Sanum Investments Limited v. Lao People’s Democratic Republic

Case summary

At a glance

Parties: Sanum Investments Limited (Macau, People's Republic of China) v. Lao People's Democratic Republic
Case no.: ICSID Case No. ADHOC/17/1 (run in tandem with Lao Holdings N.V. v. Lao PDR, ICSID Case No. ARB(AF)/16/2)
Forum and rules: Ad hoc arbitration administered by ICSID under the ICSID Additional Facility Rules (10 April 2006), by agreement of the Parties; seat New York; hearing in Singapore
Treaty: China–Lao BIT (in force 1 June 1993); jurisdiction limited by Article 8(3) to disputes over compensation for expropriation
Tribunal: Jean E. Kalicki (President), Klaus Reichert, Laurence Boisson de Chazournes
Sector: Gaming: casino and slot clubs; related real estate
Outcome: Decision on Jurisdiction, Admissibility and Liability (20 December 2024): all of Laos's objections were dismissed and most claims rejected. Expropriation under Article 4 was found for Sanum's bank accounts, part of the Savan Vegas cage cash, and the Thakhek and Savannakhet properties. A quantum phase is to follow.
Amount: Liability found for US$135,375.76 (bank accounts, as of 31 July 2013) and US$760,000 (80% of excess cage cash, as of 1 September 2016), plus the value of the properties, still to be assessed. Interest, valuation and costs are reserved for the quantum phase.

The dispute

Sanum, a Macau company and since 2012 a subsidiary of Lao Holdings N.V., invested in Lao gaming ventures with ST Group. It held 80% of SVCC, the owner of the Savan Vegas Casino, a revenue share in the Ferry Terminal and Lao Bao slot clubs, two shareholder loans to SVCC (the CFA Loans), and rights under a 2010 MOU for a land concession at Thakhek. Under a Deed of Settlement of 15 June 2014, the Claimants agreed to sell their gaming assets and leave the Lao gaming market. No sale was made within ten months. The Government then took control on 16 April 2015, terminated the Savan Vegas PDA for non-payment of taxes, moved SVCC's assets to a state-owned company (SVLL), sold them to Macau Legend and closed the slot clubs in July 2016. Sanum claimed expropriation under Article 4 of the China–Lao BIT. Laos argued that the claims were precluded by a 2017 SIAC award and the 2019 BIT I awards, were abusive successive claims and contract claims, and fell outside the Tribunal's material jurisdiction. On the merits it argued that the termination was lawful and that Sanum had engaged in corruption.

Key holdings

The Tribunal unanimously dismissed all of Laos's objections to jurisdiction and admissibility, including those based on preclusion and abuse of process. Decision, ¶ 709(1)
There was no expropriation of the CFA Loans. The PDA termination was reasonably based on Sanum's own refusal to pay taxes. The Deed of Settlement expressly allowed the sale to be structured as an asset sale rather than a corporate sale. Sanum's handling of the loans further justified that choice: US$85 million was repaid without any reduction of principal. Decision, ¶¶ 551, 561, 563
There was no expropriation of the Ferry Terminal and Lao Bao slot clubs. The April 2015 takeover implemented the Claimants' own undertaking in the Deed of Settlement. The July 2016 closure protected the buyer's exclusivity, and Sanum's non-ownership interest had little realisable value without ST's consent. Non-return of slot machines worth about US$178,000 was at most a contract breach. Decision, ¶¶ 594–605
There was no expropriation at Thakhek. Neither the MOU nor the Deed of Settlement gave Sanum a property right to a land concession or to the return of the US$900,000 it paid. They gave only a right to good-faith negotiation, and the Government did not act in bad faith. Decision, ¶ 632
Laos indirectly expropriated Sanum's bank accounts (US$135,375.76). After agreeing in July 2014 to unfreeze them, it emptied them without legal basis, and the funds were not part of the Macau Legend sale. Decision, ¶¶ 653–656
The reduction of casino cage and vault cash from about US$1.95 million to the US$1 million required for transfer to Macau Legend was more likely than not deliberate. It indirectly expropriated Sanum's 80% share of the US$950,000 excess, which is US$760,000. Separately, the transfer of the Thakhek shophouses and the Savannakhet River House and Guard Houses to SVLL, with no proof they were sold to Macau Legend, was an expropriation without compensation. Decision, ¶¶ 666–668, 686–688
The claim that Laos breached Article 8(8) of the BIT by not paying advances on costs was dismissed for lack of jurisdiction. Article 8(3) limits the Tribunal to disputes over compensation for expropriation. Cost conduct may still be considered when costs are allocated. Decision, ¶¶ 699–702
Sanum's ancillary claim over the Lao courts' refusal to recognise its 2016 SIAC award against ST was excluded. Laos had consented to the Additional Facility Rules only for the dispute described in Sanum's Notice of Arbitration. Lao Holdings was later allowed to pursue the claim in its own case. PO2, ¶¶ 30–33; PO3, ¶ 19

Procedural history

15 June 2014Deed of Settlement signed between Sanum, Lao Holdings and the Government, providing for the sale of the gaming assets; a Side Letter followed.
17 February 2017Sanum sends its Notice of Arbitration under the China–Lao BIT. In March 2017 the Parties agree to run it as an ad hoc case administered by ICSID, in tandem with the Lao Holdings case.
27 April 2017Tribunal constituted.
16 May 2017Procedural Order No. 1: Additional Facility Rules apply, seat in New York, hearings in camera.
23 October 2017Procedural Order No. 2: Sanum's ancillary claim on the 2016 SIAC award is excluded; jurisdiction and liability are to be decided before quantum.
14 November 2017Procedural Order No. 3: the ancillary claim may proceed for Lao Holdings only.
26 July 2018Procedural Order No. 6: Laos's application for security for costs is denied.
10–14 June 2019Hearing on jurisdiction and liability at Maxwell Chambers, Singapore.
6 August 2019Awards are issued in the earlier ICSID and PCA BIT I cases; the Parties later file submissions on their effect.
20 December 2024Decision on Jurisdiction, Admissibility and Liability: liability found on three expropriation claims, all others dismissed, and the Parties directed to propose a quantum schedule.

Tribunal, counsel and experts

Decided by: Jean E. Kalicki President — appointed by the parties jointly
Klaus Reichert Co-arbitrator — appointed by the claimant
Laurence Boisson de Chazournes Co-arbitrator — appointed by the respondent
For the claimant: Stinson LLP · Lackey Hershman LLP · Sanum (in-house) · Todd Weiler
For the respondent: Squire Patton Boggs · Womble Bond Dickinson (US) LLP · Womble Carlyle Sandridge & Rice LLP · School of Law, Tsinghua University · David J. Branson
Experts: Kenneth Yeo (respondent) · Hervé Ascensio (respondent) · Joseph Kalt (claimant) · Scott Fisher (claimant) · Joshua Kurlantzick (claimant) · Andrew Black (claimant) · Premjit Dass (claimant) · William Bryson (claimant) · Oanh Ho (claimant) · Dennis Amerine (claimant) · Matt Isaacs (claimant) · Ricky Lee (claimant) · Nardello & Co. (claimant) · Lok Vi Ming (claimant)

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Keywords

Summary generated with AI from the published documents — refer to the award for the authoritative text.

Case ID

ICSID Case No. ADHOC/17/1

Country

China

Economic sector