Litigation - Kazakhstan Kazakhstan's real estate market, particularly in Almaty and Astana, the country's commercial and political centres, is developing rapidly as old residential buildings are demolished to make way for new business properties. The acquisition of land for state purposes has suddenly become a pressing subject and has led to numerous court cases.
One of the main legal issues in such disputes is the questionable legitimacy of the activities of two state-authorized entities, Almatyzher (in Almaty) and Kvartirnoye Bureau (in Astana), which sue landowners to compel them to sell their land at a price which the landowners often consider to be below market value. The landowners frequently have no opportunity to negotiate directly with construction companies, which normally offer higher prices.
The Prosecutor's Office has protested to Almaty's municipal government that its decree authorizing Almatyzher to act as an intermediary between landowners and construction companies is unlawful. Almaty's civic authorities have rejected this claim and the Prosecutor's Office has filed a lawsuit to have the decree declared unlawful. The court's decision is still pending.
However, the Supreme Court has clarified that the first, mandatory stage of an acquisition of land for state needs is direct negotiation between a construction company and the landowner to establish the price of the land and other terms of sale. If the construction company and the landowner cannot agree, the local governor or an authorized agent (eg, Almatyzher) may negotiate the sale with the landowner. Only if negotiations with Almatyzher are fruitless may the municipal government or an authorized agent file a lawsuit to require the landowner to sell the land. Accordingly, Almatyzher and Kvartirnoye Bureau's conduct violates the Land Code when they sue landowners regardless of whether they have been able to negotiate terms of sale with the construction companies.
Only municipal governments may file claims to acquire land for state needs. The claims must be filed in the same locality as the land in question. If the owner is either an individual designated as an 'individual entrepreneur' under Kazakh law or a legal entity, the dispute must be submitted to the specialized inter-district economic courts.
The court must review the measures taken by the municipal government to reach agreement with the landowner before filing the lawsuit. The landowner's claims relating to the amount of compensation must not be considered counterclaims (for which a separate court fee must be paid). All issues relating to the landowner's preferred form of compensation must be considered by the court as part of the same case.
If the court finds that the municipal government's decision to acquire the land is not justified by state needs, the court must reject the claim brought by the municipal government or its authorized agent.
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