General theoretic aspects of institution of legal liability for infringement of investment law of the Republic of Kazakhstan

Table of contents: The Kazakh-American Free University Academic Journal №4 - 2012

Author: Dautbayeva Dinara, Kazakh-American Free University, Kazakhstan

It is a trustworthy fact that one of the current directions of the state policy in economic development of the country is attracting national and international investment. It's an overall observation that the Republic of Kazakhstan has created and is consolidating a complex of economic, legal and organizational measures for protection of national and foreign investments, which is formalized as a set of rules and norms and is declaring a favorable regimen for mutual investments.

As it is known, the notion of legal liability was introduced into domestic general law theory in the early 60s, mostly in a retrospective aspect. Theoretical development of legal liability in this area was supported by many soviet researchers and lawyers. It is likely that up to date legal liability in local theory still comes to reaction to infringement of the law. This way it is fixed in textbooks, research articles, legislation and law enforcement.

The paradox is that the scientists haven't yet determined the notion and meaning of retrospective legal liability. A variety of conflicting attitudes towards this issue is reflected in modern dictionaries, encyclopedias and monographs. Some determine legal liability as "state enforcement to execute law requirements, legal relationship, in which each party shall be accountable for its actions to the other party, state and society" [1, p. 503]. Others claim that "legal liability is stipulated by the law responsibility of the delinquency subject to go though unfavorable consequences". One more opinion is that "legal liability proper is application by the authoritative state agencies of law enforcement norms sanctions, which is manifested in negative consequences for infringer of the law as deprivations or limitations of personal and property character" [2, p. 694].

D.A. Lipinskiy not without reason says that "all researchers definitely admit the existence of legal liability for infringement of the law. But this is the only pint where their opinions coincide. All this despite the fact that the notion of "legal liability for the infringement of the law" has been discussed in the general theory of law for more than fifty years".

Legal liability should be of positive character only, being a valuable legal characteristic of any subject of law. Outwardly, it is manifested in socially active and habitual legitimate behavior of subjects of the law. Its inner (psychological) aspect relates to conscious understanding by the subjects (both in the present and past) of active and habitual legitimate behavior, determined by regulatory norms of the law patterns of appropriate behavior, their positive emotional and perceptional evaluation and volitional actions in accordance with legal patterns [3, p. 25].

Legal liability antipode is a legal irresponsibility of the subjects of the law, manifested outwardly in their illegitimate behavior (infringements of the law). Internal (psychological) aspect of legal irresponsibility of the subjects of law is manifested in their not knowing or insufficient understanding of values of standards of law determined by obliging and prohibiting rules of law, in their neglecting these laws, or, at times, in a direct negative attitude towards law and volitional unlawful actions.

As a part of legal culture, legal liability of the law subjects ensures internal control over legality of their behavior, based on their internationalization of obliging and restricting legal standards due to recognition of their personal and social value. In this case the demand for external control and law enforcement activity in the country goes down.

Today in Kazakhstan, the importance of legal liability of every subject of law increases and demands extra attention to be paid to its purposeful formation both by the state and by the whole society. Here, we need to consider the fact that legal liability of the subjects of law in a legal life of the society is formed by different ways: a) directly through application of encouraging sanctions and indirectly through observation of patterns of legitimate behavior, especially when it is effectively supported by encouraging sanctions; b) directly and negatively through inevitable and timely punishment of infringers of the law and indirectly through punishing observers of these punishing processes, negatively supporting their legal liability; c) directly through scientifically organized system of legal education of the population.

Kazakhstan society and state should stir to activity all mentioned ways of forming legal liability among the population. First of all, we need to pay a special attention to rewarding every important for the society legitimate behavior of the subjects of law with encouraging sanctions stipulated by the legal norms. There is a demand for utmost development of encouraging norms within the modern Kazakhstan law system. These encouraging norms, as it is mentioned by many researchers, are, in many cases, more effective in shaping legitimate behavior with the subjects of law, than protective (coercive) norms.

Legal liability institution within the scope of investment law is still at the stage of its development, although it belongs to intersect oral legal institutions, along with the property institution. [4, p. 177]. There are a number of reasons of theoretical and practical character for that. Thus, the general law theory does not provide unambiguous answer to two major questions: about positive legal liability and about specialized types of legal liability.

In the theory of socialist law there was a widely spread point of view according to which along with the negative-retrospective aspect of legal liability there is a positive-perspective aspect of liability. Positive liability represents a wider interpretation of the notion of legal liability according to which along with the liability for infringement of the law there exists a liability for positive actions which meet the objective requirements of a certain situation and ideals of the time. It is worth while mentioning that positive liability had more opponents than supporters. It is quite understandable since positive liability denies the very essence of legal liability as a form of state accusation for non-fulfillment of legal regulations and imposition of relevant sanctions directly stipulated by the law. In general, this supposition is of farfetched character and is conditioned by trends and aspirations of the epoch of developed socialism and communist society development.

However, if the first question, in our opinion, has lost its relevance under present-day conditions, the second question, on the contrary, under conditions of transition to market economy is gaining importance. In fact, the scope of accepted as of today classic types of legal liability (civil legal, material, disciplinary, administrative and criminal) cannot embrace all existing ways of effect on infringers of active law. Also, dividing types of liability by a sectoral feature does not indeed coincide with sectoral structure of the law (there are more branches of law than types of liability; material and disciplinary liability are inherent in one branch of law - labor law; one and the same type of legal liability can be applied for contempt of different branches of law). Finally, one of the main reasons for the sectoral division of liability types to become traditional was thorough readiness and elaboration of civil, administrative and criminal laws, which were recognized as fundamental (major) law branches.

Multiplicity of types of legal liability is a quite logical phenomenon, and there were multiple attempts in legal literature to single out and define the essence of specialized types of liability. Most sound and preferable in our opinion are the estimates about existence of specialized (special) types of liability in the field of nature management - mountain, soil, water, forest and ecological rights in particular. Consequently, along with sectoral (traditional) types of legal liability we can distinguish mountain-legal, soil-legal, forest-legal and ecological-legal liabilities. For example, such ways of effect on infringers of the subsoil usage law as suspension or termination of works in case of breaches of the requirements set for geological subsoil exploration, minerals exploration or mining can serve as examples of mining legal liability, though, as a rule, they are manifested as administrative and legal.

On the whole, we need to mention, that the legislation still underestimates the role and importance of legal liability as a way to increase effectiveness of investment law. Thus, the Investment Law gives a rather general description of liability of a legal person of the Republic of Kazakhstan, who made a contract, for reimbursement of the underpaid sum of tax money and custom duty in consequence of provided by the contract investment preferences with application of relevant vindictive damages, stipulated by the active law. Norms of liability of equity market professional participants fixed in equity market legislation are so unspecific and ambiguous that their realization in practice is either impossible or formal [5, p. 47]. In particular, if a professional participant breaches fixed activity norms, then, at worst, National Equity Commission will suspend the license, and, in case the found breaches are eliminated, the license is resumed and, as a result, the infringer incurs no material liability.

Consequently, lawmakers contemplate the possibility of occurrence of contractual and non-contractual liability of investors and other subjects of investment activity. In the first case, the liability is held in accordance with the signed agreement (contract), that is it should be the matter of civil law liability, but applied sanctions are of administrative legal character, besides vindictive sanctions are applied simultaneously. Administrative Offence Code of the Republic of Kazakhstan as of January 30, 2001 has a new article 134-1 "Violation of terms of repay of the state full-scale grant" stipulating the liability for violation of terms of repay of the state full-scale grants: 500 to 1000 monthly estimate indicators for legal entities - subjects of small and medium size business; 1000 to 2000 monthly estimate indicators for legal entities - subjects of large-scale enterprise. It is also worth mentioning that lawmakers give the authority to Investment Committee of the Ministry of Industry and New Technologies to consider administrative offence cases stipulated by Article 134-1 "Violation of terms of repay of the state full-scale grant" of Administrative Offence Code and to apply administrative sanctions to the law violators.

Professional players on the equity market incur liability which cannot be recognized unequivocally as administrative and (or) material, as administrative law does not provide for such type of penalty as license renewal, and what concerns liability for damage done it is possible to apply of material and civil law liability. This makes it possible to draw a conclusion about the emergence of a new specialized type of legal liability - investment legal liability.

Special character of legal liability of investors in the field of subsoil usage is manifested in the fact that Subsoil and Subsoil Usage Law does not describe norms stipulating certain types of infringement of the law and types of liability for such infringements.

There is a general principle fixed in Ecological Code of the Republic of Kazakhstan as of January 9, 2007 # 212-III, according to which violation of Ecological Law of the Republic of Kazakhstan entails liability in accordance with the Law of the Republic of Kazakhstan (art. 320). Consequently, it is supposed that making somebody liable for violation of norms, say, in the field of subsoil usage is realized in accordance with the special legislation (the same way it should work when it concerns violation of legal norms, regulating using other natural resources).

Types of legal liability that can seriously influence effectiveness of subsoil usage under market economy conditions include civil law liability. As the main characteristics of civil law liability we can mention: 1) civil law liability is just one of the forms of state-legal influence on the infringer of the law; 2) civil law liability has a property character and influences property of the infringer of the law; 3) civil law liability is laying of unfavorable property consequences on a person who violated civil rights and obligations; 4) civil law liability is the type of laying of unfavorable property consequences on a person who violated civil rights and obligations, which application of sanctions; 5) property and compensation (restoration) character of civil law liability.

Civil law liability for obligation violation can be manifested in the following forms: payment of damages; penalty payment; loss of deposit or payment of additional deposit over the returned deposit; expropriation of entire deal income in favor of the state if the deal is aimed at achieving criminal intent; loss of property right for property pledged and for property retained in accordance with the right of retention; etc. For all that, the most widely spread, though not exclusive, types of liability for violation of obligations are payment of damage and penalty payment.

We have to admit that civil law liability in the field of nature management on the whole and subsoil usage in particular is still not effective enough. In the sphere of civil legal regulations there should be no dictate of the state, state agencies or state officials. However, such facts still take place, which is why we think it is necessary to use more actively all leverages capable of suppressing lawless and illegal actions of certain representatives of the state agencies. Another important circumstance capable of increasing effectiveness of civil law is maintaining contractual discipline by the parties of civil circulation. Therefore establishment of the institution of arbitration tribunal (including international commercial arbitration) may have a positive effect.

Speaking about material liability we need to mention that it is closely connected with civil law liability considering the fact that in both cases the matter is in compensation for damage done.

Material liability and civil law liability are two independent types of legal liability and institutions of different branches of law (labor law and civil law respectively). Besides traditional differences existing between these two types of legal liability described in literature we can also mention other types of liability: civil law liability presupposes compensation for real damage and loss of profit, while material liability is limited by the sizes of direct (real) damage; unlike material liability, civil law liability presupposes compensation for moral damage. Consequently, civil law liability is based on the principle of full damage compensation, and material liability can be limited. In particular, in accordance with the active law, employees incur material liability for all damage they cause to their employer, if: 1) the employer and the employee signed a contract about bearing full material responsibility for failure to maintain safety of the property and other valuables handed over to the employee; 2) in accordance with the law the employee incurs full material responsibility for damage caused to the employer in the process of job performance; 3) property and other valuables were received by the employee to be accountable for by a one-time proxy or other one-time documents; 4) the damage caused by the employee in a state of alcohol, drug and toxic intoxication; 5) the damage is caused by shortage, deliberate destruction or deliberate spoiling of materials, semi-finished products, products (goods), including damaged caused during manufacture, and also damage of tools, meters, uniforms and other things loaned by the employer to the employee; 6) damage is caused as a result of disclosure of a commercial secret; 7) the damage is caused by the employee actions with the signs of actions prosecuted at law. This enumeration is a closed one, which means that in any other cases material liability of the employee will be limited.

We believe that under present-day conditions importance and significance of material liability as the means of ensuring rational and complex subsoil usage is underestimated. Under market economy conditions material liability of working people and office employees, as well as disciplinary liability may prove to be far more effective than other types of other types of legal liability.

Disciplinary liability of working people and office workers occurs only when disciplinary misdemeanor takes place and is of purely individual character; also peculiarities of disciplinary liability are determined by the fact that it can be applied efficiently and to all categories of workers.

Disciplinary liability in the field of subsoil usage presupposes committing disciplinary offense in the sphere of subsoil usage. Disciplinary offense in this case can take a form of non-fulfillment or inadequate fulfillment by the workers (working people and office workers) of their job responsibilities, connected with rational and complex subsoil usage, and also with their protection.

Labor law establishes the following types of disciplinary penalties: reprimand, rebuke, severe reprimand, termination of the employment contract (discharge). On the whole, disciplinary liability can be applied both at state and private enterprises (including ones with foreign interest), in accordance with the employment contract signed or other contract concerning officials (managers) and other categories of workers (working people and office workers).

At present time the type of legal liability in the field of subsoil usage, which is characterized by the most developed regulation in active law, is administrative legal liability. Administrative liability occurs in case when administrative offence, i.e. unlawful, delinquent (deliberate or careless) act (action or inaction), infringing upon the state and social system, property or life and health of the citizens takes place. The Code of the Republic of Kazakhstan (articles 259-275; article 266 is eliminated) describes sixteen elements of administrative offence in the field of subsoil usage and protection. In particular, geologic subsoil exploration without signing a contract; violation of right to geologic subsoil exploration; violation of rules of production waste and sewage disposal; violation of rules in development of projects by mineral mining and processing organizations; failure to secure norms of subsoil protection during construction and putting into operation of mineral mining and processing organizations; violation of ecological norms and rules during subsoil usage and minerals processing, and others [6, p. 80].

When characterizing administrative liability we should mention its following peculiarities: 1) administrative liability is applied for infringements of the law, which are of little danger to the society; 2) administrative law liability is always a consequence of unlawful action (inaction) of a legal or a private person; 3) administrative liability occurs as a result of infringement of the law in the field of national interests, not private legal interests; 4) administrative law liability is efficient; 5) administrative liability is administered by different authorized state agencies (their officials); 6) administrative liability occurs in accordance with the administrative legislation norms and is of preventive character (i.e. it prevents perpetration of a more dangerous act - crime).

A special way of guaranteeing of appropriate subsoil usage by national and international investors is a criminal liability. Traditionally, criminal liability is associated with the state coercion and is treated as the most severe disciplinary action (towards the infringer of the law). Besides, criminal liability is characterized by certain deprivations, which the guilty person is obliged to endure (deprivation of certain welfare is an objective feature of liability, reaction of the state to the damage caused by the criminal).

Criminal code of the Republic of Kazakhstan as of July 16, 1997 contains two special parts dedicated to infringements in the field of subsoil usage and protection: article 245 (violation of safety rules during mining and construction operations) and article 286 (violation of subsoil protection and usage rules). Among crimes, which are not connected directly with violation of norms of subsoil protection and usage, but are related to them in a certain way, we can name three more crimes: violation of ecologic requirements for economic and other activity (art. 277 of the Criminal Code of the republic of Kazakhstan); marine environment pollution (art. 283 of the Criminal Code of the Republic of Kazakhstan) and violation of Continental Shelf Law and Exclusive Economic Zone Law of the Republic of Kazakhstan (art. 284 of the Criminal Code of the Republic of Kazakhstan).

Speaking about criminal liability in the field of subsoil usage we need to remember that not only national investors can be the subjects of this type of liability, but foreign investors as well.

Advancement of the society towards democracy and freedom, recognition of an absolute priority of human dignity condition the necessity of changes in legal regulation - increase in the role of permissions, encouragements, which allow satisfying a variety of interests and needs, making by positive means a stimulating influence on will and mind. Besides all that, in Kazakhstan, where the amount of committed infringements of the law is very high, it is impractical to weaken compulsory legal influence on the subjects of law, performing these infringements. It is especially important to increase percentage of law infringements solved, which is quite low in the country at the moment. It is known that it is not the severity of punishment that keeps from infringing the law, but its inevitability. It is also of no small importance to form based on a scientific basis a system of legal education of citizens of Kazakhstan, which is missing in the country at the moment.


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Table of contents: The Kazakh-American Free University Academic Journal №4 - 2012

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