Arbitration in Laos
The choice of arbitration as a dispute resolution mechanism has risen in popularity as a time and cost-effective option to resolve commercial disputes. By including an arbitration clause in contractual arrangements, contracting parties may agree in advance on the seat and rules of arbitration, the size of the arbitration panel and even the rules to appoint an arbitrator in the event of a contractual dispute. This is particularly attractive to investors who are unfamiliar with the judicial processes of the local jurisdiction and wish to preserve the confidentiality of proceedings and final award.
In recent years, Lao PDR has established the Centre of Economic Dispute Resolution (CEDR) and Office of Economic Dispute Resolution (OEDR) as mediation or arbitration centres for commercial disputes in Lao PDR. The CEDR and OEDR are gradually gaining the attention of local investors as an alternative dispute resolution mechanism to the Lao PDR court system but the vast majority of matters referred have been for mediation rather than arbitration.
In our experience, major investors in Lao PDR prefer to designate international arbitration as the dispute resolution mechanism in a seat with well-established arbitration rules such as the Singapore International Arbitration Centre. Pursuant to the Law on Economic Dispute Resolution, foreign arbitration awards are recognised and enforced with the same status as local judgments subject to certification by the Peoples’ Court if the following conditions are satisfied: (1) the parties subject to the arbitration are nationals of member countries to the New York Convention on the Enforcement of Arbitral Awards; (2) the arbitration award does not violate the Lao PDR Constitution and laws and regulations relating to national security, social peace and environment; (3) the party obliged to repay any debt under the arbitration award has property, activities, shares, money or other assets in Lao PDR; and (4) the arbitration proceedings did not violate any procedural laws and regulations.
At the time of writing, however, there has been no public record of any foreign arbitration award which has successfully obtained certification from the Lao PDR Peoples’ Court.
Arion Legal recently contributed to the exclusive chapter on arbitration in Lao PDR in Respondek & Fan’s biennial Asia Arbitration Guide (AAG). The AAG is a free publication which covers a review of 21 jurisdictions across Asia on arbitration law, practice and institutions and is a quintessential guide for all cross-border investors seeking to understand alternative dispute resolution in the region. For the full chapter of Lao PDR in the Asia Arbitration Guide 2017 see pages 164-174 here.
Should you have any questions relating to our article or would like further advice on dispute resolution in Lao PDR, please contact the Arion Legal team at enquiries@arionlegal.com.
This article has been provided by Arion Legal, an Australian law firm established in Laos in 2008, offering international standard legal advice and documentation for foreign investors operating in, or looking to invest in, Laos.
