LONDON/ULAANBAATAR – The Mongolian government broke laws during a controversial attempt to seize full control over the Erdenet copper mine, a local court said on Thursday, the latest ruling in a long-running ownership dispute over one of Asia's biggest deposits.

The Mongolian Copper Corporation (MCC) has been fighting for more than a year to stave off the government's attempt to gain control of the lucrative Erdenet mine by forcibly taking over the company's 49% holding for about $400-million.

The case was seen as another example of the risks of doing business in Mongolia, which has struggled to make the most of its massive reserves of coal, copper, uranium and gold amid disputes with investors and wider political concerns about how much foreign ownership should be allowed in its "strategic" mining projects.

The court said in a brief statement on Thursday that laws were broken during the attempt to implement a parliamentary resolution to take over MCC's stake in the project.

Further details of the ruling will be released within two weeks, a court spokesman told Reuters.

MCC said in a separate statement on Thursday that the latest ruling shows that Mongolia's nationalisation bid was illegal. It added that the Mongolian government must now respect the decision.

"The government needs to respect the rule of law and abide by this judgment," said Tsooj Purevtuvshin, MCC's chief executive, in an emailed statement to Reuters.

"The government talks a lot about making Mongolia a good place to invest; it is time they start respecting the rights of private businesses."

The legal fight has been watched closely by international investors hoping that Mongolia's massive copper potential can help meet increasing demand from the growing electric vehicle and power transmission sectors.

Before this week's ruling, MCC said it was considering taking the case to international arbitration to protect its stake in the mine.

Launched as a joint venture between Mongolia and the Soviet Union in 1978, Erdenet is one of the region's largest copper mines, producing about 530 000 t/y of concentrate.

MCC purchased Russia's stake in the mine in 2016 with the approval of then-Prime Minister Chimed Saikhanbileg, though Mongolia's parliament said it never endorsed the sale.