Mongolia - Attachment of Assets
David C. Buxbaum, Senior Counsel
Anderson & Anderson LLP
Originally from Attachment of Assets
1. What is the general nature and effect of judicial measures available for plaintiffs to obtain provisional relief affecting property of debtors to obtain security for judgments to be obtained (“attachments”)? Freezing property in place? Placing in the custody of a third party, such as a court official, sheriff or Marshall?
In Mongolia, provisional relief to secure an enforcement of a pending judgment is available for a plaintiff upon the filing of his claim to a court. Obtaining, granting and executing provisional measures are regulated by the Civil Procedure Code of Mongolia (“Civil Procedure Code”) and the Law on Enforcing Court Judgments (“Law on Enforcing Judgments”). The general rule is that the plaintiff, after instigation of a civil proceeding, can request the judge to take provisional measures. If the judge believes that there is a risk that an enforcement of a future judgment, unless a provisional measure is taken against the assets of the defendant, will be frustrated, the judge can authorize the State Agency for Executing Court Judgments on Civil Cases (“State Agency for Executing Judgments”) to execute the provisional measures identified by the court. Attachment of assets as a provisional measure is executed by the State Agency for Executing Judgments through a similar procedure that is applied to enforce final judgments.
The freezing of assets are enforced either in personam or in rem. The in rem attachment is commonly applied in Mongolia, where an appointed local bailiff not only orders the defendant and other garnishees not to dispose or utilize the targeted assets, but also takes action to seal properties of the defendant. Disposal of those assets are not permitted without the bailiff’s permission. Breach of the freezing order is subject to a legal fine. In many instances, the bailiff takes possession of the frozen properties or it is kept in a third party’s custody. For example, if the frozen asset is a vehicle and it is kept in a garage owned by a third party, the bailiff may assign the garage owner as a custodian.
In Mongolia, the attachment of an asset, in most instances, provides security for the plaintiff in enforcing a final judgment. However, there is less protection for the debtor in case of loss incurred due to a wrongful attachment of his properties.