Tag Archives: Laos

Case of the Day: In re Application of Laos

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.
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Case of the Day: Thai-Lao Lignite v. Laos

The case of the day is Thai-Lao Lignite (Thailand) Co. v. Government of the Lao People’s Democratic Republic (2d Cir. 2012). We first saw the case in my post of August 25, 2011. I have also reported on two related cases under 28 U.S.C. § 1782, one a request for judicial assistance to obtain discovery from Laos itself, the other a request for judicial assistance to obtain discovery from Électricité de France International in order to uncover Laotian assets from which the judgment against Laos could be satisfied.

In the prior post, I described the facts as follows:

Lignite is a low-quality coal used for generating electricity. The Hongsa region of Laos, near the Thai border, has it, and in the early 1990s, Thailand needed to import electricity. And so a joint venture was born. Thai-Lao Lignite, a Thai company, entered into a Project Development Agreement with the Lao government giving it exclusive exploration and mining rights in the region. The idea was that Thai-Lao Lignite would build a Lignite-fired power plant on the Lao side of the border, and Laos would sell the electricity to Thailand. The PDA called for Thai-Lao Lignite to organize another entity, Thai-Lao Power Co., under Lao law, and to assign its rights and obligations under the PDA to the Lao company. Thai-Lao Lignite never made the assignment, and the Lao government dealt with Thai-Lao Lignite as though it were a proper party to the PDA. The PDA had an arbitration agreement calling for arbitration in Malaysia at the Kuala Lumpur Regional Centre for Arbitration under the UNCITRAL Rules.The substantive law governing the contract was the law of New York. A dispute developed …

Thai-Lao Lignite demanded arbitration. The parties agreed that the ICC would replace the Kuala Lumpur Regional Center as the appointing authority. The tribunal issued an award in favor of Thai-Lao Lignite in 2009.

The case revolved around arbitrability. The twist was that Laos wasn’t asserting that it had not agreed to arbitrate, but that its adversary, Thai-Lao Lignite, was not a proper party to the arbitration agreement. The judge’s basic conclusion, though, was that under the agreement such questions of arbitrability were for the arbitrator to decide.

The Second Circuit has now summarily affirmed. Citing Republic of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011), it held that Laos was bound by its agreement to arbitrate under the UNCITRAL rules, which in turn gave questions of arbitrability to the arbitrator.