Renewal of a Mining License

In the past weeks the firm’s Mongolian lawyers have been approached with an inquiry regarding how the recently revised Law on Permits may affect renewal of Mining Licenses.

Mining license are typically granted for a term of thirty (30) years, and are available for renewal in the two years before expiration.

The holder of a Mining License is required to submit an application for renewal of the license not less than two years prior to the expiration of the Mining License.  The applicant is required to submit the original Mining License along with a copy of the license as part of the application. The applicant is also required to submit documentation demonstrating regarding implementation of the mandatory Environmental Protection Plan for mining operations for the project.

Upon the receipt of an application for renewal of the Mining License along with supporting documents mentioned above, the relevant government agency shall reach a decision within 15 days. Where the administering agency finds no violations or other issues which result in ineligibility, the Mining License should be extended for a new term of 20 years.

Exercising the Right to Enforce Sale of Collateral without a Court Order

Our Mongolian lawyers have recently assisted a client in connection with the planned sale of collateral by auction without obtaining a court decision.  

Mongolian law provides for this type of out of court enforcement procedure where stipulated in a mutual agreement. In order to start this process, the Pledgee is required to notify the Pledgor in writing as to the demand for performance of the contractual obligation. The notice period required in 30 days. If there is no reply within 30 days, the enforcement may be registered directly with the national pledge registry which will initiate a sale of the pledged collateral.

The law provides that the auction price shall be agreed upon by the parties to the contract, and if no agreement is reached, it shall be set at 70 percent of the market value determined as determined by an appraisal.

If there is no competition during the auction, or if the winner does not deposit the price offered by him/her in the designated account within the time specified in the contract, the auction will be deemed not to have taken place and a new auction will be held.

A Pledgee is entitled to negotiate an agreement with the Pledgor within 10 days after an announcement that no auction has taken place to have the collateral transferred to its ownership at the first price of the auction.

If the collateral is sold, or the Pledgee takes possession of the collateral as satisfaction of its demand, or the Pledgee does not finally to exercise its right to purchase the collateral the security interest on the collateral shall be terminated.

The Supreme Court Made the Right Decision

In our previous post, we looked at the recent decision of the Mongolian Supreme Court finding a car accident resulting primarily in property damage will not be considered a criminal matter. Today, we will look a little deeper at the legal basis for the decision.

In the recent case, the Prosecutor charged the defendant under Article 27.10, Section 2, Clause 2.4 of the Criminal Code. However, the law at issue provides that, “Where a driver of a motor vehicle causes serious damage to human health due to a violation of the law on traffic safety”, it will be considered a crime (emphasis added).

Under the legal standard set by the law, a car accident resulting in “minor” injury or even significant property damage, would not meet the requirements to be treated criminally.

Therefore, the case in question should not be treated as a crime, but should property be dealt with a violation of traffic safety pursuant to the Law on Violations. Additionally, those suffering property damage may rely on civil law solutions in accordance with the Civil Code for appropriate compensation in accordance with the law.

When is a Car Accident Criminal?

On July 6, 2022, the Supreme Court reached a decision in the trial of an alleged criminal case. The Court considered the situation in which a motor vehicle driver caused a road traffic accident and crashed into 12 other cars, resulting in a total of over 100 million MNT monetary damages and causing minor injuries to the health of 2 people. The court ruled this situation will not be considered a criminal case.

The prosecutor filed an indictment against the driver defendant alleging the crime of “Infliction of very serious damage to human health by the driver of motor vehicle through violating traffic safety legislation and administrative norms”, in Article 27.10, Clause 2.4 of the Special Section of the Criminal Law. In other words, the prosecutor considered citizen G’s act to be a crime against traffic safety and submitted the indictment to the first instance court.
The court initially dismissed the case on the grounds of that “no crime” had been committed and acquitted the defendant.
However, the appellate court condemned the lower court’s decision and considered that the case should be reconsidered by the first instance court.

The driver defendant’s lawyer appealed to the Supreme Court which upon review of the case, concluded that the decision of the first instance court was legal and correct., because the damage in this case was primarily only property damage to other motor vehicles.

Important Changes to Permitting Extensions and Renewals

In our previous post, we looked at the new Law on Permitting and the goals of the government to reduce and standardize permitting requirements overall. This week, we will look at how the new Law on Permitting will simplify the process for application to extent a permit.

Under the revised law, a permit holder shall apply to the competent authority 30 days in advance to renew the permit.

An interesting aspect to the revised law provides that where a permit holder is able to show they meet certain qualifying conditions, for example, having fully paid taxes due, and having a good record of reliable employment, the initial period of the permit will be automatically doubled. In other words, if the permit is issued for 3 years, it can be extended for 6 years.

Also under the revised law, the reviewing authority is required to issue a decision (acceptance or denial) on the application for extension within 10 working days from the receipt of the application and the materials submitted. If no decision has been issued within the 10 day period, the permit will be automatically extended. This system is designed to avoid a common problem encountered in the past in which business found their permits revoked solely to due to delay in timely processing, even where the application for extension had been submitted on time. This had resulted in substantial difficulty and wasted resources for business forced into administrative and litigation battles to regain operating permits.

Another new regulation in the draft law is to establish electronic database of permits. The electronic database for permit shall be maintained by the Secretariat of the Council under the Prime Minister. Permission granted, extended, suspended, revoked, terminated, pledged or transferred shall be registered in the electronic database of permit.

Revised Law on Permitting Aims to Reduce Regulatory Burden

The newly submitted Law on Permits is being discussed before the Parliament and approval is expected. One of the key goals with this new update to the Law on Permits will be a reduction in the number of permits required to be issued by the state authorities with the aim of allowing citizens and legal entities more flexibility to conduct business.

The current Law on Licensing specifies the types of licensed activities. The law authorizes the relevant state administrative authority to issue licenses for specific business activities. However, various government agencies continue to create new licenses and expand licensing requirements within the scope of their authority. Over time, the situation has developed to the point where there are 1,600 separate a company may be required simply to conduct it’s target business . Originally, the Law on Licensing provided for the issuance of about 200 unique licenses. Currently, at least 8 different permits are required to operate a simple supermarket business; whereas the revised law aims to reduce that number to only two, a license for the sale of alcohol, and a separate license for sale of tobacco products. The revised Law on Permits will provide for 365 different types of permits, a reduction of 77%.

The new Law on Permits regulates only those activities that require a permit in order to allow citizens and legal entities to conduct businesses freely. Under the revised Law, permits will be classified as a “License” or a “Permit”, depending on the purpose, conditions and level of operational risk.

Under the new law, Licenses will be issued for a period of at least 5 years while ordinary Permits will be valid for a period of at least 3 years. The permit shall be extended for at least the period for which it was originally issued. Permits may be granted indefinitely in cases provided by law.

In general, the updated law calls for a decision on whether to grant a license to be made within 30 days of receipt of the application, this is an extension of the 21 days provided for under the current law.

This blog provides general reasons for the adoption of the Law on Permits. The next blog will cover other new features and a discussion of implications.

What to Consider when Entering into an Employment Agreement (Part 3)

Finally let’s look more closely into employment agreement with special conditions, and other additional clauses that may be included in any type of employment agreement.

So when should employer enter into employment agreement with special conditions and what are its specifics?

Employment agreement with special conditions should be concluded when hiring an executive level employee. In addition to specifying in employment agreement main terms and conditions provided by Labor Law, parties may also specify the expected final results of employee’s work, his/her duties and responsibilities, procedure to evaluate the agreement, and amount of compensations, bonuses, benefits and percentage of profit margin to be paid to employee. Employer may also specify in the employment agreement rights and assets made available to employee, his/her right of possession, use and disposition, liability for damage to employer’s assets and fiduciary obligations to employer. Aside from general grounds for terminating an employment agreement, Labor Law also provides four additional grounds for terminating an employment agreement with special conditions at the initiative of employer.

Pursuant to Labor Law noncompetition clause, confidentiality clause, training clause and clause for full liability for damage to employer’s assets may be included in employment agreement.

Non-competition clause. When entering into employment agreement with special conditions employer may include non-competition clause in the agreement or conclude ancillary non-competition agreement with employee. Duration of non-competition clause must not exceed one year after termination of employment agreement. Labor Law provides that after termination of employment, employer must pay employee at least 50 percent of his/her last month’s salary on a monthly basis during the term of non-competition clause or non-competition agreement. Terms and conditions of non-competition clause do not if employee is employed abroad.

Training clause. Upon agreement by parties an ancillary training agreement or training clause may be included in the employment agreement, where terms and conditions of any training provided to employee by employer must be set out. After the training, parties must agree on duration of employee’s continued employment in the company, which cannot exceed three years. Upon termination of the employment agreement at the initiative of employee, with the exception when employer partially or fully exempts employee from paying the expenses, employee must reimburse the employer training expenses proportionately to the time he/she not worked.

Employer should adopt regulation on storing and handling company’s confidential information, and must approve a list of jobs/positions that bear full liability for damage to employer’s assets.

What to Consider When Entering into an Employment Agreement (Part 2)

This week we continue the topic of issues the employer and employee should consider when concluding an employment agreement. The first post reviewing these issues can be found here.

Part-time employment agreement

Pursuant to Labor Law (Law) part-time employee means an employee who works less hours than a full-time employee. Law specifies that reducing work hours of a full-time employee in accordance with the law is not considered as working part-time. Employer may hire an employee to work part-time work and pay him/her a salary commensurate with the work performed and hours worked.

Employment agreement for employees working from home

Upon agreement employee may choose to work from home or any other place or location of his/her choice that is other than employer’s, using employer’s or own equipment and materials, under the supervision of employer. In this case employer is responsible for inspecting the safety of equipment and other tools used by employee working from home and providing safety instructions.

Chapter 6 of Law does not apply to employees working from home. Meaning that general provisions and regulations regarding work hours, rest hours, leaves and holidays does not apply to employees working from home.

Remote employee employment agreement

Upon agreement employer may allow employee to perform his/her duties remotely online, either permanently or partially.

In addition to specifying main conditions of the agreement provided by Law, remote employee employment agreement must specify place or location where employee shall perform his/her duties, term/deadlines and form of handing over the work performed, and amount of compensation payable by employer in the event of use of employee’s own assets and equipment to perform duties.

Unless otherwise provided by Law, part-time employee, employee working from home or remote employee has the same rights and obligations as a full-time, permanent employee of the employer or other employees performing similar duties, and is subject to provisions and regulations of labor laws, collective agreements, collective bargaining agreements and internal labor regulations.

When concluding any type of mentioned employment agreements main conditions provided by Law must be specified in employment agreement, which are name of the job or position, duties to be performed specified in the job description, place or location of the job, amount of salary and work conditions.

What to Consider when Entering into an Employment Agreement (Part 1)

Let’s look into what should both employer and employee consider when concluding an employment agreement.

Pursuant to Labor Law, depending on legal status of employer, there are employment agreement with individual-employer and employment agreement employer, which is legal entity. About regulation of employment agreement with individual-employer is briefly discussed in previous article.

Aside from common employment agreement, where employer is a legal entity and where it is concluded for permanent positions, Labor Law (Law) distinguishes seven other types of employment agreement.

Apprenticeship employment agreement

In order to provide an employee with work experience and skills employer may conclude an apprenticeship employment agreement. Term of regular apprenticeship employment agreement is up to three months with possibility of extending once for no more than three months. However, term for professional apprenticeship employment depending on characteristics of the profession and professional experience and skills to be acquired may be up to two years with possibility of extending once for no more than one year. Salary of an apprentice must be determined by agreement based on his/her duties, work experience and skills, and must not be less than 70% of the salary of a full-time permanent employee performing similar work.

Employment agreement for trainees

An employer, student and educational institution may conclude a tripartite traineeship agreement in order to provide vocational education and training to students of vocational educational institutions, combine theoretical knowledge with practical experience, gain work experience and skills. Term of employment agreement for trainees is up to three years, depending on the profession to be acquired. Salary of a trainee must be negotiated but not less than minimum wage, taking into consideration the ratio of study and working time, the quality and volume of work performed, as well as financial aid received from the educational institution.

Pursuant to Law at the end of agreement term employer is not obliged to hire apprentice or trainee on permanent basis, unless otherwise agreed by parties. Other provisions and regulations of Law, including provisions and regulations regarding employee allowances, surcharges and compensations also equally apply to apprentices and trainees.

Probationary employment agreement

When hiring an employee, employer may conclude probationary employment agreement to ensure that the employee meets the requirements of the job or position. Term of probationary employment agreement is up to three months with possibility of extending once for no more than three months. Salary of probationary employee must be not less than salary offered for the job or position. If employee is hired for one-time seasonal work, as replacement of a permanent employee or for temporary job or position to conclude a probationary employment agreement is prohibited.

Types of Employment Under the New Labor Law

As previously discussed here, the revised Labor Law came into force on January 1st of this year. Many of our clients have already have updated their employment agreements and internal labor regulations. However, some are still in progress in this matter. In some cases client have asked our Mongolian lawyers what types of employment agreements are permitted under the new Labor Law?

The revised Labor Law (Law) provides for a wider variety of employment agreement types. Even though Law provides general rules and requirements for all types of employment agreements, depending on legal status of employer, occupation characteristics, job description and other factors, the type of employment agreement shall vary.

The Law provides for slightly different regulation for employment agreement between employee and an individual as employer than common employment agreement, where the employer is a legal entity. Pursuant to Law such employment agreement should be concluded between the individual employer and and the worker. This uniquely type of labor arrangement is intended to accommodate a more rural employment environment. Due to the characteristics of rural work, the working schedule and resting hours are more flexible than in a typical employment arrangement. With this type of contract, the parties may agree for the employee to live and work directly in the employer’s residence or other facility, and in this case, the employer is required to provide normal living conditions to employee.

With regards to common employment agreement, Law distinguishes following types of employment agreements: apprenticeship employment agreement, employment agreement for trainees, probationary employment agreement, part-time employment agreement, employment agreement for employees working from home, remote employee employment agreement and employment agreement with special conditions (such as an executive employment agreement). Even though some types of employment agreement may sound to be somewhat similar to each other, they do differ in purpose and regulation. Also, Law separately regulates agreement for supply of labor. However, Law specifies that job placement services are not regulated by this Law, but are regulated by Employment promotion law.