BETWEEN THE GOVERNMENT OF THE MONGOLIAN
PEOPLE'S REPUBLIC AND THE GOVERNMENT OF THE
UNITED KINGDOM OF GREAT BRITAIN
AND NORTHERN IRELAND FOR THE PROMOTION
AND PROTECTION OF INVESTMENTS
The Government of the Mongolian People's Republic and the Government of the United Kingdom ofGreat Britain and Northern Ireland;
Desiring to create favourable conditions for greater investment by nationals and companies of one Statein the territory of the other State;
Recognizing that the encouragement and reciprocal protection under international agreement of suchinvestments will be conducive to the stimulation of individual business initiative and will increaseprosperity in both States;
Have agreed as follows:
For the purposes of this Agreement:
(a) "investment" means every kind of asset and in particular, though not exclusively, includes:
(i) movable and immovable property and mortgages, liens and any other property rights;
(ii) shares in and stock and debentures of a company and any other form of participation in a
(iii) claims to money or to any performance under contract having a financial value;
(iv) intellectual property rights, goodwill, technical processes and know-how;
(v) business concessions conferred by law or under contract, including concessions to
search for, cultivate, extract or exploit natural resources.
A change in the form in which assets are invested does not affect their character as investments and the
term "investment" includes all investments, whether made before or after the date of entry into force ofthis Agreement;
(b) "returns" means the amounts yielded by an investment and in particular, though not exclusively,
includes profits, interest, dividends, royalties and fees;
(c) "nationals" means:
(i)in respect of the United Kingdom: physical persons deriving their status as United
Kingdom nationals from the law in force in the United Kingdom;
(ii)in respect of the Mongolian People's Republic: all individuals having the rights of
citizens of the Mongolian People's Republic
(d) "companies" means:
(i)in respect of the United Kingdom: corporations, firms and associations incorporated or
constituted under the law in force in any part of the United Kingdom or in any territory
to which this Agreement is extended in accordance with the provisions of Article 12;
(ii) in respect of the Mongolian People's Republic: companies and other business enterprises
incorporated or constituted in accordance with the laws of the Mongolian People's
Republic provided they are competent under those laws to make investments in the
territory of the other Contracting Party.
(e) "territory" means:
(i)in respect of the United Kingdom: Great Britain and Northern Ireland, including the
territorial sea and any maritime area situated beyond the territorial sea of the United
Kingdom which has been or might in the future be designated under the national l aw of
the United Kingdom in accordance with international law as an area within which the
United Kingdom may exercise rights with regard to the sea-bed and subsoil and the
natural resources and any territory to which this Agreement is extended in accordancewith the provisions of Article 12;
(ii)in respect of the Mongolian People's Republic: the territory of the Mongolian People's
Promotion and Protection of Investment
1.Each Contracting Party shall encourage and create favourable conditions for nationals or
companies of the other Contracting Party to make investments in its territory, and, subject to its
right to exercise powers conferred by its laws, shall admit such investments.
2. Investments of nationals or companies of each Contracting Party shall at all times be accorded fairand equitable treatment and shall enjoy full protection and security in the territory of the other
Contracting Party. Neither Contracting Party shall in any way impair by unreasonable or
discriminatory measures the management, maintenance, use, enjoyment or disposal of investments
in its territory of nationals or companies of the other Contracting Party. Each Contracting Party
shall observe any obligation it may have entered into with regard to investments of nationals or
companies of the other Contracting Party.
Promotion and Protection of Investment
1. Each Contracting Party shall encourage and create favourable conditions for nationals or
companies of the other Contracting Party to make investments in its territory, and, subject to its right to exercise powers conferred by its laws, shall admit such investments.
2. Neither Contracting Party shall in its territory subject nationals or companies of the other
Contracting Party, as regards their management, maintenance, use, enjoyment or disposal of their
investments, to treatment less favourable than that which it accords to its own nationals or
companies or to nationals or companies of any third State.
Compensation for Losses
1. Nationals or companies of one Contracting Party whose investments in the territory of the other Contracting Party suffer losses owing to war or other armed conflict, a state of national emergency or civil disturbances shall, as regards compensation, restitution, indemnification or other forms of settlement, be accorded by the latter Contracting Party treatment no less favourable than that whichthe latter Contracting Party accords to its own nationals or companies or to nationals or companies of any third State. Any payments made under this Article shall be freely transferable.
2. Without prejudice to paragraph (1) of this Article, nationals and companies of one Contracting
Party who in any of the situations referred to in that paragraph suffer losses in the territory of the
other Contracting Party resulting from
(a) requisitioning of their property by its armed forces or authorities, or
(b) destruction of their property by its armed forces or authorities, which was not caused in
combat action or was not required by the necessity of the situation,shall be accorded restitution or adequate compensation. Resulting payments shall be freelytransferable.
1. Investments of nationals or companies of either Contracting Party shall not be nationalized,
expropriated or subjected to measures having effect equivalent to nationalization or expropriation
(hereinafter referred to as "expropriation") in the territory of the other Contracting Party except for
a public purpose related to the internal needs of that Party on a non-discriminatory basis and
against prompt, adequate and effective compensation. Such compensation shall amount to the real
value of the expropriated investment immediately before the expropriation or before the impendingexpropriation became public knowledge, whichever is the earlier, shall include interest at a normalcommercial rate until the date of payment, and shall be freely transferable. Such compensationshall be made without delay and be effectively realizable. The national or company affected shallhave a right, under the law of the Contracting Party making the expropriation, to prompt review,by a judicial or other independent authority of that Party, of his or its case and of the valuation ofhis or its investment in accordance with the principles set out in this paragraph.
2. Where a Contracting Party expropriates the assets of a company which is incorporated or
constituted under the law in force in any part of its own territory, and in which nationals or
companies of the other Contracting Party own shares, it shall ensure that the provisions of
paragraph (1) of this Article are applied to the extent necessary to guarantee prompt, adequate and
effective compensation in respect of their investment to such nationals or companies of the other
Contracting Party who are owners of those shares.
Repatriation of Investment and Returns
Each Contracting Party shall in respect of investments guarantee to nationals or companies of the otherContracting Party the unrestricted transfer of their investments and returns. Transfers shall be effectedwithout delay in the convertible currency in which the capital was originally invested or in any other convertible currency agreed by the investor and the Contracting Party concerned. Unless otherwise agreed by the investor transfers shall be made at the rate of exchange applicable on the date of transfer pursuant to the exchange regulations in force.
The provisions of this Agreement relative to the grant of treatment not less favourable than that
accorded to the nationals or companies of either Contracting Party or of any third State shall not beconstrued so as to oblige one Contracting Party to extend to the nationals or companies of the other thebenefit of any treatment, preference or privilege resulting from
(a) any exisiting or future customs union or similar international agreement to which either of the
Contracting Parties is or may become a party, or
(b) any international agreement or arrangement relating wholly or mainly to taxation or any
domestic legislation relating wholly or mainly to taxation.
Settlement of Disputes between an Investor and a Host State
1. Disputes between a national or company of one Contracting Party and the other Contracting Party concerning an obligation of the latter under this Agreement in relation to an investment of the former which have not been amicably settled shall, after a period of six months from written notification of a claim, be submitted to international arbitration if the national or company concerned so wishes.
2. Where the dispute is referred to international arbitration, the national or company and the
Contracting Party concerned in the dispute may agree to refer the dispute either to:
(a) the International Centre for the Settlement of Investment Disputes (having regard to the
provisions, where applicable, of the Convention on the Settlement of Investment Disputes
between States and Nationals of other States, opened for signature at Washington DC on 18
March 1965 in the event that the Mongolian People's Republic becomes a party to this
Convention, and the Additional Facility for the Administration of Conciliation, Arbitration
and Fact-Finding Proceedings); or
(b) an international arbitration or ad hoc arbitral tribunal to be appointed by special agreement or
established under the Arbitration Rules of the United Nations Commission on International
If after a period of six months from written notification of the claim there is no agreement to one of theabove alternative procedures, the dispute shall at the request in writing of the national or companyconcerned be submitted to arbitration under the Arbitration Rules of the United Nations Commissionon International Trade Law as then in force. The parties to the dispute may agree in writing to modifythese Rules.
3. Nothing in this Article shall be construed to prevent the parties to the dispute from agreeing upon any other form of arbitration or procedure for settlement of their disputes which they consider appropriate.
Disputes between the Contracting Parties
1. Disputes between the Contracting Parties concerning the interpretation or application of this
Agreement should, if possible, be settled through diplomatic channels.
2. If a dispute between the Contracting Parties cannot be settled, after six months it shall upon the request of either Contracting Party be submitted to an arbitral tribunal.
3. The arbitral tribunal shall be constituted for each individual case in the following way. Within two months of the request for arbitration, each Contracting Party shall appoint one member of the tribunal. The appointed members shall then select a national of a third State who on approval by the two Contracting Parties shall be appointed as the Chairman of the tribunal. The Chairman shall be appointed within two months from the date of appointment of the two other members.
4. If within the periods specified in paragraph (3) of this Article the necessary appointments have not been made, either Contracting Party may, in the absence of any other agreement, invite the President of the International Court of Justice to make such appointments. If the President is a national of either Contracting Party or if he is otherwise prevented from discharging the said function, the Vice-President shall be invited to make the necessary appointments. If the Vice- President is a national of either Contracting Party or if he too is prevented from discharging the said function, the Member of the International Court of Justice next in seniority who is not a national of either Contracting Party shall be invited to make the necessary appointments.
5. The arbitral tribunal shall reach its decision by a majority of votes. Such decision shall be binding on both Contracting Parties. Each Contracting Party shall bear the cost of its own member of the tribunal and of its representation in the arbitral proceedings; the cost of the Chairman and the remaining costs shall be borne in equal parts by the Contracting Parties. The tribunal may, however, in its decision direct that a higher proportion of costs shall be borne by one of the two Contracting Parties, and this award shall be binding on both Contracting Parties. The tribunal shall determine its own procedure.
1. If one Contracting Party or its designated Agency makes a payment under an indemnity given in respect of an investment in the territory of the other Contracting Party, the latter Contracting Party shall recognize the assignment to the former Contracting Party or its designated Agency by law or by legal transaction of all the rights and claims of the Party indemnified and that the former Contracting Party or its designated Agency is entitled to exercise such rights and enforce such claims by virtue of subrogation, to the same extent as the Party indemnified.
2. The former Contracting Party or its designated Agency shall be entitled in all circumstances to the same treatment in respect of the rights and claims acquired by it by virtue of the assignment and any payments received in pursuance of those rights and claims as the Party indemnified was entitled to receive by virtue of this Agreement in respect of the investment concerned and its related returns.
3. Any payments received in non-convertible currency by the former Contracting Party or its
designated Agency in pursuance of the rights and claims acquired shall be freely available to the
former Contracting Party for the purpose of meeting any expenditure incurred in the territory of thelatter Contracting Party.
Application of other Rules
If the provisions of law of either Contracting Party or obligations under international law existing atpresent or established hereafter between the Contracting Parties in addition to the present Agreementcontain rules, whether general or specific, entitling investments by investors of the other ContractingParty to a treatment more favourable than is provided for by the present Agreement, such rules shall tothe extent that they are more favourable prevail over the present Agreement.
At the time of signature of this Agreement, or at any time thereafter, the provisions of this Agreementmay be extended to such territories for whose international relations the Government of the UnitedKingdom are responsible as may be agreed between the Contracting Parties in an Exchange of Notes.
Entry into Force
This Agreement shall enter into force on the date of signature.
Duration and Termination
This Agreement shall remain in force for a period of ten years. Thereafter it shall continue in force untilthe expiration of twelve months from the date on which either Contracting Party shall have givenwritten notice of termination to the other. Provided that in respect of investments made whilst theAgreement is in force, its provisions shall continue in effect with respect to such investments for aperiod of twenty years after the date of termination and without prejudice to the application thereafterof the rules of general international law.
IN WITNESS WHEREOF the undersigned, duly authorized thereto by their respective Governments,have signed this Agreement.
DONE IN duplicate at Ulan Bator this 4th day of October 1991 in the Mongolian and English
languages, both texts being equally authoritative.
FOR THE GOVERNMENT OF THE FOR THE GOVERNMENT OF THE
MONGOLIAN PEOPLE’S REPUBLIC UNITED KINGDOM OF GREAT
BRITAIN AND NOTHERN IRELAND