WM Mining Company, LLC v. Mongolia
ICSID · Investment (ICSID and treaty) · Mongolia · 29 Aug 2024
Why it matters
This case reinforces the abuse of process doctrine in investment arbitration, clarifying that restructuring an investment to gain treaty protection after a dispute has arisen or is foreseeable will render claims inadmissible. It also illustrates the strict scrutiny tribunals apply to corporate restructuring aimed at accessing ICSID jurisdiction, particularly when the investor seeks to circumvent bankruptcy proceedings and gain advantages over other creditors.
Summary
WM Mining Company, LLC (WMM), a US company, brought an ICSID claim against Mongolia under the US-Mongolia BIT, alleging that Mongolia's measures (including a mining ban and license revocations) destroyed its investment in the Big Bend gold mining project. Mongolia objected to jurisdiction, arguing that WMM's claim was an abuse of process because WMM had restructured its investment to gain treaty protection after the dispute had already arisen. The Tribunal agreed. It found that WMM's predecessor, WM Mining AG (WMM AG), a Swiss company, had owned the investment through a Mongolian subsidiary. After WMM AG went into liquidation in 2014, WMM (the US entity) acquired the shares in 2015. However, the dispute had already crystallized by 2013, when WMM AG and its subsidiary had sent a notice of dispute to Mongolia. The Tribunal held that the transfer of the investment to WMM was a restructuring aimed at obtaining US treaty protection for an existing dispute, constituting an abuse of rights. The Tribunal also noted that WMM had attempted to use the treaty claim to gain advantages over other creditors in the liquidation of WMM AG. Consequently, the Tribunal declined jurisdiction and dismissed the claims as inadmissible, ordering WMM to pay Mongolia's costs.
The detail
Parties: WM Mining Company, LLC v. Mongolia
Case number: ICSID Case No. ARB/21/8
Outcome: Tribunal declined jurisdiction; claim dismissed as inadmissible due to abuse of process. Claimant ordered to pay Respondent USD 5,972,355.15 in costs.
Applicable law: Treaty Between the United States of America and Mongolia Concerning the Encouragement and Reciprocal Protection of Investment (1997); ICSID Convention
Issues in play: The Tribunal considered whether the Claimant's restructuring and transfer of shares to gain treaty protection constituted an abuse of process, applying the doctrine of abuse of rights under international law.
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