National Report Mongolia - Notarius International

28 D. Yanjinkhorloo, National Report Mongolia Notarius International 1-2/2004
National Report Mongolia
Contents
page
1. Notarial law 28
2. General civil law 30
3. Property law 31
4. The law of persons and family law 33
5. The law of succession 35
6. Company law 36
7. Private international law 37
8. Tax law 38
9. Bibliography and Internet 38
This report relates to the legal position as at 1.12.2004.
The report mainly focuses on the new Civil Code that
came into force on 1 September 2002.
1. Notarial law
1.1. Law governing the profession
1.1.1. General aspects
The work of notaries is carried on in Mongolia by independent
professional notaries and State court officials.
According to the statutory definition, an independent
professional notary is a person who acts in an official
capacity based on his State appointment as a notary and
receives his income from the fees charged for that purpose.
An independent professional notary must be a Mongolian
national with full legal qualifications (i.e. someone
who has completed a 4-5 year course of legal studies)
who has also passed the examinations organised by
the Chamber of Notaries and has at least three months'
practical experience as a notary or has completed practical
training to become a notary. The exam may be taken
only by lawyers who have already passed the Mongolian
bar exam. 1
State court officials who undertake notarial functions
are special officials in district authorities (Sum) 2 and in
Mongolian diplomatic missions and consulates abroad
who also undertake authentication work alongside their
other duties by State appointment. Under the law the district
chief executive 3 of each district authority (Sum) decides,
with the approval of the Minister of Justice, whether
certain Sum officials should simultaneously undertake
official notarial duties in district authorities (Sum) in
which no independent professional notaries have been
appointed (art. 14.3 of the Notaries Act).
1.1.2. Legal sources
The first department within the Justice Ministry that
was to be responsible for the authentication of contracts
was founded in the year 1925. In 1941 the first Notarial
Regulations were passed; these have now been the subject
of many amendments.
During the reform of the Mongolian legal system, 4
which began after the new Constitution was ratified in
1992, a new Act governing the Notarial Profession of
2.5.1997 5 was also passed to regulate the profession of
notary. Some minor changes have been made be an act of
23.5.2002.
The Ministry of Justice has enacted Service Regulations
for the notaries on 5.7.1997 which have been
amended most recently on 11.2.2003. The first plenary
session of the Chamber of Notaries convened on
28.6.1997 also ratified the rules on notarial ethics.
1.1.3. Access to the profession
Only as many notaries are appointed as are required
(numerus clausus). The head (Zasag Darga) of each administrative
district (Aimag) or capital city 6 draws up a
recommendation on the number of notaries required having
regard to the population and economic strength of the
area and probable developments, and forwards that recommendation
to the Ministry of Justice.
* by Mrs. DAMBADARJAA YANJINKHORLOO, Notary and Professor at the
State University Institute of Law, Ulaanbaataar, Mongolia. The author
would like to thank Mrs. AYUSHIIN OYUNCHIMG, President of the
Mongolian Chamber of Notaries, for many important contributions to
this article.
1 Law on the selection among lawyers of 22. May 2003.
2 The Mongolian administration is structured on the highest level by 21
”Aimag” (sometimes also transcribed “Aimak” – comparable to a region).
Every Aimag compasses several”Sum” (sometimes also transcribed
“Somon” – comparable to an English county) or ”Duureg” in
the capital city of Ulaan Baator. The municipalities or local communities
are called “Bag” in Mongolian.
3 The Zasag Darga is the highest administrative officer in the district
authority (Sum) as well as the most senior official in the administrative
district (Aimag). The Zasag Darga of a district authority is therefore
translated here as district chief executive, whilst the Zasag Darga
of an Aimag is translated as administrative district officer.
4 Cf the report by the Asian Development Bank (a regional international
organisation along the lines of the World Bank) of October 1995:
„Developing Mongolia's Legal Framework: A Needs Analysis“:
http://www.adb.org.Documents/Papers/Mongolia_Legal_Framework
which uses not so flattering words to describe the previous state of
the Mongolian notarial system:
„Notaries have been used in Mongolia for some time. Unlike the laws
that apply to prosecutors and advocates, the Law on Notaries has not
been substantively changed since the transition to a market economy
began although a draft law is in preparation. There is a feeling among
notaries that a new law would help to clarify their role.
Notaries generally form part of the local aimag administrations with
one notary per aimag, and their offices are financed and their salaries
paid out of the aimag budget. There are also at least five independent
notaries in Ulaanbaatar.
Notaries are used to authenticate documents. They are not involved
in drafting or in advising the parties of a documents contents, but
simply in checking that documents are in order and signing or stamping
them. The types of transaction for which notarisation is required
are bank loans and agreements for the sale and purchase of items such
as livestock. With the emergence of a leasehold market and the anticipated
privatisation of housing, it is expected that notaries' responsibilities
will increase.
The work of the notaries has changed considerably in the last few
years and it is not always clear to them how they are expected to do
their work under the new system. Neither are there any modern texts
to be used as a reference. The volume of work has also increased dramatically,
although there does not seem to be an immediate need for
more than the approximately 25 notaries now working in Mongolia.“
http://www.adb.org/Documents/Papers/Mongolia_Legal_Framework/
the_ notaries.asp?p=lawdevt
5 State Bulletin No. 6/1997, pages 540-553. Unfortunately we do not
know of any English, French or German translations of the Notaries
Act.
6 Act on State Stamp Duties, State Bulletin No. 4-5/2001, pages 525-
535. On internet: http://www.investmongolia.com/law36.pdf

Notarius International 1-2/2004 D. Yanjinkhorloo, National Report Mongolia 29
Local jurisdiction and numbers of notaries to be appointed
are matters determined by the Minister of Justice.
At the present time there are 121 notaries officiating in
the eight municipal districts of the capital city of Ulaanbaatar
and 65 notaries in the other administrative districts
(Aimag). Mongolia therefore currently has 186 (independent
professional) notaries. Alongside these there
are 317 administrative officers in the various district authorities
(Sum) and 33 officials within Mongolia's foreign
missions and consulates acting in an ancillary capacity as
State court officials.
1.2. The functions of the notary
A notarised deed is required, in particular, for the following
legal transactions:
- A promise of a gift (Article 276.4 of the Civil Code),
- Documents for entry in the Land Register (Article
13.6, 13.8, 17.1.11, 17.2, 19.2, 21.2, 21.5, 24.1, 28.2,
30.1, 34.3, 35.1, 35.3.6, 36.1, 36.6 Property Registration
Act), 7
- Incorporation documents for a legal entity under private
law (art. 14.4 Law on State Registration of Legal
Entities 8 ) and for its articles of association (art. 7.1.4
and 7.1.5 of the Law on State Stamp Duties 9 ),
- Marriage contracts to regulate matrimonial property
(Article 132.2 of the Civil Code),
- Wills (Article 523.1 of the Civil Code) and certificates
of inheritance (Article 531.1 of the Civil Code),
- for the authentication of signatures (art. 7.1.9 of the
Stamp Duty Act),
- to certify the truth and accuracy of a document (art.
7.7 of the Stamp Duty Act),
- to certify the truth and accuracy of a translation (art.
7.8 of the Stamp Duty Act).
All types of real-estate contracts must also be notarially
authenticated and entered in the Land Register (Land
Registry), otherwise they will be void. Since the enactment
of the Law governing the State Registration of
Property Rights and other Rights to Assets of 19.6.2003
(in force since 29.6.2003) the following rights also have
to be registered in the State Register (Land Register):
- Title to real estate,
- Security rights over real estate,
- Leases of real estate,
- Easements and usufructs,
- Building rights over land belonging to another,
- Possession and usage of land.
All of the aforementioned legal transactions have to be
authenticated by a notary. Transactions that are concluded
without observing the statutorily or contractually required
form or that are not given corresponding approval
will be null and void (Article 56.1.8 of the Civil Code). If
notarial authentication is prescribed by law a notary or
some other person designated by law must undertake authentication
on the conclusion of the transaction (Article
42.4 of the Civil Code). Legal transactions disposing of
real estate or rights of inheritance can only be authenticated
by a notary practising in the district in which the assets
are situated. 10
Notaries and State court officials can also authenticate
legal transactions and contracts other than the aforementioned
if so requested by the parties, provided that they
do not contravene the law.
1.3. Authentication procedure
As yet, authentication procedure is only governed by
the Regulations on the Conduct of Notarial Transactions
(Service Regulations for Notaries) 11 – and not by any
formal legislation. Art. 4.1 of the Service Regulations
provides that notaries are to authenticate legal transactions
and contracts pursuant to the Notaries Act. Notaries
and court officials authenticate legal transactions and
contracts in the presence of the parties, giving explanations
on statutory standards of validity, legal consequences
and liability arising from the transactions concerned.
When authenticating a legal transaction the notary has
to examine whether the transaction complies with statutory
requirements; he then has to affix a certificate and
certify the signatures in the presence of the parties (Article
4.1 of the Service Regulations). The notary has to examine
the deed in full. He also has to read it out, if he has
drafted the contract by himself (art. 4.1.5 of the Service
Regulations). Also the notary has to clarify whether the
parties are conscious of the legal consequences of the
transaction. Generally, the wording will not be drafted by
the notary himself, but by either the parties or their lawyers.
All notaries have standard forms available for certain
kinds of contract. The contracting parties can buy
these forms and fill them out themselves.
Contracts that have to be certified by a notary must
meet the following requirements:
- they must comply with the law,
- they must clearly set out the content and principal
terms of the contract,
- they must clearly set out the rights and obligations of
the parties,
- they must satisfy the principle of equality between the
parties,
- they must not contain grammatical errors,
7 „Law on State Registration of Property Rights and other Rights to Assets“
of 19. June 2003, State Bulletin No. 25/2003.
Previous version see: „Law on Registration of Immovable Property“
of 9 January 1997, State Bulletin No. 3/1997, in force since 1.5.1997.
English translation available on the internet at: http://www.investmongolia.com/law23.pdf
or: http://www.cis-legal-reform.org/document.asp?id=2386.
8 „Law on State Registration of Legal Entities“ of 23. May 2003, in
force since 1. October 2003.
9 English translation of the „Law on State Stamp Duties“ available on
the internet at http://www.investmongolia.com/law36.pdf
10 This rule was introduced by the Notaries Amendment Act of
23.5.2002 (State Bulletin No. 21/2002).
11 The service regulations have not been published in the State Bulletin
as they are administrative regulations laid down by the Justice Minister.

30 D. Yanjinkhorloo, National Report Mongolia Notarius International 1-2/2004
- they must be stamped and signed by persons having
legal authority to do so,
- deadlines must be clearly laid down and the consequences
of non compliance with deadlines must be
stated,
- default interest and other compensation must be clearly
stated.
1.3.1. Creation of land charges
When authenticating security agreements relating to real
estate the notary is also obliged:
- to examine proof of title to the real estate secured and
to obtain certification from the Land Registry,
- to enter the time and date of authentication of the creation
of the land charge in his own registers,
- where a land charge is jointly created by spouses, to
examine whether all of the adult members of the family
have given their consent in writing and whether
their signatures have been notarially certified,
- to examine whether the real estate secured has already
been given as security, whether the giving of security
is prohibited or whether seals have been affixed by the
court, the police or any other competent authority.
1.3.2. Life annuity agreements
The following also applies to the authentication of
agreements on annuities (Articles 483-485 of the Civil
Code):
- the notary must check whether the party under the liability
is in a position to meet his obligations (e.g. to
provide accommodation, service, care or medical assistance
at his own expense or at the expense of the
party entitled to benefit).
- the notary must check certifications by the mayor of
the municipal authority or the doctor as to whether the
party entitled to benefit is unable to maintain himself
or live independently.
- a person must be designated to monitor performance
of the contract.
1.3.3. Document roll and language of authentication
The notary must keep a list of all of his authentications
and make any additional notes, where necessary.
The language of authentication is Mongolian. Authentication
in a foreign language is not allowed; however,
a notary can certify the accuracy of a translation himself
if he has a good command of that foreign language.
Otherwise the translation must be carried out by an authorised
translator and will then be merely certified by
the notary. The notary does not draw up his own deed but
affixes his stamp to the translation showing the registration
number of the notary in question.
1.4. Notarial fees
Notarial fees are governed by the Stamp Duty Act (Article
7 of the Stamp Duty Act – which can also be translated
as the „Act governing State Fees“ or Cost Act) 12
In 1997 the Minister of Justice brought in Regulations
on Notarial Fees which, in addition to the fixed rates laid
down in the Costs Act, also regulate other notarial fees.
The Regulations on Notarial Fees have been revised in
2003 in order to incorporate the notaries' new functions
under the 2002 Land Privatisation and Property Act. State
court officials have to forward all income from their notarial
duties to the State, whereas independent professional
notaries keep the fees themselves.
- Fixed fees are laid down for almost all official actions
taken by notaries (i.e. fees are not governed by value);
they are determined according to the nature of the official
activity and amount to between 200and 200,000
tugrig (1,000 tugrig is the equivalent of approximately
one US$).
- On transactions up to a value of 100,000 tugrug, however,
a value-based fee of 0.5% of the purchase price
or value of the property has to be paid to the notary.
For transactions of higher value, the following table
applies:
value of the transaction notary's fee
1,000,001 – 10,000,000 10,000 Tugrug
10,000,000 – 25,000,000 25,000 Tugrug
25,000,001 – 100,000,000 50,000 Tugrug
100,000,001 – 300,000,000 100,000 Tugrug
more than 300,000,001 200,000 Tugrug
- Together with the new „Law on State Registration of
Property Rights“, in 2003 also new registration fees
for the landregister have been introduced, such as for
a mortgage a value based fee of 0.1%, otherwise fees
between 100 and 60,000 Tugrug.
1.5. Professional association
All independent professional Mongolian notaries are
members of the Mongolian Chamber of Notaries; this
enables their activities to be coordinated throughout the
whole nation. The Mongolian Chamber of Notaries is a
non-profit-making legal entity with which all notaries
have to be registered before they are allowed to practise.
The Chamber of Notaries was set up in 1997 under the
first Notaries Act. 13
Branches of the Chamber of Notaries exist in the capital
as the Capital Council and in all 21 Aimags as Aimag
Councils (Article 6.2 of the Notaries Act).
2. General civil law
2.1 Civil Codes after 1926
After the success of the People's Revolution in Mongolia
in 1921 and Mongolia's declaration of independence
from China, the first Mongolian Civil Code was enacted
12 State Bulletin No. 4-5/1993, pages 525-535. English translation of
the „Law on State Stamp Duties“ available on the internet at:
http://www.investmongolia.com/law36.pdf.
13 The Mongolian Chamber of Notaries' home page can be found on the
internet at: http://www.owc.org.mn/notariat/ (unfortunately at present
only in Mongolian; there is still no English home page).

Notarius International 1-2/2004 D. Yanjinkhorloo, National Report Mongolia 31
in 1926. It took as its model the former Russian (Soviet)
Civil Code. The Civil Code was later amended and reformed
several times. 14
When the new democratic Constitution of 13.1.1992 15
was brought in a Civil Code of 1 November 1994 16 was
also enacted. However, this did not quite reflect the free
market economy. However, the Civil Code of 1992/1994
did recognise private ownership alongside State ownership.
2.2. New 2002 version of the Civil Code
The new Civil Code of 10.1.2002 has been in force in
Mongolia since 1 September 2002; this can also be
found on the internet in both English and German
translations. 17 It is a complete revision of the former
Civil Code.
It regulates inter alia the property position following
the recent commencement of privatisation of land. It also
contains a number of new legal concepts necessary for
the free market economy, such as self-help, the law of
neighbours, heritable building rights, the pledging of
rights, general terms and conditions, options, pre emption
rights, leasing, land leases, franchise agreements, trusts,
travel agreements, insurance policies etc.
The new Mongolian Civil Code is modelled on major
continental European codifications; it particularly echoes
German law in many respects. However, its provisions
are often briefer and less detailed than in the European
codes.
Important separate private-law Acts alongside the Civil
Code include, in particular, the Consumer Protection
Act of 1 September 1991 (which was brought in even before
the new Constitution was ratified!), reformed by an
act of 26 december 2003, 18 and the Building Act of 7 August
1998. 19
3. Property law 20
3.1. Privatisation of land
In June 2002 the Law of Land 21 and the Law on the
Allocation of Land to Mongolian Citizens for Ownership
22 were enacted. Owner-occupied apartments had already
been privatised in the years 1997-1998 and title
granted free of charge to the occupants concerned. The
Privatisation Act 23 permits Mongolian citizens for the first
time to acquire private ownership of real estate in Mongolia,
since before that the State had been the sole owner of
all land even though Article 16(3) of the 1992 Constitution
had made provision for the private ownership of land.
Houses and land, in particular, can now be owned by their
former occupiers. Title to property of up to 700 square
metres can be acquired free of charge for own family use
in the capital and in the Aimag up to 3,500 square metres;
nationals can also purchase additional land (art. 7.1). This
measure will be implemented within 2 years. This means
that approximately 585,000 families 24 will be able to acquire
ownership of the residential land occupied by them.
1.24 million hectares of land have been earmarked for
privatisation, representing approximately 0.9% of the
whole territory of Mongolia. 25
The Land Act, on the other hand, governs the use of
land that is still owned by the State.
Under the Act all kinds of undertakings can also acquire
or use land. Foreigners, on the other hand, cannot
acquire land; they can only have use or possession of it
(Article 102.1 of the Civil Code, Article 6.2 of the Constitution,
art. 5.1 of the Land Act). On the other hand, foreign
undertakings or undertakings with foreign associates
may use and acquire land in the same way as other undertakings
(art. 6.3 of the Land Act).
3.2. Disposal of land
The registration of land and transfer of title are governed
by the Act on the State Registration of Ownership
and other Property Rights (Property Registration Act)
of 19.6.2003 (in force since 29.6.2003) 26 and by Article
182 et seq. of the Civil Code.
14 See, with regard to the legal position during Soviet dominance:
WILLIAM E. BUTLERR, The Mongolian Legal System: contemporary
legislation and documentation, 1982.
15 English translation of the Constitution available on the internet at:
http://www.cis-legal-reform.org/document.asp?id=415.
16 Civil Code of 1 November 1994, State Bulletin No. 1/1995, in force
from 1.1.1995 to 30.8.2002; printed version in the English language:
The Civil Code of Mongolia, Ulaanbaatar, Mongolia, 1994, 101 pages;
on the internet (unfortunately only in Mongolian) at
http://www.cis-legal-reform.org/document.asp?id=2962. See also
STELTER/GÜNTHER, Rechtliche Aspekte der marktwirtschaftlichen
Transformation in der Mongolei, Osteuropa-Recht 1992, p. 309.
17 State Bulletin No. 7/2002. An English translation is available on the
internet at: http://www.investmongolia.co./law04.pdf. A German
translation of the new draft Mongolian Civil Code, which appears to
reflect the final wording of the legislation, is to be found in German
on the internet at: http://www.cis-legal-reform.org/civil-code/index.html#civil-code-mongolia.
cf. also D. NELLE, Privatisierung in der Mongolei erhält neuen Auftrieb,
WiRO (Wirtschaft und Recht in Osteuropa) 2001, 325-332.
18 Old version: State Bulletin No. 3/1991. English translation,
”Consumer Protection Law of Mongolia“ available on the internet at:
http://www.investmongolia.com/law06.pdf. New version: State
Bulletin No. 3/2004; compare: NELLE, WiRO 2005, 30.
19 Building Act of 7 August 1998 on the internet (in Mongolian only) at:
http://www.cis-legal-reform.org/document.asp?id=4667.
20 D. NELLE, Immobilienrecht in der Mongolei, WiRO (Wirtschaft und
Recht in Osteuropa) 2004, 293-298, 333-337.
21 Land Act of 7.6.2002, State Bulletin No. 27/2002. English translation:
„Law of Land“ on the internet at http://www.investmongolia.
com/law28.pdf.
The fees for use of land still in State ownership but used by private
persons or undertakings are governed by the „Law on Land Fees“
State Bulletin No. 5/1997 in force since 9.1.1997; http://www.investmongolia.com/law35.pdf.
22 „Law on the Allocation of Land to Mongolian Citizens for Ownership“
of 27.6.2002 State Bulletin No. 27/2002, in force since 1.5.2003,
available on the internet at http://www.investmongolia.com/
law26.pdf.
23 For the earlier position, see the Land Act of 11 November 1994, in
force from 1 April 1995 to 2002 (English translation on the internet at:
http://www.cis-legal-reform.org/document.asp?id=2387); see also the
report of the Asian Development Bank (ADB) (see footnote 3 above),
particularly the section on „Property Rights“: http://www.adb/
org.Documents/Papers/Mongolia_Legal_Framework/property
rights.asp.
24 Zuunii medee (daily newspaper), No. 151 of 25.06.2003, page 2.
25 Urdriin sonin (Daily News), No. 114 of 12.05.2003, page 2.
26 „Law on Registration of Immovable Property“ of 9 January 1997,
State Bulletin No. 3/1997, in force since 1.5.1997. English translation
available on the internet at http://www.investmongolia.com/
law23.pdf or at http://www.cis-legal-reform.org/document.asp?
id=2386.

32 D. Yanjinkhorloo, National Report Mongolia Notarius International 1-2/2004
Entry in the Land Register constitutes acquisition of
title (Article 4 Property Registration Act). An application
to register the acquisition of immovable property in the
Land Register can be made by either the transferor or
transferee (Article 109.1 of the Civil Code).
Registration requires the existence of a notarised deed
(Articles 13.6, 17.1.1, 17.2, 19.2, 21.2, 21.5, 24.1, 28.2,
30.1, 34.3, 35.1, 35.3.6, 36.1, 36.6 of the Property Registration
Act). The notarised deed on the transfer of rights
to immovable property must specify the transfer title
deed. Where someone acts as agent for one of the parties
details of the representative and power of attorney must
be given in the deed, or else the power of attorney must
be attached (Article 109.2 of the Civil Code).
The first step is for the parties entering into a contract
of sale to conclude a private written agreement. The
agreement is drafted by the parties themselves or by their
lawyers. After that, a certificate is obtained from the Land
Registry showing who the owner is and whether the
property has been given as security. The contract is then
authenticated by the notary. After the transfer of title has
been registered by the Land Registry the purchase price
is paid. In many cases 50% of the purchase price is first
paid to the vendor, with the remaining 50% being handed
over once a new certificate is released by the Land
Registry. Notaries do not hold escrow accounts.
As far as the transferee is concerned, the vendor is
deemed to be the owner if he is shown as such in the
Land Register (good faith principle). This does not apply
if the transferee is aware that the vendor is not the
owner (Article 109.3, 183 of the Civil Code).
A purchaser or heir can initially have a kind of caution
registered (caveat), which the owner can have deleted
again if the purchaser does not make payment (Article 21
of the Property Registration Act); caveat protection corresponds
to that provided under German law (Article 185
of the Mongolian Civil Code). An option to purchase
can also be registered in the Land Register.
There are no special rules applicable in Mongolia on
the acquisition of property or part of a property where the
vendor is obliged to build a house or apartment at the
same time (along the lines of the German „Bauträgervertrag“
or building contract). Transactions such as this
are treated as works contracts, although this does not fully
reflect the nature and essence of this particular legal relationship.
3.3. Owner-occupied apartments and heritable
building rights
The basic principles governing owner-occupied
apartments are laid down in Articles 142-149 of the Civil
Code, with the details being contained in the „Act on
the Joint Ownership of Apartments“ 27 and the Apartment
Privatisation Act 28 , both of 1996, and the Apartments Act
of 22.4.1999. 29 A law on the legal position of associations
of owner-occupiers and on title to jointly-owned
properties was passed by Parliament on 18.6.2003. It is
mainly modelled on the German Act governing Ownership
of Apartments. Ownership of apartments is ownership
peculiar to apartments (or other premises) giving
joint title to the land and other parts of the building (Articles
142.1 and 2 of the Civil Code). The percentage of
joint title is determined by the proportion that the area occupied
bears to the whole area (Article 142.3 of the Civil
Code). Separate title is only granted if the apartment or
premises are completely separate and self-contained (Article
142.4 of the Civil Code). A notarised deed is also required
in order to acquire title to an owner-occupied
apartment so that it can be entered in the Land Register
(Article 145.2 of the Civil Code).
The heritable building right („building right“) is governed
by Article 150 of the Civil Code. The structure built
as a result of the building right is deemed an integral part
of the building right (Article 150.5 of the Civil Code).
The provisions on the acquisition of immovable property
apply mutatis mutandis to the formation and acquisition
of a building right (Article 150.17 of the Civil Code); a
notarised deed and entry in the Land Register is therefore
required for acquisition in rem. Heritable building rights
are expressly governed by the revised Land Registry
Regulations.
3.4. Limited rights of use of property in rem
Limited rights of use of property in rem known to Mongolian
law are the servitude (Article 151 of the Civil
Code) and the usufruct (Article 152 of the Civil Code),
but not the limited personal easement. The distinction
corresponds to that made under German law: the usufruct
is a comprehensive right of use, whereas the servitude
can take one of the following three forms:
- limited use of the servient tenement,
- a prohibition on the conduct of certain action on the
servient tenement, or
- prevention from exercising certain rights arising from
title to the servient tenement.
3.5. Mortgages/hypothecs
The mortgage is the only security over land in existence
under Mongolian law. An abstract land charge separate
from the debt itself is unknown to Mongolian law.
The mortgage is accessorial. The mortgage and the underlying
receivable can only be assigned together (Article
172.1 of the Civil Code). If the receivable does not
arise, an „owner's mortgage“ is then created (Article
168.1 of the Civil Code). The receivable can be substituted
(Article 165.3 of the Civil Code).
The mortgage is not created until it is entered in the
Land Register (Article 166.1 of the Civil Code). Registration
itself is regulated in the Property Registration Act.
An assignment of the receivable is not valid until the
transfer of the mortgage is entered in the Land Register
27 Act on the Joint Ownership of Apartments of 25 October 1996, State
Bulletin No. 3/1997.
28 Apartment Privatisation Act of 25 October 1996, State Bulletin No.
3/1997; (unfortunately only) Mongolian text on the internet at
http://www.cis-legal-reform.org/document.asp@id=5107.
29 Apartments Act of 22.4.1999, State Bulletin No. 21/1999.

Notarius International 1-2/2004 D. Yanjinkhorloo, National Report Mongolia 33
(Article 172.2 of the Civil Code). Nor is substitution of
the receivable valid until an entry is made in the Land
Register (Article 165.3 of the Civil Code).
Both the creation of the mortgage and its transfer require
a notarially certified deed (Article 172.2 of the
Civil Code).
Special types exist in the form of the maximum-sum
mortgage (Article 165.2 of the Civil Code) and the security
mortgage (Article 167 of the Civil Code).
4. The law of persons and family law 30
Mongolian law on marriage and children is governed
by the Family Code of 11 June 1999 (in force since
1.8.1999 31 – Article 76.1).
4.1. The law of names 32
The Mongolian language does not distinguish between
forenames and surnames. A name consists of the given
name, plus the father's name (i.e. the father's given name)
(Article 24 of the Family Code). A given name can consist
of several components (such as „Dambadarjaa“), or
even be linked with a hyphen (e.g. Altan Ochir). 33
This is why there is often confusion between the two
names. On identity cards the names are shown in the following
order:
- Tribal name (Ovog): Tribal names have been allowed
(again) for the last few years. (The tribal name is
therefore shown on identity cards but not in passports).
- After that comes the father's name („surname“: Etsgiin
ner),
- the given name („first name“: Ner) is given last.
For example, my tribal name is Borjigin, the tribe of
Chingis Khan, which is why half of all Mongolians
choose this tribal name. Everyone is free to choose his
own. My full name is therefore Borjigin (tribal name)
Dambadarjaagiin (father's name, i.e. my father's given
name, with giin being the genitive ending) Yanjinkhorloo
(my own given name).
In passports however this order is reversed to the internationaly
used order (i.e. first of all, the given name
followed by the father's name; the tribal name is not stated).
4.2. Matrimonial law and relationships akin to marriage
4.2.1. Marriage and divorce
Marriage is governed by Article 4 et seq. of the Family
Code.
Divorce can be pronounced either by the administrative
authorities (registry office divorce) provided that both
spouses agree to the divorce, do not have any children below
the age of 18 years and that there is no property dispute
(Article 13 of the Family Code). Otherwise there is
the judicial divorce (Article 14 of the Family Code). 34
4.2.2. Family property
The law of matrimonial property as well as family
property is set out in Article 125 et seq. of the Civil
Code 35 (referred to in Article 20 of the Family Code).
Assets acquired by the spouses during marriage are not
only the communal property of the spouses (as would be
the case with community of acquests) but are also communal
family property – that is to say, including the
children (but not the spouses' parents). This reflects the
traditional significance of the clan in Mongolian society.
Communal property is the property that one of the
spouses or children acquires after the marriage during
their communal life together (Article 126 of the Civil
Code), particularly:
- the income from work or capital received by a member
of the family,
- replacements acquired from communal property,
- sole property allocated to communal property by one
of the spouses or another member of the family,
- an increase in the value of the sole property of one
spouse due to improvements by a member of the family.
The sole property of one of the spouses or of a member
of the family is made up of (Article 127 of the Civil
Code):
- the property brought into the marriage,
- property acquired during the marriage by gift or on
death,
- income from intellectual property and royalties,
- and replacements acquired from sole property.
Each member of the family is entitled to hold, use,
manage and consume his or her own property at his or her
own discretion (Article 127.2 of the Civil Code).
30 See D. NELLE, Mongolia, in: BERGMANN/FERID, Internationales Eheund
Kindschaftsrecht, updated March 2003; A. WOHLGEMUTH, Zum
Staatsangehörigkeits-, Familien- und Namensrecht in der heutigen
Mongolei, StAZ (Das Standesamt) 1996, 72-76.
31 Mongolian State Bulletin No. 30/1999; German translation to be found
at: D. NELLE, in BERGMANN/FERID, Mongolia (footnote 30), p. 36-53.
On the internet in Mongolian only at http://www.cis-legal-reform.org/
document.asp?id=7415.
The first Mongolian Family Code was enacted in 1928. Further codifications
followed in 1954 and 1973, all influenced by the Soviet
model at that time. The 1973 Family Code applied until 1999.
32 See D. NELLE, Mongolia, in: BERGMANN/FERID, Mongolia (footnote
30); A. WOHLGEMUTH, Zum Staatsangehörigkeits-, Familien- und Namensrecht
in der heutigen Mongolei, StAZ (Das Standesamt) 1996,
72-76.
33 By a decision of the Supreme Court dated 18.3.2002, No. 71 (State
Bulletin No. 18/2002), the word „name“ for the purposes of Article 24
of the Family Code is to be understood to mean the child's given name
and „father's or mother's name“ to be the name of the father or mother
in the genitive. The tribal name is determined according to the father's
descent and the „17th Regulation on Family Trees“ dated
8.1.1997.
34 For the grounds of divorce under Mongolian law, see: Wunsiedel District
Court judgement of 21.8.1995 - F46/95, FamRZ 1996, 350.
35 German translation of Article 125 et seq. of the Mongolian Civil Code
available at D. NELLE, in: BERGMANN/FERID, Mongolia (footnote 30),
p. 33 et seq. Internet see footnote 17.

34 D. Yanjinkhorloo, National Report Mongolia Notarius International 1-2/2004
In order to manage immovable communal property
(i.e. to dispose of it, in particular) each member of the
family requires the written and notarially certified consent
of all of the adult members of the family (Article
128.2 of the Civil Code); however, official or judicial
consent is not required, even if the family property also
belongs to children who are still minors. If a disposal
takes place without the consent of the other members of
the family they may object on the grounds that the disposal
is invalid (Article 128.4 of the Civil Code).
The partitioning of communal property (Article 130
of the Civil Code) is accomplished during the marriage
on an application made by one of the spouses or another
adult member of the family, or otherwise after the marriage
has been dissolved, and if an individual family
member's share of the property is not sufficient, on an application
made by the family member concerned. The
members of the family can also partition communal property
by agreement; the agreement only requires the consent
of the adult members of the family and not of the
children who are minors. Nor is any official or judicial
consent to partitioning required.
In principle, each member of the family receives the
same share of the family property, including those who
are minors or not able to work (Article 126.4 of the Civil
Code). However, the court can order a different allocation
(Article 130.3 of the Civil Code). Children who
move away from home can demand their share of the
family property; however, the family (parents) must be
left sufficient to enable them to continue to run the household
(Article 131 of the Civil Code).
4.2.3. Marriage contracts
Spouses can conclude a marriage contract to regulate
the contributions to be made by each of them individually
to the family expenditure, the family budget, the size
of the share of property on the dissolution of the marriage
and any other terms linked to property under the Civil
Code (Article 132 of the Civil Code). The marriage contract
can be concluded either prior to or during the continuance
of the marriage (Article 132.3 of the Civil
Code).
The contract must be notarially authenticated, otherwise
it will be null and void (Article 132.2 of the Civil
Code).
If the contract is inequitable (or if it is disproportionately
prejudicial to one of the spouses, Article 132.5 of the
Civil Code) it may be amended or set aside by the court
(Article 133 of the Civil Code).
Marriage contracts are extremely rare in Mongolia in
practice. It is considered abnormal to conceive of the partitioning
of family assets at the time that a marriage takes
place, when the spouses are intending to live together for
the whole of their lifetime.
4.2.4. Maintenance for spouses
There is a legal obligation on the spouses to pay maintenance
to each other in the following cases following a
divorce (Article 36 of the Family Code):
- if one spouse is not working because of having to care
for a child under three years of age,
- if the spouse in need of maintenance has already retired,
or
- if a spouse is unable to work „due to the use of force
within the family“.
In addition to spouses and maintenance for children
and parents, relatives (siblings, grandparents or step-parents)
may also be obliged to maintain minor children who
cannot be maintained by their parents.
Maintenance agreements are possible in relation to all
kinds of maintenance. Maintenance agreements must be
notarially authenticated (Article 45.1 of the Family
Code). The amount stated in the agreement must not fall
short of the minimum subsistence level stipulated by the
State for the region concerned (Article 45.3 in conjunction
with Article 40.4 of the Family Code).
There is no entitlement to a share of pension funds in
Mongolia.
4.2.5. Non-marital relationships
Mongolian law does not contain any rules governing
non-marital relationships or homosexual relationships.
4.3. Other family law
4.3.1. The law governing children
The age of majority in Mongolia is 18 years (Article
15.1 of the Civil Code). No court authorization is required
for parental representation.
4.3.2. Adoption
The adoption of children, which is governed by Article
54 et seq. of the Family Code, does not play any great
role in practice. The consent of the parents and the applicant's
adoption application must be notarially authenticated
(Article 55.1 of the Family Code).
4.3.3. Guardianship and care and control
Guardianship and care and control are also governed by
the Family Code (Article 63 et seq.). The person having
care and control requires the consent of the appropriate
Zasag Darga of the relevant Sum or Duureg (district
chief executive or mayor of the administrative unit concerned)
in order to dispose of the immovable property
of the person in care (Article 69.1.4 and 70.1.4-5 of the
Family Code).

Notarius International 1-2/2004 D. Yanjinkhorloo, National Report Mongolia 35
5. The law of succession
5.1. General remarks
The law of succession is contained in the Fifth Part of
the Mongolian Civil Code (Articles 515-538).
A deceased's property rights and copyright (intangible
assets) are capable of inheritance (Articles 515.1 and 516
of the Civil Code). Succession takes place on the date of
the deceased's death (Article 518 of the Civil Code).
However, inheritance does not arise until it is accepted,
although it then has retrospective effect to the date of
succession (Article 527 of the Civil Code). In the case of
statutory heirs who lived with the deceased, inheritance is
deemed to have been accepted unless they make a notarially
authenticated waiver of their inheritance or declare
to the mayor that they waive the same within three
months of succession (Article 528.1 of the Civil Code).
The period for acceptance in the case of the other heirs is
one year; generally speaking, acceptance will take the
form of an application for probate being made to a notary
or mayor; acceptance can also be implied, however, as
a result of taking possession or disposing of the inheritance
(Article 528.2 and 3 of the Civil Code). An heir can
also renounce succession in favour of a particular statutory
heir (Article 528.5 of the Civil Code).
The heirs' liability for estate debts is limited by law to
the amount of their inheritance; each individual heir is liable
only for the amount of their part of the inheritance
(Article 535 of the Civil Code).
5.2. Statutory line of succession
The deceased's spouse, children and parents incapable
of working inherit the estate in equal shares. If there
are no such persons in existence, or if they should renounce
or lose their inheritance, they are replaced as
heirs by the deceased's grandparents, siblings and grandchildren
(Article 520 of the Civil Code).
Two examples: (1) If a person leaves a spouse, two
children and a mother who has already retired, each of
them will receive one-quarter as joint heirs. (2) If the deceased
just leaves a spouse and five grandchildren, however,
the surviving spouse will be the sole heir.
On a death the deceased's share of the communal family
property is determined (Article 129.1.4 of the Civil
Code); only the deceased's spouse, children and parents
are entitled to inherit that share (Article 520.5-6 of the
Civil Code).
A deceased's household belongings go only to those
statutory heirs who were living with the deceased at the
time of his or her death (Article 520.4 of the Civil Code).
5.3. Compulsory portion
Only those statutory heirs who are either minors or incapable
of working are entitled to a compulsory portion.
They all receive one-half of the estate divided between
them in equal shares. This is a genuine right of „inheritance
of necessity“ – that is to say, a right to the estate in
rem and not a pecuniary entitlement (Article 522.3 of the
Civil Code). 36
For example: A deceased leaves a working spouse,
two children, one of whom is a minor, and his retired
mother. He bequeaths the whole of his property to a third
party. The only persons entitled to a compulsory portion
here are the child who is a minor and the deceased's
mother. Both of them together receive one-half of the estate
as a compulsory portion (i.e. one-quarter each).
A waiver of an inheritance or a compulsory portion
during the lifetime of the deceased is not known to Mongolian
law. However, an heir who has been appointed by
will may renounce his appointment as heir under the will
even before succession occurs (Article 522.5 of the Civil
Code). It is possible for an inheritance to be renounced or
for „inheritance of necessity“ to be waived after succession
has occurred.
5.4. Testamentary form
A will must be drawn up in writing, stating the time and
place, and must be notarially certified. If there should
not be any notary in the district authority (Sum) concerned,
the will can also be certified by the district executive
officer or mayor of the locality (Bag) (Article 523.1
of the Civil Code).
The following procedures are equated with notarial certification
of a will:
- certification of the will of a member of the armed forces
by the armed forces authorities,
- certification of a prisoner's will by the prison authorities,
- certification of the will of a crew member or private
individual present on a vessel by the captain of that
vessel.
Mongolian law does not recognise joint wills or contracts
of inheritance. A contract between third parties in
relation to the deceased's estate is null and void; a contract
between statutory heirs relating to the statutory portions
of their inheritance is permissible however (Article
191 of the Civil Code). No consideration has yet been
given to the extent to which a foreign joint will or contract
of inheritance would be recognised in Mongolia.
5.5. Administration of wills
It is for the heirs themselves to administer the will.
However, the testator can also appoint an executor (Article
526 of the Civil Code).
5.6. Probate
The notary in responsible for issuing the „grant of probate“
– or, if there is no notary in the locality, the mayor
will do so (Article 531.1 of the Civil Code). The „grant
of probate“ cannot be issued until one year after the
succession has occurred (Article 531.2 of the Civil
Code).
36 The German translation on the internet and in NELLE wrongly puts the
share of an „inheritance of necessity“ under Mongolian law at twothirds.
A compulsory portion of one-half of the estate is correct.

36 D. Yanjinkhorloo, National Report Mongolia Notarius International 1-2/2004
6. Company law 37
Under Mongolian law a legal person is an organisational
unit created in order to permanently carry on certain
activities and pursue certain objectives, which is endowed
with its own assets, acquires rights and obligations
as a result of its actions, has independent liability
through its own assets and can appear in court as claimant
or defendant under its own name (Article 25 of the
Civil Code). A distinction is drawn between legal persons
governed by public law and legal persons governed by
private law.
6.1. Types of legal person
Legal persons carrying on business activities can be
formed either as partnerships or as companies (Article
33.2 of the Civil Code).
Legal persons not carrying on commercial activities
can be created as foundations, associations or cooperatives
(Article 33.2 and Article 36 of the Civil Code).
Monasteries, churches and religious establishments have
the same legal status as foundations (Article 36.6 of the
Civil Code).
Legal persons can merge, whereupon the rights attributed
to the legal person accrue to the participating parties
(Article 31 of the Civil Code).
6.2. Companies: limited liability companies and
joint-stock companies
There are two forms of company in Mongolia (Article
35 of the Civil Code): the limited liability company –
khyazgaarlagdmal khariutslagatai kompany – HHK) and
the joint-stock company – khuvitsaat kompany – HK).
The limited liability company is the most widespread
form of trading in Mongolia.
The limited liability company and joint stock company
are governed by the „Company Law“ of 2 July 1999. 38
Whereas the Civil Code takes after the continental legal
system, the Company Law is modelled on the Common
Law, particularly that of the USA. Hence, there are not
only differences in language, but also some inconsistencies
between the two laws. The Mongolian law on limited
liability companies is nevertheless fairly similar to
German law.
The minimum capital needed to incorporate a limited
liability company is 1 million tugrig (approx. 1,000 US
dollars) and for a joint-stock company 10 million tugrig
(approx. 10,000 US dollars). Both a limited liability company
and a joint-stock company can be incorporated as a
one-man company (Article 12.3 of the Company Law).
The number of founders of a limited liability company
must not exceed 50; however, the company can also later
have more shareholders (Article 5.1 of the Company
Law).
The articles of association of an undertaking with foreign
investment must be notarially certified in the case
of both a limited liability company and a joint-stock company.
39 Any amendments to the articles of association
must also be entered in the State Register (art. 22 of the
Law on the State Registration of Legal Persons, passed
on 23.05.2003 and in force since 1.10.2003). Companies
can be reorganised by way of merger, amalgamation, partition,
division or modification.
Both limited liability companies and joint-stock companies
are represented by their directors (Guitsetgekh
udirdlaga). Unless otherwise provided, where more than
one director is appointed they can only represent the
company jointly (Article 80.7 of the Company Law). In a
joint-stock company a board of directors must be appointed
as a further entity; this is possible in the case of
limited liability companies, but not essential (Article 75
of the Company Law). In both forms of company the
principal executive body is the general meeting of shareholders
(Article 60.1 of the Company Law).
6.3. Partnerships
A partnership is a legal person the assets of which are
made up of the member's shares and for the debts of
which both the partnership assets and the partners' private
assets are liable (Article 35.1 of the Civil Code).
Partnerships are governed by the Partnership Law of 11
May 1995. 40 Mongolian partnership law distinguishes
between unlimited partnerships (bukh gishuud buren
khariutslagatai or BB) where all of the partners have unlimited
joint and several personal liability (Articles 19-26
of the Partnership Law) and the limited partnership –
zarim gishuud buren khariutslagatai or ZB), where,
alongside at least one partner with unlimited liability,
there are also partners whose liability is limited to their
contributions (Articles 27-28 of the Partnership Law).
6.4. Non-commercial bodies: the association, foundation
and cooperative
An association under Mongolian law is a legal person
consisting of members and organised on a voluntary basis
established in order to achieve certain common aims
(Article 36.1 of the Civil Code; Law on Non-Governmental
Organisations of 6 February 1997). 41
A foundation is a legal person not based on membership
which is founded by one or more initiators
(founders) in order to achieve a common charitable purpose
(Articles 36.2 and 37-38 of the Civil Code, Law on
Non-Governmental Organisations of 31 January 1997).
37 NELLE, Handelsgesellschaften und Genossenschaften in der
Mongolei, WiRO (Wirtschaft und Recht in Osteuropa) 2003, 129-136
38 Company Law of 2 July 1999, State Bulletin No. 34/1999; English
translation available on the internet at: www.investmongolia.com/
law05.pdf.
39 Based on the Regulations on the Registration of Undertakings with
Foreign Investment laid down by the FIFTA (= Foreign Investment
and Foreign Trade Agency of Mongolia), a government authority responsible
for direct organisations and foreign trade.
40 The Partnership and Company Law of 11 May 1995, State Bulletin
No. 8-9/1995; English translation available on the internet at:
www.cis-legal-reform.org/document.asp?id=424. The part of the Law
relating to companies has since been revised and was repealed on
16.7.1999 and replaced by the Company Law of 2 July 1999.
41 State Bulletin No. 3/1997.

Notarius International 1-2/2004 D. Yanjinkhorloo, National Report Mongolia 37
A cooperative is a legal person consisting of at least 9
persons established for the purposes of meeting communal
economic, corporate and cultural needs (Article 36.4
of the Civil Code; Law on Cooperatives of 8 January
1998). 42
6.5. State Register and proof of authority
All kinds of legal person are entered in the State Register.
The State Register for partnerships, companies, cooperatives
and undertakings partly owned by the State
has been kept since 1.10.2003 by the National Fiscal Office,
whereas associations, foundations, religious establishments
and media are registered at the Ministry of Justice
(art. 7 of the Law on the State Registration of Legal
Persons).
Legal persons that do not carry on commercial activities
may only carry out those activities stated in their articles
of association (Article 26.6 of the Civil Code).
However, this ultra vires doctrine does not apply to companies
and partnerships as legal persons carrying on a
commercial activity (Article 26.7 of the Civil Code; Article
8.1 of the Company Law).
The name, registration number and registered office of
the company, as well as its nominal capital and directors,
are to be shown in the Commercial Register (art. 11 of the
Law on the State Registration of Legal Persons). Third
parties are safeguarded by their good faith in the authority
of the directors shown in the Commercial Register.
7. Private international law
7.1. New PIL since 1 September 2002
Along with the new Civil Code there has also been a
new Private International Law since 1 September 2002. It
is to be found in the last (Sixth) Part of the new Civil
Code (Articles 539-552). 43 Content-wise, there is very
little difference from the earlier law (compared to the
great changes made in other parts of the Civil Code).
Renvoi to Mongolian law is assumed (Article 540.2 of
the Civil Code). There are no other statutory provisions
governing the application of the renvoi principle. No further
renvoi is observed.
The public polity proviso is governed by Article 540.1
of the Civil Code; in principle, when deciding civil issues
and regulating civil-law relationships, foreign legislation,
legal principles and internationally recognised practices
can be applied provided that they do not infringe the Constitution
of Mongolia or any other laws or international
conventions to which Mongolia is a signatory.
7.2. Lex personalis, the law governing form and the
law of obligations
The legal competency of foreign nationals is determined
by the law of their country of origin (nationality)
(Article 543.2 of the Civil Code).
The form of a legal transaction is governed by the law
of the State in which the transaction is concluded (lex loci
contractus) or by the subject matter of the legal transaction
(the law of the transaction) (Article 548.2 of the
Civil Code); compliance with Mongolian rules on form is
always sufficient (Article 548.4 of the Civil Code). In the
case of real property situated in Mongolia, however, the
form required under Mongolian law is vital (Article
548.5 of the Civil Code).
If the parties do not make any valid choice of law, Articles
547 and 549 state which law is to apply. In the case
of contracts of sale, for example, it is the law of the State
in which the vendor is habitually resident or has its principal
place of business.
The form and time limit for a power of attorney are determined
by the law of the State in which the power of
attorney is granted (Article 548.8 of the Civil Code).
7.3. Family law
In the case of a marriage contracted abroad between
a Mongolian person and a foreigner all of the propertylaw
and personal effects of the marriage between the
spouses (i.e. including the matrimonial property) are
governed by the law of their habitual place of residence
(Article 6.5 of the Family Code). The law governing
the effects of the marriage will change if the spouses
change their habitual place of residence.
The spouses can, in any event, make a choice of law at
the time that they contract their marriage; they can
choose either the law of their habitual place of residence
or the law of the homeland of one of the spouses. Otherwise
(unless the marriage is contracted abroad) Mongolian
law will apply (Article 6.6 of the Family Code).
7.4. Succession law
Succession is determined by the law of the State where
the deceased had his final habitual place of residence
(Article 552.1 of the Civil Code). Succession in relation
to real property situated in Mongolia is determined,
however, according to Mongolian succession law (partial
division of estates) (Article 552.4 of the Civil Code).
Mongolian private international law does not allow any
choice of law with regard to succession.
Testamentary capacity, the formal validity of a will
and amendments thereto are governed by the law of the
deceased's habitual place of residence at the time that the
will was made (Article 552.2). A will that conforms to the
formalities locally applicable or the form required under
Mongolian law will also be recognised as formally valid
(Article 552.3).
42 Law on Cooperatives of 8 January 1998, State Bulletin No. 2/1998;
English translation available at: www.cis-legal.reform.org/document.
asp?id=2384.
43 German translation IPRax 2003, 381; available on the internet at:
www.cis-legal.reform.org/civil-code/mongolia/PART9.HTM. See D.
NELLE, Neues Internationals Privat-, Zivilverfahrens- und Vollstreckungsrecht
in der Mongolei, IPRax 2003, 378-381. The version of the
Mongolian PIL applicable until 1.9. 2002 is published in English and
German (with translations by HERTEL/YANJINKHORLOO) in:
KROPHOLLER/KRÜGER/RIERING/SAMTLEBEN/SIEHR, Außereuropäische
IPR Gesetze, Eigenverlag DNotI, 1999, p. 538-565.

38 D. Yanjinkhorloo, National Report Mongolia Notarius International 1-2/2004
7.5. Company law
The legal capacity of foreign legal persons is determined
by the law of their country of origin (Article 544.1
of the Civil Code). The legislative wording relies here on
the incorporation theory, although this is a matter of
dispute amongst academics.
7.6. Legalisation of foreign deeds
Mongolia is not a signatory to the Hague Convention of
5 October 1961 Abolishing the Requirement of Legalisation
for Foreign Public Documents. 44 The German, Austrian
and Swiss courts and authorities will therefore generally
require legalisation for documents from Mongolia.
(Conversely, however, in practice, a translation by an official
translator will generally suffice for notarised German
documents to be used in Mongolia, without legalisation).
8. Tax law 45
8.1. Land transfer tax
Land transfer tax is currently 2% of the value of the
property. 46 The value of property is determined from a
certificate issued by the Land Registry.
8.2. Inheritance and gift tax
There is no liability to tax on the gift of real estate or
on the acquisition thereof on death because there is no inheritance
or gift tax.
8.3. Foreign direct investment
Special protection and particular tax advantages and
exemptions are given in some areas for undertakings with
foreign investment (foreign direct investment). 47
9. Bibliography and Internet
9.1. Internet
Numerous Mongolian civil and commercial laws are to
be found as a result of the Bremen University project
„Law Reform in Transition States“ financed by the GTZ
(Gesellschaft für Technische Zusammenarbeit). Unfortunately,
however, the legislative wording there is principally
in Mongolian, although some is also to be found in
English, Russian or German. Unfortunately the documentation
ends in the year 2003/2004. Internet source:
http://www.cis-legal-reform.org.
English translations of various Mongolian statutes, particularly
on commercial and tax law, are to be found on
the homepage of the Foreign Investment and Foreign
Trade Agency of Mongolia (FIFTA), a government authority
responsible for direct organisations and foreign
trade: http://www.investmongolia.com/legislation.htm.
Other legislative wording is to be found on the Indiana
University homepage: http://www.indiana.edu/~mongsoc/mong/lawlib.html.
A list of English translations of Mongolian legislation
available from the US Embassy in Ulaanbaatar, FIFTA
or the Mongolian Ministry of Finance is to be found on
the internet at:http://www.us-mongolia.com/bizinv/mongollaws/lawsinenglish.html.
9.2. Bibliography
Books about Mongolian law in western European languages:
WILLIAM E. BUTLER, The Mongolian Legal System:
contemporary legislation and documentation, The Hague
(Martinus Nijhoff Publishers), 1982, 995 pages, ISBN
90-247-2685-9 (outdated).
D. NELLE, Mongolei, in: BERGMANN/FERID, Internationales
Ehe- und Kindschaftsrecht, last update: March
2003, ISBN 3-8019-1150-0.
44 German BGBl. 1965 II, p. 876; on the internet at
http://www.hcch.net/e/conventions/menu12e.html.
45 See D. NELLE, Mongolisches Steuerrecht, WIRO (Wirtschaft und
Recht in Osteuropa) 2001, 229-223.
46 Article 8.3 of the Income Tax Act for Nationals.
47 See Foreign Investment Law of 10.5.1993, State Bulletin No. 3/1993;
English translation on the internet at http://www.investmongolia.com/
law14_2.pdf and Economic Entity and Organisation Tax Law of Mongolia
of 14 December 1992, State Bulletin No. 1/1993; English translation
on the internet at: http://www.investmongolia.com/ law33.pdf.