Sanum Investments Limited, a Macau-based firm, has raised serious concerns regarding the actions of the Laos courts in its case against the gambling group responsible for the development of the Savan Vegas Hotel and Entertainment Complex, alleging the courts are operating under unlawful pressure.
The case pitted Sanum Investments Respondents against ST Group and ST Vegas, along with its owner – Laotian businessman Sithat Xaysoulivong, regarding the establishment and operation of slot clubs and casinos in Laos.
In 2012 the Laos government seized the Savan Vegas property from Sanum Investments alleging tens of millions in unpaid taxes and penalties. The property was later sold to Macau Legend in 2016, for a consideration of $42 million, paid out to the Laos government.
After prior litigation in Lao courts, Sanum initiated arbitration proceedings in the Singapore International Arbitration Center (SIAC), but a ruling from the Singapore Court of Appeal in late 2019 determined that the arbitration should have been seated in Macau.
Consequently, in January 2020, Sanum filed a Macau-seated arbitration with the Macau office of the international Chambers of Commerce (ICC) which then ruled in their favor.
The ICC Award dated October 23rd, 2023 mandated that ST Group Co. Ltd., Sithat Xaysoulivong, and ST Vegas Co. Ltd. pay approximately $180 million in damages for breaching contracts.
The recognition action was filed with the Vientiane Court of First Instance on May 10th, 2024.
However, on June 13th, the Vientiane Capital People’s Court of Laos dismissed the results of the international arbitration process, labeling both the ICC Award and the arbitration agreement as illegal and unconstitutional.
Notably, the Laos court did not reference the New York Convention or Macau law, which governed the arbitration.
In submissions made to the Laos Court on August 8th, Sanum highlighted that the Laos government had entered into an arbitration agreement with Sanum and ST entities this year, which follows the same dispute resolution procedures outlined in their existing agreements.
The dispute, involving contractual breaches between Sanum and the Laos-based ST Groups Ltd. and its affiliates, related to their collaboration on gaming and hotel operations in Laos.
Sanum sought recognition of the arbitration award from the Vientiane court, which has jurisdiction under both Lao law and the New York Convention, but the court rejected the claim, citing previous Lao court decisions as final and asserting that the ICC’s award contradicted Lao law.
In its ruling, the Lao court stated that the ICC award violated public order and the Constitution of Laos, claiming that the arbitration agreement was invalid under local law.
This decision has raised concerns about the implications for Laos’s foreign investment climate, as it suggests that local courts may disregard international arbitration decisions, potentially undermining trust from foreign investors.
Sanum contends that the Vientiane Court’s ruling implies that the Lao government has violated both the law and the Constitution, raising questions about the legality of the arbitration agreements.
Judge Anousorn Souliya, who was overseeing the case, allegedly refused to deny recognition of the ICC Award as instructed and has since stepped down. The Court of Appeal is now tasked with appointing a new judge, whose identity has not yet been disclosed.
Sanum has established a website titled “Justice for Sanum” to keep the public informed of the case’s developments (stlaocollection.com). The ICC Tribunal that issued the award was seated in Macau and applied Macau’s new arbitration law.
Macau lawyer Jorge Menezes, representing Sanum in the ICC arbitration, expressed his “frustration” over the situation to AGB noting that “to see a 283-page long Award, issued following five years of debate by three reputable arbitrators, being dismissed by a nine-page domestic judgment that fails to cite the governing rules”.
“The judges who signed this judgment do not speak English, which raises doubts about their ability to verify the references in the ICC Award”, the lawyer stated.
Menezes emphasized the implications for Laos’s investment climate, saying the developments are “detrimental to Laos’ efforts to attract foreign investment”.
“Why would companies invest millions in a country where courts disregard international decisions? It is ironic for a country leading ASEAN, which aims for economic development and respect for the rule of law.”
The lawyer also warned that if Laos continues to disregard international agreements and its own laws, it risks undermining its future, and characterized the Vientiane Court’s judgment as a breach of respect for Macau as the arbitration seat and a violation of treaties binding both jurisdictions. Regarding the transition to a new judge, he stated:
“The new president of the Court of Appeal, Mr. Phansy, will need to appoint a replacement. This will be a crucial test, as the new judge must review thousands of pages of documentation. If a judgment is issued swiftly, we will better understand the situation.”
Sanum was informed of the judgment on June 25th and filed an appeal to the Court of Appeal on July 12th. On July 17th, it submitted an expert opinion from Professor Gary Born, a leading authority in international arbitration, who argued that the ICC Award and the arbitration agreement comply with both Macau law and the New York Convention.
Gaming company Macau Legend had initially purchased the Savan Vegas property for $42 million, paid out to the Laos government, who had seized the property from its previous operator Sanum Investments in 2012 – alleging tens of millions in unpaid taxes and penalties.
The company later sold the property to Japanese buyer Shundo Yoshinari for some $39 million, with Macau Legend expecting a gain before tax of approximately $6 million.
