In a series of studies titled “Foreign Direct Investment Inflow in Mongolia” conducted by the Economic Research Institute between 2017 and 2019, it was ultimately found that FDI inflow into a country was largely determined by the country’s investment environment. In Mongolia, disputes with foreign investors and ill-conceived policy decisions were the factors most detrimental to its investment environment. To study this further, this update focused on investment dispute resolution and ways to improve contract enforcement institutions in the mining sector as most FDI into Mongolia is centered around the mining sector.
The update first reviewed international studies of dispute resolution mechanisms. It then covered international cases of dispute resolutions along with an analysis of Mongolia’s judicial system and key domestic case studies. The research found that while Mongolia does well in terms of enforcing contracts and the duration needed to resolve disputes, it is lacking in terms of the quality of its judicial processes. Additionally, large-scale mining disputes usually involve the Government of Mongolia and require international arbitration. Therefore, it is important for the government to improve its adherence to due processes in the mining sector to ensure a better legal environment and implement its policies to promote FDI inflow.