LAW OF MONGOLIA

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MONGOLIACIVIL CODEImportant DisclaimerThis translation has been generously provided by the Financial Regulatory Commission of Mongolia. This doesnot constitute an official translation and the translator and the EBRD cannot be held responsible for anyinaccuracy or omission in the translation. The text should be used for information purposes only andappropriate legal advice should be sought as and when appropriate.

UNOFFICIAL TRANSLATIONLAW OF MONGOLIAJanuary 10, 2002Ulaanbaatar cityCIVIL CODESUBPART I.GENERAL BASISSub-part 1.Civil Legal Relationship, LegislationCHAPTER ONECommon provisionsArticle 1. Purpose of the Law1.1. The purpose of the Law shall be to regulate relationship with respect tomaterial and non-material wealth arising between legal persons.1.2. Civil legislation shall be based on the principle of ensuring equality andautonomy of participants to the civil legal relations, sanctity of their property,contract freedom, non-interference into personal affairs, unlimited exercising ofcivil rights and fulfillment of obligations, having violated rights restored and courtprotection.1.3. Unless stipulated otherwise by law, this Law shall not be applied forregulating relationship with respect to material and non-material wealth, subject toregulation by Administrative Laws including Tax, Budget and Finance or based onadministrative subordination.Article 2. Civil Legislation2.1. Civil Legislation shall consist of the Constitution of Mongolia, this Law andother legislative acts adopted in compliance with them.2.2. If the International Treaty of Mongolia stipulates otherwise, the InternationalTreaty shall be observed.Article 3. Application of Civil Legislation3.1. Courts shall not apply any law contradicting the Constitution of Mongolia.3.2. In cases other than the International Treaty stipulating that national legislationshould be adopted, civil legal relations shall be regulated by the InternationalTreaty of Mongolia.1

3.3. In case laws other than the Constitution and this Law contradict each other,the provisions of the Law, which regulates this matter in more details, or in case ofabsence of such, provisions of the lately adopted Law shall apply.3.4. Validity of an invalidated law shall not be restored if the law annulling this lawis invalidated.3.5. If the Law envisages, the legal acts adopted in compliance with this Law byGovernment, other competent government agencies or officials and containingcivil legal norms and enforced publicly, shall be applied.3.6. Legal acts defining norms shall be applied only in case they replace the legalnorms.3.7. Ignorance about the Law or its misinterpretation shall not serve as a groundfor its non-appliance or exempt from responsibilities stipulated by the Law.Article 4. Similar application of Civil Law4.1. Norms of other laws regulating similar relations shall be applied, if the CivilLaw lacks norms regulating a particular relationship.4.2. In the absence of norms regulating similar relations, the particular relationsshall be regulated in compliance with the civil legal content, principles andcommonly accepted norms.4.3. Norms regulating particular relationship shall not similarly regulate otherrelations.Article 5. Retrospective application (ex post facto) of civil legislation5.1. Unless stated otherwise in the Law, retrospective application of civillegislation shall be excluded.5.2. In case the newly approved legislation damages the rights and legitimateinterests of the parties to the contract, contract terms and conditions shall be valid.5.3. If parties to the contract agree, the newly adopted legislation with better termsand conditions shall apply.Article 6. Objects of civil legal relationship6.1. In accordance with the grounds and procedure stated in the law, material andnon-material wealth, which could be valued in terms of money in civil circulation,shall be objects of civil legal relationship.6.2. Material or non-material rights, action or non-action and information may beobjects of civil legal relations as well.2

Article 7. Participants to civil legal relationship7.1. Citizens, juridical/legal persons and organizations without legal status shall beparticipants to civil legal relationship.7.2. Mongolian and foreign citizens, individuals without citizenship participating inthe civil legal relationship shall be deemed as citizens.7.3. Aimags, the capital city, soums, districts, as state, administrative andterritorial units, may enter into civil legal relation like other legal entities.CHAPTER TWOGrounds for arising and protecting civil legal relationship,exercising rights and assuming duties in civil legal relationshipArticle 8. Grounds for arising civil legal relationship8.1. Civil legal relationship shall arise on the following grounds:8.1.1. transactions stated or not stated in the Law, which do not contradictcontent-wise the law;8.1.2. court ruling causing civil legal relationship;8.1.3. an administrative decision causing civil legal relationship if stated inthe Law;8.1.4. creation of an intellectual value;8.1.5. causing harm;8.1.6. acquisition or possession of goods without grounds;8.1.7. legal cases creating civil legal relations;8.1.9. other grounds stated in the Law creating civil legal relationship.Article 9. Civil legal protection9.1. Civil legal protection shall aim at restoration of violated rights.9.2. A participant to the civil legal relationship shall be entitled to select the personwhose rights to be protected as provided by law.9.3. Civil legal protection shall be executed by court or arbitration body along withprocedures and methods provided by Law.9.4. Civil rights shall protected as follows:9.4.1. admitting the rights;9.4.2. halting acts violating the rights and restoring the pre-violationconditions;9.4.3. enforcing to assume duties;9.4.4. eliminating damages caused;9.4.5. liquidating non-material harms;9.4.6. enforcing to pay indemnities stipulated in the law or contract;3

9.4.7. invalidating decisions violating rights of others;9.4.8. altering or terminating civil legal relationship;9.4.9. self-help;9.4.10. other methods stipulated by law.Article 10. Compelled defense10.1. Compelled defense shall be an appropriate and required action undertakento defend him/herself, or other persons or assets from illegal attacks.10.2. Harms caused by compelled defense shall be born by the person took therespective act.Article 11. Action taken in a desperate situation11.1. Action taken in a desperate situation shall an action/ or non-action/ taken tohalt or prevent the danger of that particular situation, if other liquidation methodsare impossible.11.2. If the harm done in a desperate situation is less than the potential one, theperson has taken such an action shall not be responsible for its liquidation.11.3. If the harm done in a desperate situation is obviously more than the potentialone, the person has taken such an action shall be responsible for its liquidation,commensurate to he/r excessive action.11.4. Taking into consideration real circumstances of harm-doing, court mayassign the third person, in whose interests the act was taken, to eliminate theharm, or the harm-doer or the third person may be partially or fully released fromsuch an obligation.11.5. If the person took action in a desperate situation, him/herself created such asituation, him/herself should eliminate the harm.Article 12. Self-protection12.1. In case it is impossible to get timely assistance from competent authorities,without which it is impossible to exercise civil rights or if serious impediment tosuch rights may occur, respective actions taken by a participant of a civil legalrelationship in order to self- help and protect own legitimate interests, and targetedat detaining the performer who might seize, destroy or damage, escape or haltcounter measures by the latter against legitimate actions taken by the competentperson, shall not be deemed illegal.12.2. Legal persons that took actions stated in Article 12.1 of this Law shallimmediately notify the competent authority in order to seal the assets or detain theobligated person.12.3. Self-help action shall not exceed the norms appropriate for the particularsituation.4

12.4. Person which took the action stated in Article 12.1 of this Law by mistake orby exceeding norms shall be obligated to eliminate the harm.Article 13. Exercising rights and fulfilling obligations in civil legalrelationship13.1. Participants of civil legal relationship shall fairly exercise and fulfill theirrights and obligations stipulated by law.13.2. Participants of civil legal relationship may at own will exercise rights andfulfill obligations not prohibited or not directly stated in the law.13.3. Participants of civil legal relationship are prohibited to undertake activitiesharmful to others, limiting freedom of market relations, illegally taking advantageof legitimate advantages while enjoying own rights or fulfilling obligations.Otherwise, they shall bear responsibilities stipulated by law.Sub-part 2.PARTICIPANTS TO CIVIL LEGAL RELATIONSHIPCHAPTER THREECitizensArticle 14. Citizens’ legal capacity14.1. Civil legal capacity shall commence with the birth and terminates with thedeath.14.2. It is prohibited to limit civil legal capacityArticle 15. Full civil legal capability15.1. Civil legal capability to acquire rights and obligations by own conduct orfull legal capacity emerges with reaching 18 or adolescence.15.2. Court may consider citizens reached the age of 16-18 with full civil legalcapability at own request with the consent of parents, or guardians, or trusteesbased on grounds and procedures stipulated by Law.15.3. If sound grounds exist, the court rule considering the citizen with civil fullcapability could be invalidated at the request of an interested person.Article 16. Partial civil legal capability16.1. Minors under age of 14-18 shall have partial civil legal capability.5

16.2. Minors may conclude transactions other than the ones permitted by Law,based on written consent of the legal proxy (parents, guardians, trustees).16.3. Minors may exercise the following rights without their legal proxy consent:16.3.1. administering own salary, student stipend, other similar incomes, or anyasset transferred to them for administering at own discretion;16.3.2. concluding transactions harmless or of utility nature with immediateexecution;16.3.3. depositing in banks or credit institutions incomes stated in Article 16.3.1. ofthis Law.16.4. Citizens of age 16-18 may be cooperative members.Article 17. Some civil legal capability17.1. Persons of 7 to 14 age shall possess some civil legal capability.17.2. Legal proxies (parents, guardians, trustees) of persons of 7 to 14 age shallon their behalf conclude transactions other than petty and harmless ones of utilitynature with immediate execution.Article 18. Citizens without civil legal capability18.1. Persons under age of seven shall lack civil legal capability.18.2. Court shall deem deprived of civil legal capability the persons, unaware ofown conduct and lacking self-control due to mental diseases, and shall establishfor them custody.18.3. Legal proxies shall conclude any transactions on behalf of persons withdeprived civil legal capability.18.4. In case of elapsing the conditions or grounds for considering the persondeprived of civil legal capability, court may revoke its decision on consideringher/him deprived of civil legal capability.Article 19. Limited civil legal capability19. 1. Civil legal capability of drug addicted citizens, or the ones regularly usingaddictive drug substances or alcohol and causing substantial economic damages,may be limited and custody may be established at the request of interestedperson according to procedure defined by law.19.2. It shall be prohibited to limit civil legal capability by concluding transactions.19.3. Person with limited civil legal capability may conclude transactions withcustodian consent within the unlimited part of the limited capability.6

19.4. With elapse of circumstances served as grounds for limiting civil legalcapability, court shall rule invalid the imposed limitation and shall release thecustodian from obligations.Article 20. Name of citizen20.1 Citizens shall have own names.20.2. Procedure to register and change citizens’ names shall be determined bylaw.20.3. Citizen name shall be registered with the competent authority. Civil rightsand obligations shall be acquired and exercised at own name. Pseudonyms couldbe used only according to the procedure and conditions stipulated by law.20.4. Name changing shall not serve as grounds for changing or terminating therights and obligations acquired under the previous name.20.5. Person with changed name shall inform the obligation performer or theperson whose obligations performed about the name change, in case of failure todo so s/he personally shall bear the responsibility for the consequences.Article 21. Protection of name, honor, dignity and business reputation21.1. It is prohibited to use illegally the name of citizens.21.2. If the person, who defamed citizen’s name, honor, dignity and businessreputation, fails to prove the defamation accuracy, s/he shall be liable to refute thedefamation via media and in the form, it was originally disseminated, or in otherforms.21.3. If the defamation of others’ name, honor, dignity and business reputation isdue to incomplete information about the documents, the guilty person shall beliable to refute, as stipulated in Article 21.2 of this Law.21.4. Citizen, considering harmful the dissemination without his/her consent of anypersonal information, defined by law as confidential, shall be entitled to demandthe harm elimination.21.5. Person, considering harmful any publication or public demonstration withoutits consent of an individual image in a form of photo, movie, video recording,portrait or any other form, shall be entitled to demand the harm elimination. In case a person receives any fee or payment for using his/her image or forgranting rights to use his/her image in connection with his/ her social status forpromotion during public activities as a part of training, scientific research, businessactivities, no special permit shall be required from the person.7

21.7. If any information, defaming the name, honor, dignity and businessreputation, or confidential personal news is publicized without the heir’s consentas provided in Article 520 of this Law, its provision shall be equally applied.21.8. Harm done in the case stipulated in Article 21.7, shall not be demanded tobe compensated in material form.21.9. Person violated rights provided by this Article, shall eliminate the harm doneto others, as envisaged in Articles 497 and 511 of this Law.Article 22. Citizen’s residence22.1. Citizen’s residence shall be determined by the administrative and territorialunit, where the individual is registered according to law.22.2. If the citizen does not reside in the registered location, the place s/hebasically live or the most of her/his personal assets is located may be deemed asher/his residence.22.3. Residency of a person under others’ custody shall be determined by theresidency of her/his parents or custodians.Article 23. Citizen declared missing23.1. Upon request of an interested person, Court may declare a citizen missing, ifhis/her whereabouts is unknown or not heard for a period of two years since thedate of her/his missing from the place of residence.23.2. Court shall rule the protection over the property of a missing citizen, and thecitizen’s statutory obligations such as raising and assisting her/his dependants,paying fees and taxes according to law, paying debts according to liabilities, shallbe charged from the property.23.3. If the location of the missing person is identified, or the person is back, theCourt shall revoke its ruling and terminate the property protection.23.4. Upon return, the missing citizen shall be entitled to reclaim his/her propertyavailable or transferred free to others on grounds other than stipulated by Article23.3 of this Law. However, any profit gained in the result of using the assets foreconomic purposes, shall not be claimed.23.5. The administrator shall pay the price of assets of the missing person if itssold, or pay their full or partial value if they are lost, or short of, or damaged, in theamount ruled by Court, depending on the degree of guilt.23.6. If the missing person is back, the administrator of the assets, shall beentitled to demand the reimbursement of costs related to their protection, storageand use.8

Article 24. Citizen declared deceased24.1. Upon request of an interested person, Court may declare a citizen deceasedif his/her whereabouts remains unknown for over five years since the date ofher/his missing from the residency, or if her/his existence remains unknown for ayear since the date of missing in life-threatening circumstances.24.2. Person missing while participating in military operations could be deemeddeceased after the expiration of two years since the termination of suchoperations.24.3. The date of death of the citizen declared deceased shall be the date, whenthe Court decision on considering him/her deceased enters into force.24.4. If the citizen declared deceased due to missing under life-threateningcircumstances, Court may consider the date of possible death as the date of thedeath of that citizen.24.5. The property of a citizen declared deceased shall be transferred to othersaccording to the succession rule.24.6. If the person declared deceased is back or her/his location is identified,Court shall revoke its previous decision.24.7. If the person declared deceased is back, s/he shall enjoy the right to reclaimthe available property transferred free to others in inheriting or other forms. If thustransferred to the state property cannot be returned to the owner, its price shall bereimbursed.24.8. Revocation of the Court rule declaring a person deceased shall not serve asgrounds for invalidating the new marriage of her/his spouse.CHAPTER FOURLegal personSub-chapter oneCommon provisionsArticle 25. Legal person25.1. Legal person shall be an organised unity with concrete mission andengaged in regular activities, which is entitled to own, possess, use and disposeof its separate property, which can acquire rights and create liabilities in ownname, which bears responsibility for consequences arising from own activities withits own assets, and which is capable to be defendant or plaintiff.9

25.2 Legal person may be a for-profit or non-profit organisation with concretegoals specified by law or rules.25.3. Legal person may have public or private, or mixed property.25.4. If not otherwise provided in the Law, several legal persons may merge withthe purpose to coordinate their activities, thus merging they will retain their legalperson status.25.5. Legal status of legal persons shall be defined by law.Article 26. Civil legal capacity of legal persons26.1. Legal person shall have the rights and liabilities, arising with registering withthe State Register, and terminating upon its liquidation according to law or itsdeletion from the State Register.26.2. Procedure to register legal persons with or to be deleted from the StateRegister shall be determined by law.26.3. Civil legal capacity of public legal persons shall arise or terminate with itsfoundation or liquidation according to law provisions, and they shall be entitled toparticipate in civil legal relationships with equal to other participants’ rights.26.4. Legal persons shall participate in civil legal relationship via their governingbodies.26.5. Legal status of governing bodies of legal persons shall be specified by law oftheir incorporation by-laws.26.6. Non-profit legal persons shall undertake activities in compliance with theobjectives specified by their by-laws or charters.26.7. For-profit legal persons shall be entitled to undertake any activity no

CIVIL CODE SUBPART I. GENERAL BASIS Sub-part 1. Civil Legal Relationship, Legislation CHAPTER ONE Common provisions Article 1. Purpose of the Law 1.1. The purpose of the Law shall be to regulate relationship with respect to material and non-material wealth arising between legal persons. 1.2. Civil legislation shall be based on the principle of ensuring equality and autonomy of participants to .

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