Beijing Shougang Mining Investment Company Ltd., China Heilongjiang International Economic & Technical Cooperative Corp., and Qinhuangdaoshi Qinlong International Industrial Co. Ltd. v. Mongolia

At a glance

Parties

Beijing Shougang Mining Investment Company Ltd., China Heilongjiang International Economic & Technical Cooperative Corp., and Qinhuangdaoshi Qinlong International Industrial Co. Ltd. (China) v. Mongolia

Case no.

No. 17 Civ. 7436 (ER)

Court

U.S. District Court, Southern District of New York (Ramos, D.J.)

Underlying award(s)

Award of June 2017 by an ad hoc three-member tribunal seated in New York and administered by the Permanent Court of Arbitration; it declined jurisdiction over the claims and the counterclaims

Forum and rules

Petition to vacate and cross-motion to confirm under the Federal Arbitration Act (9 U.S.C. §§ 9–10) and the New York Convention, Article V

Treaty

China–Mongolia BIT (1991), in force 1993

Sector

Mining (iron ore)

Outcome

The court denied the Chinese companies' motion to vacate and granted Mongolia's cross-motion to confirm the award.

The dispute

Three Chinese companies held interests in a joint venture formed in 2002 to develop an iron ore deposit in the Tumurtei region of northern Mongolia. Mongolian authorities revoked the joint venture's licence in September 2006. The joint venture challenged the revocation in the Mongolian courts, up to the Supreme Court, and lost. By 2009 the licence and land-use rights had passed to a Mongolian state-owned metallurgy company. In February 2010 the companies started arbitration under Article 8 of the 1991 China–Mongolia BIT, alleging expropriation in breach of Article 4. In June 2017 the tribunal held that Article 8(3) gave it jurisdiction only over disputes about the amount of compensation for expropriation, not over whether an expropriation had occurred, and declined jurisdiction. In this court, the companies asked for de novo review of the arbitrability ruling, vacatur of the award and an order sending the parties back to arbitration. Mongolia cross-moved to confirm the award.

Key holdings

1. The BIT itself contains no clear and unmistakable agreement to let the arbitrators decide arbitrability. The words in Article 8(5), 'The tribunal shall determine its own procedure', cover procedure, not jurisdiction. Unlike the treaty in Republic of Ecuador v. Chevron, this BIT does not incorporate the UNCITRAL Rules. pp. 6–7
2. The companies' conduct is clear and unmistakable evidence that they agreed to submit arbitrability to the tribunal. They started the arbitration and argued for jurisdiction from their first submission. They agreed not to bifurcate jurisdiction and merits, took part for seven years and never objected. They therefore waived the right to de novo court review. The court distinguished First Options and relied on Opals on Ice and Halcot. pp. 7–9
3. The companies relied on no specific ground for vacatur under the FAA or Article V of the New York Convention, and the court could have treated such arguments as waived. It instead read their arguments as a petition under FAA section 10(a)(4), on the ground that the arbitrators exceeded their powers. p. 10
4. On deferential review, the tribunal's analysis is 'well beyond colorable' and draws its essence from the treaty, because it rests almost entirely on the treaty's text. The court expressed no view on whether the analysis was correct. The award was confirmed. p. 10

Procedural history

1. 1991China and Mongolia sign the BIT. It enters into force in 1993.
2. September 2006Mongolian authorities revoke the joint venture's iron ore licence. The joint venture sues in the Mongolian courts in November 2006 and loses.
3. February 2010The Chinese companies start arbitration under Article 8 of the BIT.
4. September 2015Hearing held in the Netherlands, after a pause that included the replacement of one arbitrator.
5. June 2017Award: the tribunal declines jurisdiction over both the claims and Mongolia's counterclaims.
6. 25 November 2019S.D.N.Y. Opinion & Order (filed on this date; the database gives 19 November 2019): the petition to vacate is denied and the award is confirmed.

Keywords

• China–Mongolia BIT
• vacatur
• confirmation
• arbitrability
• clear and unmistakable evidence
• First Options
• waiver
• de novo review
• Federal Arbitration Act section 10(a)(4)
• New York Convention Article V
• amount of compensation for expropriation
• expropriation
• iron ore
• Tumurtei
• mining licence
• Permanent Court of Arbitration

Summary generated with AI from the published documents — refer to the award for the authoritative text.