Dr. Batbold Amarsanaa, Academic Secretary of National Legal Institute, Mongolia

1. Challenges to the legal system of
Mongolia: a case of foreign
investment
Dr. Batbold Amarsanaa
Joint conference by Business Council of Mongolia and UBRM Consulting
‘Foreing investment in Mongolia: Challenges, Risks and Solutions’
Kempinski hotel
20130419

2. Presentation plan
• General overview and past trend of foreign
investment law in Mongolia
• Challenges to legal framework
• Recent trend and likely solutions

3. General overview and past trend of
foreign investment law
• Law on Foreign Investment of Mongolia (1993)
• Law on Regulation of Foreign Investment in Strategic Entity (2012)
• WTO agreements
• Convention on the Settlement of Investment Disputes between
States and Nationals of Other States
• Convention on the Recognition and Enforcement of Foreign Arbitral
Awards
• The Convention Establishing the Multilateral Investment Guarantee
Agency
• Mongolia-EU Partnership and Cooperation Agreement (2010)
• Bilateral investment treaties with 43 countries (as of March 1, 2013)

4. Focus of the presentation
• There are not a few individual legal issues
pertaining foreign investment laws in
Mongolia
– Registration, regulation etc.
• Focus of presentation is to see bigger picture
– Identify risks and most likely solutions

5. Previous policy on foreign investment
• Law on Foreign Investment of Mongolia is one
of the few laws that hasn’t been revised or
invalidated since 1993.
• Comparable example: Company laws have been newly
adopted 3 times and revised once between 1991-2011.
• Past trend/policy regarding foreign investment
– Encourage foreign investment inflow without
substantial restriction

6. Challenges to legal framework:
Policy v. Laws
• Law without policy? (easily changeable policy
and law=no policy)– high risk for foreign
investment
• To determine Policy first and design the laws
in accordance with the policy
– Laws will not be easily changed
• Low risks from legal point of view

7. Why relevance of policy and laws is
important?
• Trend of regulating businesses parliamentary
documents/statutes rather than procedural rules
of the ministries etc.

8. Biggest risks from the legal point of
view
• Problem: SUDDEN CHANGE OF LEGAL
ENVIRONMENT which increases RISKS for
foreign investment
• Example: Law on Regulation of Foreign
Investment in Strategic Entity (2012)
– Change of policy:
– (Encourage) – (encourage+regulate)
– In very short time span (few weeks)

9. Law on Regulation of Foreign
Investment in Strategic Entity (2012)
• Shortages mostly criticized:
– Poorly drafted – ambiguity
– Might need to ask permission from Govt. when
foreign investor exits from Mongolia
– Problem with the sale of shares through stock
exchanges /confidentiality of a deal/ etc.

10. Recent trend and likely solutions
• Tackling ambiguity of laws
– In the past: statutes with substantive rule only –
power of administrative organs, obligation of
companies etc.
– Recent trend: To draft statutes inclusive the
procedural rules – Government organ in charge to
issue decision to grant or not to grant approval
within 10 days etc.

11. Recent trend and likely solutions
• Tackling sudden change of policy/statutes
– At present: promulgating statutes without substantial
public/stakeholder input in some important occasions.
• basically drafts sponsored by the Cabinet and the President
On-going discussion and
• On-going discussion and likely trend: Binding provision
to throw draft statutes for public/stakeholder discussion –
• OUTCOME: will take time thus enable investors to evaluate
possible risks and chance of lobbying

12. Recent trend and likely solutions
• Law+ministerial decree = a package
– Law and ministerial decrees to implement the law
is drafted separately. It can be drafted together in
order to avoid ambiguity
• To train legal community, judges, prosecutors
etc. – to understand complex business and
commercial matters.

13. Thank you.
Any questions?