--- title: "Overview of Astana International Financial Center’s (AIFC) Jurisdiction and Legal framework" description: "Yerbol NazhmidenovLegal Adviser, AIFC Legal Services BoardLawyer and partner of the law firm Law Council Groupwww.lcg.kzIntroductionThe concept of jurisdiction is central to the legal system of any state, defining the scope of the authorities and law e..." author: "Law Council Group" published: "2024-12-12T05:12:48+00:00" modified: "2024-12-12T05:12:48+00:00" locale: "ru" canonical_url: "https://yvision.kz/post/overview-of-astana-international-financial-center-s-aifc-jurisdiction-and-legal-framework-1011091" markdown_url: "https://yvision.kz/post/overview-of-astana-international-financial-center-s-aifc-jurisdiction-and-legal-framework-1011091/markdown" site_name: "Yvision.kz" --- # Overview of Astana International Financial Center’s (AIFC) Jurisdiction and Legal framework > Yerbol NazhmidenovLegal Adviser, AIFC Legal Services BoardLawyer and partner of the law firm Law Council Groupwww.lcg.kzIntroductionThe concept of jurisdiction is central to the legal system of any state, defining the scope of the authorities and law e... ***Yerbol Nazhmidenov*** ***Legal Adviser, AIFC Legal Services Board*** ***Lawyer and partner of the law firm Law Council Group*** [www.lcg.kz](http://www.lcg.kz/) **Introduction** The concept of jurisdiction is central to the legal system of any state, defining the scope of the authorities and law enforcement. According to the legal dictionary edited by S. Bratus (1953), jurisdiction is the area covered by the powers of the relevant authorities, including their right to make decisions and enforce them. Based on this glossary, we can define the term “AIFC Jurisdiction” as the **territory or scope within which the AIFC has the authority to make legal decisions, establish regulatory frameworks, and enforce laws related to financial and business activities.** The legal system under which an IFC operates is a central factor that influences its success. The world’s two primary legal systems for financial services are **Common Law** and **Civil Law** (Reynolds, 2021, p. 5). These systems shape the regulatory and legal environments of IFCs. In the AIFC context, jurisdiction takes on a special significance because it is separate from national law and is based on English common law principles. This is a unique solution for Kazakhstan aimed at creating a competitive legal environment to attract international capital and strengthen the country's position in the global economic arena. Apart from that, how did it happen that the legislation of Kazakhstan voluntarily agreed to the application of Anglo-Saxon law for only one jurisdiction on its territory? **Common Law System (English Common Law) and AIFC** The **common law system**, which has evolved primarily from judicial decisions and precedents, plays a significant role in shaping many of the world’s leading IFCs, especially in **Anglo-Saxon** jurisdictions. Common law provides flexibility and adaptability, which are crucial for a dynamic financial market. It allows the legal system to evolve gradually through judicial decisions made in specific cases, rather than being bound by a set of written statutes. Common law is often perceived as more flexible and business-friendly because it can quickly adapt to new financial innovations and market needs (Reynolds, 2021, p. 10). In an IFC context, the **common law jurisdiction** typically ensures the enforceability of financial contracts, clear dispute resolution mechanisms, and international legal consistency - all features that are highly valued by global investors and financial institutions. This is why jurisdictions based on English law (e.g., London, Hong Kong, and Singapore) are among the top choices for global financial transactions (Reynolds, 2021, p. 7). In contrast, the **civil law system** that is generally based on written codes and statutes, primarily derived from the **French** or **German** legal traditions. Kazakhstan’s legal system is primarily based on civil law traditions, which aligns more closely with French-German legal traditions rather than the Anglo-Saxon common law system. Kazakhstan's legal framework was heavily influenced by Soviet law during its time as part of the USSR, which itself drew on Russian civil law traditions. The civil law system is more prescriptive, with well-defined rules for handling legal disputes and regulating businesses. While civil law systems tend to be more rigid in terms of legal interpretation, they offer a high degree of legal certainty, which can also be attractive for businesses seeking clear, predefined regulatory frameworks (Reynolds, 2021, p. 5). On the other hand, the rigid nature of civil law systems can be a disadvantage in the fast-moving financial sector, where flexibility and adaptability are crucial. Consequently, many **emerging IFCs** (including AIFC) are increasingly adopting a hybrid approach, incorporating elements of both legal systems to address the needs of global financial markets (Reynolds, 2021, p. 6). The coexistence of **common law** and **civil law** systems in mixed jurisdictions presents significant challenges. As noted by Reynolds (2021), while both systems can achieve similar results, their methods differ fundamentally, which can make reconciliation difficult. The distinction between common law and civil law extends beyond mere procedural differences. At the heart of this divergence are **legal techniques** and **underlying philosophies**. Common law, based on judicial precedent, evolves through **case-by-case decisions** that build on prior rulings, allowing the system to adapt and respond flexibly to new situations. In contrast, civil law, with its emphasis on **codification**, relies on comprehensive written statutes that are meant to cover every conceivable scenario. This difference in approach is often not just procedural but philosophical: common law systems tend to prioritize **flexibility** and **evolution**, while civil law systems stress **clarity** and **predictability** (Reynolds, 2021, p.14). In jurisdictions where both systems attempt to coexist, the core issue arises from their different ways of achieving legal certainty. Common law’s reliance on **judicial precedent** means that **decisions** made in specific cases shape future rulings, making the law dynamic and context-sensitive. On the other hand, civil law systems seek **completeness and clarity** through **codified laws**, where rules are laid down in statutes, leaving little room for interpretation beyond those codes (Reynolds, 2021, p. 16). The result is a **tension between codification and precedent**, which makes blending the two legal systems difficult. **Concept definition** The **AIFC Jurisdiction** is officially defined as the designated area within the city of Astana as determined by the President of the Republic of Kazakhstan. This area is governed by a special legal regime in the financial sphere, as established by the **Constitutional Statute of the Republic of Kazakhstan on the Astana International Financial Centre**. The jurisdiction is clearly demarcated, covering a territory of **1632 hectares**, as outlined in **Decree № 161** of the President of Kazakhstan, dated **31 December 2015**. However, the definition of AIFC Jurisdiction can be interpreted differently depending on the viewpoint: - In the formal-legal sense, it can be defined by legal acts of AIFC based on the Constitutional Law, and memorandums on interaction with national authorities; - From the point of view of legal doctrine, it is a combination of the institutions of English common law and the national law of the Republic of Kazakhstan. **Legal framework** The legal framework of the AIFC is a unique structure designed to facilitate the development of Kazakhstan as a global financial hub. Positioned as an independent legal space, the AIFC operates under a distinct set of laws that diverge from Kazakhstan’s national legal system, aligning more closely with international best practices, particularly those of leading financial centres such as London. This legal framework is designed to attract international investors and businesses by providing a stable, transparent, and flexible legal environment, underpinned by principles of English common law. The AIFC’s legal system combines both constitutional and regulatory sources of law, ensuring a comprehensive approach to governance, financial services, and dispute resolution. The sources of law that govern the operations of the AIFC can be divided into two broad categories: - **Constitutional Foundations for the AIFC’s Operations**: - The Constitution of the Republic of Kazakhstan, as amended on September 19, 2022, forms the foundational legal basis for the establishment and operation of the AIFC, particularly about its legal autonomy and jurisdictional scope (Article 2). - The Constitutional Law of the Republic of Kazakhstan on the Astana International Financial Centre (AIFC), adopted on December 7, 2015 and amended on December 30, 2022, sets out the framework for the AIFC’s governance, structure, and operations within Kazakhstan. - Various Presidential Decrees from 2015 to 2017 further detailed the operational framework of the AIFC, laying out the legal and institutional foundations needed for its development. - **AIFC Jurisdiction – Legal Sources and Legal Institutions**: - The legal acts of AIFC governing bodies, including documents like the AIFC Company Law, AIFC Court Regulations, and AIFC Contract Regulations, provide the regulatory backbone for the AIFC. These documents are predominantly written in English, reflecting the AIFC’s international outlook and its commitment to aligning with global standards. - The [Regulatory Sandbox](https://aifc.kz/news/aifc-committee-launches-global-sandbox-program/) initiative allows for the testing of new financial technologies within a controlled environment, ensuring the AIFC remains at the forefront of innovation in the financial sector. - The adoption of best practices from leading international financial centers, combined with the use of English common law, forms a crucial part of the AIFC’s legal infrastructure. This approach enables the AIFC to integrate global legal and financial norms while maintaining flexibility and adaptability in a rapidly evolving financial landscape. If we link our discussion to the AIFC Jurisdiction section, then we can say that the AIFC legal framework is shaped by two primary sources of law: **civil law** and **common law**. ***Sources of AIFC Law: English Common Law*** - **Statutory Law**: The principles and norms of **English law** are directly incorporated into AIFC legislation, ensuring that the legal framework aligns with internationally recognized standards. - **Legal Doctrine**: The writings and judgments of AIFC judges (including Lord G. Wolf and others) play a key role in interpreting AIFC legal acts. These judicial works are essential for the development and clarification of the legal provisions and their application. - **Judicial Precedents**: The **AIFC Court**, along with decisions from other common law courts, serves as a significant source of precedent. This ensures that legal decisions are consistent and in line with established common law principles (Article 4, Part 1, Clause 2 of the Constitutional Law on the AIFC). **** ![undefined](https://storage.yvision.kz/images/user/581290/56d6f5154fa23f29fa763581111d2799.png?width=974&height=712) ***Sources of AIFC Law: National Civil Law*** - **Constitution of the Republic of Kazakhstan**: The special legal regime governing the AIFC is rooted in the Constitution of Kazakhstan, which outlines the establishment and operational independence of the AIFC. - **Constitutional Law on the AIFC**: This law defines the scope of AIFC legal acts and the areas of regulation, which include: - Acts of the Centre may be based on the principles, norms, and precedents of **English law** and/or the standards of leading international financial centres, within the powers granted to the Centre. - The areas of regulation include: - **Civil law relations** - **Civil procedure** - **Financial relations** - **Administrative procedures** - **Procurement procedures** (for the purchase of goods, works, and services by AIFC bodies) - **Memorandums and International Agreements**: These agreements, made between the AIFC and foreign financial institutions or between public authorities, further strengthen the AIFC's legal framework and enhance its international cooperation. ![undefined](https://storage.yvision.kz/images/user/581290/0f0a2d7e86f16b22f42b670c8b950d29.png?width=974&height=529) **Conclusion** The AIFC Jurisdiction represents a unique legal framework that blends elements of English common law with Kazakhstan’s national civil law system, creating a flexible yet stable environment for global financial activity. This hybrid system allows the AIFC to operate independently within Kazakhstan, attracting international investors by providing a predictable and internationally recognized legal regime. The AIFC's legal structure is built on both constitutional and regulatory foundations, with English common law principles playing a central role in areas such as contract law, dispute resolution, and corporate governance. By leveraging the best practices from leading financial centres and integrating these with Kazakhstan's legal traditions, the AIFC offers a dynamic platform that is adaptable to the fast-evolving financial landscape. Ultimately, the AIFC's jurisdiction is not only a testament to Kazakhstan's commitment to global financial integration but also to the ability of mixed legal systems to support innovation and legal consistency in the modern economic world. **** **Liability exclusion** This material is for general informational purposes only and does not constitute legal or professional advice. No part of this document should be relied upon or used as a substitute for legal consultation. Please note that legal standards and practices may have changed since the publication date. For any questions, feel free to contact us via WhatsApp at +7 (707) 384 83 52 or email at info@lcg.kz. **** **** **Reference list:** Reynolds, B. (2021). *Restoring UK law: Freeing the UK's global financial market.* Politeia. Tukulov, B. (2018, August 4). *AIFC Court and arbitration: what do they give to Kazakhstani business?**[Суд и арбитраж при МФЦА: что они дают казахстанскому бизнесу?]* Forbes. [https://forbes.kz/articles/o_sude_i_arbitraje_pri_mftsa_chto_oni_dayut_kazahstanskomu_biznesu](https://forbes.kz/articles/o_sude_i_arbitraje_pri_mftsa_chto_oni_dayut_kazahstanskomu_biznesu) --- Source: [https://yvision.kz/post/overview-of-astana-international-financial-center-s-aifc-jurisdiction-and-legal-framework-1011091](https://yvision.kz/post/overview-of-astana-international-financial-center-s-aifc-jurisdiction-and-legal-framework-1011091)