Mongolia: Turning court judgements into reality

Efficient and transparent rule of law institutions are critical for a healthy investment climate. They enhance confidence and predictability in commercial relationships and protect investors’ rights in case of failed payments. Ensuring compliance with court decisions is a key element – when court decisions stay unenforced, this affects public perception of the rule of law system as a whole.

© Zuzana Zalanova

© Zuzana Zalanova

In Mongolia, non-enforcement of court decisions remains a key obstacle to investor confidence. “The majority of commercial disputes in Mongolia concern loans, sales agreements and service contracts in areas of such as construction and mining,” says Altangerel Taivankhuu, IDLO Senior Legal Advisor in the country. “They involve private companies, from large scale to SMEs, as well as state-owned enterprises and joint ventures with foreign investors.” The main challenges for enforcing commercial disputes lie in unsound laws and institutional weaknesses such as low paid staff, poor facilities and ad hoc training which is not up to speed with market developments. Although established as a principle, the rule of law in law enforcement is undermined in practice by widespread phenomena such as nepotism and corruption.

The main body responsible for the enforcement of court decisions in Mongolia is the General Executive Agency of Court Decisions. Established 20 years ago, it employs over 200 bailiffs across the country. “In a vast country like Mongolia, we are involved in enforcement of all types of decision,” says bailiff Batbold Batdemberel, “from the enforcement of child support payments to that of payments from government agencies, such as customs, tax and social security authorities.” He points out the challenging nature of bailiffs’ work, which is limited by lack of authority to summon or put into custody the debtor, and lack of special personnel who can provide bailiffs with security and protection “The most basic example of inefficiency is the lack of service vehicles and other equipment to carry out our daily work,” he explains.

To ensure efficient operation of the Agency, building strong human and institutional capacities is crucial. This requires a systematic program of training to ensure bailiffs acquire an even level of professional skills. As a result of low levels of attention and international assistance devoted to the issue, there is little understanding of efficient enforcement procedure among bailiffs, and the number of unenforced court decisions per year remains consistently high. This includes a large number of cases involving banking cooperatives, which affect a very large number
of creditors.

Effective settlement of commercial disputes lies at the heart of a program that IDLO is implementing in Mongolia in partnership with the European Bank for Reconstruction and Development (EBRD). “We helped strengthen the Agency’s capacities to effectively enforce court decisions through technical assistance to amend the Court Decision Enforcement Law and related legislation, and providing its employees with a combined international apprenticeship and training program in areas such as search, seizure and sale of property, mediation and international arbitration, and conflict management,” says Carlos Escudero, IDLO Chief of Party in Mongolia.

In June 2015, over 200 employees of the Agency received the first-ever comprehensive training delivered by international and local experts but also bailiffs themselves. Participants were trained by 12 ‘bailiffs-trainers’ who had participated in IDLO’s 2014 training on teaching methodology and substantial topics and are now able to deliver training to their peers. This pool of devoted trainers, along with handbooks and video lectures published on the Agency website, can help systematize training for Agency staff, which can be held on a regular basis. “The training is a great opportunity not only for the Agency but also for trainers, senior and junior bailiffs, who will gain the knowledge and necessary skills to advance their professional development,” says Lieutenant Colonel Unurtsetseg, Head of the Agency’s Professional Management Division. These efforts are already bearing the first fruits as one of the Agency’s own trainings in 2016 will be based on IDLO’s curricula.

Work on enforcement of court decisions is just one element of the comprehensive approach to effective dispute settlement IDLO has been taking in Mongolia in partnership with the EBRD. In the last three years, we have increased the courts’ capacity to apply commercial law in areas such as mining disputes, intellectual property and competition law. We have also provided Mongolia’s business community with a faster and more cost-effective alternative to the courts for settling disputes through the country’s first private mediation center and the first Mongolian corps of internationally certified commercial mediators.

All of these efforts contribute to strengthening the key rule of law institutions of Mongolia with a view to managing the country’s mining economy and increasing investor confidence. This is essential to sustain the remarkable progress Mongolia has achieved 25 years since its transition to democracy and a market economy.

Zuzana Zálánova, IDLO Program Coordinator