Ya.San­jmy­atav: Mon­go­lia lost Er­denet ar­bi­tra­tion case

The UB Post - - Business & Economics -

Mon­go­lia has lost its ap­peal to the London Court of In­ter­na­tional Ar­bi­tra­tion (LCIA) re­gard­ing the ar­bi­tra­tion of the 109 mil­lion USD loan given to Er­denet Min­ing Cor­po­ra­tion by Stan­dard Bank of South Africa, whose ma­jor stake­holder is In­dus­trial and Com­mer­cial Bank of China Limited.

For­mer Head of Er­denet Ch.Gan­zorig and Direc­tor of Just Group Sh.Batkhuu failed to re­pay the hefty loan they took out from Stan­dard Bank by putting up the Er­denet mine as col­lat­eral. The case be­gan to be heav­ily pub­li­cized af­ter LCIA ruled in fa­vor of Stan­dard Bank. The rul­ing puts Mon­go­lia’s long­stand­ing cash cow Er­denet Min­ing Cor­po­ra­tion in a tough sit­u­a­tion.

In May 2016, the ar­bi­tra­tion de­cided that Er­denet should pay 50.98 mil­lion USD to Stan­dard Bank. Al­though the Mon­go­lian side ap­pealed to this de­ci­sion, it was de­nied as it re­quired Er­denet to place the 50.98 mil­lion USD with the ar­bi­tra­tion court. Re­port­edly, Stan­dard Bank last year de­manded through ar­bi­tra­tion that the com­pany pay the in­ter­est for the loans and court fees,which amounted to around 44 mil­lion USD as of Au­gust 2017.

Due to the ar­bi­tra­tion rul­ing in fa­vor of Stan­dard Bank, the for­eign ac­counts of Er­denet were re­port­edly frozen and mak­ing in­ter­na­tional trade for the com­pany is im­pos­si­ble.

The most re­cent ap­peal case took place in July 2018 and was ruled against Er­denet Min­ing Cor­po­ra­tion. MP O.Baasankhuu first re­ported that Er­denet had lost the case. Ya.San­jmy­atav, the head of the par­lia­men­tary work­ing group tasked with in­ves­ti­gat­ing the own­er­ship of the 51 per­cent stake in Er­denet, con­firmed that Er­denet had lost the ap­peal.

The le­gal fees and the in­ter­est of the 50.98 mil­lion USD owed by Er­denet to Stan­dard Bank have added up to 172 mil­lion USD as of March. The re­ported in­ter­est of the pay­ment is 800 to 900 USD a day. The lat­est rul­ing con­cerns the ap­peal of the Mon­go­lian side to pay­ing the le­gal fees of Stan­dard Bank.

“The work­ing group con­vened and de­cided to send rep­re­sen­ta­tives from law agen­cies in­stead of rep­re­sen­ta­tives from Par­lia­ment. They were sent to mon­i­tor the sit­u­a­tion. The ar­bi­tra­tion de­ci­sion was not in fa­vor of Er­denet,” said Ya.San­jmy­atav.

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