.

2.    The legislation does not ignore the currently established process of dissolution of contracts. Shall the mechanism of settlement [of disputes between the parties under a contract] specified in Article 45-2 of the law on subsoil and subsoil use fail to bring the intended effect – that is restored balance of economic interests of the state – the contract shall be terminated by judicial means. It will be the court that will define the fate of the contract and all the termination-related repercussions for the parties with due consideration of concrete circumstances, international practices, the law on investments and the contract terms.

3.    The norms of the passed legislation seek to ensure consistent restitution of economic interests of the state with the view of maintaining the contract for subsoil use itself.

Shall the duly authorized body apply the Article 45-3 in case of unilateral refusal to perform the contract, the subsoil user has the right to turn to court to have its interests protected.