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Milbank Secures Significant Victory for Mongolia over Chinese SOEs in Treaty-Based Arbitration www.milbank.com
NEW YORK, July 5, 2017 – Mongolia, represented by Milbank, Tweed, Hadley & McCloy LLP, has prevailed in an arbitration brought by Chinese State-Operated Entities’ (SOEs) pursuant to the investment-protection treaty between the two countries following Mongolia’s revocation of a license for the Chinese entities to mine the vast Tumurtei iron ore deposit. The Tribunal’s award of June 30 dismissing all claims has potentially significant implications for Chinese foreign investment worldwide because the identical treaty language appears in the majority of China’s 110 bilateral investment protection treaties with other countries.
The Tribunal’s award parted ways with determinations by two tribunals in prior arbitrations brought by Chinese investors, one confirmed by the Singapore Supreme Court, that found the critical treaty language to be a broad submission to the jurisdiction of international tribunals. In contrast, the Tumurtei Award relied upon evidence of historic Chinese state practices not considered in the prior cases and held that only national courts in the host country of foreign investment, not arbitral tribunals constituted pursuant to the China-Mongolia treaty, were empowered to determine whether the host State had committed an unlawful expropriation.
The final award handed down on June 30, which was unanimous, puts an end to seven years of arbitration. The arbitration was presided over by the former President and current Judge of the International Court of Justice Peter Tomka. A week-long hearing was held at the Peace Palace in The Hague in late 2015. The other members of the arbitration tribunal were Yas Banifatemi, a member of the Shearman & Sterling team that secured the $50 billion arbitration award for Yukos against Russia (by nomination of the Chinese Claimants) and Mark Clodfelter, the former US State Department’s Assistant Legal Adviser for International Claims and Investment Disputes (by nomination of Mongolia).
At a time when Chinese outbound foreign investment has become enormous and is growing, the decision of the arbitral Tribunal has potentially significant implications for Chinese foreign investments around the world. Out of 110 bilateral investment treaties entered into by China and still in force, 70 are treaties of the “1st generation” – that is, early treaties concluded in the 1980’s and 1990’s almost all of which contain the same sort of language restricting access to arbitration to disputes involving the amount of compensation for expropriation. These early treaties reflect China’s distrust of arbitration as a mechanism to resolve disputes with foreign investors at a time when China was predominantly a capital importer hosting foreign investments. It is only around the time that China adopted its so-called “going out” strategy in 2001, shifting its focus to becoming a significant exporter of capital, that a new wave of BITs were signed. In these ‘2nd’ and subsequent generations of Chinese BITs, the arbitration clause was extended to “any disputes concerning an investment” so as better to protect China's outbound investments.
The Tribunal's ruling on the Chinese Treaty departed from prior awards interpreting identical language in other Chinese treaties and similar language in communist-era treaties of Russia, Bulgaria and the Czech Republic. In support of its position, claimants had relied on arbitral awards in Tza Yap Shum v. Peru, EMV v. Czech Republic, Renta v. Russia and Sanum v. Laos. In Sanum, the Singapore Court of Appeal held, in September 2016, following extensive treaty-based arbitration proceedings, that a “narrow interpretation” of the dispute resolution clause of the China-Laos BIT (containing the same language) could “render illusory the availability of access to arbitration” and leave the clause without meaningful effect. In Tza Yap, the arbitral tribunal also agreed that the Chinese claimant’s “interpretation, the broader one, is the most appropriate.”
The Tumurtei arbitration was the first in which a respondent-State had put forward the argument that international arbitration would be available for the determination of quantum following an expropriation formally “proclaimed” by the State. In the arbitration, Mongolia submitted substantial of China's historic use of such proclaimed expropriations, whether through ordinances or decrees, when its 1st Generation treaties were entered. Thus, Mongolia argued that the critical treaty language had meaningful effect even if construed so as to exclude international review of its revocation of the Tumurtei license.
By unanimous decision, the Tribunal accepted Mongolia’s position and found that the China-Mongolia BIT “restrict[s] the jurisdiction of an ad hoc arbitral tribunal to encompass only disputes which involve the amount of compensation for expropriation.” The Tribunal disagreed with Claimants’ view that the arbitration provision of the BIT would be deprived of any effect in practice, because “[a]rbitration before an ad hoc arbitral tribunal would be available in cases where an expropriation has been formally proclaimed and what is disputed is the amount to be paid by the State to the investor for its expropriated investment. In other words, arbitration will be available where the dispute is indeed limited to the amount of compensation for a proclaimed expropriation.”...
Gold prices picked up Wednesday on North Korea's successful test-launch of an intercontinental ballistic missile, and gloomy US economic data.
Bullion rose as high as $1,228.40 an ounce after US secretary of state Rex Tillerson said last night North Korea’s test represented "a new escalation of the threat" to the country and its allies.
The metal was trading slightly down last at $1,223.60 per ounce, while investors were awaiting the release of minutes from the US Federal Reserve’s June meeting, due Wednesday afternoon shortly after gold futures settle.
The market was also looking ahead to employment data on Friday that could influence the pace of rate rises.
In the nearer term, analysts at Commerzbank said technical support for gold was around its May low of $1,214.
Ulaanbaatar /MONTSAME/ Under the theme “25 years of CICA: For Asian Security and Development”, the second non-governmental forum of Conference on Interaction and Conference-Building Measures in Asia (CICA) took place in Beijing, China on June 28-29. The forum was attended by over 300 delegates including CICA member states, observer states (organizations) and concerned countries in the region and discussed issues such as security situations in Asia, on how to achieve common, comprehensive, cooperative and sustainable security in Asia and jointly build the Belt and Road.
Within the framework of the forum, eight roundtable panels focusing on the Asian security situation was held, such as the implementation of the United Nations 2030 Agenda for Sustainable Development, anti-terrorism cooperation, cyberspace security, addressing climate change, financial security, the role of the CICA Non-governmental Forum, and the role of the media. Also, Director of International Relations’ Department of Mongolian Academy of Sciences PhD. J.Bayasakh held a discussion on “Northeast Asian Security and Mongolia’s Contribution in the Region” during the roundtable panel on anti-terrorism cooperation.
“Northeast Asia’s security is still delicate. The issues are both bilateral (Japan-Russia, Japan-China, China-Vietnam) and multilateral (China-ASEAN). And this is only Mongolia in the region which faces no challenges in terms of security. Owing to its geographical location and foreign relationship potentials, Mongolia is pursuing soft power policy in the region, and in taking advantage of its neutrality position it calls other regional countries for holding security dialogues” said PhD. J.Bayasakh during his presentation.
Russian energy major Gazprom has signed an agreement with Hungary to deliver gas via the Turkish Stream pipeline, the MTI news agency reported, citing Hungary’s Foreign Minister Peter Szijjarto.
He said the Turkish Stream branch to Hungary would be completed by the end of 2019. Budapest sees Turkish Stream gas supplies as the best option because other routes, across Romania and Croatia, are at an early stage, the foreign minister added.
"This will improve Hungary's energy security a great deal, so it is in our strategic interest for this cooperation to start," said Szijjarto.
The Turkish Stream gas pipeline will consist of two branches. The first with a maximum capacity of 15.75 billion cubic meters, is expected to be finished in 2018 and to deliver Russian natural gas directly to Turkey. The second branch is supposed to deliver gas to European customers.
Russia accounts for over 75 percent of oil and 60 percent of gas consumption in Hungary which is supplied via Ukraine.
The Prime Minister of Hungary Viktor Orban said earlier his country would prefer to diversify the delivery method, including via the Nord Stream or Turkish Stream pipelines.
In February during a state visit to Hungary Russian President Vladimir Putin guaranteed the country would receive the contracted amount of oil and gas, and confirmed deliveries using northern and southern routes were also possible. He said that Nord Stream-2 could deliver gas to Hungary through Slovakia and Austria.
"We are studying all these possibilities, but can say for sure: Russian gas will reliably come to the Hungarian market, it is a hundred percent probability," Putin told Orban.
Gazprom CEO Aleksey Miller announced the start of the Turkish Stream pipeline construction in May. He said that “by late 2019 our Turkish and European consumers will have a new, reliable source of Russian gas imports.”
The Turkish Stream project was signed by Putin and his Turkish counterpart Recep Tayyip Erdogan in October 2016. Its total cost was estimated at €11.4 billion ($12.9 billion).
Petro Matad, the AIM quoted Mongolian oil explorer announces that further to the press release on 31 May 2017, a comprehensive drilling contract has now been signed with SINOPEC INTERNATIONAL PETROLEUM SERVICE MONGOLIA CO. LTD ("Sinopec") and that the initial drilling targets have been selected.
2017 exploration drilling programme
The first exploration well will be located on the Irves (Snow Leopard) prospect in the Taats Basin of Block V and will spud in September 2017. The well will be drilled to a total depth of 3150 m and have an expected duration of 50 days. The Irves prospect comprises a series of tilted fault blocks, with multiple stacked reservoir targets, and has an estimated potential of 160 million barrels of oil-in-place (mean-case) and an upside of 350 million barrels of oil-in-place.
Irves-1 is an important 'basin and play opening' well. It will be the first deep exploration well drilled in Central Mongolia to test the hydrocarbon potential of the highly prolific Early Cretaceous 'syn-rift' play already proven in neighbouring Chinese and eastern Mongolian basins. Success at Irves-1 would open the Taats Basin for further exploration and potentially access over 1.8 billion barrels oil-in-place (mid-case estimate).
Once the Irves-1 well has been completed, the rig will mobilise to the second well location, which is the Takhi (Wild Horse) prospect within the Baatsagaan Basin of Block IV. Takhi-1 will be a shallower exploration well, with a total depth of 1850m and an expected duration of approximately 20 days. The Takhi prospect comprises a large faulted anticline with several stacked reservoir objectives. The well is designed to target 280 million barrels of oil-in-place (mean-case), and has an upside case exceeding 650 million barrels of oil-in-place. Success at Takhi-1 would likewise, open the Baatsagaan Basin for further exploration and potentially access over 1.2 billion barrels oil-in-place (mid-case estimate).
For both the Irves and Takhi prospects there is significant stratigraphic upside potential, which is not included in the prospect volumes stated above. More details on the drilling targets will be provided nearer the commencement of drilling operations.
The Taats and Baatsagaan basins are just 2 basins out of a total of 12 basins that the Company has identified within Blocks IV and V. Petro Matad has so far mapped over 65 structural prospects and leads across these basins and based on these alone the 12 basins have the potential to contain over 20 billion barrels of oil in place. These basins may also offer significant upside potential from stratigraphic traps and unconventional oil plays. All volumes are the Company's internal estimates.
Further announcements will be made on progress leading up to the spud of the first well.
Ridvan Karpuz, the CEO of Petro Matad, said:
"I am very pleased to have executed the rig contract which is a significant milestone as we head toward exploratory drilling later in 2017. With the signature of the agreement with Sinopec, the Company is now poised to deliver on its commitment to undertake a high impact exploration drilling programme in 2017."...
The Korea Tourism Organization (KTO) opened an office in Mongolia, Tuesday, as part of its efforts to diversify the country's tourism market beyond neighboring China and Japan.
The KTO said it held an opening ceremony at the office in Ulaanbaatar, Mongolia's capital, in which 150 government officials from both countries, local travel agents and medical officials attended to strengthen their ties.
According to the KTO, the number of Mongolian visitors has increased rapidly over the past five years. In 2016, 79,165 Mongolians came to Korea, and 20 percent of them did so to get medical treatment.
Gantogoo Sergelen, who became a singer after winning the Migrants' Arirang Multicultural Festival in Korea last year, was appointed as the KTO's honorary ambassador.
The KTO said more than 17.2 million foreigners visited Korea last year. Nearly half of them were Chinese (8 million), followed by Japanese (2.3 million).
The Russian Direct Investment Fund and the China Development Bank (CDB) have agreed to establish a Russian-Chinese investment fund worth 68 billion yuan ($10 billion).
The agreement was signed at a meeting between Russian President Vladimir Putin and Chinese President Xi Jinping, who is in Russia on an official visit.
The new fund, to be called the Russia-China RMB Cooperation Fund, was created to make settlements in ruble and yuan. Both Moscow and Beijing have repeatedly talked about the importance of payments in local currencies for bilateral trade.
The money will be used on infrastructure projects in Russia and China. Particularly to projects linked to One Belt One Road (the 21st-century Maritime Silk Road) scheme and the Eurasian Economic Union.
"The Russian-Chinese investment cooperation fund in yuan will be a major stage in China-Russia investment partnership, supported by the governments of both countries, which will stimulate the growth of direct investment between the countries and promote a significant increase in the number of Russian-Chinese projects," said CDB Chairman Hu Huaibang.
"We are pleased to announce a partnership with the China Development Bank and provide an opportunity for Chinese investors to invest in their national currency. It will give a powerful impetus to increase the volume of cross-border direct investment and significantly increase the number of jointly implemented projects," said Russian Direct Investment Fund chief Kirill Dmitriev.
AKIPRESS.COM - Cabinet authorized Finance Minister of Mongolia B.Choijilsuren to conclude a loan agreement with South Korea during its Tuesday session in Ulaanbaatar, state media report.
Mongolia is implementing a project to support international public transport services on a soft loan from the Export-Import Bank of Korea, Montsame reports.
The loan agreement finances the import of the 43 buses that Mongolia has received and the second batch of buses yet to be imported.
Mongolia hasn’t reformed its international and intercity public transport sector since 1987.
Mongolia Energy Corp Ltd (0276.HK) shares are moving today on volatility -5.22% or $-0.012 from the open. The HKSE listed company saw a recent bid of $0.218 and 606750 shares have traded hands in the session.
Investors are typically looking for any little advantage when it comes to the equity markets. Investors often have to figure out not only how certain companies are faring, but also how the overall global economic landscape is shaping up. Focusing in on the proper economic data can help detect overall trends in the economy. Investors who are able to hone their analytical skills might be able to put themselves in a much better position to achieve success. Being able to process and organize all of the different types of financial information that is constantly being thrown around may be a great asset to the individual trader and investor. The amount of information floating around in today’s investing climate is enormous. Zooming in on the most pertinent information can help keep things manageable.
Taking a deeper look into the technical levels of Mongolia Energy Corp Ltd (0276.HK), we can see that the Williams Percent Range or 14 day Williams %R currently sits at -106.67. The Williams %R oscillates in a range from 0 to -100. A reading between 0 and -20 would point to an overbought situation. A reading from -80 to -100 would signal an oversold situation. The Williams %R was developed by Larry Williams. This is a momentum indicator that is the inverse of the Fast Stochastic Oscillator.
Mongolia Energy Corp Ltd (0276.HK) currently has a 14-day Commodity Channel Index (CCI) of -121.70. Active investors may choose to use this technical indicator as a stock evaluation tool. Used as a coincident indicator, the CCI reading above +100 would reflect strong price action which may signal an uptrend. On the flip side, a reading below -100 may signal a downtrend reflecting weak price action. Using the CCI as a leading indicator, technical analysts may use a +100 reading as an overbought signal and a -100 reading as an oversold indicator, suggesting a trend reversal.
The RSI, or Relative Strength Index, is a widely used technical momentum indicator that compares price movement over time. The RSI was created by J. Welles Wilder who was striving to measure whether or not a stock was overbought or oversold. The RSI may be useful for spotting abnormal price activity and volatility. The RSI oscillates on a scale from 0 to 100. The normal reading of a stock will fall in the range of 30 to 70. A reading over 70 would indicate that the stock is overbought, and possibly overvalued. A reading under 30 may indicate that the stock is oversold, and possibly undervalued. After a recent check, Mongolia Energy Corp Ltd’s 14-day RSI is currently at 38.07, the 7-day stands at 33.06, and the 3-day is sitting at 26.90.
Currently, the 14-day ADX for Mongolia Energy Corp Ltd (0276.HK) is sitting at 18.80. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders often add the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of a trend....
A team of former traders from Glencore (LON:GLEN) will launch Wednesday an online platform to connect miners with customers such as smelters and sign deals without the need of brokers.
The online marketplace, named Open Mineral, will let miners put up tenders for their concentrate directly to end-users.
Open Mineral will focus first on gold, silver, copper, zinc and lead concentrates.
The platform will focus first on gold, silver, copper, zinc and lead, which represent a combined market worth about $50 billion.
Smelters and miners could potentially boost returns by millions of dollars by dealing directly in the concentrate market, which is inefficient and opaque, chief executive Boris Eykher told Reuters.
Open Mineral will also provide trade services such as transportation, surveying, assaying and insurance.
Since annual concentrate deals for the year are already set, the new online tool will target spot and 2018 contracts, which are due to be negotiated before the end of the year.
Open Mineral is not the first attempt to take the trading of metals from the physical to the online world. Last month, the former chief executive officer of the London Metals Exchange launched an alternative electronic trading platform for metals.