What was the ICSID Award at the centre of the Lao Holdings setting-aside application?

The ICSID Award in Case No ARB(AF)/12/6, issued on 6 August 2019, dismissed Lao Holdings NV's claims and ordered it to pay the Lao Government US$481,622.95 in arbitration costs. The dispute concerned casinos, hotels and clubs in Laos and had been ongoing for more than ten years.

[2024] SGHC(I) 9 — THE GOVERNMENT OF THE LAO PEOPLE’S DEMOCRATIC REPUBLIC v LAO HOLDINGS N.V.

Q: What was decided in Government of the Lao People's Democratic Republic v Lao Holdings NV [2024] SGHC(I) 9?

The Singapore International Commercial Court dismissed Lao Holdings NV's application to set aside an order granting the Lao Government leave to enforce an ICSID Award. Lao Holdings had alleged the tribunal was misled into an excessive costs order by non-disclosure of a fee cap agreement, but Vivian Ramsey IJ rejected the application.

SUPREME COURT OF SINGAPORE

18 April 2024

Case summary

Government of the Lao People’s Democratic Republic v Lao Holdings NV [2024] SGHC(I) 9

Singapore International Commercial Court Originating Application No 18 of 2023 (Summons No 2721 of 2023)

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Decision of the Court (delivered by Vivian Ramsey IJ):

Outcome: SICC dismisses application to set aside order of court to enforce ICSID arbitration award on grounds of non-disclosure of fee cap arrangement with solicitors.

1 This was an application by Lao Holdings NV (“LHNV”) to set aside an order of court granting the Government of the Lao People’s Democratic Republic (“GOL”) leave to enforce an ICSID arbitration award (the “ICSID Award”) on the ground that GOL had misled the ICSID Tribunal into granting excessive costs by intentionally withholding disclosure of a fee cap agreement with its solicitors.

Background

2 The application arose out of a dispute between GOL, LHNV and LHNV’s wholly-owned subsidiary (“Sanum”) relating to the development and operation of casinos, hotels and clubs in the Lao People’s Democratic Republic.

3 The ICSID Award was issued on 6 August 2019, dismissing LHNV’s claims and ordering LHNV to pay GOL US$481,622.95 for arbitration costs and US$1,467,483.72 for legal costs and expenses. On 6 November 2019, LHNV filed an application to set aside the ICSID Award, but this application was dismissed, as was its appeal against the dismissal. On 12 May 2023, GOL obtained an order of court to enforce the ICSID Award in Singapore. LHNV then made the present application to set aside the court order.

The SICC’s Decision

LHNV’s application was an abuse of process

4 The SICC held that, pursuant to the doctrine in Henderson v Henderson (1843) 3 Hare 100, LHNV was precluded from relying on its grounds based on GOL’s fee agreement because it had failed to raise them in its earlier application to set aside the ICSID Award. The SICC rejected LHNV’s contention that it could not have relied on those grounds as it only came to know about GOL’s fee agreement after its setting-aside application was filed and the three-month time limit for a setting-aside application under Article 34(3) of the UNCITRAL Model Law on International Commercial Arbitration had passed. The three-month time limit applied only to the application (by originating summons) and not to the supporting affidavit, and LHNV had been permitted to file its supporting affidavit on 8 June 2020 as it had initially erroneously filed a supporting affidavit intended for a different application. In effect, LHNV had been permitted to add grounds to support its setting-aside application, after the expiry of the three-month time limit. By the time the correct supporting affidavit was filed on 8 June 2020, LHNV was already aware of GOL’s fee agreement and it could and should have raised it in the setting-aside application. Having failed to do so, LHNV was now precluded from relying on these grounds to set aside the order for enforcement: at [10] to [27].

Enforcement of the ICSID Award should not be refused because of GOL’s Fee Cap Agreement

5 In any event, there was no merit in LHNV’s argument that GOL’s fee agreement gave rise to grounds for resisting enforcement of the ICSID Award.

6 The SICC found that the fee agreement included both a fee cap of US$1.5m and a conditional element for GOL to pay its counsel any amount above the US$1.5m fee cap which was awarded as costs and expenses by the ICSID Tribunal: at [41] to [43].

7 The SICC rejected LHNV’s argument that the full details of the fee agreement should nonetheless have been disclosed to the ICSID Tribunal since it could have had an effect on the costs order made by the tribunal. The SICC held that a party did not have to disclose its fee agreement with its lawyers if it was claiming an amount that was equal to or lower than the amount payable by the client. It followed that where costs between a party and its lawyers were agreed to be on a time basis or where there was a cap but a conditional additional amount on a time basis, as in this case, there was no obligation on a party to disclose the terms of the fee agreement: at [60] to [61].

8 Therefore, there was no improper or fraudulent conduct in GOL not disclosing the fee agreement in the ICSID Arbitration and no grounds that could justify refusing to enforce the ICSID Award. Even if the fee agreement should have been disclosed, the SICC found that the non-disclosure did not reach the high threshold required for finding that an enforcement of the ICSID Award would be contrary to public policy in Singapore: at [67] to [70].

9 Accordingly, LHNV’s application was dismissed.

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

THE GOVERNMENT OF THE LAO PEOPLE’S DEMOCRATIC REPUBLIC v LAO HOLDINGS N.V.

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Summary

What was decided in Government of the Lao People's Democratic Republic v Lao Holdings NV [2024] SGHC(I) 9?

What was the ICSID Award at the centre of the Lao Holdings setting-aside application?

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