Received a response today (incorporated CG's comment in my question):
First, I must clearly state that I am not a lawyer, so I am giving a personal opinion based upon Mongolian political and public views of the OT situation, not on the terms of the Dubai--Treaty as intended to be understood by Rio Tinto or the OTLLC Board. Your question in fact has stumbled upon the problem that always arises when talking about OT. The two sides (investors vs. the Mongolian govt) are talking across each other.
Why is this called a Treaty? Companies do not have treaties as representing their contracts. It is a treaty because it involves a government. All the OT agreements from inception to the introduction of Rio Tinto into the operations have involved Mongolian government approval. However, the Mongolian political establishment no longer can just sign their names and say they have the power to represent the government. The government of Mongolia is a democracy now. The Mongolian political establishment under the Elbegdorj government (since 2009) defines this democracy as to its rights and obligations in its own way. Not in the US or European way. This is difficult for foreign investors to appreciate or agree with, but is the crux of the issue from the Mongol side. The Mongols on all sides of the political spectrum today agree that any OT operating agreement must have parliamentary approval. This is something Rio Tinto and Turquoise Hills, I believe, finally understand, because the whole OT issue has suffered from YEARS of opaqueness and downright illegalities. It is a bitter history which has resulted in great distrust among the Mongolian people, and parliamentary approval is the only way the Mongol political establishment can proceed and still retain the trust of the electorate.
To show the delicacy of the matter, one only needs to look at just what happened. The Mongolian PM Sanhaibileg this week just survived a removal from office vote in the Mongolian Parliament because over 40 parliamentarians from different parties claimed that he as PM had no right to even make this Dubai deal. President Elbegdorj while attending the session of removal did not argue to the Mongols the merits of the content of the Agreement, he just argued that the PM's removal under such circumstances was not reasonable. This does not settle the principle of the issue as the losing Parliamentarians warned. You can see this story in the Feb. 5 issue of The Mongol Messenger. Rio Tinto's legal position, as you stated it, is not the Mongolian government's position on how the OT agreement is to continue or be changed. Frankly, either Rio Tinto changes its views on the parliamentary approval or there is no agreement. No agreement means OT's development stops. Economists may not believe this but always Mongols put political survival and national security over economic benefit--hard as this is to believe for foreigners. Any continued stoppage is not in the best economic interest of either side, but the Mongolian political establishment in and out of power today will keep OT Phase II shut rather than proceed with operations without parliamentary approval covering their backs. That is the reality of the situation.