KAZAKHSTANI INTERNATIONAL ARBITRAGE
RULES OF MEDIATION

INTRODUCTION

Before the case is referred to arbitration court the parties may try a case under the mediation. In case of mediation the Mediator proposes the parties the options of mutually advantageous dispute resolution but does not make an award binding for the parties. Mediation will be carried out in accordance with the Rules of Mediation of Kazakhstani International Arbitrage.

If the parties wish to apply mediation as a part of the dispute resolution related to the contract (agreement) signed between them, they may include in (contract) agreement the following mediation clause:

If any dispute arises from this agreement or in relation thereto and if this dispute cannot be settled by means of negotiations, the parties shall submit the dispute to be settled by means of mediation under the Rules of Mediation of Kazakhstani International Arbitrage before applying to the court of the common jurisdiction, arbitration court or to be settled otherwise.

Parties may wish to consider adding this clause with the following provisions

1. The number of mediators shall be _________ mediators (sole mediator);
2. The place of mediation shall____________
3. The language to be used in the mediation proceedings shall be________
4. The mediation shall be completed within ______ days after selection of the mediator by the parties.

RULES OF MEDIATION

Article 1. Commencement of Mediation

1. A party that wishes to initiate mediation shall send to the Secretariat of Kazakhstani International Arbitrage a written request to commence mediation that shall include the following:
1. a subject matter of the dispute;
2. the amount of claims under this dispute;
3. names, postal addresses, numbers of telephones and faxes of the parties to a mediation and/or their authorized representatives;
4. reference to the KIA competence to carry out a mediation and
5. name of a proposed mediator.
2. If the parties to a mediation agreement do not submit a joint request, then the party that has submitted such request shall be obligated to notify the other party about mediation and send a copy of the request for mediation.
3. The KIA will accept the request for mediation after the registration fee stipulated in these Rules of Mediation has been paid.
4. The date of commencement of mediation will be the date when the KIA Secretariat receives the request for mediation.

Article 2. Appointment of Mediator

1. The parties shall select a Mediator from among the names in the list of the KIA arbitrators. A person that is not included in the list of KIA arbitrators but meets the requirements specified in the Article 3 of these Rules may be appointed as a Mediator.
2. Unless the parties have agreed otherwise, mediation will be carried out by a Sole Mediator.
3. If the parties within 14 days from the date of submitting the request for a mediation have not reached agreement on the name of a Mediator, or if the Mediators appointed by the parties have not selected a third Mediator to be a Presiding Mediator, the Mediator or Presiding Mediator shall be appointed by the KIA Chairman with due account of the wishes of the parties.
4. A Mediator appointed by the parties or the KIA Chairman shall sign a declaration that there are no circumstances that may cause doubts on its impartiality and independence, and the Agreement on non-disclosure of the information that has become know to him due to participation in mediation.

Article 3. Mediator's Qualification

1. A physical person that is not interested directly or indirectly in the outcome of the case, is independent of the parties, that has agreed to perform the duties of the Arbitrator and reached the age of twenty five and has a higher education shall be selected (appointed) as a Mediator. .
2. A person may not be a mediator, if:
1. he has been elected or appointed as a judge of the court of competent jurisdiction in the manner established by the legislative act of the Republic of Kazakhstan;
2. he has been recognized incapable or partially capable by a court of competent jurisdiction in the manner established by the laws of the Republic of Kazakhstan;
3. he has previous conviction that has not been expunged or cancelled or is a person charged with a crime;
4. is a government official; or
5. he is a person whose powers as a judge of a court of competent jurisdiction, lawyer, notary, criminal investigator, public prosecutor or other employee of the law-enforcement bodies have been dismissed for committing the offence incompatible with his professional activity.

Article 4. Replacement of Mediator

If for any reason a Mediator cannot perform his functions, the KIA Chairman shall appoint another Mediator unless the parties have agreed otherwise.

Article 5. Representatives of the Parties

The parties may participate in mediation directly or through duly authorized representatives appointed by the parties at their own discretion, including from among the foreign organizations and citizens. The authorities of the representative shall be legalized with due observance of the requirements set forth in Article 61 of the Civil Code of the Republic of Kazakhstan.

Article 6. Notice of Mediation

1. The parties will agree the way and form in which they will acquaint the Mediator with the mediation materials. In this case each party shall provide the Mediator with a brief written notice containing description of the subject matter of a dispute and issues to be solved not later than 7 days before the first hearing appointed by the Mediator.
2. Each written notice shall be attached with the copies of the documents on which the party claims are based on.
3. Each party shall provide a copy of the written notice and copies of the documents attached thereto to the other party.

Article 7. Date, Time and Place of Mediation

The Mediator shall determine the date and time of a mediation at his own discretion. Mediation will take place in the KIA office if the parties and/or Mediator have not determined another place for mediation.

Article 8. Procedure of Mediation

1. The Mediator may carry out a mediation in such form that he thinks appropriate for prompt and efficient dispute resolution with due account of the circumstances of the case and claims of the parties.
2. The Mediator shall determine the language of mediation at his own discretion, unless the parties have agreed otherwise.
3. In case of mediation the hearings are held in private
4. Each party shall notify the other party and the Mediator about the number and names of those people that will be present at the hearings held by the Mediator.

Article 9. Authorities of Mediator

The Mediator has no authority to impose obligations on the parties but is to help the parties reach a mutually acceptable option of resolution of their dispute. The Mediator may conduct joint sessions or private meetings with the parties and make oral and written recommendations about dispute resolution.

If necessary the Mediator may request to provide the expert's opinion on technical aspects of the dispute given the parties agree to cover expenses associated with obtaining such expert's opinion.

The Mediator shall have authority to stop mediation if in the estimation of the Mediator further efforts in mediation are not likely to lead to resolution of dispute between the parties.

Article 10. Confidentiality

The Mediator shall have no authority to disclose the confidential information that has become known to him in the course of mediation. All records, reports or other documents which the Mediator has got in the process of mediation shall be considered confidential.

The Mediator shall not be compelled to disclose any confidential information related to the mediation in any court proceedings or arbitration proceedings.

The parties shall be obligated to maintain confidentiality of mediation and shall not rest upon or present as evidence in any court and/or arbitration proceedings:

1. opinions or proposals put forward by the other party with regard to possible dispute resolution;
2. confessions made by the other party in the course of mediation;
3. proposals made or opinions expressed by the Mediator; or
4. the fact that the other part has expressed or has not expressed a wish to accept a proposal for dispute resolution made by the Mediator.

Article 11. Protocol of Mediation

No protocol will be kept in the process of mediation.

Article 12. Closure of Mediation

Mediation shall be closed if:

1. the parties have signed the dispute settlement agreement; or
2. the parties have notified the Mediator that according to their opinion the dispute may not be settled; or
3. after consultations with the parties the Mediator declares that further efforts within the frameworks of a mediation proceedings are likely to be unreasonable; or
4. the period of time for dispute resolution stipulated in the mediation agreement has been exceeded and the parties have not come to an agreement about its extension.

Article 13. Dispute Settlement Agreement

1. If the parties have agreed the terms of the dispute resolution they, with the assistance of the Mediator, shall make and sign a dispute resolution agreement which confirms the terms of the settlement.
2. The dispute settlement agreement signed by the parties shall be binding upon them.

Article 14. Mediator as Arbitrator

Unless the parties have agreed otherwise the Mediator shall not act as the Arbitrator in the dispute that has not been or is not a subject matter of the conciliation procedure, or other dispute that has arisen with relation to the same contract or legal relationship, or any contract or legal relationship pertaining thereto.

Article 15. Court or Arbitration Proceedings

Unless the parties have agreed otherwise, they may refer the dispute for settlement to a court of common jurisdiction or to arbitration irrespective of the outcome of mediation.

Article 16. Expenses

1. Expenses associated with a mediation (hereinafter referred to as the Expenses) shall include the Mediator's compensation and the KIA administrative expenses indicated in the Appendix to these Rules of Mediation.
2. The expenses shall be covered by the parties jointly in the equal shares (or in such a proportion that the parties will agree between them in the written form).
3. Expenses incurred by the witnesses shall be covered by the party that has invited such a witness.
4. Before commencement of mediation the KIA will calculate the expected expenses and the parties shall submit a deposit based on such calculation. Each party shall pay a part of the sum in the amount agreed by the parties. After completion of mediation the KIA will make calculation and if necessary refund the unused portion of the deposit to the parties.

Appendix
To the Mediation Rules of
Kazakhstani International Arbitrage

REGULATION
ON MEDIATION FEES AND EXPENSES

1. ADMINISTRATIVE EXPENSES
1. Registration fee — USD 350
   The KIA will charge a registration fee for processing of the Request for Mediation. The registration fee is paid in advance as of the time of the Request for Mediation is submitted and is non-refundable.
2. Administration Fee
   Time spent by the KIA Secretariat on administration of the process of mediation.
   The Secretariat — USD 100 per hour
3. Expenses
   Expenses incurred by the KIA in connection with mediation (such as postal expenses, telephone bills, rentals and other expenses required for a meditation proceeding) will be calculated by the KIA for each separate case and covered by the parties.
2. MEDIATOR'S COMPENSATION AND EXPENSES
1. Compensations
   Mediators appointed by the KIA shall charge on an hourly basis. The rates may vary depending upon the circumstances of the case and special skills of the Mediator.
   The compensation rates shall be agreed by the parties and the mediator before the latter appointment and be determined within the following limits:
   USD 100—300 per hour
2. Expenses
   Expenses incurred by the Mediator in connection with a mediation proceeding shall be covered by the parties based on the data provided by the Mediator and approved by the KIA.
3. PAYMENT OF COMPENSATIONS AND EXPENSES
1. Deposit
   Within 14 days from the date of submission of the Request for Mediation in accordance of Article 1 of the KIA Rules of Mediation, the parties shall submit a deposit to the KIA which is required to cover expenses associated with mediation, including Mediator's compensation and expenses and the KIA administrative expenses. Deposit shall be submitted by the parties in equal shares (or in such proportion that the parties have agreed between them) prior the appointment of the Mediator.
   The Mediator will not be considered appointed and mediation will not start until the deposit has not been submitted.
2. Expenses
   Upon completion of mediation, the KIA together with the Mediator will calculate the expenses incurred with regard to mediation including the Mediator's compensation and expenses and administrative expenses («the Expenses».)
   If the amount of the submitted deposit exceeds the expenses, then the money paid in excess will be refund to the parties in the same proportion in which they have paid the deposit. If the expenses exceed the amount of the deposit the short amount shall be immediately paid by the parties in equal shares (or in the proportion agreed by the parties.)
3. The parties shall be held liable, jointly and severally, to the Mediator for payment of compensation and expenses and to the KIA for payment of the administrative expenses until complete reimbursement of the amounts due to them.