BETWEEN MONGOLIA AND THE UNITED STATES
OF AMERICA CONCERNING
THE ENCOURAGEMENT AND
RECIPROCAL PROTECTION OF INVESTMENT
Mongolia and the United States of America (hereinafter the "Parties");
Desiring to promote greater economic cooperation between them, with respect to investment by nationals and companies of one Party in the territory of the other Party;
Recognizing that agreement upon the treatment to be accorded such investment will stimulate the flow of private capital and the economic development of the Parties;
Agreeing that fair and equitable treatment of investment is desirable in order to maintain a stable framework for investment and maximum effective utilization of economic resources;
Recognizing that the development of economic and business ties can contribute to the well-being of workers in both Parties and promote respect for internationally recognized worker rights; and
Having resolved to conclude a Treaty concerning the encouragement and reciprocal protection of investment;
Have agreed as follows:
For the purposes of this Treaty,
(a) "investment" means every kind of investment in the territory of one Party owned or
controlled directly or indirectly by nationals or companies of the other Party, such as equity, debt, and service and investment contracts; and includes:
(i) tangible and intangible property, including rights, such as mortgages, liens and
(ii) a company or shares of stock or other interests in a company or interests in the assets
(iii) a claim to money or a claim to performance having economic value, and associated
with an investment;
(iv) intellectual property which includes, inter alia, rights relating to:
literary and artistic works, including sound recordings,
inventions in all fields of human endeavor,
industrial designs, semiconductor mask works,
trade secrets, know-how, and confidential business information, and
trademarks, service marks, and trade names; and
(v) any right conferred by law or contract, and any licenses and permits pursuant to law;
(b)"company" of a Party means any kind of corporation, company, association, partnership, or
other organization, legally constituted under the laws and regulations of a Party or a political subdivision thereof whether or not organized for pecuniary gain, or privately or governmentally owned or controlled;
(c) "national" of a Party means a natural person who is a national of a Party under its
(d)"return" means an amount derived from or associated with an investment, including profit;
dividend; interest; capital gain; royalty payment; management, technical assistance or other fee; or returns in kind;
(e) "associated activities" include the organization, control, operation, maintenance and
disposition of companies, branches, agencies, offices, factories or other facilities for the conduct of business; the making, performance and enforcement of contracts; the acquisition, use, protection and disposition of property of all kinds including intellectual property rights; the borrowing of funds; the purchase, issuance, and sale of equity shares and other securities; and the purchase of foreign exchange for imports;
(f) "investment authorization" means an authorization granted by the foreign investment
authority of a Party to an investment or a national or company of the other Party;
(g)"investment agreement" means a written agreement between the national authorities of a
Party and an investment or a national or company of the other Party that (i) grants rights
with respect to natural resources or other assets controlled by the national authorities and (ii) the investment, national or company relies upon in establishing or acquiring an investment.
Each Party reserves the right to deny to any company the advantages of this Treaty if nationals
of any third country control such company and, in the case of a company of the other Party, that company has no substantial business activities in the territory of the other Party or is controlled by nationals of a third country with which the denying Party does not maintain normal economic relations.
Any alteration of the form in which assets are invested or reinvested shall not affect their
character as investment.
Each Party shall permit and treat investment, and activities associated therewith, on a basis no
less favorable than that accorded in like situations to investment or associated activities of its own nationals or companies, or of nationals or companies of any third country, whichever is the most favorable, subject to the right of each Party to make or maintain exceptions falling within one of the sectors or matters listed in the Annex to this Treaty. Each Party agrees to notify the other Party before or on the date of entry into force of this Treaty of all such laws and regulations of which it is aware concerning the sectors or matters listed in the
Annex. Moreover, each Party agrees to notify the other of any future exception with respect to the sectors or matters listed in the Annex, and to limit such exceptions to a minimum. Any future exception by either Party shall not apply to investment existing in that sector or matter at the time the exception becomes effective. The treatment accorded pursuant to any exceptions shall, unless specified otherwise in the Annex, be not less favorable than that accorded in like situations to investments and associated activities of nationals or companies of any third country.
(a) Investment shall at all times be accorded fair and equitable treatment shall enjoy full
protection and security and shall in no case be accorded treatment less than that required by international law.
(b) Neither Party shall in any way impair by unreasonable and discriminatory measures the management, operation, maintenance, use, enjoyment, acquisition, expansion, or disposal of investments.
(c) Each Party shall observe any obligation it may have entered into with regard to investments.
Subject to the laws relating to the entry and sojourn of aliens, nationals of either Party shall be
permitted to enter and to remain in the territory of the other Party for the purpose of establishing, developing, administering or advising on the operation of an investment to which they, or a company of the first Party that employs them, have committed or are in the process of committing a substantial amount of capital or other resources.
Companies which are legally constituted under the applicable laws or regulations of one Party,
and which are investments, shall be permitted to engage top managerial personnel of their choice, regardless of nationality.
Neither Party shall impose performance requirements as a condition of establishment,
expansion or maintenance of investments, which require or enforce commitments to export goods produced, or which specify that goods or services must be purchased locally, or which impose any other similar requirements.
Each Party shall provide effective means of asserting claims and enforcing rights with respect
to investment, investment agreements, and investment authorizations.
Each Party shall make public all laws, regulations, administrative practices and procedures, and
adjudicatory decisions that pertain to or affect investments.
The treatment accorded by the United States of America to investments and associated
activities of nationals and companies of Mongolia under the provisions of this Article shall in
any State, Territory or possession of the United States of America be no less favorable than the treatment accorded therein to investments and associated activities of nationals of the United States of America resident in, and companies legally constituted under the laws and regulations of other States, Territories or possessions of the United States of America.
The most favored nation provisions of this Article shall not apply to advantages accorded by
either Party to nationals or companies of any third country by virtue of:
(a) that Party's binding obligations that derive from full membership in a free trade area or
customs union; or
(b)that Party's binding obligations under any multilateral international agreement under the
framework of the General Agreement on Tariffs and Trade that enters into force subsequent to the signature of this Treaty.
Investments shall not be expropriated or nationalized either directly or indirectly through
measures tantamount to expropriation or nationalization ("expropriation") except: for a public purpose; in a nondiscriminatory manner; upon payment of prompt, adequate and effective compensation; and in accordance with due process of law and the general principles of treatment provided for in Article 11(2). Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriatory action was taken or became known, whichever is earlier; be calculated on the basis of the prevailing market rate of exchange at that time; be paid without delay; include interest at a commercially reasonable rate from the date of expropriation; be fully realizable; and be freely transferable.
A national or company of either Party that asserts that all or part of its investment has been
expropriated shall nave a right to prompt review by the appropriate judicial or administrative authorities of the other Party to determine whether any such expropriation has occurred and, if so, whether such expropriation, and any associated compensation, conforms to the principles of international law.
Nationals or companies of either Party whose investments suffer losses in the territory of the
other Party owing to war or other armed conflict, revolution, state of national emergency,
insurrection, civil disturbance or other similar events shall be accorded treatment by such other Party no less favorable than that accorded to its own nationals or companies or to nationals or companies of any third country, whichever is the most favorable treatment, as regards any measures it adopts in relation to such losses.
Each Party shall permit all transfers related to an investment to be made freely and without
delay into and out of its territory. Such transfers include: (a) returns; (b) compensation pursuant
to Article III; (c) payments arising out of an investment dispute; (d) payments made under a contract, including amortization of principal and accrued interest payments made pursuant to a loan agreement; (e) proceeds from the sale or liquidation of all or any part of an investment; and (f) additional contributions to capital for the maintenance or development of an investment.
Transfers shall be made in a freely usable currency, as defined in Article 3 0 of the Articles of
Agreement of the International Monetary Fund, at the prevailing market rate of exchange on
the date of transfer with respect to spot transactions in the currency to be transferred.
Notwithstanding the provisions of paragraphs 1 and 2, either Party may maintain laws and
regulations (a) requiring reports of currency transfer; and (b) imposing income taxes by such means as a withholding tax applicable to dividends or other transfers. Furthermore, either Party may protect the rights of creditors, or ensure the satisfaction of judgments in adjudicatory proceedings, through the equitable, nondiscriminatory and good faith application of its law.
Each Party shall permit returns in kind to be made as authorized or specified in an investment
authorization, investment agreement, or other written agreement between the Party and an investment or a national or company of the other Party.
The Parties agree to consult promptly, on the request of either, to resolve any disputes in connection with the Treaty, or to discuss any matter relating to the interpretation or application of the Treaty.
For purposes of this Article, an investment dispute is a dispute between a Party and a national
or company of the other Party arising out of or relating to (a) an investment agreement between
that Party and such national or company; (b) an investment authorization granted by that Party's foreign investment authority to such national or company; or (c) an alleged breach of any right conferred or created by this Treaty with respect to an investment.
In the event of an investment dispute, the parties to the dispute should initially seek a resolution
through consultation and negotiation. If the dispute cannot be settled amicably, the national or company concerned may choose to submit the dispute for resolution:
(a) to the courts or administrative tribunals of the Party that is a party to the dispute; or
(b)in accordance with any applicable, previously agreed dispute-settlement procedures; or
(c) in accordance with the terms of paragraph 3.
(a) Provided that the national or company concerned has not submitted the dispute for
resolution under paragraph 2 (a) or (b) and that six months have elapsed from the date on which
the dispute arose, the national or company concerned may choose to consent in writing to the submission of the dispute for settlement by binding arbitration:
(i) to the International Centre for the Settlement of Investment Disputes ("Centre") established
by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, done at Washington, March 18, 1965 ("ICSID Convention"), provided that the Party is a party to such Convention; or
(ii)to the Additional Facility of the Centre, if the Centre is not available; or
(iii)in accordance with the Arbitration Rules of the United Nations Commission on
International Trade Law (UNICTRAL); or
(iv)to any other arbitration institution, or in accordance with any other arbitration rules, as may
be mutually agreed between the parties to the dispute.
(b) Once the national or company concerned has so consented, either party to the dispute may initiate arbitration in accordance with the choice so specified in the consent.
Each Party hereby consents to the submission of any investment dispute for settlement by
binding arbitration in accordance with the choice specified in the written consent of the national
or company under paragraph 3. Such consent, together with the written consent of the national or company when given under paragraph 3 shall satisfy the requirement for:
(a) written consent of the parties to the dispute for purposes of Chapter II of the ICSID
Convention (Jurisdiction of the Centre) and for purposes of the Additional Facility Rules;
(b)an "agreement in writing" for purposes of Article II of the United Nations Convention on
the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958 ("New York Convention").
Any arbitration under paragraph 3(a)(ii), (iii) or (iv) of this Article shall be held in a state that is
a party to the New York Convention.
Any arbitral award rendered pursuant to this Article shall be final and binding on the parties to
the dispute. Each Party undertakes to carry out without delay the provisions of any such award
and to provide in its territory for its enforcement.
In any proceeding involving an investment dispute, a Party shall not assert, as a defense,
counterclaim, right of set-off or otherwise, that the national or company concerned has received
or will receive, pursuant to an insurance or guarantee contract, indemnification or other compensation for all or part of its alleged damages.
For purposes of an arbitration held under paragraph 3 of this Article, any company legally
constituted under the applicable laws and regulations of a Party or a political subdivision thereof but that, immediately before the occurrence of the event or events giving rise to the dispute, was an investment of nationals or companies of the other Party, snail be treated as a national or company of such other Party in accordance with Article 25(2)(b) of the ICSID Convention.
Any dispute between the Parties concerning the interpretation or application of the Treaty
which is not resolved through consultations or other diplomatic channels, shall be submitted, upon the request of either Party, to an arbitral tribunal for binding decision in accordance with the applicable rules of international law. In the absence of an agreement by the Parties to the contrary, the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL), except to the extent modified by the Parties or by the arbitrators, shall govern.
Within two months of receipt of a request, each Party shall appoint an arbitrator. The two
arbitrators shall select a third arbitrator as Chairman, who is a national of a third State. The UNCITRAL Rules for appointing members of three member panels shall apply mutatis
mutandis to the appointment of the arbitral panel except that the appointing authority referenced in those rules shall be the Secretary General of the Centre.
Unless otherwise agreed, all submissions shall be made and all hearings shall be completed
within six months of the date of selection of the third arbitrator, and the Tribunal shall render
its decisions within two months of the date of the final submissions or the date of the closing of the hearings, whichever is later.
Expenses incurred by the Chairman, the other arbitrators, and other costs of the proceedings
shall be paid for equally by the Parties. The Tribunal may, however, at its discretion, direct that
a higher proportion of the costs be paid by one of the Parties.
The provisions of Article VI and VII shall not apply to a dispute arising (a) under the export credit, guarantee or insurance programs of the Export-Import Bank of the United States or (b) under other official credit, guarantee or insurance arrangements pursuant to which the Parties have agreed to other means of settling disputes.
This Treaty shall not derogate from:
(a) laws and regulations, administrative practices or procedures, or administrative or
adjudicatory decisions either Party;
(b)international legal obligations; or
(c) obligations assumed by either Party, including those contained in an investment agreement
or an investment authorization,
that entitle investments or associated activities to treatment more favorable than that accorded by this Treaty in like situations.
This Treaty shall not preclude the application by either Party of measures necessary for the
maintenance of public order, the fulfillment of its obligations with respect to the maintenance
or restoration of international peace or security, or the protection of its own essential security interests.
This Treaty shall not preclude either Party from prescribing special formalities in connection
with the establishment of investments, but such formalities shall not impair the substance of
any of the rights set forth in this Treaty.
With respect to its tax policies, each Party should strive to accord fairness and equity in the
treatment of investment of nationals and companies of the other Party.
Nevertheless, the provisions of this Treaty, and in particular Article VI and VII, shall apply to
matters of taxation only with respect to the following:
(a) expropriation, pursuant to Article III;
(b)transfers, pursuant to Article IV; or
(c) the observance and enforcement of terms of an investment agreement or authorization as
referred to in Article VI (1) (a) or (b),
to the extent they are not subject to the dispute settlement Provisions of a Convention for the avoidance of double taxation between the two Parties, or have been raised under such settlement provisions and are not resolved within a reasonable Period of time.
This Treaty shall apply to the political subdivisions of the Parties.
This Treaty shall enter into force thirty days after the date of exchange of instruments of
ratification. It shall remain in force for a period of ten years and shall continue in force unless terminated in accordance with paragraph 2 of this Article. It shall apply to investments existing at the time of entry into force as well as to investments made or acquired thereafter.
Either Party may, by giving one year's written notice to the other Party, terminate this Treaty at
the end of the initial ten year period or at any time thereafter.
With respect to investments made or acquired prior to the date of termination of this Treaty and
to which this Treaty otherwise applies, the provisions of all of the other Articles of this Treaty shall thereafter continue to be effective for a further period of ten years from such date of termination.
The Annex and Protocol shall form an integral part of the Treaty.
IN WITNESS WHEREOF, the respective plenipotentiaries have signed this Treaty.
DONE INduplicate at Washington on the sixth day of October, 1994, in the Mongolian and
English languages, both texts being equally authentic.
FOR MONGOLIA FOR THE UNITED STATES OF AMERICA
The United States reserves the right to make or maintain limited exceptions to national
treatment, as provided in Article II, paragraph 1, in the sectors or matters it has indicated below:
air transportation; ocean and coastal shipping; banking, insurance, securities and
other financial services; government grants; government insurance and loan programs; energy and power production; customhouse brokers; ownership of real property; ownership and operation of broadcast or common carrier radio and television stations; ownership of shares in the Communications Satellite Corporation; the provision of common carrier telephone and telegraph services; the provision of submarine cable services; use of land and natural resources; mining on the public domain; and maritime services and maritime-related services.
The United States reserves the right to make or maintain limited exceptions to most favored
nation treatment, as provided in Article II, paragraph 1, in the sectors or matters it has indicated below:
ownership of real property; mining on the public domain; maritime services and
maritime-related services; and primary dealership in United States government securities.
Mongolia reserves the right to make or maintain limited exceptions to national treatment, as
provided in Article II, paragraph 1, in the sectors or matters it has indicated below:
land ownership and banking.
With respect to Article II, paragraph 1, the Parties confirm their mutual understanding that the national and most favored nation treatment obligations specified therein apply to the establishment and acquisition as well as to the expansion, management, conduct, operation and sale or other disposition of investments.