Lao Holdings N.V. v. Lao People's Democratic Republic
ICSID · Investment (ICSID and treaty) · Laos · 10 Jun 2015
Why it matters
This decision clarifies the standard for reviving settled investment treaty claims based on alleged material breach of a settlement agreement. It underscores the importance of direct evidence of state action, the limits of circumstantial evidence against a sovereign, and the effectiveness of cure provisions. The tribunal's rejection of attribution based on minority state ownership and private conduct reinforces the high bar for establishing state responsibility in investment arbitration.
Summary
Lao Holdings N.V., an Aruban company, initiated ICSID arbitration against Laos in 2012 under the Netherlands-Laos BIT, alleging expropriation and unfair treatment of its casino investments. The parties settled in June 2014, with Laos agreeing to respect Sanum's (Lao Holdings' subsidiary) 50-year casino monopoly and facilitate a sale. Shortly after, media reports suggested a rival casino project (Savan City) had been approved. Lao Holdings claimed this was a material breach of the settlement, seeking to revive the original arbitration. The tribunal found no direct evidence that Laos approved a rival casino. The government's 30% minority stake in Savan City did not constitute control for attribution. The government promptly investigated and denied any approval, curing any potential breach within the 45-day cure period. The tribunal dismissed the application, holding that the claimant failed to prove a material breach, and ordered costs against Lao Holdings.
The detail
Parties: Lao Holdings N.V. v. Lao People's Democratic Republic
Case number: ICSID Case No. ARB(AF)/12/6
Outcome: The Tribunal dismissed the Claimant's application for a finding of material breach and revival of the arbitration, and ordered the Claimant to pay the Respondent's costs.
Applicable law: Agreement on Encouragement and Reciprocal Protection of Investments between Laos and the Netherlands; ICSID Arbitration (Additional Facility) Rules; New York law (governing the Deed of Settlement)
Issues in play: The case involved interpretation of the Deed of Settlement, particularly Article 6 (monopoly rights) and Article 32 (material breach and cure period), and principles of state attribution under international law.
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