Published 22 February 2021
Kazakhstan is marking its 30th anniversary of independence this year. In this relatively short period, Kazakhstan has enacted progressive reforms in many spheres of life, including the collection of court-mandated fines and debts.
For many years Kazakhstan has experienced numerous problems in trying to improve debt collection. A series of court cases showed that state bailiffs were failing to ensure fairness in their attempts to collect payments from debtors. State enforcement agents and debtors experienced many negative issues in the execution of court orders. State bailiffs failed to achieve good results and the level of satisfaction with their work was poor. As a result, the number of unresolved cases and complaints increased. Many people criticised the enforcement system, stressing that desirable results have not been achieved despite the use of the public budget to fund bailiffs. The government, in turn, allocated huge sums for the state enforcement agents to provide them with the necessary facilities, in addition to their salaries.
These issues demonstrated that major changes to the system were required. To solve these mounting problems, the government decided to reform the system, and allow the introduction of private sector bailiffs. This idea was based on the French model, where bailiffs collect debts on a commercial basis. This practice was carefully researched and explored before implementation. Overall, there were three stages in the reform process.
First, in 2005, during a meeting with judges, the first President of Kazakhstan, Nursultan Nazarbayev, invited them to study best practices in enforcement proceedings. As a result, discussions, and research were carried out into the enforcement practices in various countries that Kazakhstan could emulate. It was agreed that the French model seemed the most suitable.
In 2010, the government introduced a new law that paved the way for switching from state enforcement to a commercial system. Initially, there was an interim period where claimants could choose between state bailiffs and private firms. Increasingly, people were starting to choose private enforcement agents, despite the need to pay a fee for their service. This shift can be explained by the growing number of successful cases that were achieved by private sector bailiffs, who, as a commercial enterprise have a vested interest in efficient debt collection. Furthermore, the government did not have to spend funds on private bailiffs as their activities are self-funded. These two factors led to a new stage of reform.
In 2015, the government announced its ‘National Plan: 100 concrete steps’, where step 27 focused on the reduction in the number of state enforcement agents and their migration to the private-sector, along with the promotion of private-sector bailiffs. During the following three years, the number of public bailiffs decreased gradually with a concurrent growth in the number of private enforcement agents.
In addition, amendments in the legislation were introduced that transformed state enforcement into private sector activity and transferred many functions and rights to private bailiffs. In effect, almost all categories of cases would now be executed by private-sector bailiffs, while state bailiffs would continue to work on cases that directly relate to government interests. Under this new system, private bailiffs have the same powers as their state counterparts, except for the right to produce administrative reports.
Two further reforms that improved the system should also be mentioned. Firstly, a special body, or Head Office, was created through statute. Specifically, the Head Office constitutes a Republic Chamber for private bailiffs that coordinates the activity of private bailiffs and protects their interests. Only those companies and individuals who are members of the Chamber can operate as private bailiffs and receive profits from this activity.
As a new organisation, the Chamber initially experienced numerous teething problems, including a lack of relevant rules and human resources. However, the Chamber has since become more structured and well-organised. It contains a special learning centre where new private bailiffs can study. This element of professional education was absent in the old system of public bailiffs; its creation has led to a genuinely useful resource for bailiffs, especially those new to the profession. It has led to an improvement in the professional skills of bailiffs and serves as a valuable training platform. The Chamber has specific powers of regulation over bailiffs, such as imposing disciplinary action on bailiffs who do not follow the regulations, ranging from disciplinary sanctions to exclusion from the Chamber, which prevents individuals from working as a bailiff.
Secondly, private bailiffs are now provided with a government-owned automated information system (AIS). Initially, the government directly allocated funds to support the system, but a subsequent agreement devolved funding powers to the Chamber. This led to savings for the national budget, and simultaneously, to the modernisation of the information system, with private sector bailiffs paying a subscription fee for its use. At the same time, both the Ministry and the Chamber are overseeing improvements to the system, which enable enforcement agents to work remotely. This is possible due to the integration of AIS with the internal systems of banks and other authorised bodies, such as the Supreme Court, the Ministry of Internal Affairs, and others. As an example, court decisions are delivered to the bailiffs in a digital format, which means a private sector bailiff can create a digital case file. Simultaneously, the system allows some categories of debt, such as fines, to be paid by debtors online. Thanks to the AIS, the work of private bailiffs has become much more effective and organised. Enforcement work that once took a considerable amount of time and effort can now be achieved with just a few clicks.
There is no doubt that any reform has its pros and cons and Kazakhstan’s experience is no exception. The wider public still occasionally complains about the bailiffs’ work. However, progress has undoubtedly been made. While previous complaints focused on state bailiffs not fulfilling their work and obligations, current criticisms are mostly aimed at measures taken by private bailiffs to enforce debt collection. Another positive aspect of private sector bailiffs is the fact that they create employment opportunities, as they require assistants, administrative staff, and other personnel.
Ultimately, private sector bailiffs have become the main players in Kazakhstan’s court apparatus, which has played an important role in the ongoing efforts of the Ministry of Justice to improve the system.