Earlier, the FBRK editorial team reported on the protracted property dispute between JSC "National Company "Kazakhstan Garysh Sapary" (KGS) and LLP "King Development". The Supreme Court of the Republic of Kazakhstan recognised as lawful the termination of the investment contract with the company that systematically missed construction deadlines for the facilities of the National Space Centre (NSC) and violated the terms of the lease agreement.
Today we will detail the situation that led to the court proceedings, and analyse the potential consequences for the project, given that the Malaysian-capital company, despite exhausting all domestic judicial mechanisms, is preparing to challenge the decision in international courts.
The National Space Centre was conceived as a unique technological cluster, combining both production and social infrastructure. The first phase of the centre, including an assembly and test complex, an engineering and technology complex, and a satellite ground control complex, was successfully commissioned as far back as 2015-2019. However, the implementation of the second phase, which involved the construction of residential buildings, a school, and an administrative building for space companies, encountered serious difficulties due to the developer's bad faith conduct.
The National Space Centre was conceived as a unique technological cluster, combining both production and social infrastructure. The first phase of the centre, including an assembly and test complex, an engineering and technology complex, and a satellite ground control complex, was successfully commissioned as far back as 2014-2019. However, the implementation of the second phase, which involved the construction of residential buildings, a school, and an administrative building for space companies, encountered serious difficulties due to the developer's bad faith conduct.
In 2018, JSC "Kazakhstan Garysh Sapary" entered into a contract with LLP "King Development" for the construction of the second phase of the NSC. The company was provided with a land plot of over 14.5 hectares in a prestigious area of the capital with ready utility infrastructure on extremely favourable terms. The annual rent was only 2.88 million tenge - an amount incomparable to the market value of land of that size in Astana.
Notably, it was during this period that LLP "King Development", which had been operating in the Kazakh market for over 8 years, entered into a strategic partnership with the Malaysian holding company "Goldmore Ventures Sdn. Bhd.", led by investor Dato Hii King Chiong. The partnership resulted from a personal acquaintance between the founder of "King Development", Chingis Akhanov, and Dato Hii back in 2014. The collaboration began with an ambitious project — the construction of the innovative "Cosmic City" residential complex and an international space-oriented school in Astana, near the National Space Centre.
According to the contract, the developer undertook to build six residential complexes and an administrative building with offices, hotel rooms, and a cosmonautics museum. In return, KGS was to receive two apartments in each residential block, as well as a 30% discount on the purchase of additional apartments for its employees.
As noted by the space company's management, the initial contract terms and subsequent amendments are significantly at odds with current economic realities, especially considering the value of the land plot in this prestigious area of Astana.
By way of comparison, in similar joint projects with private investors, local executive bodies typically receive no less than 10% of the floor area of the total commissioned facilities into municipal ownership.
In this instance, in 2022, "Kazakhstan Garysh Sapary" received ownership of only 2 apartments with a total value of 80 million tenge out of 259 apartments in block D, while 14 apartments were purchased by company employees at a 30% discount.
However, LLP "King Development" showed a lack of due responsibility from the very beginning. Construction of block C, which was supposed to be completed in the second quarter of 2023, was not finished, and the developer did not even start construction on the remaining blocks. From the beginning of 2023, work on the site was completely suspended.
In addition to systematically missing construction deadlines, the developer regularly delayed rent payments. By the time the contract was terminated, the total amount of overdue payments exceeded 7.2 million tenge, and the total period of arrears reached 701 days.
"Despite all our concessions and relaxations, including repeated revisions of deadlines in favour of the developer, the company was still unable to fulfil its obligations", noted representatives of JSC "Kazakhstan Garysh Sapary".
It is worth noting that such problems with construction deadlines and meeting obligations are not uncommon for LLP "King Development". The company has a fairly long history of violations related to the construction of residential complexes.
For instance, in September 2023, the Inter-district Court for Civil Cases of Astana city issued a ruling on a lawsuit by Dinara Bissenova against LLP "King Development". The court established that after concluding a preliminary contract for the purchase of an apartment in the "Kingsland Residence" residential complex and fully paying 230 million tenge, the developer did not complete construction within the agreed timeframe. The court fully upheld the claim, ordering the company to return the full amount and pay an additional 4.3 million tenge in court costs.
In addition to financial violations, the company's activities were also marked by more serious incidents. In February 2022, at one of LLP "King Development"'s construction sites in Astana, a tower crane collapsed, resulting in the death of the crane operator. The tragedy sparked protests from construction workers, who pointed to systemic safety violations and a lack of proper oversight.
According to participants in the spontaneous gathering, despite numerous appeals to various authorities, the safety situation at the company's sites remained unsatisfactory, and the existing moratorium on inspections of small and medium-sized businesses effectively blocked the work of regulatory bodies.
In February 2024, KGS sent notices of termination of the contract and lease agreement, and then proposed the developer sign a termination agreement and return the land plots. However, LLP "King Development" refused to comply with these demands, forcing the space company to go to court.
During the court proceedings, representatives of the developer attempted to shift responsibility onto KGS, citing alleged delays in the transfer of the land plot and the lack of necessary infrastructure. However, these arguments were refuted - it was established that the NSC territory was fully equipped with all utility networks long before the start of cooperation with LLP "King Development".
Particular attention is warranted by the developer's attempt to appeal to the minutes of the Investment Attraction Council meeting, according to which the termination of contracts with investors must be agreed upon with the General Prosecutor's Office. However, the court rightly pointed out that the construction of a residential complex does not constitute an investment in production as defined by the Entrepreneurial Code, and LLP "King Development" is not included in the register of investors. Thus, agreement with the General Prosecutor's Office was not required to terminate the contract.
Significantly, all judicial instances - the Specialised Inter-district Economic Court of Astana, the judicial panel for civil cases of the Astana City Court, and finally the Supreme Court of the Republic of Kazakhstan - unanimously sided with KGS, confirming the legality of the contract termination and ordering the developer to return the land plots, as well as hand over all design and estimate documentation.
It should be noted that for LLP "King Development", whose head is Hii Wei Wen, this is not the first instance of legal violations.
In April 2020, the company was found guilty of an administrative offence for raising funds from equity holders during the construction of the multi-apartment residential building "Cosmic Hall" without obtaining the relevant permit. The company was fined 556,710 tenge, and an appeal by director Hii Wei Wen was dismissed. In May of the same year, "King Development" was placed on the "blacklist" of the capital's developers.
Furthermore, in November 2023, the Association of Property Owners (APO) "Cosmic City, 89/3" was forced to sue LLP "King Development", demanding the transfer of documentation and the residential complex itself, which had been commissioned back in July 2021. Despite numerous appeals from the APO, the developer did not hand over the building and the necessary documentation, which is a violation of the law. The court upheld the claim and ordered the company to transfer the residential complex and all necessary documentation.
According to data from the Kompra.kz website, LLP "King Development" currently has serious restrictions imposed on it, including a ban on registration actions and an encumbrance on the founder's share of the legal entity, which may indicate serious financial problems for the company.
However, according to available information, LLP "King Development", 85% of which is owned by the Malaysian company "Goldmore Ventures Sdn. Bhd.", intends to appeal to international arbitration bodies. Such a step not only delays the process of returning the land plots and resuming construction of the second phase of the NSC but also potentially poses a threat to the sovereignty of Kazakhstan's national judicial system, whose decisions the company effectively refuses to recognise.
Interestingly, one of the founders of LLP "King Development", Chingis Akhanov, is a business partner of Dias Atamkulov, the eldest son of Beibut Atamkulov — one of the most influential statesmen in Kazakhstan. Over his career, the elder Atamkulov has held a number of key ministerial posts: he headed the Ministry of Defence and Aerospace Industry (which, incidentally, also controlled the space industry), was Minister of Foreign Affairs, and Minister of Industry and Infrastructural Development.
He currently serves as Ambassador Extraordinary and Plenipotentiary of Kazakhstan to Uzbekistan. Akhanov's business partnership with Dias Atamkulov is officially formalised through the joint venture LLP "KazEcoHouse". It is noteworthy that the name of Beibut Atamkulov also appears in the international "Paradise Papers" investigation, where he is mentioned as a director of the Maltese company "Centraz Finance Ltd". Such a connection vividly illustrates the close intertwining of business and political interests at the highest level, characteristic of Kazakhstan.
This situation clearly demonstrates the risks the state can face when cooperating with foreign investors, especially when strategically important facilities are involved. Now, JSC "Kazakhstan Garysh Sapary" will not only have to find a new, more responsible partner to complete the construction but also build a legal defence against potential international lawsuits.
Experience from other countries shows that such international proceedings can last for years and require significant resources. However, KGS's strong legal position, confirmed by all national judicial instances, as well as the extensive history of violations by LLP "King Development", provides grounds to believe that justice will prevail even at the international level.
This case should serve as an important lesson for all state-owned companies: when concluding contracts with foreign partners, it is necessary not only to thoroughly check their reputation and financial standing but also to provide for clear dispute resolution mechanisms that will protect the state's interests, even if the matter goes to international arbitration. Such attention to detail is particularly important when cooperating with companies that have a complex track record of fulfilling obligations.