Category Archives: Dispute Resolution

Domestic Arbitration for Foreign Companies in Mongolia



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Our Mongolian lawyers frequently assist clients engaged in a range of international business. One of the questions asked by our clients is about domestic arbitration proceeding in Mongolia.

Domestic arbitration in Mongolia is arbitration proceedings other than international arbitration proceeding. If parties have agreed to solve their dispute by domestic arbitration or such agreement is provided in the contract, any disputes related to the contract will be settled by the Mongolian International Arbitration Centre in Mongolia.

The claimant shall submit a written claim which should state the facts supporting the point at issue and the relief or remedy sought and the respondent is required to state his/her defense in respect of these particulars within the period of time agreed by parties or determined by the arbitration tribunal, unless the parties have otherwise agreed. Within 30 days of receiving a notice of arbitration initiation notice, the parties are entitled to appoint an arbitrator from the list of international arbitrators in Mongolia. If the parties did not appoint within a specified time frame, the presiding arbitrator of the tribunal appoints an arbitrator. Following this, a preliminary hearing will be held to establish procedures for resolving arbitration cases, and the following issues will be discussed in the hearing. Among them:

  • Whether an arbitration proceeding has been negotiated between the parties,
  • Whether the dispute subjects to jurisdiction of an arbitration,
  • Place of arbitration proceedings and hearings,
  • Judicial norms for dispute resolution and proceedings,
  • Arbitration language,
  • Basic and additional costs of arbitration,
  • Resolving requests such as summoning a witness, appointing an expert, including an interpreter, a translator, and providing evidence;
  • Whether the arbitration proceedings will be open or closed,
  • The date of the arbitration hearing.

Arbitration will be conducted in accordance with the agreed procedures of the parties, the Arbitration Act, and the rules of arbitration proceeding.

Freezing Assets in Mongolian Litigation



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A frequent issue in litigation is the risk that the defendant may liquidate or transfer assets during the court proceeding, so that when the court award is finally granted the defendant has no assets on paper.

In order to prevent this situation, Mongolian courts allow for a process of freezing a defendant’s assets or bank account at the start of the court proceeding. Such an asset freeze will prohibit the defendant from transferring assets and cash to other parties in an attempt to avoid the negative consequences of a judgment against them. To initiate such an asset freeze, Mongolian courts require payment of a deposit, or bond by the Plaintiff into an account controlled by the court, in an amount equal to the claim.

An asset freeze of this kind requires a formal petition to the court. In most cases the court will grant a plaintiffs request for an asset freeze. There is no legal timeline for the freeze, but in most cases it will be implemented quickly to avoid any transfers by the defendant to evade the freeze. However, there are certain situations in which actual implementation of the freeze is delayed due to administrative issues, or delay by the Court Enforcement Bureau.

There is also the issue of appeal of the court’s decision regarding the freeze of assets.

The defendant has the right to appeal the decision of the court within 10 days, and the court must decides on the appeal within 14 days. The law does not regulate whether or not the Judge’s order on freeze of assets will be suspended until the complaint is resolved, or will be effective during the appeal process. This situation sometimes creates confusion and differences in actual implementation. Of course, if the actual impact of the asset freeze is not enforced until 24 days after the order, the defendant will have a lot f time to potentially transfer or hide the targeted assets.

Although, there is no specific regulation on the liability for failure to comply with the Judge’s order on measures to secure implementation of court decision, the law does allow for penalty in the form of a fine, and in some cases potential imprisonment.

Legal Opportunities to Defer an Arbitration Hearing



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As provided in the Procedure for Arbitration proceeding of the Mongolian Chamber of Commerce and Industry, the Parties are entitled to submit the request on the deferral of the hearing only on the grounds stated in law or justified reasons.

The Law on Arbitration does not provide an interpretation on what occasions shall be deemed as the justified reasons. However it may include the instances such as being sick, getting a medical treatment, taking care of a sick person, having a business travel inland or abroad, taking part in the training, joining the public mobilization, to be imprisoned in zone of public quarantine due to serious contagious disease, sudden fire and natural dangers or force majeure events (flood, drought, zud, dangerous snow and dust storms, earthquake, etc.).

Moreover, pursuant to the Procedure for Arbitration proceeding stipulated, if the Arbitration composition may defer the arbitration hearing if they deem that new evidences are required. On the other side, the Parties may also file the request to the appoint an expert for the case, and in such case the arbitration composition may assign an expert if they deem it is inevitable for the accurate detection of the arbitration case.

Finally, one shall also note that it is almost impossible to defer the hearing by means of challenging the arbitrator once the hearing has already taken place. This right to challenge is granted to the Parties only for 7 days after the receipt of the statement on the neutrality of the arbitrator and this way you can defer the hearing.