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A cautionary tale: Laos violates another Sanum agreement

Fort Mill Times, USA

A Cautionary Tale: Laos Violates Another Sanum Agreement

13 July 2013

VIENTIANE, Lao P.D.R — Sanum Investments Limited ("Sanum") had seemingly found a winning formula with its hospitality and entertainment enterprises in Lao P.D.R, until the Government arbitrarily revoked licences, cancelled concessions, imposed wrongful tax penalties and, most significantly, forcibly took control of its highly lucrative Thanaleng Slot Club. At the time, the Club was generating over USD $3 Million a month in net income. Sanum’s top executives have also been threatened with unlawful arrest.

Having exhausted all domestic avenues for resolution, Sanum has sought legal redress by filing a request for arbitration at the International Center for Settlement of Investment Disputes ("ICSID"), where it is hopeful that the Rule of Law will prevail. Sanum’s case is a classic example of the need for bilateral investment treaties, such as those that the Lao P.D.R. has signed.

Despite Sanum’s cautionary tale, the much publicized Thai Lignite litigation together with other commercial and humanitarian abuses, including the disappearance of Community Leader and Activist Sombath Somphone, Laos continues to succeed in generating support from other countries, and is an increasingly popular tourist destination. Only this year, this landlocked country, one of the poorest in South East Asia, has been awarded the accolade of "World’s Best Tourist Destination 2013".

Jody Jordahl, Sanum’s President states:

"We are proud that Sanum has irrefutably played a part in Laos’s growth. We invested heavily in our projects there, both emotionally and financially. We are very disappointed that the Government has not yet realized that it could go even further towards achieving its Millenium Development Goals, if it started to live and breathe the ethos of the WTO and to treat foreign investors justly."

The Lao Government’s most recent violation of agreements with Sanum occurred, when a Memorandum of Understanding ("MOU") was signed between Champassak provincial government officials and the Solar Entertainment Corporation ("Solar"), which agrees to the construction of a new golf course, a four star hotel and licensed casino. The MOU also includes the rights to build a slot machine club at Chong Mek, which should be very lucrative, based on the success of Sanum’s Thanaleng Slot Club. The Government’s agreement with Solar contravenes Sanum’s own contract with the Government of Laos, which grants Sanum a fifty year right of monopoly in Champassak province, preventing the Lao Government from granting licences to competing businesses.

Jordahl comments:

"Laos undoubtedly has sizeable opportunities for foreign investors, but it continues to perplex us how and why Sanum’s successes have been so wrongfully undermined. We sincerely hope that the Government of Laos begins to see how investors like Sanum can aid its development. It is vital that the deals do not turn sour. Laos still has the chance to earn its place meritoriously in the Asian Economic Community."

Meetings held before the Arbitration Tribunal in Europe in May with Debevoise & Plimpton, Sanum’s lead Counsel, and David Branson, Counsel for the Laotian Government have seen Sanum’s ICSID arbitral proceedings gather speed.

Meanwhile Sanum continues to operate its resort in Savannakhet, and supports its Lao community.