VIENTIANE, Lao P.D.R--(EON: Enhanced Online News)--Following a hearing held in London on 2 September 2013, members of an international arbitral tribunal have recently ordered the Government of Laos not to seize assets or take other adverse actions that would aggravate a dispute between Netherlands-based Lao Holdings, N.V. and Laos, pending resolution of that dispute. Among other things, the award of provisional measures against Laos prevents the Lao Government from seizing a resort hotel and casino in Savannakhet, Savan Vegas, from further interfering with the business operations of Lao Holdings and its subsidiaries, and from implementing a new, confiscatory 80% tax on gross casino revenue. The tribunal’s order, issued on 17 September 2013, marks the first time the Lao Government has been ordered in an investment treaty arbitration to cease interference in the affairs of a foreign investor.
In August 2012, Lao Holdings and its subsidiary company, Sanum Investments Limited, filed arbitration claims against Laos, which became a member of the WTO in 2013, under international bilateral investment treaties that protect foreign investors. Together, the arbitrations challenge conduct of the Lao Government that has imperiled and in several cases destroyed the value of Lao Holdings’ and Sanum’s investments in the country. This conduct has included the expropriation of the highly successful Thanaleng Slot Club in Vientiane; the wrongful imposition of millions of dollars in taxes and penalties against another successful property, the Savan Vegas Hotel & Casino in Savannaket; and the Lao government’s refusal to honor, and outright cancellation of, multiple licenses, concessions and monopoly rights. After failing to resolve their disputes with the Government, Lao Holdings and Sanum decided they had no choice but to protect their rights under applicable bilateral investment treaties.
The order of provisional measures will remain in place pending a final disposition in the Lao Holdings arbitration. In addition to prohibiting Laos from seizing Savan Vegas or any of Lao Holdings’s other assets -- actions the government has repeatedly threatened to take – it requires disputed tax payments to be placed in escrow, and it orders the Lao Government not to interfere with the use of the Lao banking system by Lao Holdings and related companies.
Responding to this ruling, Jody Jordahl, Sanum’s President, said:
“Losing Savan Vegas would have seriously harmed Sanum and Lao Holdings, and sent a terrible message to the international investment community. Had Laos’ new 80% tax been enforced, we would have had no choice but to close. This interim award comes as a relief, and we continue to have hope that the government will abide by its commitments, and the Rule of Law will be upheld in Laos”.
Lao Holdings and Sanum together are one of the largest foreign investors in Laos, and the largest employer in Savannakhet province, with over 1,500 employees. Savan Vegas Hotel & Casino, which opened in 2008, is a major part of the revitalization of tourism and economic growth in Western Laos made possible by the recent opening of several Friendship Bridges across the Mekong River.
The international arbitrations are Lao Holdings, N.V. v. The Lao People’s Democratic Republic and Sanum Investments Limited v. The Lao People’s Democratic Republic. In both cases, Lao Holdings and Sanum are represented by Debevoise & Plimpton LLP and Dr. Todd Weiler.