Ministry of Justice of Kazakhstan stated that the decision of a Kazakhstani court to collect an environmental fine from North Caspian Operating Company (NCOC) is subject to voluntary compliance by 20 July 2026. The department also reported that the interim measure of protection from the UNCITRAL commercial arbitration does not have automatic legal force on the country's territory.
WHY THE MINISTRY OF JUSTICE CONSIDERS THE COLLECTION LAWFUL
According to the Ministry of Justice, the environmental fine is related to a violation of environmental legislation requirements during the storage of sulphur. The department notes that the legality of the collection has been confirmed by decisions of Kazakhstani courts.
The ministry reminded that on 19 June 2026, the Atyrau Regional Court upheld the decision of a lower court regarding the fine imposed by the Department of Ecology of the Atyrau Region. According to the department's statement, the court ruling has entered into legal force and must be voluntarily complied with by 20 July 2026.
WHAT THE MINISTRY OF JUSTICE SAID ABOUT THE UNCITRAL ARBITRATION
It has been reported that the UNCITRAL arbitration is commercial, not investment-based, therefore its powers are limited to examining private law disputes and do not extend to the exercise of sovereign powers by the state. The department also emphasised that interim measures from foreign commercial arbitration do not automatically take effect in Kazakhstan and require recognition by a competent court, which, according to the ministry, has not occurred in this case.
WHAT WILL HAPPEN AFTER 20 JULY
According to the Ministry of Justice, if the fine is not paid voluntarily by 20 July 2026, enforcement measures may be applied against NCOC and its contractor companies. In this case, an additional enforcement fee of 10% of the amount collected may be withheld.
PARTIES' POSITIONS ON THE DISPUTE
The collection of the environmental fine relates to the state's exercise of its powers to ensure compliance with environmental legislation and protect the public interest.
For its part, NCOC disagrees with the findings of the environmental inspection, contests the inspection results and the amount of the fine, and also claims that the interim decision of the UNCITRAL arbitral tribunal prohibits enforcement of the fine until the arbitration proceedings are concluded, reports Reuters.
The ministry also stated that the company's publication of information about the ongoing arbitration proceedings is inconsistent with the confidential nature of international arbitration.
CONTEXT OF THE DISPUTE
The dispute relates to the results of an environmental inspection from 2022, during which the Department of Ecology of the Atyrau Region concluded that sulphur storage standards at the Kashagan field had been exceeded. Based on the results of the inspection, the company was faced with a demand for the collection of 2.3 trillion tenge.
The court proceedings on this case have been ongoing since 2023, and the dispute is being examined not only in the courts of Kazakhstan but also in international commercial arbitration.
Previously, the Prosecutor's Office of the Atyrau Region reported the collection of 3.6 billion tenge from NCOC for environmental damage related to the excessive flaring of raw gas without an environmental permit.
Furthermore, the Ministry of Ecology and Natural Resources reported that in 2022–2024, oil-producing companies Tengizchevroil, NCOC, Caspian Oil, and Mangystaumunaigas were issued fines totalling over 61.1 billion tenge for violations of environmental legislation.
NCOC's activities were also discussed in the Mazhilis. During a session, deputies questioned the company's Managing Director, Giancarlo Rui, about compliance with environmental requirements and asked whether the company has a strategy in the field of environmental protection.
Responding to the questions, Giancarlo Rui stated that the company does not view the payment of fines as an alternative to complying with environmental requirements. According to him, NCOC operates in Kazakhstan, adheres to the best standards, and complies with the law.
