CHAPTER VI

PRIVATE LAW: CIVIL LAW & FAMILY LAW

Dinara Asanbaeva, Kanykei Kasybekova, Kundyz Jylkychyeva

Learning outcomes
By the end of the chapter, students are expected to:

 Know the system and concept of Civil Law;

 Be able to elaborate on principles and sources of Civil Law;
 Be able to list the important features of civil relations and its
contents;
 Know the subjects of civil law relations and their types;
 Explain objects of civil law relations and its classifications;
 Understand the concept of property;
 Define and explain ownership right;
 Explain and differentiate acquisition and termination of
ownership right;
 Define the contract;
 Identify the main elements of the contract;
 Describe the formation of the contract;
 Illustrate the consequences of the contract breach;
 Define what is a legal entity and its capacity;
 Identify types of legal entities;
 Explain creation, reorganization and liquidation of legal entities;
 Identify types of commercial organizations;
 Understand the concept of torts and their main elements;
 Explain the compensation for the health and life, moral
compensation and product liability;
 Know the concept, principles and sources of family law.

The Concept and System of Civil Law

Initially, the term “civil law” (lat. Jus civile) originated in ancient
Rome and included all the rights of Roman citizens, i.e. domestic, national
law as opposed to the law that governed relations with citizens of other
states (lat. jus gentium). Later, they began to denote only the area of
100 BASICS OF LAW

private law. In this regard, it is appropriate to recall that the right of

Roman citizens was formed as a set of rules that governed their private,
related to the benefits of individuals’ interests. These norms in a certain
way should have been correlated with the public right, reflecting the
interests of the state. The historically established division of the totality of
legal norms into norms of private and public law is based on the
criterion underlying the legal regulation of social relations: whose
interests are protected - public or private.
Questions about the relationship between private and public
interests in law, limits of restriction of private liberty have always been
central to the construction of any legal order. Unable to rationalize all
forms and spheres of life, wishing to encourage citizens to independently
regulate their relations with partners, the ancient Roman state voluntarily
refuses arbitrary interference in certain areas of their life. It not only
transfers the relevant powers to private subjects but also takes them under
its protection. Instead, the state requires compliance with the established
legal order, i.e. accounting of social (public) interests.
In the continental (European) system, the distinction between the
right to private and public is fundamental. It does not reflect the sectoral
specificity, but indicates the presence of two relatively independent
branches of legal regulation, with significant differences in the nature of
the impact on social relations. Protecting public interest requires the legal
regulation of social relations by the method of power - submission, the
protection of private interests - by the method of legal equality of the
parties.
Civil Law in its modern sense covers the relations of not only
citizens/individuals, but also other participants of legal relations - various
organizations and the state. Article 1 of the Civil Code of the Kyrgyz
Republic indicates the following relations as a subject matter of its
regulation:
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Article 1. Relationships Regulated by Civil Legislation

1. Civil legislation determines the legal status of civil turnover
participants, the grounds for emergence and procedure for enforcement
of property rights and other substantive rights, rights to the results of
intellectual activity, and regulates contractual and other obligations, as
well as other property relationships and connected personal non-
property relationships.
Civil legislation is applied to family, housing and labor relationships,
and relationships on use of natural resources and environment
protection, complying with the qualifications described in part one of
point 1 of this Article, if such relationships are not regulated by family,
housing and labor legislation or the legislation on use of natural
resources and environment protection respectively.
Specifics of relations in the field of Islamic principles of banking and
financing are regulated by other laws. For relations in the field of
Islamic principles of banking and financing, this Code applies to the
extent not regulated by other laws.
Civil law as an integral part, a branch of private law, the norms of
which regulate the activity of participants in public relations aimed at
meeting their own (private) interests. In the Kyrgyz system of private law,
it is customary to single out in addition to civil law such branches as
family, inheritance, and international private law. Their common features,
determined by their belonging to private law, are:

 individuals as subjects of the relationship;

 private interest as the content of the relationship.

The generally accepted criteria for the delineation of branches
of law, as is known, are the subject matter and method of legal
regulation. With their help, one can not only determine the place and
role of civil law in the general legal system but also reveal its features as
an independent legal entity.
The subject matter of civil law is extremely voluminous and
tends to expand. Within its framework, there are usually two types of
relationships:
1. Property relations constitute the main group of civil relations.
Their subject matter concerns the property – tangible and
102 BASICS OF LAW

intangible goods that are of an equivalent-compensated nature,

i.e. may be subject to valuation.
The predominant part of the property is made up of objects of the
material world or natural origin - land, subsoil, forests, etc. - or
representing the result of human activity - enterprises, residential
buildings, industrial products, etc. A special type of property is
money and securities. They may have a different legal nature: for
example, money in the form of coins or bills are things, and
deposited in a bank account is a right of claim, i.e. property law,
which also applies to property types.
Property relations characterize the statics and dynamics of civil
turnover. In their static state, they indicate the connection of a
person with a certain property, and for this reason, it is customary
to single out relationships that characterize the subject as the
owner of this property or as the holder of another real right. The
dynamics of legal relations under consideration indicate the
movement of property, i.e. his transition from one person to
another within the framework of the obligation of legal relations.
2. Personal non-property relations arising from intangible
goods (such as name, honor, dignity, business reputation). They
are usually divided into two groups - taking into account the
presence or absence of a relationship with property relations:
a. personal non-property relations related to
property - characterize the activity of a person in
creating and using the results of intellectual creativity
(works of science and literature, computer programs,
inventions, industrial designs, etc.), as well as means of
individualization of legal entities, goods, works and
services (trademarks, brand names etc.). The rights
arising from a person to the results of intellectual activity
and means of individualization are called intellectual.
(governed by the norms of part II of the KR Civil Code).
b. Personal non-property (not related to property)
relations protect intangible benefits inalienable from a
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person (honor, dignity, health, life, etc.). Intangible

benefits are inseparable from their carriers, cannot be
transferred to other persons, are highly personal and free
from economic, material content. Civil law contains only
rules on their protection since the forms of using
intangible benefits practically exclude the possibility of
legal regulation of the latter.
Citizens (individuals) and legal entities acquire and exercise their
civil rights through their own will and in their interest. They are free
to establish their rights and obligations based on a contract and to
determine any conditions of their contract that do not contradict the law.
Subjects act on their initiative and their independence provide a
possibility to establish civil law relations primarily based on a contract.
This contractual method fundamentally distinguishes private law
regulation from public law that is dominated by authoritative legislative
regulations. In civil law, the state refrains from direct regulation of
relations, leaving it to the discretion of subjects and providing only a
framework of such relations.
In establishing, exercising and protecting civil rights and in the
performance of civil obligations, participants of civil law relations must act
in good faith. No one has the right to take advantage of his or her illegal
or unfair behavior. The KR Civil Code establishes that norms of civil law
do not regulate all property and personal non-property relations, but only
those that are based on equality, the autonomy of will and
property independence of participants. See more on Principles in
the next section.

Principles of Civil Law and Sources of Civil Law

Principles of Civil Law

Principles (from lat. Principium - “basis”, “principle”) of civil law

are the main, fundamental, guiding principles on which civil law is based.
As defined by Professor Sukhanov, “legal principles are understood [as]
the basic principles, the most general guidelines of the law, which, by their
legislative consolidation, are generally binding.” (Rossiiskoe
104 BASICS OF LAW

Granzhdanskoe pravo, http://be5.biz/pravo/g031/1.html#2-7 ) Legally

enshrined in Article 2 of the Civil Code, the principles of civil law can
directly, by the analogy of law, be applied in the regulation of civil
relations. The basic principles of civil law include:

 equality of participants- no civil law entity (including the

state) has many advantages over other entities. The rights of all
owners (individuals and legal entities, the state and
municipalities) are protected equally.

 inviolability of property; which means that no subject of civil

law can be deprived of his property other than by a court decision
made only in cases expressly provided for by law.

 freedom of contract; providing for freedom of subjects of civil

law in the choice of both counterparties under the agreement, and
the type of agreement and the conditions under which it will be
concluded

 inadmissibility of arbitrary interference in private

affairs and unhindered exercise of civil rights. The
inadmissibility of arbitrary interference in private affairs and the
ability to exercise freely their rights provide the subjects of civil
circulation with the freedom of contractual regulation of relations.
Civil law relations arise, as a rule, at the will of the persons
participating in them, and the activities of the latter are proactive.
In this regard, freedom of contract is manifested in the ability of
subjects to decide how to draw up their relationship,
independently choose their counterparties, and determine the
type of contract and its conditions. By proclaiming freedom of
contract, the legislator refused to intervene in civil circulation.

 ensuring the restoration of violated rights and judicial

nature of the protection of civil rights. implying the desire
of civil law to restore violated rights in kind, and in the case when
this is not possible, the obligation of the debtor to compensate the
creditor for the losses that should ensure the restoration of the
rights of the latter. The provision of judicial protection of civil
rights acts as a universal way of protection. Moreover, if the
CHAPTER VII. INTERNATIONAL LAW 105

protection of civil rights is carried out in an administrative order,

the decision made by the administrative authority may also be
appealed to a court, the decision of which will be binding.

Sources of Civil Law

The source of law in the legal sense of the word is a form of

expression of legal norms in which they can be used to regulate specific
relationships. Formally, the unrecognized source of law has no legal, i.e.
mandatory values. There are several varieties of the main sources in which
legal norms can be found: legal custom, normative legal act, judicial
precedent, International treaties, and other instruments. In the
continental legal system to which Kyrgyzstan belongs, the dominant form
(source) of law is a normative legal act: “an official document of the
established form adopted (published) within the competence of an
authorized state body (official), local government or through a referendum
aimed at establishing, amending or repealing legal norms (legal
norms).”114 In other words, acts of the competent state authority
containing the norms of law, in totality, all acts constitute the Civil Law
legislation. According to article 6 of the Constitution of the Kyrgyz
Republic and article 4.4 of the Civil Code, international treaties ratified by
the Kyrgyz Republic as well as generally recognized principles and norms
of international law are an integral part of the national legal system, hence,
belong to the sources of Civil Law as well.
Thus, the sources of Civil Law of the Kyrgyz Republic include:
1. International Treaties, to which the KR is a party, generally
recognized principles and norms of international law;
2. Legislation (normative legal acts);
3. Business customs and other customs recognized by law.
The notion of international treaties includes inter-governmental
agreements of the Kyrgyz Republic with a foreign state or an international
organization. Examples of such international treaties include the United
Nations Convention on International Sale of Goods 1980 (CISG), or the

Article 2 Law on Normative Legal Acts of the Kyrgyz Republic, 20 July 2009
114

No.241
106 BASICS OF LAW

Convention on the Recognition and Enforcement of Foreign Arbitral

Awards (New York, 1958) (New York Convention).115
Civil normative legal acts constitute a certain system, built on a
hierarchical basis. The content of this system is predetermined by the
norms of the Constitution, which has the highest legal force and leads the
entire system of current legislation. The hierarchy of normative legal acts
in the Kyrgyz Republic is defined by the Law on Normative Legal Acts
article 6 and is as follows:
1. Constitution;
2. Constitutional Laws;
3. Civil Code;
4. Laws;
5. Decrees of the President;
6. Resolutions of the Gogorku Kenesh;
7. Resolutions of the Government;
8. Acts of the National Bank, Central Electoral Committee;
9. Acts of ministries and other executive bodies (departmental acts)
issued within their competence;
10. Acts of local representative bodies (local kenesh).
The Civil Code recognizes business custom as a source of civil
law in article 4, “a business custom is the rule of conduct that has been
developed and is widely used in any area of business activity and not
stipulated by law, regardless of whether it is recorded in any document.”
Hence, there may be rules of conduct that are not stipulated by current
legislation, but established and widely used in any field of business or
other activity.
The analogy of law is understood as the application of the
norms of civil legislation, which regulate similar legal relations and do not
contradict the essence of the latter. If it is impossible to use the analogy of
the law (there is no relevant norm or it cannot be applied), the rights and
obligations of the parties are determined on the basis of the analogy of law,
i.e. based on the general principles (principles) and the meaning of civil

115 https://uncitral.un.org/en/texts
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law, taking into account the requirements of good faith, rationality

and justice.

Civil Law Relations

An essence of civil law relations is expressed in the presence of the
legal connection of its participants when an obligation of one
corresponds to the subjective right of the other and vice versa.
The proprietary nature of the majority of civil law relations
predetermines the main method of their regulation. Civil legal relations
are established, as a rule, by the will of the persons participating in them
based on the principle of equality of the parties. In this regard, the most
significant features of such legal relations are the autonomy of the will
of the parties, their legal independence from each other, as well as
the contractual nature of the interaction and the judicial
procedure for resolving disputes (or arbitration) that arise. The
duty in civil law relations corresponds with the law not as a command, but
as a claim, therefore subjects of legal relations are always in an equal
position, i.e. in terms of coordination, not subordination.
Civil law relations emerge, change and terminate based on certain
circumstances (events, actions) called juridical facts. Juridical facts are
circumstances of life to which the legal norms connect an emergence,
change or termination of legal relations (for instance, conclusion of a
contract or death of a person).

Article 7. Grounds for Emergence of Civil Rights and

Obligations
1. Civil rights and obligations shall arise from the bases provided by
legislation, as well as from actions of citizens and legal entities, which,
though not provided by legislation, generate civil rights and obligations
by general principles and the essence of civil legislation.
Following the above, civil rights and obligations shall arise:
1) from contracts and other transactions envisaged by law, as well as
from contracts and other transactions, which, though not specifically
provided for by law, do not contradict it;
2) from acts of state power bodies and local authorities, which are
provided by law as grounds for the emergence of civil rights and
obligations;
3) from a court decision establishing civil rights and obligations;
108 BASICS OF LAW

4) as a result of production and acquisition of property on grounds not

prohibited by law;
5) as a consequence of the creation of works of science, literature, arts,
invention and other products of intellectual activity;
6) as a consequence of causing harm to another person;
7) as a consequence of unjust enrichment;
8) as a consequence of other actions of citizens and legal entities;
9) as a consequence of events, which, under the legislation, entail civil
law consequences.
2. Property rights subject to state registration shall arise from the
moment of registration of the property or relevant rights unless
otherwise provided by law.

Content of Civil Law Relations

Subjective Right Legal Obligation

(type and limits of possible conduct of a
+ (type and limits of the proper conduct of
subject) a subject)

Figure 8 Content of Civil Law Relations

The nature of the legal relationship of subjects is demonstrated by

the corresponding nature of their interaction in the exercise of the relevant
rights and obligations. The state provides the possibility of exercising the
subjective right by imposing on the other side of the legal relationship a
legal obligation. The combination of subjective civil rights (opportunities)
is called competences (правомочия). Their content is a combination
of certain powers including:

 the right to own actions (the ability to independently perform

actual and legally significant actions);
 the right to demand or claim (the ability to demand from the
obligated subject of the performance of the duties assigned to
him);
 the right to protection (the possibility of applying various
measures of protection using state coercion).
The combination of powers in a particular legal relationship may
be different. The nature of obligations is in the need for a subject to
perform certain actions or to refrain from socially harmful actions. In this
regard, there are two types of obligations:
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1. active - encouraging subjects to commit socially useful actions in

the interests of an authorized subject (for example, the debtor who
has delayed execution is responsible to the creditor for losses
caused by the delay, and for the consequences of the impossibility
of execution that happened accidentally during the delay);
2. passive - legal impossibility of committing actions that violate
the interests of other persons or the state (expressed in the
existence of limits for the exercise of civil rights, that is, in the
establishment of certain prohibitions (for example, the
inadmissibility of a unilateral refusal to perform the contract, the
prohibition of the custodian to use the property, the
inadmissibility of transferring debt without the consent of the
lender, etc.).

Subjects of Civil Law Relations

Subjects of civil law relations may be individuals (citizens of
Kyrgyzstan, foreign citizens, stateless persons), legal entities, and public
legal entities (the Kyrgyz Republic and municipal entities).
Civil legal personality is the ability of a person to be a holder
of rights and obligations and participate in civil legal relations. This
concept includes 2 components:
1. passive legal capacity (the opportunity provided by the law to
be a holder of civil rights and obligations), and
2. active legal capacity (the possibility established by the law to
acquire and exercise corresponding rights and obligations by
actions).
Full participation in civil circulation is possible only if the subjects
of civil legal relations have two components of legal personality in full.
Individual
Individual is a subject of civil law relations, who participates on
its behalf in civil relations and turnover and bears full personal liability for
its actions.
110 BASICS OF LAW

Passive legal capacity of individuals emerges from the moment of

the birth of a person and terminates at the moment of the death of the
person.

Passive Legal Capacity of Individuals (arts. 52-53 CC)

Birth Death
starts ends

 All individuals have passive legal capacity regardless of age, health

condition, etc;
 Passive legal capacity cannot be limited unless provided in the law
(art.57 CC);
 Partial or full denial by an individual of its passive legal capacity
and other transactions aimed at limiting individuals’ active or
passive legal capacity are void unless provided otherwise in the
law (art. 57CC).

Article 53. Substance of Civil Legal Capacity

A citizen can have property by virtue of an ownership right; inherit and
bequeath his property; engage in business or any other activity not
prohibited by law; establish legal entities independently or jointly with
other citizens and legal entities; engage in any transactions not
prohibited by law and participate in obligations; choose a place of
residence; have an authorship right to works of science, literature, arts,
inventions and other results of intellectual activity; have other property
and personal non-property rights.

Active Legal Capacity of Individuals

“A citizen's ability to acquire and exercise civil rights through his actions,
and to create for himself obligations and exercise them (legal capacity)”
Art. 56 CC.
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Table 24 Legal Capacity of Individual
Full Partial
18 years old Children 0-14 y.o.
Before reaching 18 y.o. General Rule (art.63.1
through emancipation CC):
(art.62 CC):  all transactions on
1. Marriage (17 their behalf are
y.o. art.14 Family concluded by
Code); parents/custodian;
2. Employment  transactions
or self- concluded by
employment: children are void.
by the decision of
the State Body Exception (art.63.2 CC)
for the Protection Can be concluded
of Children if independently:
both parents or a 1) small domestic
guardian give transactions;
permission; by 2) transactions directed to
the court decision gratuitous receipt of
if there is no such benefits, not requiring
permission. notarial certification or
state registration;
3) transactions on disposal
of funds provided by the
lawful representative or
given, by consent of the
latter, by a third person for
a certain purpose or free
disposal.
Liability
Parents/Custodian bear
the liability unless they can
prove that an obligation
was violated without their
fault.
An individual’s active legal capacity can be limited based on the existence
of the following conditions together (art. 65 CC):
111
Adolescents 14-18 y.o.
General Rule (art.61.1
CC):
 all transaction are
concluded with the
written permission of
parents/guardian;
 transactions concluded
without written
permission are
voidable.
Exception (art.61.2 CC)
Can be concluded
independently:
1) dispose of their earnings,
student allowance, and other
incomes;
2) exercise an authorship
right to works of science,
literature, or arts, invention or
other results of their
intellectual
activity protected by the law;
3) make deposits in credit
institutions and dispose of
these under the legislation;
4) engage in small domestic
transactions and other
transactions stipulated in
point 2, Article 63 of the Civil
Code.
Liability
Adolescents bear
responsibility individually.
112 BASICS OF LAW

Gambling, alcohol and drug abuse

+
that worsens dramatically his family's financial position

The Court can limit active legal capacity and appoint a

guardian

Figure 9 Limited active legal capacity

An Individual can be recognized as incapable (art. 64 CC) only based

on mental illness and by the decision of the court. The court
appoints a custodian in such cases.

Table 25 Custody and Guardianship

Custody (опека) Guardianship

(попечительство)
 Children under 14  Adolescents 14-18 y.o.;
y.o.;  Individuals limited in their
 Incapable individuals legal capacity

Custodians represent their Guardians permit their mentees to

mentees and conduct all legal conclude transactions that they
actions for them. cannot conclude independently.
Legal Entity
Legal Entities are organizations participating in civil turnover
that have the following identifying features (art. 83 CC):
1. They own, or have under economic management or operative
management certain separate property (property is separated
from the property of LE’s founders/participants and becomes the
property of the LE itself) that allows LEs to participate in civil
turnover;
2. Organizational structure and unity (LE stands out as a single unit,
has its structure and bodies, fulfilling their functions to achieve
stated social goals);
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3. Independent participation in a civil turnover on its behalf and

representation in the court (LEs have the name that individualizes
them, they are registered at the certain official address and
participate in civil relations and courts on their name);
4. LE’s bear responsibility for their actions concluded transactions
independently from their founders/participants.
Legal Entities also have legal capacity (active and passive legal
capacity emerges at the same time – the moment an entity is registered in
the Ministry of Justice of the KR and entered into the Single Registry of
Legal Entities (art.86.2 CC). The legal capacity of a legal entity ceases at
the moment of its liquidation (art. 98.8 CC).
Types of Legal Capacity of Legal Entities
Table 26 Types of Legal Capacity of Legal Entities

General (universal) Special

Capacity to perform any kinds of Capacity to perform only those
activities not prohibited by the activities included in the founding
law. documents.

 All commercial legal  All non-commercial legal

entities entities;
 Banks and credit
organizations;
 Insurance companies.

Legal Entities divided into the 2 groups based on their purpose of

establishment and operation:
1. Commercial legal entities aim at gaining profits and distributing
those profits among participants;
2. Non-commercial legal entities aim at achieving various social,
cultural, political, charitable, scientific, educational and other
purposes.
114 BASICS OF LAW

Creation of Legal Entities

All legal entities have a founding document that can be in the form
of a founding agreement between the founders or a charter. The founding
agreement is concluded by 2 and more founders of a legal entity, while a
charter is adopted by participants of a legal entity. See article 87 of the civil
code explaining the difference between these 2 kinds of founding
documents.

Article 87. Creation and Founding Documents of a Legal

Entity
4. The charter and other founding documents shall specify the name of
the legal entity, its location, the procedure for the management of its
activities, the purpose of its activities, as well as other data, as required
by the law on legal entities of the corresponding type. The founding
documents of non-commercial organizations, state and municipal
enterprises, and, if provided by the law, of other commercial
organizations, must specify the subject and purposes of the legal entity's
activities. The subject and purposes of the activities of other commercial
organizations may be specified in their founding documents.
In the founding agreement, the parties (founders) assume an obligation
to establish a legal entity, define the order for joint activities dealing
with its establishment, define the terms for the transfer of their
property to the legal entity, and the terms of participation in its
activities. The agreement shall also define the terms and the order of
distribution of profits and losses among founders, the terms of the
management of the legal entity's activities, and the terms of the
founder's withdrawal from the legal entity. By the founders' mutual
consent, other terms may be included in the founding agreement.
The table below shows what kind of founding documents govern
activities of different kinds of commercial and non-commercial legal
entities.
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Table 27 Types of Legal Entities

Commercial Legal Entities

Type of Legal Entities Founding
documents
Full partnerships
Founding agreement
Partnerships Limited partnerships
Limited liability company Founding agreement
Additional liability + Charter (if 1
Companies company participant – charter)
Joint-stock company
(JSC)
Charter
 Open JSC
 Closed JSC

Cooperatives Production cooperative Charter

State and Enterprises based on

Municipal economic management
Charter
Enterprises Enterprises based on
operative management
Non-Commercial Legal Entities
Public organizations Charter
Foundations Charter
Institutions Charter
Religious organizations Charter
Cooperatives Charter
Associations (unions) of legal entities Charter + Agreement
Legal entities are considered as established from the moment they
register at the Ministry of Justice of the Kyrgyz Republic according to the
Law on Registration of Legal Entities.116 Upon the registration, a legal
entity receives a certificate that permits it to be registered at the respective
tax inspection, social fund office, to open a bank account, and to order a
stamp.

116Law on Registration of Legal Entities, Branches and Representative Offices of

the Kyrgyz Republic of 20 February 2009 #57.
116 BASICS OF LAW

Reorganization of Legal Entities

The reorganization is a liquidation of a legal entity with the
subsequent transfer of its rights and obligations to newly created legal
entities. Legal Entities can be reorganized based on the decision of their
founders or the authorized body of the legal entity according to article 92
CC KR. With certain legal entities as banking and credit organizations, an
authorized state body can also take such a decision.
Table 28 Five kinds of reorganization

A merger of legal entities is an arrangement whereby their rights

and obligations are transferred to the newly established legal entity
under a transfer deed.
Acquisition of a legal entity by another legal entity is an arrangement
whereby the rights and obligations of the acquired company are
transferred to the acquiring legal entity under a transfer deed.
A split-up of a legal entity is an arrangement whereby its rights and
obligations are transferred to the newly established legal entities under
a separation balance sheet.
A spin-off of one or more legal entities from the original legal entity is
an arrangement whereby the rights and obligations of the reorganized
legal entity are transferred to each of them under a separation balance
sheet.
A conversion of a legal entity of a given type into a legal entity of
another type (change in the legal form of organization) is an
arrangement whereby the rights and obligations of the reorganized
legal entity are transferred to the newly established legal entity under a
transfer deed.
A transfer deed and a separation balance sheet are the documents
required for the reorganization of a legal entity. They must contain
provisions on the legal succession concerning all liabilities of the legal
entity reorganized. The transfer deed and separation balance sheet shall
be approved by the founders/participants of the legal entity or the
authority that decided to reorganize and shall be submitted together
with the founding documents for state registration of the newly
established legal entities or amendment of the founding documents of
existing legal entities.
Legal Forms of Doing Business, Kalikova & Associates
Liquidation of Legal Entities
CHAPTER VII. INTERNATIONAL LAW 117

The Civil Code (part 1) of the KR. regulates the process of liquidation.
According to article 96 of the CC, liquidation of a legal entity “entails its
termination without transfer of rights and obligations in succession to
other persons.”
A legal entity may be liquidated based on the decision of:

 founders (participants) of the legal entity, or

 an organ of the legal entity empowered by its founding

documents.
Liquidation can also take place due to:

 expiration of the term for which the legal entity was created,

 achievement of the purposes of creating the legal entity, or

 a court-ordered invalidation of the registration of the legal

entity due to an irremediable violation of legislation in the course
of its founding; or

 a decision of a court if the legal entity is conducting

o activities without proper authorization (license), or
o activities which are prohibited by law, or
o commits any other repeated or gross violations of
legislation, or
o in the case of systematic conduct of activities which
contradict the charter purposes of the legal entity.
According to art 97 CC, upon the decision of liquidation, a
liquidation committee (a liquidator) is created to establish the procedure
and terms of liquidation in compliance with the legislation.
As of the moment the liquidation committee is appointed, it
acquires the authority to supervise the legal entity’s action in disposing of
its property. Hence, all activities of the legal entity directed to the
alienation of its property or recovery of its debts may be issued only with
the permission of the liquidation committee.
118 BASICS OF LAW

Under Article 98CC, the Liquidation committee from the

moment the decision on liquidation is taken and the committee is
nominated must give written notification of the decision to Ministry
of Justice of the KR as it should make an entry in the state register of legal
entities that the legal entity is in the process of liquidation. Moreover,
notice to the Ministry should contain information regarding procedures
and terms within which creditors can submit their claims (the term shall
not be less than 2 months from the moment of publication). This
information should also be published on the webpage of the Ministry
within 5 days from the day it was received.
The liquidation committee shall take all measures possible to
identify company creditors and to collect accounts receivable, and notify
creditors in writing regarding the liquidation of the legal entity. The
liquidation committee executes all payments to creditors in the order
established by art. 99 CC. After all payments are made, the liquidation
committee prepares a liquidation balance, which should be approved by
the founders or a body that decided on liquidation. The property that
remains after all payments are made is distributed among founders.
The liquidation is considered complete and the legal entity ceases
its existence from the moment the decision of the Ministry of Justice on
liquidation is made.

Types of Commercial Organizations

Partnership
The partnership is a form of business organization that is based
on mutual trust of its participants who manage and conduct their
business, share profits and are jointly and severally liable for the debts of
the partnership. The legislation of the KR provides 2 types of partnerships:
full and limited. Full partnerships are regulated by articles 108-121 CC,
limited partnerships are regulated by articles 122-126 CC KR. Norms on
full partnerships also govern the status of full partners in a limited
partnership according to article 122.5 CC KR.
CHAPTER VII. INTERNATIONAL LAW 119

Table 29 Types of Partnerships

Full Partnership (arts. Limited Partnership (arts. 122-

108-121 CC)
 To create there should at
least 2 full partners;
 All partners are jointly and
severally liable for the debts
of the partnership;
 All partners can represent
the partnership unless it is
indicated differently in the
founding agreement;
 Decisions are taken
unanimously by all
partners, the founding
agreement can indicate
cases when a majority vote
is possible;
 Partners can be members of
only one full partnership;
 All partners have a right to
get acquainted with the
documents of the
partnership;
 Profits and losses are
distributed among all
partners per their
contribution;
 If only one partner is left, it
has a right either to
reorganize or to liquidate.
126 CC)
 To create there should be at least
1 full partner + 1 limited partner;
 Full partners are jointly and arts
liable for the debts of the
partnership, while limited
partners risk only their
contribution (limited liability);
 Only full partners participate in
the management, limited
partners can represent a
partnership only based on a
power of attorney;
 Decisions are taken unanimously
by all full partners, the founding
agreement can indicate cases
when a majority vote is possible;
 Full partners can be full partners
only in one limited partnership;
 Limited partners have a right to
receive part of the profits as
indicated in the founding
agreement; full partners share
profits and losses per their
contribution;
 If only one full partner or one
limited partner is left, it has a
right to reorganize or to liquidate.

Limited Liability Company (LLC)

LLC is a form of business organization that is one of the most
popular in Kyrgyzstan due to its suitability for small and medium-sized
businesses, simple structure and limited liability of its participants.
Articles 127 – 137 CC KR provide for more detailed regulation of the legal
status of LLCs, rights, and obligations of participants, etc.
Below are the main characteristics of an LLC:
120 BASICS OF LAW

 Min # of participants – 1, max# -30, if more than 30

reorganization into JSC or liquidation within one year (art. 128.1
CC).
 Capital is divided into shares, contribution = percentage of a share
(art. 130.1 CC).
 There is no minimum capital requirement set in the law;
participants determine the size of the capital, which is a guarantee
of creditors’ interests (art. 130.1 CC).
 Capital should be fully paid within the first year of operation, if
not it should be decreased or LLC is liquidated (art. 130.3 CC).
 Participants risk only their contribution limited liability
(art. 127.1 CC). None of the participants can be exempted from
contributing; offsets are prohibited (art. 130.2 CC).
 Founding documents include a founding agreement (2+
participants) and a charter (art. 129.1 CC).
 Participants have a preemptive right (priority to buy other
participants’ share).
 Generally, participants can sell their share to non-participants but
the charter can prohibit it, so the transfer would then be possible
only internally, among participants (art. 133.2 CC).
 The procedure for selling a share in the LLC is as follows
(art.133.2-133.4 CC):

Participant willing to sell his share

Offer to other participants

1 month waiting period (unless participants expressly refused to buy)

If no participant is interested to buy, then a share is sold to 3rd party
If the charter prohibits the transfer of shares to non-participants,
then LLC itself should buy the share.
Figure 10 Procedure for selling a share in the LLC
CHAPTER VII. INTERNATIONAL LAW 121

 In case of succession, an heir of an individual or a successor of a legal

entity become new participants if the charter does not require an
acceptance of other participants (in the latter case, if participants
refuse, then successors are paid an amount of a share) (art. 133.5 CC).
 A participant can be excluded from the company only based on a
court decision if severe damage was caused to the company and other
participants (art. 136 CC).

Governing Structure of LLC (art.131 CC)

Table 30 Governing Structure of LLC

General Meeting of Participants

Excl. competence (art. 131.3 CC)
1) amending the charter and changing the charter capital;
2) formation and recall of an executive body if this competence is not given to
BoD (if it exists);
3) formation and recall of an executive body at the moment of establishing and
liquidation of LLC;
4) approval of the company's annual reports and account balances,
distribution of its profits and losses;
5) decisions on reorganization and liquidation of the company;
6) election of the auditing commission (auditor);
7) formation and recall of the BoD.
Other matters referred to the exclusive authority of the company's general
meeting may be defined by law or by the LLC's charter.
Matters within the exclusive competence of the company's general meeting
may not be delegated for consideration to the BoD or the executive body.

Board of Directors
(art. 40-1, 40-2, 40-3 of Law117)
Optional
Can be established by the GMP

Executive Body
Can be 1 person or a Board
Fulfills daily activities

117 Law on Partnerships and Companies of 15 November 1996 # 60.

122 BASICS OF LAW

Joint Stock Company (JSC)

JSC is a form of business organization that is suitable to medium
and large size business as it allows attracting more capital through selling
shares publicly but involves more burdensome reporting requirements set
by the financial markets regulator.118 The Civil Code and the Law on JSC
regulate JSCs.119
The main features of JSCs include:

 The capital is divided into shares/акции (securities/ценные

бумаги). Shares can be common or preference (not more than
25%), arts. 22-25 of the Law on JSC:
o Common shares permit shareholders to participate and
vote at the general meeting, to receive dividends (not
guaranteed and depends on the financial situation;
o Preference shares provide their holders with a fixed
dividend but no voting rights;
 Limited liability of shareholders;
 Founding document of JSC is a charter;
 JSC can be of 2 types: open and closed:

Table 31 Types of Joint Stock Companies

Closed JSC Open JSC

 Shares are distributed only  Shares can freely be sold to third
among participants; parties;
 No public offer of shares;  Shares can be sold publicly (on the
 Shareholders have a stock exchange); in this case, the
preemptive right for the JSC becomes a public company and
purchase of shares; is subject to disclosure
 Max of 50 shareholders; requirements set by the financial
 No disclosure requirements. markets regulator;
 No limit as to the number of
shareholders;

118 In Kyrgyzstan the regulator of financial markets is Gozfinnadzor –The State

Service of Regulation and Supervision of the Financial Market at the Government
of the Kyrgyz Republic, see their webpage for more information:
http://www.fsa.kg/#/home.
119 Law on Joint Stock Companies
CHAPTER VII. INTERNATIONAL LAW 123

Governing Structure of JSC

Table 32 Governing Structure of Joint Stock Company

General Meeting of Shareholders (arts. 36-52 of the Law

on JSC)
General annual meetings are conducted every year, no later than May 1
of the following the reporting year (art. 37 of the Law on JSC)
Exclusive competence (art. 38 Law on JSC)
 Modification and additions to the charter;
 Reorganization;
 Liquidation, assignment of the liquidation commission and the
approval of the liquidation balance;
 Deciding to change (increase or reduce) the number of outstanding
shares of the joint-stock company, and also on the issue of securities,
convertible into shares;
 Deciding on the closed placement of shares additionally issued by the
open company or the securities convertible into shares;
 Deciding on non-use of the right of priority of the shareholder to
purchase shares of the Company or the securities convertible into
shares;
 Deciding on fulfillment of large transactions;
 Conversion of preference shares into common ones;
 Election of heads and members of a joint executive body of the
Company or the person who is carrying out functions of an individual
executive body of the Company (if the Company carries out the
activity without the formation of the Board of Directors);
 Deciding on the issue of the company are not convertible into shares
of bonds and other securities, the total nominal value of 50 and more
percent of the book value of assets of the company at the date of the
decision to issue such securities;
 Election of members of the audit committee (an auditor) of the
Company and the prescheduled termination of their powers;
 Deciding on the size and the order of payment of dividends;
 Approval of the amounts of paid compensation and indemnifications
to members of the Board of Directors;
 Deciding on cancellation of the decisions contradicting the legislation
of the Kyrgyz Republic, adopted by previous general meetings of
shareholders;
 Use reserve and other funds of the Company;
 Deciding on the prescheduled termination of powers of the Board of
Directors, an executive body of the Company (if the Company carries
out the activity without the formation of the Board of Directors);
124 BASICS OF LAW

 Definition of quantitative membership of the Board of Directors of

the Company if the charter does not determine the number of seats
in the Board of Directors;
 Approval of annual reports, accounting balances, accounts of profits
and losses of the company, distribution of its profits and losses;
 Approval of membership of the accounting commission;
 Approval of the amounts of paid compensation and indemnifications
to members of the auditing (an auditor) of the Company;
 Election of members of the Board of Directors;
 Solution of other issues referred to the competence of the general
meeting of shareholders by this Law, legislation of the Kyrgyz
Republic and the charter of the Company.

The general meeting of shareholders shall not be entitled to make

decisions on this Law within the competence of other management
bodies, except as provided by this Law.

Board of Directors
(art. 40-1, 40-2, 40-3 of Law120)
Article 53 of the Law on JSC, “The Board of Directors shall carry out the
general management of the Company's activity, except for the issues
referred by this Law to the exclusive competence of the general meeting
of shareholders.”
Exclusive competence (art. 54 Law on JSC):
 establishment of strategic purposes of a joint-stock company and
formation of its policy, and also control for its implementation by the
executive body;
 adoption and approval of internal documents of the Company,
changes, and additions to them, except for the cases stipulated by this
Law;
 deciding on large transactions;
 election of an executive body and the head of it, establishment of
amounts of remuneration to be paid; deciding on the pre-scheduled
termination of powers of the executive body;
 preparation of recommendations on the size of the dividend on shares
and the order of its payment;
 submission of the grounded recommendations concerning
reorganization of the JSC, and also on the creation of branches and
opening of representations of the JSC;

120 Law on Partnerships and Companies of 15 November 1996 # 60.

CHAPTER VII. INTERNATIONAL LAW 125

 election of an auditor of the Company and definition of the size of

payment of the auditor's services;
 recommendations to the general meeting of shareholders on the size,
conditions, and order of increase or reduction of the number of
outstanding shares;
 development of materials for consideration at the general meeting of
shareholders;
 supervision of the execution of decisions of the general meetings of
shareholders;
 election of the secretary of the Company.
There are also other functions that can be referred as the competence of
the JSC by shareholders (art. 54.2 Law on JSC).

Executive Body (art. 58 Law on JSC)

Can be 1 person (CEO, General Director, etc.) or
a Board consisting of several officers.
 Manages current (daily) activities of the JSC.
 Members of the Executive Body are elected by the BoD or the GMS (if
there is no BoD) for the term of 1 year and re-elected an unlimited
number of times.
 Persons elected to the executive body of the JSC with the 50% state
ownership of the shares cannot be re-elected again in the event of
worsening financial performance for the period of their work.
 Officers, who led the JSC to bankruptcy, were removed from office for
unsatisfactory work, faulty behavior or committed an offense at the
place of work, cannot be elected to the executive body of the JSC with
the state-owned block of shares.
 Annually (not later than 20 days before the GMS), the executive body
should prepare an annual report, balance report, an account of profit
and losses, and an annual budget and make these materials available
to shareholders.
 The executive body shall regularly, at least once in a quarter, report to
the BoD on financial and economic activities of the company and
meeting objectives and policies of the JSC.

The position of a Company Secretary is mandatory in JSCs

with more than 50 shareholders (art. 62 Law on JSC). CS is elected by the
BoD and fulfills the following functions:

 communication with shareholders on issues related to the

enforcement of their rights;
126 BASICS OF LAW

 maintenance and keeping of the company register of

shareholders;
 collection of shareholder proposals on the agenda of GMS;
 provision of shareholders with materials related to GMS;
 keeping materials of GMS, sessions of the BoD.
Company officers (должностные лица) are responsible for any
damage they cause to the JSC by their guilty actions (omissions to act)
under article 65 of the Law on JSC. Company officers include BoD
members, executives/members of the executive board, audit committee
members, the company secretary.

Objects of Civil Law Relations

An object of civil law relations is understood as both the
subject matter and an activity (conduct) of subjects of civil law relations,
depending on the approach taken. Indeed, in the scholarly discourse, there
are these two approaches. One of them (broad) makes it possible to add
participants to the objects of civil turnover, in addition to material and
spiritual benefits, the process of their creation, i.e. the activity of subjects
(individuals, legal entities, etc.) of civil legal relations.
Supporters of the second (narrow) approach, which was legally
embodied in the norms of the Civil Code, argue that an object covers only
certain benefits (tangible or intangible), a subject matter of activities of
subjects (individuals, legal entities, etc.), not activities per se.121

Article 22. Types of Objects of Civil Rights

Objects of civil rights shall be things, including money and securities,
other property, including property rights, works and services, protected
information and the results of intellectual activity, firm brands,
trademarks and other means of individualizing (intellectual property)
as well as other tangible and intangible benefits.

121 Chapter 3, articles 22-50 of the Civil Code.

CHAPTER VII. INTERNATIONAL LAW 127

Classification of Objects
Based on the transferability of objects in civil turnover, all objects
can be divided into the following 3 categories:
a. Objects that be freely transferred;
b. Objects that are limited in their transfer (e.g.
medications);
c. Objects that are prohibited for transfer (e.g. narcotic
substances, weapons).
Things can be classified based on various legal grounds and
regulation of their transfer in civil law depends on this classification.
1. Moveable and immoveable things are divided based on their
physical connection to the land or provisions of the law. Article 24
CC states that “Immovable things (immovable property,
immovables) shall be land plots, areas of mineral resources,
detached water objects, and all that is firmly connected with earth,
that is, objects which cannot be transferred from one place to
another without inflicting damage disproportionate to their
purpose, including forests, long-term plantations, buildings,
constructions, etc. Other property can also be identified as
immovable by the legislation of the Kyrgyz Republic.”122 Moveable
things are defined by the CC as “those things which are not
attributed to immovables, including money and securities….”123
This classification is important as the ownership right for an
immoveable thing should be registered and emerges from the
moment of such registration (for instance, ownership rights for
land plots, residential and non-residential premises should be
registered according to the Law on State Registration of Rights on
Immoveable Property and Related Transactions124).
2. Main thing and its fixture are differentiated as it is assumed
that a fixture follows the main thing. For instance, a painting

122 Article 24.1 CC KR.

123 Article 24.3 CC KR.
124 Law on State Registration of Rights on Immoveable Property and Related

Transactions of 22 December 1998 #153.

128 BASICS OF LAW

(main things) and its frame (fixture) are sold together, if the
painting is sold, its frame is supposed to be sold as well.
3. Divisible and indivisible things are classified based on the
possibility of their physical division without changing their
purpose. For instance, the land is divisible as it can be divided
between several owners, whereas a cup is indivisible as it cannot
be used for its purpose after division.

Civil Law: Property

Concept of property
Prof. John Sprankling provides that “the law defines property as
rights among people that concern things.”125 Another definition is
“property is a collective concept where it is a set of things belonging to the
individual as well as property rights and obligations”.126 In his book
Suhanov indicates that “property is not the things, but rather it is the
relationship between people in regard to the specific thing (if someone
owns something then other people should not intervene) and also the
attitude of the person toward that thing as to its own (person treats
differently his and other’s things)”.127 What can be derived is that we
should think not only about what type of property is there, but also what
is the extent of the ownership rights toward the thing.
The primary source of property law in the Kyrgyz Republic is the
Constitution, which provides the following:

Article 12 of the Constitution of the Kyrgyz Republic

1. The Kyrgyz Republic recognizes the diversity of forms of property
ownership and guarantees equal legal protection of private, state,
municipal and other forms of ownership.
2. The property is inviolable. No one shall be arbitrarily deprived of his
property.

125 John G. Sprankling, Understanding Property Law (Matthew Bender &

Company, Inc., 1999). p.2.
126E.A. Suhanov, ed., Rossiiskoe Grazhdanskoe Pravo. T.1 [Russian Civil Law.

Vol.1], 2nd ed. (Statut, 2011).p.301.

127 E.A. Suhanov, ed., Grazhdanskoe Pravo. Tom 1 [Civil Law. Vol 1], 2nd ed.

(Moscow: Izdatelstvo BEK, 2002). p.477

CHAPTER VII. INTERNATIONAL LAW 129

The seizure of property against the will of the owner is allowed only by a
court decision.
Compulsory seizure of property without a court decision is permitted in
cases provided for by law to protect national security, public order, public
health and morals, and the protection of the rights and freedoms of others.
The legality of such withdrawal is subject to mandatory review by the
court.
The seizure of property for public needs, as defined in the law, may be
affected by a court decision with fair and prior security for the
reimbursement of the value of this property and other losses caused
because of alienation.
3. The conversion into state ownership of property owned by citizens and
legal entities (nationalization) is carried out based on the law with
reimbursement of the value of this property and other losses.
4. The Kyrgyz Republic protects the property of its citizens and legal
entities, as well as its property located in the territory of other states.
5. The earth, its soils, airspace, waters, forests, flora, and fauna, other
natural resources are the exclusive property of the Kyrgyz Republic, are
used to preserve a unified ecological system as the basis for the life and
work of the people of Kyrgyzstan and are under the special protection of
the state.
The land can also be in private, municipal and other forms of property
ownership, except for pastures that cannot be privately owned.
6. The limits and procedure for the exercise by the owners of their rights
and guarantees for their protection are determined by law.
From the article above, we can highlight the forms of ownership
as private property ownership and state property ownership.
These two forms of property differ in relation as to who has the attribution
of belonging of a thing, would it be individuals, legal entities or state and
municipality.128
The Constitution Art.12 (2) says that “the property is inviolable.
No one shall be arbitrarily deprived of his property.” The following excerpt
from the decision of the Constitutional Chamber of the Kyrgyz Republic
emphasizes that it is the owner of the property has a right to terminate her
right of ownership:

128 Suhanov. p.480-483.

130 BASICS OF LAW

Decision of the Constitutional Chamber of the Supreme Court

of the Kyrgyz Republic in the case of the verification of constitutional
articles 282 of the Civil Code of the Kyrgyz Republic and articles 209 of
the Civil Procedure Code of the Kyrgyz Republic in connection with the
appeal of citizen Yevgeny Vladimirovich Osintsev (December 23, 2013 No.
16-p)
[Facts: Mr. Osintsev challenged the norms of Civil Code and Civil
Procedure Code arguing that Art.46 of the Constitution provides the right
to housing and no one can be arbitrarily deprived of it.]
“[…] The generally recognized constitutional principles of the inviolability
of property and freedom of contract, which imply equality, the autonomy
of will and property independence of participants in civil law relations,
and inadmissibility of arbitrary interference by anyone in private affairs,
determine the freedom of possession, use, and disposal of property. This
means that the owner has the right, at his discretion, to take any actions
in relation to property belonging to him, if they do not contradict the law
and do not violate the rights and legitimate interests of other persons,
including the possibility of the owner performing his obligations at the
expense of property including the real estate.
Law (part 6 of article 12 of the Constitution) establishes the boundaries of
powers to possess, use and dispose of property. However, this regulation
must comply with the principles of the rule of law based on legal equality
and justice, and proceed from the fact that the right of ownership, as well
as all other human and civil rights and freedoms, are recognized and
guaranteed in the Kyrgyz Republic in accordance with generally
recognized principles and norms of international law and accordance with
the Constitution (Articles 1, 6, 12, 16, 17 of the Constitution).
Thus, the owner of the property has the right to engage in economic
activity that is not contrary to the law, to dispose at his own discretion of
property owned by him on the right of private ownership, including
alienation of property, transfer of rights to possess and use the property,
and also to fulfill his civil obligations at the expense of his property.
Consequently, the owner is responsible for all possible consequences
established for himself by civil obligations arising from the meaning and
content of the contract stipulated by law or not provided for by that
(principle of freedom of contract), concluded only based on the autonomy
of will and equality of arms.
Failure to fulfill obligations based on the contract entails liability
established by law, which includes the forced seizure of property of the
owner in favor of the creditor. Withdrawal of property, including
CHAPTER VII. INTERNATIONAL LAW 131

residential premises, by foreclosure to cover the debt obligations of the

owner, is a case of termination of the right of ownership of property
provided by law and cannot be considered as arbitrary deprivation of
property.
Ownership right
The central concept of property is the ownership right, which is
“the legal possibility of a person to own, use and dispose of a property
belonging to her at her discretion while taking on the burden and risk of
its maintenance”.129 Ownership right is “bundle of rights”130 as described
below:

Art.222 of the Civil Code provides:

1. The right of ownership is the right of the subject, recognized and
protected by legislative acts, at its discretion to possess, use and dispose
of the property belonging to it.
2. The owner has the right to possess, use and dispose of his property.
The right of possession is a legally enforceable opportunity to exercise the
actual possession of the property.
The right to use is a legally enforceable opportunity to extract from its
property its useful natural properties, as well as benefit from it. Benefits
can be in the form of income, increment, fruits, litter, and other forms.
The right of disposal is a legally enforceable opportunity to determine the
legal fate of the property.
3. The owner has the right, at his own discretion, to perform in respect of
his property any actions that do not contradict the law and do not violate
the rights and interests of other persons protected by law, including
alienating his property in the ownership of other persons, transferring his
powers to them, remaining the owner, possession, use and disposition of
property, give property as security and encumber it in other ways, dispose
of property in a different way.
Possession, use, and disposal of land to the extent that its circulation is
permitted by law (art. 23) shall be exercised by its owner freely unless it
infringes on the rights and legitimate interests of other persons and does
not prejudice the environment.
4. The ownership right is unlimited. The ownership of property may be
forcibly terminated only on the grounds provided for by this Code.

129 Suhanov. p.489.

130 Sprankling, Understanding Property Law. P.4-7.
132 BASICS OF LAW

5. The owner shall bear the burden of maintaining the property belonging
to him unless otherwise provided by law or the contract, and cannot
unilaterally transfer such a burden to a third party.
6. The owner bears the risk of accidental loss or accidental damage to
property unless otherwise provided by law or contract.
One of the abilities of the owner to transfer her rights being still
the owner (for example, lease agreement – based on the lease the owner
provides a property to another person for temporary use).
Acquisition (emergence) of ownership right
There are two ways of ownership right acquisition, e.g. how a
person is to get ownership right over something, and these ways are
primary (not dependent on the previous owner) and derivative (the
ownership right occurs based on the will of the previous owner (most
commonly based on the contract)131.

Primary
Newly created property
[e.g. you baked a cake, where you will have an ownership right for the
cake]
see Art. 251(2) of the CC KR
Things, products or income received as a result of using the property
[e.g you borrowed a cow from your neighbor, and you take the milk that
the cow produces]
see Art.29 of the CC KR
Property created as a result of the processing of existing materials
See Art.253 of the CC KR
Things that are generally accessible for collection
[e.g. berries, fish]
see Art. 254 of the CC KR
Property that is not owned by anyone, or the owner is unknown, or an
entity given up an ownership

131 Suhanov, Grazhdanskoe Pravo. Tom 1 [Civil Law. Vol 1]. p.493
CHAPTER VII. INTERNATIONAL LAW 133

[e.g. this may include cases when the dogs or houses are being
abandoned]
see Art.257-264
- Stray animals
- Treasure
- Lost property
Derivative
Based on the agreement
[e.g. sale contract, exchange contract, gift contract, or any contract as a
result of which the property is transferred from one to another entity]
Inherited property
Nationalization or Privatization
see Art.288 of the CC KR
Confiscation
see Art.287

Termination of ownership right

There are two ways for terminating the ownership right:
voluntary and compulsory. In the majority of cases, the termination
of ownership right is provided in the legislation, and usually when there is
a voluntary will of the owner to terminate the right (for example, when the
owner sells her property to others or voluntarily rejects her right as
throwing the thing away)132. However, there can be cases of compulsory
termination (for example, based on the court decision or based on the law
the owner could not have owned a thing).
Common ownership
Property can also be under the common ownership, where one
property can be in ownership of several entities. The brightest example of
the common ownership is the ownership of spouses, e.g. husband and wife
are presumed to have common ownership of the property, which was
acquired after the marriage.

132 Suhanov, Rossiiskoe Grazhdanskoe Pravo. T.1 [Russian Civil Law. Vol.1].
134 BASICS OF LAW

Article 266. The Concepts and Grounds for the Emergence of

Common Property
1. Property that belongs to two or several people belongs to them with the
right of common ownership.
2. Property may be held in common ownership in such a way that the share
of each of the owners in the ownership right is either defined (shared
ownership) or not defined (joint ownership).
3. Common ownership of property is shared ownership, except in cases
when the law permits the establishment of joint ownership to this
property.
4. Common ownership emerges when two or several people assume
ownership of property which cannot be divided without changing the
purpose of the property (indivisible things), or when a division of the
property is prohibited by law.
Common ownership of divisible property may arise in cases provided by
law or by contract.
5. The common property of people may achieve the status of shared
ownership by an agreement of the participants in joint property and in
case of a failure to reach an agreement, by a decision of the court. […]
Article 275. Common Property of Spouses
1. The property earned by spouses during their marriage shall be their joint
property unless the law or a contract between them provides otherwise.
2. Property that belonged to spouses before they were married, as well as
property that they acquired as a gift, or inherited during their marriage, as
well as another property defined by law, shall constitute the property of
each of them. Items of individual use, such as clothes, footwear, jewelry,
and other items provided in the Marriage and Family Law, though
purchased during the marriage at the expense of common funds, shall be
recognized as the property of the spouse who uses them.
The property of each of the spouses may be recognized as their joint
property if it is ascertained that during the marriage investments which
considerably increased the value of such property (overhaul repair,
reconstruction, refurbishment, etc.), were made at the expense of their
joint funds.
3. Under obligations of one of the spouses, the recovery may be imposed
against such a property that is owned by him, as well as against his share
in the common property, that would be due to him after the division of
family property.
4. If the division of each spouse's share in their common property occurs,
the rules to determine each spouse's share, as well as the procedures for
the division, shall be stipulated by the legislation on marriage and the
family.
CHAPTER VII. INTERNATIONAL LAW 135

Some challenges to the property rights

Taking into account that law is mono-national (each country has
its regulation of a particular issue), we may assume that the challenges
faced in each particular country are to be diverse.

[Research assignment: select one country and make short research as to

the problems they have about the property rights of private individuals].
Addressing the situation in the Kyrgyz Republic some of the
aspects could be brought to attention, in particular, property rights of the
foreign investors in circumstances where the state decides to expropriate
the property of the investor, or in the circumstances of seizure of the lands
by private persons.
A. Expropriation:

There are several cases against the Kyrgyz Republic before

international arbitration tribunals for expropriation without adequate
compensation. “Expropriation is defined as the deprivation of some right
of property.”133
The excerpts below are taken from the decision of the ICSID Case
No. ARB (AF)/06/1 Sistem Muhendislik Sanayi Ve Ticaret A.S. v. the
Kyrgyz Republic awarded on 30 September 2009134, which discusses the
case of expropriation:

“117. The Tribunal has found that in 1999 the Claimant became the sole
owner of the hotel, and that the Claimant's ownership rights in the hotel
were abrogated by the decision of the Leninskiy District Court of the City
of Bishkek dated June 27, 2005, which was upheld by the decision of the
Bishkek City Court dated August 30, 2005 and the decision of the Kyrgyz
Supreme Court dated November 2, 2005, invalidating the July 1999 Share
Purchase Agreement. The effect of those decisions was supported by the
decision of the Bishkek Interdistrict Court dated June 17, 2005, annulling
the bankruptcy of Ak-Keme.

133 B.A. Wortley, “Expropriation in International Law,” Transactions of the

Grotius Society 33 (1947): 25–48, https://www.jstor.org/stable/743091.
134 http://cisarbitration.com/wp-content/uploads/2012/07/Sistem-v.-Kyrgyz-

Republic.pdf
136 BASICS OF LAW

118. That abrogation was effected by an organ of the Kyrgyz State, for
which the Kyrgyz Republic is responsible. It is well established that the
abrogation of contractual rights by a State, in the circumstances that
obtained in this case, is tantamount to an expropriation of property by that
State. The Court decision deprived the Claimant of its property rights in
the hotel just as surely as if the State had expropriated it by decree. If the
Claimant has been deprived of its property rights by an act of the State, it
is irrelevant whether the state itself took possession of those rights or
otherwise benefitted from the taking.
119. That abrogation of the Claimant's property rights amounts to a breach
of the Article III of the Turkey-Kyrgyz BIT, which forbids the
expropriation of property unless it is done for a public purpose, in a non-
discriminatory manner, and upon payment of prompt, adequate and
effective compensation. Those conditions are not satisfied in this case: in
particular, no compensation has been paid. The Respondent is accordingly
obliged to make reparation for that breach of the BIT. […]
121. The Claimant was deprived of all of its rights in the hotel, and the
appropriate form of reparation is compensation for the value of the hotel.
Article III (2) of the Turkey-Kyrgyz BIT stipulates that in cases of
expropriation compensation "shall be equivalent to the real value of the
expropriated investment before the expropriatory action was taken or
became known.
122. The history of the investment in the Kyrgyz courts is convoluted. Two
things are, however, clear beyond doubt. First, the Claimant operated the
hotel and was treated by the Kyrgyz authorities as owner of the hotel from
1999 to March 2005 — and indeed, for some time afterwards, when the
Kyrgyz authorities appeared disposed to take steps to restore control of
the hotel to Sistem. Second, in March 2005, the Claimant lost control of
the hotel as a matter of fact and, by virtue of the decision of the Kyrgyz
court on June 27, 2005, the Claimant was deprived of all of the rights in
the hotel which it had obtained under the 1999 Agreements.”
Seizure of the lands:
In the Kyrgyz Republic, one of the other challenges that could be
observed is a seizure of lands by individuals, who then may claim their
legalization and ownership rights. For more, you may read Craig Hatcher,
Illegal geographies of the state: the legalization of a “squatter” settlement
in Bishkek, Kyrgyzstan, International Journal of Law in the Built
CHAPTER VII. INTERNATIONAL LAW 137

Environment, April 2015, who elaborates on one of the settlements at the

outskirts of Bishkek city.135
Intellectual Property (IP)
Though Intellectual property has the term “property” in its title, it
primarily touches the issues of exclusive rights of IP owners (and there is
no material things or physical items that can be owned (think of the
trademark), and referred as intangibles).136 “Intellectual property (IP)
refers to creations of the mind, such as inventions; literary and artistic
works; designs; and symbols, names, and images used in commerce.”137

Intellectual Property
Related to
Industrial Property Copyright
copyright

Industrial Geographical Books, music,

Inventions Trademarks Broadcasting
designs indications art

Article 1039. Personal non-property and property rights to

intellectual property
1. Authors have personal non-property and property rights to the results
of their intellectual activities.
Personal non-property rights belong to the author regardless of his
property rights and remain with him in the event of the transfer of his
property rights to the results of intellectual activity to another person. […]
3. The right of authorship (the right to be recognized as the author of the
result of intellectual activity) is a personal non-property right and may
belong only to the person whose creative work created the result of
intellectual activity.

135 Craig Hatcher, “Illegal Geographies of the State: The Legalisation of a

‘Squatter’ Settlement in Bishkek, Kyrgyzstan,” International Journal of Law in
the Built Environment 7, no. 1 (2015): 39–54, https://doi.org/10.1108/IJLBE-
01-2014-0004.
136 Suhanov, Grazhdanskoe Pravo. Tom 1 [Civil Law. Vol 1]. P.11, 298.
137 WIPO, What is Intellectual Property? available at

https://www.wipo.int/about-ip/en/
138 BASICS OF LAW

The right of authorship is inalienable and indescribable.

4. If the result is created by the joint creative work of two or more persons,
they are recognized as co-authors.
Article 1040. Exclusive Rights to Objects of Intellectual
Property
1. The owner of property rights to the result of intellectual activity or
means of individualization has the exclusive right to lawfully use this
object of intellectual property at its discretion in any form and in any way.
The use by other persons of objects of intellectual property in respect of
which their copyright holder has an exclusive right is allowed only with
the consent of the copyright holder.
2. The owner of an exclusive right to an intellectual property object has the
right to transfer this right to another person in whole or in part, to allow
another person to use the object of intellectual property and have the right
to dispose of it in another way, if this does not contradict the rules of this
Code and other laws.
3. Restrictions of exclusive rights, including by providing the possibility of
using the object of intellectual property to other persons, recognition of
these rights as invalid and their termination (annulment) are allowed in
cases, limits and procedures established by this Code and other laws.
Restrictions on exclusive rights are allowed provided that such a
restriction does not prejudice the normal use of the object of intellectual
property and does not infringe upon the legitimate interests of the rights
holders.

Civil law: Contracts

Concept and Nature

The Oxford dictionary defines a contract as “A written or spoken
agreement […] that is intended to be enforceable by law.”138 The legislation
of the Kyrgyz Republic states that “Contract is an agreement between two
or more persons/parties on creation, change or termination of the civil law
rights and obligations.”139 The former definition contains already several
terms that need to be clarified as, for example, “written or spoken
agreement”, “intended” or “enforceable by law”, and the latter has

138 Lexico Dictionaries | English, “Contract | Definition of Contract by Lexico,”

accessed August 28, 2019, https://www.lexico.com/en/definition/contract.
139 Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

Republic] Art.381 (1).

CHAPTER VII. INTERNATIONAL LAW 139

reference to the “parties”. If we are to look further - the term “agreement”

is “a negotiated and typically legally binding arrangement between parties
as to a course of action.”140
Illustration: You are talking with your friend, and you agreed
that you are to meet today at 5 pm at the café. Is it a contract in a legal
sense? If your friend does not show up, what will happen? Can you force
her to come, or in another way, does she have a legal obligation to come?
The illustration above is the example of the moral agreement, but
not of a contract understood in a legal sense. When the person fails to
perform what she agreed in the contract, which is protected by the law,
another person has a legitimate right to “enforce” or make the other party
fulfill the given promises with the help of law. Therefore, here is where the
contract is important, as the party can refer to the court (and law allows
this) and make the other party fulfill what they promised or ask
compensation for not doing that based on the law.
The rules addressing contracts would be referred to as contract
law, and contract law is to tell what are the important components of
contract or the elements of the contract or, what the requirements for
various types of contracts are.
In the Kyrgyz Republic contract law is a part of the law of
obligations. In a very simplified manner, the law of obligation addresses
when a person has to (has an obligation) do something or refrain from
doing something toward another person. Such type of obligation may arise
from a contract or come from other grounds (will be discussed later in
Chapter on Torts).
Overall, it includes legal rules applicable to all kinds of obligations
as parties, the questions of performance of the obligation, securing the
performance of the obligation, change of the parties, liability for the
breach of obligation and its termination. The law of obligations includes
the general rules of contract law.

140Lexico Dictionaries | English, “Agreement | Definition of Agreement by

Lexico,” accessed August 28, 2019,
https://www.lexico.com/en/definition/agreement.
140 BASICS OF LAW

In the Kyrgyz Republic there are following types of obligations:

 Obligations concerning the change of ownership (sales of goods,

exchange of goods, donation/gift);
 Obligations concerning the transfer of property for temporary use
(rent, financial lease);
 Obligations concerning the performance of a work (construction
contracts);
 Obligations concerning intellectual property rights (license
contracts, franchising);
 Obligations concerning services (consulting, storage of goods,
legal & financial services);
 Obligations stemming from multiparty transactions (partnership
contract);
 Obligations stemming from a one-party transaction (the public
promise of an award/prize, public competition).

Thus, the obligation can emerge from the contract. A contract may
be concluded between two persons or more persons, who are often
referred to as “party” or “parties” or the “sides” of the contract. For
example, Nurbek (party/side 1) agreed to sell his cell phone to Bektur
(party/side 2), together referred to as “parties” or “sides". If they have such
type of contract (which is possible under the laws of the Kyrgyz Republic),
the law refers to them as “debtor” and “creditor”, where “debtor has to do
something for creditor as transfer property, render service, pay money
or refrain from doing something, and creditor have a right to require the
debtor to fulfill her obligations.”141 Following the illustration, Nurbek will
be creditor as he can claim money and Bektur is debtor as he is to give
money, but also Nurbek is debtor as he is to give the cell phone, and Bektur
is creditor as he is to claim this cell phone from Nurbek.

Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

141

Republic] Art.296.
CHAPTER VII. INTERNATIONAL LAW 141

Source of Contract Law

The main source of the In the law of the Kyrgyz
contract law in the Kyrgyz Republic is Republic, you may see such
terms as agreement, a
the Constitution of the Kyrgyz
transaction that is used in
Republic, and then the Civil Code. The connection with the term
Civil Code of the Kyrgyz Republic sets ‘contract’.
out the rules that the parties have to
follow to have an enforceable contract, i.e. based on the contract a party
can oblige to do certain things via the court [or other legal means available,
for example, arbitration].
Illustration: can you conclude a contract asking another person
to punch in the face of your friend or another person? Will you be able to
‘enforce’ such contract, i.e. go to the court and compel via court the other
party to perform what was promised in the contract? In the alternative,
can you conclude a contract to purchase a house? Consider the following
rules:

Constitution 2016 of the Kyrgyz Republic, Art.18.

Everyone has a right to undertake any actions and activities, except for
those prohibited under the Constitution and laws.
Civil Code of the Kyrgyz Republic, Art. 172
(1) The transaction is the actions of citizens or legal entities aimed at the
creation, change or termination of the civil rights and obligations.
(2) Transactions can be unilateral, bilateral or multilateral
(agreements/contracts).
(3) The unilateral transaction is the one which execution, based on the
legislation or agreement of the parties, requires and suffices the
expression of the will of one party.
If a person purchases a house she is to create a right toward that
house (for example, ownership right) and obligations related to that house
(for example, to pay taxes or to maintain the house). In addition, if a
person is to purchase a house, can she purchase it today or in a year?
Alternatively, can she pay full price or pay partially? One of the
peculiarities of the contract law is that the parties may also agree on the
conditions, which are not prohibited by law and these conditions will
142 BASICS OF LAW

become binding on them (because they are to agree), therefore, creating

the rule which will have the force of the law with the use of the contract.
Parties are also to be guided by the important principle of “freedom of
contract”.142
Classification of Contracts
The contract provides for an obligation. The contract can be
agreed and established between two sides, which is referred to as a
“bilateral” contract [i.e. two], and if established or concluded between
more parties, then it is referred to as a “multilateral” contract.
A contract may be concluded based on payment or gratuitous
ones. When there is a payment, assuming when party has an obligation to
do certain actions there is a corresponding obligation of another party to
provide something in return (providing money, things, works), whereas in
gratuitous transaction the other party does not have this counter
obligation to provide something in return (for example, gift transaction).
Once a person decides that she wants to conclude the contract, she
can do so orally or in written form (a form of contract), depending
also what the legislation requires. For example, in the Kyrgyz Republic an
agreement, which is not required by law to be in writing, can be in oral
form.143
Illustration: You go and buy bread at a small kiosk next to your
house, is it a contract? See the following Articles from the Civil Code of the
Kyrgyz Republic:

Article 175. Oral Transactions

1. A transaction may be made in verbal/oral form if the written (simple or
notarial) form is not required by law or by agreement of the parties.
2. Unless otherwise provided by the agreement of the parties, all
transactions that are completed at the same time they are entered into may
be made in oral form, except for those transactions for which notarial form

142 Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

Republic] Art.382.
143 Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

Republic] Art.175.
CHAPTER VII. INTERNATIONAL LAW 143

is prescribed, or which are invalid unless the simple written form is

observed.
3. By agreement of the parties, subsequent transactions made in the
performance of a written contract may be made in a verbal form, unless
otherwise provided by law or by the contract.
Article 176. Written Transactions
1. A transaction shall be made in written form by the creation of a
document that expresses the substance of the transaction, and is signed by
the person or persons making the transaction, or by persons properly
authorized by them. Bilateral transactions may be made by an exchange of
documents, each signed by the party that originates it (point 2 of Article
395). Additional requirements as to the form of a transaction (use of a
preprinted form, authentication by a seal, etc.), and the consequences of
failure to meet those requirements may be established by law or by the
agreement of the parties. Otherwise, the consequences of non-compliance
with the simple written form of transactions shall apply.
2. A facsimile reproduction of a signature using mechanical or other
copying, digital signature or any other analogue of a personal signature is
permitted if provided for by law or by agreement of the parties.
3. If a citizen cannot make his signature due to physical disability, sickness
or illiteracy, at his request the transaction may be signed by another
citizen. The signature of the latter shall be certified by a notary or other
official authorized to take notarial action, along with an indication of the
reasons why the person making the transaction could not sign by his hand.
4. However, in making the transactions set forth in point 3 of Article 204
of this Code, or authorizing the making of such transactions, the signature
of a person making the transaction and who is unable to sign by his hand
may be attested to by the organization where this citizen works, or by the
administration of a medical institution where he is receiving a course of
treatment.
Article 177. Simple Written Form of Transactions
1. Except for those transactions that require certification by a notary, the
following must be made in simple written form:
1) transactions between legal entities, and those between legal entities and
citizens;
2) transactions between citizens for an amount over ten times the monthly
minimum payment for labor, or as provided by law regardless of the
amount of the transaction.
144 BASICS OF LAW

2. For transactions that may be made verbally, as provided in Article 175

of this Code, the simple written form is not required.
Article 178. Consequences of Failure to Comply with the Simple
Written Form of Transactions
1. Failure to comply with the simple written form of transactions shall
deprive the parties of the right, in case of a dispute, to refer to the
testimony of witnesses to corroborate the transaction and its provisions,
but shall not deprive them of the right to submit written and other
evidence.
2. Failure to comply with the simple written form of transaction entails the
invalidity of the transaction in cases provided expressly by law or by the
agreement of the parties.
3. Failure to comply with the simple written form of foreign economic
transactions entails the invalidity of the transaction.
Article 179. Transactions Certified by a Notary
1. Notarial certification of transactions is accomplished by the signature of
a notary or other official authorized to make a notarial act on a document
complying with requirements of Article 176 of this Code.
2. Notarial certification is compulsory:
1) in cases provided by law;
2) on the demand of any party of the transaction.
Validity of contract
There is a concept of the ‘validity of the contract’, which provides
that the contract has to comply will all requirements of the legislation. If
such requirements are not met, the contract can be void or voidable and
generally invalid. The illustrations of void transactions are sham
transactions, transactions by individuals whose capacity was limited in
full, transactions that did not meet the form requirement set by law. The
illustrations of voidable transactions are transactions entered by legal
entity exceeding its legal capacity, transactions concluded under duress
(under threats, violence) to name few.
Formation of contract: Offer and acceptance
For a valid contract, there has to be a meeting of the minds.
Meeting on the minds happens when the parties agree on the essential
terms of the agreement. This agreement on essential terms happens when
there is a formation of the agreement, where another party accepts the
CHAPTER VII. INTERNATIONAL LAW 145

offer of the initial party. For the formation of the agreement, we need offer
and acceptance.

Article 393. Basic Provisions Concerning Entering Into

Contract (forming contract)
1. A contract shall be considered entered into if the parties agree to all
significant conditions of the contract in the form required in specific cases.
Significant conditions of the contract shall include conditions about the
subject matter of the contract, conditions that are established as
significant by legislation or conditions necessary for such type of
contracts, and all conditions on which an agreement must be reached as
declared by one of the parties.
2. A contract shall be entered into when an offer (a proposal to enter into
a contract) is sent by one of the parties and is accepted (acceptance of a
proposal) by the other party.
Article 396. Offer
1. An offer shall be a proposal addressed to one specific person or more
which is sufficiently definite and expresses the intention of the offeror to
be deemed a person who would enter into a contract with the offeree.
An offer shall contain essential conditions of a contract.
2. An offer shall bind the offeror from the time the offer is received by the
addressee.
If a notice about the revocation of the offer is received before, or at the
same time as the offer itself, the offer shall be deemed as not having been
received.
Article 397. Irrevocability of Offer
Article 398. Invitation to Make Offer. Public Offer
1. Unless otherwise directly provided in the proposal, advertisements and
other proposals addressed to an indefinite group of persons shall be
considered as proposals to make offers.
2. A proposal that includes all significant terms of a contract, and which
outlines the will of the offeror to enter into a contract with anyone who
responds on conditions outlined in the proposal shall be recognized as an
offer (a public offer).
Article 399. Acceptance
1. Acceptance shall be an affirmative response received from a person to
whom an offer is addressed.
Acceptance must be complete and unconditional.
146 BASICS OF LAW

2. Unless otherwise provided by law, or arising from business customs or

previous business relationships between the parties, silence shall not be
an acceptance.
3. Unless otherwise provided by legislation, or specified in the offer,
actions committed by the offeree during the period set forth for acceptance
of the offer, with the view of performing the indicated conditions of a
contract (shipment of goods, rendering services, performance of works,
payment of a corresponding sum of money, etc.) shall be deemed an
acceptance.
Article 404. Acceptance of Other Conditions
A response agreeing to enter into a contract on terms other than those
proposed in the offer shall not be deemed an acceptance.
Such a response shall be recognized as a denial of the original offer and at
the same time as a new offer.
Illustration: Please consider the following hypothetical
situation: identify if there was an offer or an acceptance and whether the
contract was formed:
Azamat offered his friend Maksat to purchase a very famous
painting from his collection. Maksat sent his acceptance of the offer the
next day by email, indicating the price he would like to pay. Several days
later Azamat wrote to Maksat that he is ready to sell for the price, which
was 25% higher than the one included in the Maksat’s acceptance. Maksat
replied that he has already accepted an offer, so the contract was
concluded when he sent his e-mail. Therefore, the price he stated was the
final price.
Breach of contract & remedies
As a follow up of the hypothetical above and supposing that
Azamart and Maksat concluded a contract, what if when he brings the
painting, it appears to be not a very famous, but rather regular painting.
Question: can Maksat claim breach of contract/violation of contract, and
claim his money back?

Article 411. Grounds for Amendment or Annulment of Contract

1. A contract may be amended and annulled by the agreement of the
parties, unless otherwise provided by this Code, by other laws or by the
contract.
CHAPTER VII. INTERNATIONAL LAW 147

2. The court may amend or annul the contract at the demand of any party
only:
1) in the event of a material violation of the contract by the other party;
2) in other cases provided by this Code, by other legislation or by the
contract.
A violation shall be deemed material when the breach of the contract by
any party results in such damages for the other party, where she
considerably loses what she anticipated to get when entering into the
contract.[…]
Article 412. Amendment and Annulment of Contract in
Connection with Material Change in Circumstances
1. A material change in circumstances, upon which the parties relied in
entering a contract, shall be the grounds for amendment or annulment of
the contract unless otherwise provided by the contract or arising from the
essence of the same.
Change in circumstances shall be deemed material, where the
circumstances change so greatly that the parties would not have entered
into the contract, or have entered into the same on considerably different
conditions, had the reasonably foreseen such circumstances.
2. If the parties fail to reach an agreement to make the contract consistent
with the materially changed circumstances or to annul the same, the
contract may be annulled, and on the grounds provided in point 4 of this
Article it may be amended at the demand of the interested party where all
of the following conditions are present:
1) change in circumstances resulted from reasons which the interested
party could not overcome with the good faith and prudence required by
the nature of the contract and the conditions of activity;
2) performance of the contract, without amending its conditions, would
violate the existing balance of property interests of the parties and would
result in such damages for the interested party, that it would considerably
lose what it anticipated to get when entering into the contract;
3) business customs or the essence of the contract does not indicate that
the interested party shall bear the risk of the change in circumstances.
3. When a contract is annulled because of materially changed
circumstances, at the request of any party the court shall define the
consequences of annulling the contract, with consideration given to the
necessity of fair allocation of expenses between the parties, which
expenses were suffered in connection with the performance of the
contract.
148 BASICS OF LAW

4. Amendment of a contract in connection with materially changed

circumstances shall be allowed by a court decision in exceptional cases
when annulment of a contract contradicts public interests or would cause
damages to the parties that greatly exceed the expenses necessary to
perform the contract under the conditions amended by court.
Article 414. Consequences of Amendments and Annulment of
Contract
1. When annulment of a contract occurs, the obligations of the parties shall
terminate.
2. When a contract is amended, the obligations of the parties shall remain
effective in the amended form.
3. In the event of amendment or annulment of a contract, the obligations
shall be deemed annulled or amended from the time the parties reach an
agreement on amendment or annulment, unless otherwise arising from
the agreement of the parties or the nature of amendment of the contract,
and if the contract is amended or annulled by a court decision, -
from the time the court decision on annulment or amendment of the
contract becomes effective.
4. The parties shall have no right to demand the return of what they have
performed under the obligation before amendment or annulment of the
contract unless otherwise provided by law or by agreement of the parties.
5. If the reason for annulment or amendment of a contract is a breach of
the contract by any party, the other party shall have the right to demand
compensation for damages caused by the annulment or amendment of the
contract.

Torts (Delicts)
Non-contractual obligations (which are also referred to as Torts
(Delicts) arise out of the circumstances provided in the legislation, and
some of the types of non-contractual obligations in the Kyrgyz Republic
are obligations arising from the causing of harm or unjust enrichment.
In the Kyrgyz Republic obligations arising from the causing of
harm addressing four main issues:
- general principles of liability (Arts.993- 1011);
- compensation for harm caused to the life or health of a citizen
(Arts.1012-1022);
CHAPTER VII. INTERNATIONAL LAW 149

- compensation for the harm resulting from defects in goods, work,

or services (Arts.1023-1026); and
- compensation for moral harm (Arts.1027-1028).
Table 33 Elements of tort

The following elements of tort could be highlighted:

 The incidence of harm or damage;
 Illegal behavior on the part of the causer;
 A “causal connection” between the illegal behavior and the
damage;
 Fault on the part of the person causing damage (except when
liability ensues regardless of fault).144
Based on the legislation of the Kyrgyz Republic harm to the person
or property of a citizen or the property of a legal person is subject to full
compensation by the person who caused the injury.145 Granting
compensation may be conditional on the fault of a person who caused the
harm; however, the legislation may list the cases when the harm is to be
compensated regardless of fault.146 When harm is caused in the result of
lawful actions, it is compensated only in cases identified by the law (Art.
993(3)). The harm caused by a request or an agreement with an injured
person is not compensated (Art. 993(3)).
There could be the cases when the harm may result in the future,
therefore, the cases can be brought for the prevention of harm in the
future:
- the danger of future harm is the basis for a lawsuit to prohibit an
endangering activity (Art. 994(1));
- when harm is caused by a production activity (enterprise) that
continues to cause harm or endangers to cause harm in the
future, the court can stop such an activity in addition to

144 E.A. Suhanov, ed., Grazhdanskoe Pravo. Tom 2, Polutom 2 [Civil Law. Vol.2.
Sub-Vol.2], 2002.p.367.
145 Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

Republic] Art. 993(1).

146 Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

Republic] Art. 993(2).

150 BASICS OF LAW

awarding a compensation with the exception of cases when such

an activity is conducted in public interests (Art. 994(2,3)).
Legal entities and individuals whose activity is connected with an
increased danger to other people must compensate any harm caused by
the source of an increased danger (sources of increased danger are
transport and other equipment; electricity; explosives; strong poisonous
substances; construction work, etc.) unless:
- It is shown that the harm resulted from irresistible force or the
intent on the part of the victim (Art. 1007(1));
- If the source of increased danger is out of the possession of its
owner due to unlawful actions – the liability will be on those who
illegally possess the source(Art. 1007(2));
- Owners (possessors) of sources of increased danger are jointly
liable for the harm caused to third parties because of the collision
of their sources (car accident, etc.). The harm caused to owners
(possessors) themselves is compensated on the following basis:
 Guilty side fully compensates an innocent side;
 If both (or more) sides are guilty, then they will pay
compensation proportionally to their level of guilt;
 If it is impossible to establish the level of guilt of
involved parties – equally;
 If there is no guilt of either side – no compensation
is paid, each party bears its expenses (Art. 1007(3)).
Not every harm caused can be the basis to claim compensation,
especially if there was also intent/negligence on the part of the victim147,
specifically:
- The harm caused due to the victim’s intention is not compensated;
- If harm is caused or increased with the contribution of victim’s
gross negligence, an amount of compensation can be reduced;
- In cases of a non-fault liability, an existence of victim’s gross
negligence results in either less compensation or refusal of

Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

147

Republic] Art.1011.
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compensation (the latter is irrelevant for cases of harm to life and

health);
- Compensation can be reduced by the court based on the financial
situation of a wrongdoer unless harm is caused intentionally (art.
1011(5)).
Compensation for harm caused to the life or health
Another aspect of the obligation based on legislation for which
compensation is provided relates to the harm for injury to life or
health. Injury or death sustained in the course of exercising contractual
obligations, military services, service in police and other appropriate
duties shall be compensated as set in CC KR unless a higher extent of
liability is provided by the law or agreement (art.1012).
- The scope and character of compensation for harm to health:

 Victim should be compensated for lost earnings

(income) that he either had or could have definitely
had, and also additional expenses including expenses
for treatment, extra nutrition, acquisition of
medicines, prosthesis, nursing, health resort
treatment, acquisition of special transport vehicles,
retraining in another profession (art. 1013(1)).
 Compensation to a minor victim (less than 14y.o.
who does not have an income yet) should cover all
expenses connected to the health injury (art.
1015(1)).
 Compensation to adolescents (14-18 y.o.) should also
include payments for the loss of employability (art.
1015(2)).
Compensation is paid to the following persons who have lost a
breadwinner (art. 1016):
- incapable dependents of the deceased person or those who had the
right to his maintenance by the date of his death;
- the child of the deceased person, if he was born after his death;
152 BASICS OF LAW

- a parent, spouse or other member of the family regardless of his

dispositive capacity who does not work and is engaged in nursing
the deceased person's children, grandchildren, siblings under the
age of fourteen, or those who despite the fact of being in the age of
fourteen and over, still need permanent maintenance due to the
bad state of health. Such a parent has a right for compensation
even after his work is finished;
- the deceased person's dependents who became incapable of work
within five years after his death;
- The amount of compensation in cases of a loss of a breadwinner is
identified per the article 1017-1019 CC.
Product Liability
The legislation of the Kyrgyz Republic provides that damage
inflicted to life, health or property of an individual or the property of a
legal entity as a consequence of faulty design, recipes or other
defects in goods, work or service, and also as a result of
inaccurate or insufficient information about the goods (work,
service) must be compensated by the seller or manufacturer of the goods,
by person who performed the work or rendered a service regardless of
their fault, or the fact whether or not the latter and the injured person have
been under contractual relationship148. However, these rules apply only in
instances when goods were acquired (work performed, services rendered)
for purposes of personal consumption, not a business activity.
As it is the consumer who may claim damage because of a
defective good, she may do so by either claiming the compensation from
either the seller or manufacturer of the good.149 Whereas if the damage was
inflicted because of faulty work or service, then the person who performed
the work or provided the service must compensate.150 Importantly, there
will be no liability on the part of the seller or manufacturer of goods,

148 Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

Republic] Art.1023.
149 Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

Republic] Art. 1024(1).

150 Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

Republic] Art. 1024(2).

CHAPTER VII. INTERNATIONAL LAW 153

performer of work (service), if they prove that the harm was caused by the
force majeure or resulted from the consumer's violation of the
instructions of use or storage of the goods, results of work or
services.151
Damage inflicted as a result of defective goods (work, service)
must be compensated if it ensued within the warranty period of goods
(work, service) established in accordance with law and if the warranty
period is not specified, within ten year period as of the date of
manufacturing (performance) of the goods (work, service) (art. 1025).
Compensation for Moral Harm
Compensation is paid in cases of non-material injuries such as
psychological damage, emotional distress, or injury to the honor or good
name of a person. If a citizen incurs moral harm (physical or moral
suffering) by actions that infringe the citizen's intangible benefits or
violating his non-property rights, as well as in other cases provided by law,
the court may impose an obligation of monetary or other material
compensation for the harm on the person responsible for the violation
(art.16).
Moral harm is generally compensated only if the wrongdoer is
guilty (art. 1027(1)). However, moral harm can also be compensated
regardless of the guilt of the injurer in the following cases:
- harm is inflicted to the life or the health of the individual by the
source of increased danger;
- harm is inflicted to the individual in the result of an illegal
conviction, illegal holding him criminally liable, illegal
imprisonment or recognizance not to leave as the measures to
secure the appearance of the defendant, illegal imposing of
administrative sanction in the form of arrest or correctional labor;
- harm is inflicted by the dissemination of data that defamed dignity
and business reputation.

Grazhdanskii Kodeks Kyrgyzskoi Respubliki [Civil Code of the Kyrgyz

151

Republic] Art. 1026.

154 BASICS OF LAW

Such factors as the character of physical and moral suffering, the

degree of fault of the causer (where the fault is necessary), the factual
circumstances of the case, and the individual characteristics of the injured
party are to be assessed in making an award of damages (art.1028(2)). In
determining actual compensation, “the demands of reason and
justice” are to be considered.

Family law
Family law regulates a certain type of public relations, family
relationships arising from marriage, blood relationship, adoption of
children for upbringing to the family.
The family is a collective, united by the most diverse bonds,
where people who are united not only by emotional relationships but also
by mutual rights, obligations stipulated by the norms of law, that form a
separate sphere of legislation - family legislation152.
The subject of regulation of family law are social relations
arising from marriage, blood relationship, adoption of children for
upbringing to the family, where the legislation, in particular, in the Kyrgyz
Republic Family Code:
• establishes conditions and procedure for marriage, termination of
marriage, and invalidation of marriage;
• regulates personal non-property and property relations between
family members: spouses, parents, and children (adoptive parents
and adopted children), and in cases and within the limits provided
by family law, between other relatives and other persons.
Principles of family law.
1. Recognition of marriage entered into only in the registry
office;
2. Voluntariness of marriage union of a man and a woman;
3. Equality of spouses in the family;
4. The resolution of family issues by mutual agreement;

152 A.M. Nechaeva, Family Law. Course of Lectures (Moscow: Yurist, 2000). p .8.