Case of the Day: In re Application of Laos
Posted on April 12, 2016
The case of the day is In re Application of the Government of the Lao People’s Democratic Republic (D.N.M.I. 2016). The Laotian government was partners with Sanum Investments Ltd. and Lao Holdings N.V. in the Savan Vegas casino, which was located in Laos. As part of the deal, Laos had given tax benefits and a monopoly to the casino, but due to disagreements, Sanum and Lao Holdings brought a claim in arbitration under the BITs between Laos and China (Sanum was a Macau company) and Laos and the Netherlands (Lao Holdings was a Dutch company). The parties settled the claims in 2014, but Sanum and Lao Holdings unsuccessfully sought to reopen the arbitration on the grounds that Laos had breached the settlement agreement. Laos initiated its own arbitration at the SIAC pursuant to the settlement agreement. Laos also began an investigation of criminal bribery and tax evasion on the part of Sanum and Lao Holdings, which it had discontinued as part of the settlement agreement.
In its § 1782 application, Laos sought discovery for use in its criminal investigation and the SIAC arbitration. I’m just going to focus The target of the proposed subpoena, Bridge Capital, argued that the statutory prerequisites were not satisfied because the SIAC arbitration was not a “proceeding in a foreign or international tribunal.” I’ve considered this question a few times before, for example here, here and here.
The court reached what I generally think is the right conclusion, holding that private arbitrations are not proceedings before a foreign or international tribunal. The judge reviewed the precedents on both sides, but ultimately she seemed most persuaded by the history of the statute. If Congress had wanted to include private arbitral tribunals within the scope of the statute, it could easily have done it.