Company wins appeal against Laos government

Sanum Investments has won its appeal against the Laos government in a case before the Appeal Court in Singapore.
Sanum Investments has won its appeal against the Laos government in a case before the Appeal Court in Singapore. PHOTO: ST FILE

Bilateral investment treaty includes Macau though it reverted to China later: Court

A Macau-based company has won its appeal against the Laos government in a case before the Appeal Court in Singapore. Sanum Investments had tried to seek redress under a bilateral investment treaty (BIT) signed by Laos and China in 1993, for its claim of capital investment benefit losses through unfair taxes by the Laos government.

Reversing a decision by the Singapore High Court, the Court of Appeal has ruled that Macau would be included under the pact though the former Portuguese colony reverted to China only later, in 1999.

Letters between Laotian and Chinese diplomats that the treaty did not extend to Macau failed to convince the court, which found it was subject to the "moving treaty frontier "(MTF) rule.

"Simply put, because a treaty is binding in respect of the entire territory of a State, the MTF Rule presumptively provides for the automatic extension of a treaty to a new territory as and when it becomes part of that State," wrote Chief Justice Sundaresh Menon, in judgment grounds last week.

The five-judge Appeal Court met in April to hear the case.

Sanum Investments, which had a joint venture with a Laotian entity in the gaming and hospitality industry, started arbitration proceedings against the Laos government in 2012, based on the China-Laos BIT. It claimed capital investment benefit losses through unfair taxes. An independent arbitration tribunal chose to settle the spat in Singapore and, against Laotian objections, ruled it had jurisdiction to hear the case and that the treaty applied.

Laos successfully appealed to the Singapore High Court last year where it produced two diplomatic letters between the Laotian Ministry of Foreign Affairs and the Chinese Embassy in Laos.

Sanum, through a Wong Partnership team led by Senior Counsel Alvin Yeo and lawyer Koh Swee Yen, appealed to the apex court, arguing that the Laotian government could not rely on the two letters generated only after the date the dispute had arisen.

The Lao government, through Drew & Napier lawyers Senior Counsel Cavinder Bull and Ms Lim Gerui, countered that the letters were material as the Vienna Convention on the Law of Treaties envisages subsequent deals may shape treaty interpretation.

The court, among other things, ruled the case turned on the critical date the dispute arose and allowed Sanum's appeal.

The case "marked the first time that Singapore courts have had to review an investment treaty arbitral award as well as to deal with the interpretation of a BIT to which Singapore is not a party", said Senior Counsel Michael Hwang in a 2015 article.

A version of this article appeared in the print edition of The Straits Times on October 04, 2016, with the headline 'Company wins appeal against Laos government'. Print Edition | Subscribe