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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES

In the arbitration proceeding between

SANUM INVESTMENTS LIMITED
Claimant

and

LAO PEOPLE'S DEMOCRATIC REPUBLIC
Respondent

ICSID Case No. ADHOC/17/1

DECISION ON JURISDICTION, ADMISSIBILITY AND LIABILITY

Members of the Tribunal
Ms. Jean E. Kalicki, President
Mr. Klaus Reichert, SC
Professor Laurence Boisson de Chazournes

Secretary of the Tribunal
Ms. Mercedes Cordido Freytes-de Kurowski

Date of dispatch to the Parties: 20 December 2024

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REPRESENTATION OF THE PARTIES

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TABLE OF SELECTED ABBREVIATIONS/DEFINED TERMS

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I. INTRODUCTION AND PARTIES

1. This case concerns a dispute submitted ad hoc to the International Centre for Settlement of Investment Disputes (“ICSID” or the “Centre"), involving claims under the Agreement between the Government of the People's Republic of China and the Government of the Lao People's Democratic Republic concerning the Encouragement and Reciprocal Protection of Investments which entered into force on 1 June 1993 (the “China-Lao BIT").

2. The claimant is Sanum Investments Limited (“Sanum” or “Claimant”), a company incorporated under the laws of the People's Republic of China. The respondent is Lao People's Democratic Republic ("Lao PDR” or the “Respondent”).

3. By agreement of the Parties, the proceedings in this case were administered in tandem with those for another arbitration against the Respondent, which was brought by Sanum's parent company, Lao Holdings N.V. (“LHNV"), a company incorporated under the laws of Aruba, a Netherlands constituent country, on 28 January 2011. The “LHNV case" was brought on the basis of the Agreement on Encouragement and Reciprocal Protection of Investments between the Lao People's Democratic Republic and the Kingdom of the Netherlands which entered into force on 1 May 2005 (the "Lao-Netherlands BIT”). The Parties agreed that both this case and the LHNV case would be administered under the Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of ICSID, as amended and effective as of 10 April 2006 (the “ICSID Additional Facility Rules").

4. The Decision on Jurisdiction, Admissibility and Liability in the LHNV case is being issued contemporaneously herewith.

5. For ease of reference, given the substantial overlap between the two cases – including the filing of composite memorials applicable to both cases Sanum and LHNV are often referred to collectively as the "Claimants,” except where it is necessary to distinguish them, when their individual names will be used. The Claimants and the Respondent are collectively referred to as the “Parties." The Parties' representatives and their addresses are listed above on page (i).

6. This dispute arises against the backdrop of several other proceedings between the Parties, commenced before this arbitration but to some extent proceeding concurrently with it, as will be explained further below. This has led to an exceedingly complicated procedural history, and

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numerous arguments by both sides about the extent of any preclusive effect of various findings in the other proceedings.

7. In particular, this dispute relates to actions implemented by the Government of Lao PDR after the conclusion on 15 June 2014 of a "Deed of Settlement" between the Parties.¹ That Deed of Settlement had attempted to resolve – but in the end did not actually resolve – prior disputes between the Parties under the Lao-Netherlands BIT and the China-Lao BIT (together, the “BITs”). The prior disputes were heard in parallel by two other arbitral tribunals, one at ICSID² and the other at the PCA³ (collectively, the “BIT I Tribunals” hearing the “BIT I Cases”), and were initially suspended upon conclusion of the Deed of Settlement.

8. Almost immediately thereafter, however, both Parties accused the other of material breach of the Deed of Settlement. The Claimants' claims of material breach by the Respondent were submitted to the BIT I Tribunals, pursuant to a provision in the Deed of Settlement which allowed those tribunals to adjudicate such claims and to revive the BIT I Cases in the event the Lao PDR were found to be in material breach. Meanwhile, the Respondent's claims of breach by Claimants were submitted (along with Claimants' counterclaims) to a tribunal under the auspices of the Singapore International Arbitration Centre (the “SIAC Case”).⁴ The SIAC Case resulted on 29 June 2017 in a majority award in favor of the Lao PDR (the “2017 SIAC Award"). Roughly six months later, however, the BIT I Tribunals found the Lao PDR to have been in material breach of certain settlement terms, and determined accordingly that the BIT I Cases should be revived. Upon revival, however, the BIT I Cases continued to focus on the actions of the Government of Lao PDR that had been challenged originally in those cases, each of which necessarily predated the Deed of Settlement. The awards were rendered in the BIT I Cases on 6 August 2019 (the “ICSID BIT I Award" and "PCA BIT I Award,” or collectively, the “BIT I Awards").

¹ Amended Notice of Arbitration, 27 July 2016, ¶ 6. ↩

² Lao Holdings N.V. v. Lao People's Democratic Republic (ICSID Case No. ARB(AF)/12/6), with a tribunal chaired by The Honourable Ian Binnie, C.C., K.C. and also including Prof. Bernard Hanotiau and Prof. Brigitte Stern (the “ICSID BIT I Case"). ↩

³ Sanum Investments Limited v. Lao People's Democratic Republic (PCA Case No. 2013-13), with a tribunal chaired by Dr. Andrés Rigo Sureda and also including Prof. Bernard Hanotiau and Prof. Brigitte Stern (the “PCA BIT I Case"). ↩

⁴ The Government of the Lao People's Democratic Republic v. Lao Holdings, N.V. and Sanum Investments Ltd., SIAC Case No. 143/14/MV, with a tribunal chaired by Judge Rosemary Barkett and including Mr. William Laurence Craig and Ms. Carolyn B. Lamm (the "SIAC Case"). ↩

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9. As distinguished from the BIT I Cases (but overlapping to some extent with the various material breach proceedings), this arbitration focuses on actions by the Government of Lao PDR after the Deed of Settlement. The Claimants allege that these actions breached the Respondent's obligations under the BITs, depriving them of their investments for the development of gaming enterprises in Laotian territory.

II. PROCEDURAL HISTORY

10. The LHNV case commenced prior to this one, and certain aspects of its procedural history are relevant to recite. First, on 4 May 2016, ICSID received a Notice of Arbitration, dated 2 May 2016, from LHNV against the Lao PDR, together with Exhibits A to M (the “LHNV Request”), which was supplemented by further communications of 18 and 19 May 2016.

11. On 27 May 2016, the Secretary-General of ICSID registered the LHNV Request in accordance with Articles 4 and 5 of the ICSID Additional Facility Rules and notified the Parties of the registration. In the Notice of Registration, the Secretary-General invited the Parties to proceed to constitute an arbitral tribunal as soon as possible in accordance with Article 5(e) of the ICSID Additional Facility Rules.

12. On 27 July 2016, LHNV filed an Amended Notice of Arbitration. Additionally, LHNV requested the Secretary-General to follow the procedure established under Article 9 of the ICSID Additional Facility Rules for the constitution of the tribunal and informed the Centre that it appointed Mr. Klaus Reichert SC, a national of Germany and Ireland, as arbitrator.

13. On 17 August 2016, Mr. Reichert accepted his appointment as arbitrator.

14. On 19 August 2016, the Respondent appointed Prof. Laurence Boisson de Chazournes, a national of France and Switzerland, as arbitrator. On the same date, LHNV requested the Secretary-General to proceed with the appointment of the presiding arbitrator pursuant to Article 10 of the ICSID Additional Facility Rules.

15. On 22 August 2016, Prof. Boisson de Chazournes accepted her appointment as arbitrator.

16. On 19 September 2016, the Centre sent a ballot to the Parties, for them to consider five candidates to act as the presiding arbitrator. The Parties' ballots received on 27 September 2016, did not result in the selection of a mutually agreeable candidate.

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17. On 3 October 2016, the Secretary-General proposed the appointment of Ms. Jean Kalicki, a national of the United States of America, as the presiding arbitrator.

18. On 6 October 2016, Ms. Kalicki accepted her appointment as the presiding arbitrator. On this same date, the Secretary-General, in accordance with Article 13(1) of the ICSID Additional Facility Rules, notified the Parties that all three arbitrators had accepted their appointments and that the Tribunal in the LHNV case was therefore deemed to have been constituted on that date. Ms. Anneliese Fleckenstein, ICSID Legal Counsel, was designated to serve as Secretary of the Tribunal.

19. Accordingly, the Tribunal in the LHNV case is composed of Ms. Jean Kalicki, President, appointed by the Chairman of the ICSID Administrative Council in accordance with Article 10 of the ICSID Additional Facility Rules; Mr. Klaus Reichert, appointed by LHNV; and Prof. Laurence Boisson de Chazournes, appointed by the Respondent.

20. On 20 February 2017, the Respondent filed in the LHNV case a Notice of Objection to the Tribunal's Competence and a Request for Bifurcation, together with Exhibits R-1 to R-10 ("Respondent's Bifurcation Request").

21. In accordance with Article 21 of the ICSID Additional Facility Rules, the Tribunal held a first session with the Parties in the LHNV case on 7 March 2017, in London, United Kingdom. During the first session, the Parties raised with the Tribunal the fact that Sanum, a subsidiary of LHNV since 17 February 2012, had sent the Lao PDR a separate Notice of Arbitration dated 17 February 2017, seeking arbitration of certain related claims under the China-Lao BIT (the “Sanum Request"). The Claimants stated that they hoped to have the same Tribunal handle the Sanum case, and the Respondent indicated that it did not object in principle, subject to further discussion of certain parameters. The Tribunal encouraged the Parties to discuss the matter further.

22. On 21 March 2017, LHNV filed its Opposition to the Respondent's Bifurcation Request, together with Exhibits C-1 to C-14 and Legal Authorities CL-1 to CL-45 (“LHNV's Opposition to Bifurcation").

23. On 24 March 2017, the Respondent informed the Centre that it had agreed that the Sanum proceedings could be run as an ad hoc arbitration in tandem with those in the LHNV case, with both cases to be administered by ICSID and to be formally seated in New York, albeit with hearings to be held outside the United States. On 27 March 2017, the Claimants agreed to these terms.

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24. On 28 March 2017, the Tribunal sought the Parties' confirmation as to whether the two parallel proceedings both would be governed by the ICSID Additional Facility Rules. Both Parties consented on the same day.

25. On 3 April 2017, the Tribunal issued Procedural Order No. 1 in the LHNV case (“LHNV PO1”), concerning procedural matters.

26. On 4 April 2017, the Respondent filed its Reply to Claimants' Opposition to Bifurcation, together with Exhibits R-11 to R-21 and Legal Authorities RL-1 to RL-26 (“Respondent's Reply on Bifurcation").

27. On 11 April 2017, LHNV filed its Rejoinder to Respondent's Reply on Bifurcation, together with Exhibits C-15 to C-25 and Legal Authorities CL-46 to CL-48 (“LHNV's Rejoinder on Bifurcation").

28. On 24 April 2017, the Tribunal denied the Respondent's Bifurcation Request. The Tribunal requested the Parties to keep it informed of any ruling rendered in various other proceedings which the Parties had addressed in their bifurcation submissions, “without prejudice to the parties making arguments in the future regarding the weight to be given to any such decision or the implication of any such decision for the breath of inquiry in this case."

29. On 27 April 2017, the Tribunal was constituted in this case, in accordance with Article 6(3) of the Additional Facility Rules. As in the LHNV case, its members are composed of Ms. Jean Kalicki, President, appointed by agreement of the parties; Mr. Klaus Reichert, appointed by Sanum; and Prof. Laurence Boisson de Chazournes, appointed by the Respondent.

30. On 16 May 2017, the Tribunal issued a revised Procedural Order No. 1 (“Revised PO1”), which among other things cross-referenced the Parties' agreement to run the LHNV proceedings in tandem with the parallel ad hoc arbitration in the Sanum case, although not formally consolidated.

31. On 1 September 2017, the Claimants filed their Memorial on the Merits (“Claimants' Memorial"), including two ancillary claims: (i) an “incidental” claim relevant only to the LHNV case in respect of "the application of Lao law received through Articles 3(4) and 3(5) of the Lao-Netherlands BIT, specific references to which were not explicitly included in the Request for Arbitration," and (ii) an "additional" claim in respect of “Respondent's refusal to recognize” a 2016 SIAC arbitration award in a case between Sanum Investments Limited and ST Group Co. Ltd., et al. (“the 2016 ST SIAC Award"). Claimants' Memorial was accompanied by the witness statements of John

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Baldwin, John Clay Crawford, Philip James, Jordy Jordahl, and Jorge Menezes; the expert reports of Scott Fisher, Joseph Kalt, Joshua Kurlantzick, Andrew Black, Premjit Dass, William Bryson from Global Market Advisors (GMA), VPC, and Oanh Ho from CBRE; Exhibits C-1 to 1 and1; and Legal Authorities CL-18, CL-39, CL-40, CL-46, and CL-49 to CL-171.

32. On the same date, the Respondent filed its Memorial on Competence, together with Appendix A, Indexes of Exhibits and Legal Authorities, the expert report by Hervé Ascensio, Exhibits R-1 to R-31 and Legal Authorities RL-1 to RL-73 (“Respondent's Memorial on Competence").

33. On 18 September 2017, the Respondent filed a request for the Tribunal's reconsideration of its decision on the Respondent's Bifurcation Request, as well as an objection to the Claimants' ancillary claim concerning non-recognition of the 2016 ST SIAC Award. In this communication, the Respondent additionally requested the suspension of the procedural calendar set forth under the Revised PO1 (all together, the “Respondent's Applications").

34. On 22 September 2017, the Claimants filed their observations on the Respondent's Applications, accompanied by Legal Authorities CL-19, CL-34, CL-66, CL-68, CL-91, CL-153, and CL-172 to CL-182.

35. On 27 September 2017, the Tribunal sent instructions to the Parties to be accounted for in their further submissions on the Respondent's Applications, and it also informed them that the procedural calendar was maintained.

36. On 6 October 2017, the Respondent filed its Reply on its Applications, together with an Index of Legal Authorities, and Legal Authorities RL-74 to RL-82.

37. On 10 October 2017, the Claimants filed their Rejoinder on Respondent's Applications, together with Exhibits C-15, C-26, C-27, C-481 and Legal Authorities CL-183 to CL-193.

38. On 23 October 2017, the Tribunal issued Procedural Order No. 2 (“PO2”), concerning its Decisions on the Respondent's Applications. The Tribunal sustained the Respondent's objection to the Claimants' ancillary claim regarding the 2016 ST SIAC Award, and granted reconsideration in part of its decision on the Respondent's Bifurcation Request, in the sense that it (a) denied the request to consider and resolve Respondent's jurisdictional objections prior to the liability phase of this case, but (b) agreed to consider and resolve the combined jurisdictional/liability issues prior to further proceedings with respect to quantum, if needed. The Tribunal also provided a revised procedural timetable for the remainder of the proceeding.

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39. On 24 October 2017, the Claimants filed a Request for Clarification of the Tribunal's PO2, specifically concerning to its decision on the Claimants' Ancillary Claims. The Claimants inquired, essentially, whether LHNV could pursue ancillary claims even if Sanum could not, because of certain differences in the treaty frameworks applicable to the two cases.

40. On 31 October 2017, the Respondent filed its observations on the Claimants' Request for Clarification, as well as its comments on the revised procedural timetable.

41. On 1 November 2017, the Claimants filed their observations to the Respondent's comments on the revised procedural timetable.

42. On 14 November 2017, the Tribunal issued Procedural Order No. 3 (“PO3") granting the Claimants' Request for Clarification of the Tribunal's PO2. The Tribunal acknowledged that PO2 had presumed that Sanum was the only party seeking to present the additional claim regarding non-recognition of the 2016 ST SIAC Award issued in Sanum's favor, and had not appreciated that LHNV was asserting independent standing to bring claims about this issue. Based on certain differences between the applicable treaty frameworks for the two cases, the Tribunal determined that LHNV could proceed with this additional claim, although "[i]t naturally will bear the burden of proof on those claims, which includes a burden of demonstrating legal standing to complain about non-recognition of an arbitral award issued in favor of its subsidiary rather than itself." Accordingly, the Tribunal stated that the ancillary claims “may go forward, with the understanding that they are being pursued only by Lao Holdings and not by Sanum."

43. On 27 November 2017, the Tribunal issued Procedural Order No. 4 with a revised procedural timetable.

44. On 23 March 2018, the Respondent filed an Amended Opening Memorial on Competence and a Counter-Memorial on the Merits, together with Appendix A, Indexes of Exhibits and Legal Authorities, the second expert report by Hervé Ascensio, BDO's expert report by Kenneth Yeo and its corresponding Appendices 1-28, the witness statement of Bouavone Sisavath, Exhibits R-1 to R-103 and Legal Authorities RL-1 to RL-126 (“Respondent's Counter-Memorial”).

45. On 4 May 2018, the Respondent requested the Tribunal to decide on certain disputed document requests. The same day, the Claimants likewise requested the Tribunal's decision on disputed document requests, in a submission which was accompanied by Exhibits C-482 to C-515 and Legal Authorities CL-194 to CL-201.

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46. On 18 May 2018, the Tribunal issued Procedural Order No. 5 (“PO5”) concerning the Parties' document production requests. PO5 was accompanied by Annex A containing the Tribunal's decisions on the Respondent's requests and Annex B containing the Tribunal's decisions on the Claimants' requests.

47. On 12 June 2018, the Centre informed the Parties that Ms. Mercedes Cordido-Freytes de Kurowski, ICSID Legal Counsel, would serve as Secretary of the Tribunal, replacing Ms. Fleckenstein for a certain period of time.

48. On 25 June 2018, the Claimants filed a request for the Tribunal to assist in resolving certain alleged deficiencies in the Respondent's document production (“Claimants' Renewed Request on Document Production"). The Claimants' Renewed Request on Document Production was accompanied by Exhibits C-102, C-466, and C-519 to C-525.

49. On 29 June 2018, the Respondent filed its first Application for Security for Costs, accompanied by the witness statement of Sabh Phommarath, Exhibits R-104 and R-105, an Index of Legal Authorities and Legal Authorities RL-127 to RL-132 (“Respondent's First Application for Security for Costs").

50. On 2 July 2018, the Respondent filed its observations on the Claimants' Renewed Request on Document Production. The Tribunal issued its decision on this Request on 4 July 2018, making no additional orders regarding document production. The Tribunal stated that “the Parties remain free to present any arguments they wish, in the context of the remaining scheduled submissions, regarding the adequacy of evidence presented by either Party and the inferences or conclusions they believe the Tribunal should reach."

51. On 9 July 2018, LHNV filed its response to Respondent's First Application for Security for Costs, together with the second witness statement of Jorge Menezes and Exhibits C-68, C-373, C- 379, C-383 to C-385, C-422, C-432, and C-526 to C-539, Legal Authorities CL-18, CL-19, CL-49, and CL-202 to CL-209 (“LHNV's Response to Respondent's First Application for Security for Costs").

52. On 13 July 2018, the Respondent filed its Reply to LHNV's Response to Respondent's First Application for Security for Costs (“Respondent's Reply to its First Application for Security for Costs").

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53. On 26 July 2018, the Tribunal issued Procedural Order No. 6 (“PO6”) denying the Respondent's First Application for Security for Costs.

54. On 10 August 2018, the Claimants filed their Reply on Jurisdiction and Liability, accompanied by the second witness statements of John Baldwin and John Clay Crawford, the third witness statement of Jorge Menezes and the witness statement of Gerard Ngo, the second expert reports of Joshua Kurlantzick and Premjit Dass, the expert reports of Dennis Amerine together with its corresponding exhibits A1 to A10, Matt Isaacs together with its corresponding exhibits I-1 to I-67, Ricky Lee and its corresponding exhibits L-1 to L-30, Nardello & Co., and the expert report of Lok Vi Ming S.C. together with its Annexes A and B and exhibits M-1 to M-25, Exhibits C-546, C-548 to C-550, C-551A and C-551B, and C-552 to C-626, and Legal Authorities CL-210 to CL-216, CL-218, CL-220 to CL-237, CL-239 to CL-249, CL-251 to CL-270, CL-274 to CL-296, CL-298 to CL-310, CL-312 to CL-316, CL-318 to CL-323, CL-325 to CL-354, and CL-356 to CL-360 (“Claimants' Reply").

55. On 1 October 2018, the Respondent requested an extension of time to file its Rejoinder on Competence and the Merits. On 4 October 2018, the Claimants objected to this request and additionally requested leave from the Tribunal to file additional documentary evidence into the record. The Claimants' request was accompanied by Legal Authorities CL-367 to CL-370.

56. On 5 October 2018, the Tribunal issued a decision on the Respondent's request for an extension to file its Rejoinder and sent the Parties a revised procedural timetable.

57. On 10 October 2018, the Respondent opposed the Claimants' request to file additional documentary evidence into the record and requested an extension of one day to file its Rejoinder. On 11 October 2018, the Claimants opposed the one-day extension request. The Claimants further requested leave from the Tribunal to supplement their request of 4 October 2018, in order to add one additional piece of evidence.

58. On 11 October 2018, the Tribunal granted the Claimants' request to file additional documentary evidence into the record and the Respondent's one-day extension to file its Rejoinder. On this same date and pursuant to the Tribunal's instructions, the Claimants filed Exhibits C-627 to C-631 and Legal Authorities CL-361 to CL-366.

59. On 17 October 2018, the Tribunal instructed the Parties to jointly prepare two documents in advance of the hearing: (a) a short list of disputed issues, neutrally phrased, with annotated

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references to the corresponding sections of the pleadings or key exhibits that each Party considered most important to review for each issue, and (b) a similar short list of the key chapters of the factual chronology, likewise neutrally phrased and with annotated references to the factual record.

60. On 1 November 2018, the Respondent filed a Rejoinder on Competence and the Merits together with Exhibits R-106 to R-253 and Legal Authorities RL-133 to RL-172 (“Respondent's Rejoinder").

61. On 6 November 2018, the Claimants filed an Application to Strike the Respondent's Argument and Exhibits submitted in the Respondent's Rejoinder, together with its Annex A.

62. On 7 November 2018, the Respondent informed the Tribunal of the list of Claimants' witnesses and experts it wished to cross-examine at the hearing.

63. On 8 November 2018, the Claimants provided a list of the Respondent's witnesses and experts they wished to cross-examine. The Claimants also requested the Tribunal strike from the record the witness statement of Sabh Phommarath due to his passing. Also on 8 November 2018, the Claimants filed an Application for Leave to Supplement the expert report of Joseph Kalt.

64. On 12 November 2018, the Respondent filed its responses to: the Claimants' Application to Strike the Respondent's Argument and Exhibits submitted in the Respondent's Rejoinder; the Claimants' Application for Leave to Supplement the expert report of Joseph Kalt; and the Claimants' request to strike from the record the witness statement of Sabh Phommarath (all together, the “Claimants' Applications").

65. On 13 November 2018, the Tribunal held a pre-hearing organizational meeting with the Parties by teleconference.

66. On 14 November 2018, the Tribunal issued Procedural Order No. 7 (“PO7") concerning the Claimants' Applications.

67. On 16 November 2018, the Tribunal issued Procedural Order No. 8 (“PO8") on the organization of the hearing.

68. On 20 November 2018, the Claimants filed an application to introduce into the record 13 additional exhibits. On this same date, the Respondent informed the Tribunal that it did not object to the admission of the Claimants' additional exhibits into the record.

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69. Pursuant to the Tribunal's orders in PO7, on 28 November 2018, the Claimants submitted a supplemental expert report of Joseph Kalt.

70. On this same date, the Respondent requested a one-week extension to comply with the Tribunal's order to modify Exhibit R-253, which was granted by the Tribunal based on the Claimants' statement that it did not object to the Respondent's extension request.

71. On 5 December 2018, the Respondent filed a revised version of Exhibit R-253.

72. On 11 December 2018, the Respondent's counsel requested a postponement of the hearing due to Mr. Branson's unidentified health concerns that were making it impossible for him to participate personally as counsel. On this same date, the Tribunal requested further information from the Respondent on this matter.

73. On 12 December 2018, the Secretariat sent the Parties a further communication providing a schedule for the Respondent's submission of the further information requested by the Tribunal, and for the Claimants to indicate their position on the Respondent's request for postponement of the hearing.

74. On 13 December 2018, the Respondent submitted a communication regarding this matter. On 14 December 2018, the Claimants submitted their opposition to the Respondent's request to postpone the hearing. Their submission was accompanied by Exhibits A through K.

75. Later on 14 December 2018, the Tribunal informed the Parties that it “[is] willing to contemplate a one-time adjournment of the scheduled hearing on the understanding that the Parties will cooperate [...] to achieve a rescheduled hearing date in the first half of 2019.”

76. On 17 December 2018, the Tribunal invited the Parties to consider two blocks of time to hold the hearing and confirm their availability thereto by 20 December 2018.

77. On 20 December 2018, the Parties confirmed their availability to hold the hearing and indicated their respective preference on the two blocks of time proposed by the Tribunal. On this same date, the Tribunal confirmed that the hearing would be held in June 2019.

78. On 11 May 2019, the Tribunal invited the Parties to confirm, by 20 May 2019, its understanding that "the Award shall be deemed to be made at the place of arbitration [New York, in accordance to Section 11.1 of PO1], irrespective of where it is signed."

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79. On 13 May 2019, the Tribunal invited the Parties to confirm whether the Hearing Schedule proposed by the Parties in December 2018 was still in effect and invited them to confirm the availability of their respective witnesses to testify in person at the June 2019 hearing.

80. On 15 May 2019, the Respondent confirmed its witnesses' availability to testify at the June 2019 hearing but requested an extension of time to confirm the hearing schedule. On this same date, the Claimants confirmed both the availability of their witnesses and the hearing schedule.

81. On 16 May 2019, the Claimants informed the Tribunal of the Parties' agreement to introduce new documents into the record. The agreement was confirmed by the Respondent on 17 May 2019. The Claimants introduced Exhibits C-442.1, C-540, C-547 and C-645 to C-653 and Legal Authorities CL-85-6, CL-112, CL-121, CL-217, CL-219, CL-238, CL-250, CL-271-3, CL-297 and CL-297A, CL-311, CL-317 and CL-324. The Respondent introduced Exhibits R-254 to R-263 and Legal Authority RL-173.

82. As requested in the Tribunal's communication of 11 May 2019, on 20 May 2019, the Respondent confirmed the Parties' agreement of New York as the place of arbitration and the fact that the award "shall be deemed to be made in New York, irrespective of where it is signed." The Claimants subsequently confirmed such agreement.

83. On 24 May 2019, the Claimants submitted a proposed revised hearing schedule. Subsequently, the Respondent confirmed its agreement with the revised schedule.

84. A hearing on jurisdiction and liability was held at Maxwell Chambers in Singapore, from 10 to 14 June 2019 (the “Hearing”). The following persons were present at the Hearing:

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85. During the Hearing, the following persons were examined:

86. During the Hearing additional documents were introduced into the record. The Claimants introduced Legal Authorities CL-372 to CL-378 and the Respondent introduced Legal Authorities RL-174 to RL-177. The Parties also presented extensive arguments by counsel, supported by PowerPoint presentations that are referenced here as “Claimants' Opening Presentation," "Respondent's Opening Presentation, “Claimants' Closing Presentation,” and Respondent's Closing Presentation."

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87. On 24 June 2019, after an invitation made by the Tribunal during the Hearing, the Claimants provided a Claim Breakdown, organized to show which claims each Claimant was pursuing.

88. On this same date, the Secretariat reminded the Parties about the Tribunal's confirmation request of whether the Tribunal should render a single consolidated decision/award or whether it should render two separate decisions/awards.

89. On 26 June 2019, the Claimants confirmed their consent to the "issuance of a consolidated award."

90. On 1 July 2019, the Respondent filed an Application for Leave to Consider a Jurisdictional Objection, together with Legal Authorities RL-178 to RL-181.

91. On 3 July 2019, the Respondent in response to the Secretariat's communication of 24 June 2019, requested the Tribunal to "maintain the existing separation between ICSID Case No. ARB(AF)/16/2 and ICSID Case No. ADHOC/17/1 as it pertains to the issuance of Tribunal Awards and decisions."

92. On 15 July 2019, the Claimants filed their Response to the Respondent's Application for Leave to Consider a Jurisdictional Objection, together with Exhibits C-657-8 and Legal Authorities CL-380 to CL-392.

93. On 6 August 2019, the Respondent informed the Tribunal that Final Awards had been rendered on that date in the BIT I Cases (ICSID Case No. ARB(AF)/12/6 and PCA Case No. 2013-13), and attached such Awards as Exhibits R-264 and R-265, respectively. The Respondent further indicated that the "Parties should have the opportunity to submit brief submissions on the material implications of these Awards."

94. On this same date, the Tribunal invited the Parties to confer and agree on a potential schedule for supplemental submissions regarding "the implications of the [BIT I] Awards for the matters before the Tribunal."

95. On 13 August 2019, the Respondent transmitted to the Tribunal the Parties' agreed proposed schedule for the additional submissions regarding the implications of the BIT I Awards for the matters before this Tribunal. By subsequent communication, the Claimants confirmed their agreement. On this same date, the Tribunal confirmed the Parties' agreed proposed scheduled.

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96. On 15 August 2019, the Respondent withdrew its Application for Leave to Consider a Jurisdictional Objection.

97. On 11 September 2019, the Respondent filed a Second Application for Security for Costs, together with Exhibits R-266 to R-270 and Legal Authorities RL-178 to RL-184 (“Respondent's Second Application for Security for Costs").

98. On 24 September 2019, the Respondent filed its Submission on the ICSID and PCA Final Awards, together with Exhibits R-271 to R-273 and Legal Authorities RL-185 to RL-191 (“Respondent's Submission on the BIT I Awards").

99. Also, on 24 September 2019, the Claimants filed their Response to the Respondent's Second Application for Security for Costs, together with the witness statement of Wendy Lin, and the submission's corresponding supporting documentation including: Exhibits C-659 to C-666 and Legal Authorities CL-393 to CL-402.

100. The Tribunal considered it inappropriate to rule at the time on the Respondent's Second Application for Security for Costs, which was filed roughly three months after the Hearing, and in consequence after the Tribunal had engaged in certain preliminary deliberations. In the Tribunal's view, it would not have been appropriate so late in the proceedings to consider shifting the status quo as to cost allocation between the Parties, or to issue any ruling that could complicate or potentially interfere with the disposition of the proceeding, even if arguendo the standards for doing so otherwise had been met (which the Tribunal did not decide). At the same time, the Tribunal was reluctant to articulate the reasons for not ruling contemporaneously on the Application, because this might lead the Parties to speculate about the content and direction of the Tribunal's preliminary deliberations. The Tribunal therefore determined to explain its reasoning as part of this Decision, as it hereby does.

101. On 5 November 2019, the Claimants filed their Response to the Respondent's Submission on the BIT I Final Awards of 24 September 2019, together with Appendices A and B, its corresponding supporting documentation, including: Exhibits C-672, C-675 to C-713 and Legal Authorities CL-403 to CL-451 (“Claimants' Response on the BIT I Awards").

102. On 20 November 2019, the Respondent submitted an 18 November 2019 decision of the Singapore Court of Appeal in the case ST Group Co. Ltd v. Sanum Investments Ltd. (the “2019 ST Appeal Decision") and requested the Tribunal to submit a brief on its view on "the significance of the

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decision" in the current proceeding. On this same date, the Tribunal set a schedule for the Parties' comments thereto.

103. On 21 November 2019, the Claimants filed a request for the Tribunal to extend the deadline to submit their comments on the Respondent's submission on the 2019 ST Appeal Decision. The extension request was granted on 22 November 2019.

104. On 25 November 2019, the Respondent filed its comments on the 2019 ST Appeal Decision, and filed an additional copy of the decision which was introduced into the record as Exhibit R-266.

105. On 9 December 2019, the Claimants filed a Response to the Respondent's comments on the 2019 ST Appeal Decision.

106. On 27 February 2020, the Claimants requested leave from the Tribunal to introduce a new document into the record pursuant to Section 17.2 of PO1. On 28 February 2019, the Respondent sought leave to comment on the Claimants' request. The Tribunal granted such leave on the same date.

107. On 6 March 2020, the Respondent filed its comments on the Claimants' application to submit new evidence, indicating that it did not object and attaching, for the record, the document subject to the Claimants' application.

108. On 27 March 2020, the Tribunal noted the absence of objection, and therefore authorized Claimants to file the new document as requested. The Claimants did so the same day, with the document introduced into the record as Exhibit C-680.

109. On 20 April 2020, the Claimants filed a second application for leave to submit newly acquired evidence, this time concerning two additional documents. On the same date, the Respondent filed observations, followed by further observations on 28 April 2020. On 28 April 2020, the Claimants requested leave to submit a response.

110. On 29 April 2020, the Tribunal decided on the Claimants' second application of 20 April 2020. The Tribunal noted that the application had triggered a response from Respondent seeking to present new evidence and assertions of its own, a development which risked a broader resumption of submissions and counter-submissions at a late stage of the proceedings. The Tribunal accordingly denied the requests of both Parties for permission to submit new documents or make

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additional arguments, and stated that it would decide the case on the basis of the record already established prior to the recent exchanges.

111. On 8 August 2020, the Claimants submitted a third application for leave to add new evidence to the record, to which the Respondent responded (as invited by the Tribunal) on 17 August 2020, objecting to the application. On 25 September 2020, the Tribunal denied the application “in light of the stage of these proceedings, without prejudice to the possibility of revisiting the issue should the Tribunal consider it appropriate."

112. On 13 August 2021, the Respondent submitted an application for leave to add new evidence to the record, to which the Claimants responded (as invited by the Tribunal) on 20 August 2021. On 30 August 2021, the Tribunal denied the application, on the basis that the Respondent had not shown the new evidence “to have sufficient materiality to justify reopening the record at this late date."

113. On 29 June 2023, the Respondent submitted another application for leave to introduce new evidence, to which the Claimants responded (as invited by the Tribunal) on 7 July 2023. On 11 September 2023, the Tribunal denied the application, on the basis that the proffered evidence was insufficiently material “to derail a proceeding which has been pending for some time."

114. Along the proceedings, the Tribunal kept the Parties informed on the status of its work (i.e., by communications of 30 March 2023, 11 September 2023, 11 April 2024, and 10 September 2024).

III. FACTUAL BACKGROUND

115. The Tribunal provides below a detailed summary of facts, because that is necessary to make sense not only of the substantive issues disputed in this case but also of the Parties' respective arguments regarding doctrines of preclusion, based on the complicated history of prior arbitration proceedings. Certain of these facts are directly relevant only to claims in the LHNV case, but are included herein for context, given the close relationship between the two proceedings. At the same time, this is not intended as an exhaustive summary of the evidence in either case or the Tribunal's findings. Additional relevant facts are set forth in connection with the Tribunal's analysis of disputed issues. The absence of reference to particular facts or assertions, or to the evidence supporting any particular fact or assertion, should not be taken as an indication that the Tribunal did not consider those matters. The Tribunal has carefully considered all evidence and argument submitted to it in the course of these proceedings.

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A. SANUM'S "MASTER AGREEMENT" WITH ST

116. Sanum was established in the Macau Special Administrative Region, People's Republic of China, in 2005.⁵

117. On 30 May 2007, Sanum (which was not yet owned by LHNV⁶) entered into an agreement with ST Group Co. Ltd. (“ST”), a Lao company that operated several slot clubs and had been granted Government concessions to develop certain casino projects.⁷ The Parties both refer to this agreement as the “Master Agreement,”⁸ and the Tribunal adopts this terminology, although the term does not appear in the document itself.

118. The Master Agreement called for Sanum and ST to "negotiate and work towards entering into certain joint ventures," which would be established by subsequent agreements that collectively would convey to Sanum "60% of all [of ST's] gaming businesses" in the Lao PDR. The Preamble to the Master Agreement expressly provided that it “is not intended to be a definitive agreement but only provides the Parties' general understandings of their relationship," until they could finalize "all necessary agreements to fully implement the concepts and terms set forth in this Agreement.”⁹

119. The Master Agreement anticipated the eventual creation of three joint ventures which would own and operate all of ST's “present and future gaming businesses in Lao PDR.”¹⁰ Two of the joint ventures anticipated in the Master Agreement would be dedicated to casino projects for which ST already had concessions: (a) the Savan Vegas casino in Savannahket (known as “Savan Vegas" or the "Savan Vegas Casino”), which was owned by an ST company called Savan Vegas and Casino Co., Ltd. (“SVCC"), and (b) a contemplated Paksong Vegas casino in Champasak Province ("Paksong Vegas"), which was owned by an ST company called Paksong Vegas and Casino Company, Ltd.¹¹ The Lao PDR already held a 20% ownership stake in the two casino projects, Savan Vegas and Paksong Vegas.¹² The Savan Vegas Casino was eventually built and operated successfully, while the Paksong Vegas casino was never built.

⁵ Claimants' Memorial, ¶ 22 (citing Witness Statement of John K. Baldwin, 31 August 2017 (“Baldwin WS”), ¶ 5). ↩

⁶ As noted above, LHNV acquired Sanum on 17 January 2012. Claimants' Memorial, ¶ 22. ↩

⁷ Claimants' Memorial, ¶ 24 (citing Baldwin WS, ¶¶ 10-11). ↩

⁸ Claimants' Memorial, ¶ 31 (citing C-26, Master Agreement between Sanum and ST Group, 30 May 2007, hereafter “Master Agreement”); Respondent's Counter-Memorial, ¶ 412 (adopting same terminology). ↩

⁹ C-26, Master Agreement, Preamble. ↩

¹⁰ C-26, Master Agreement, Art. 1. ↩

¹¹ Claimants' Memorial, ¶ 32 (citing C-26, Master Agreement Art. 1). ↩

¹² Claimants' Memorial, ¶ 33 (citing C-26, Master Agreement, Art. 1(4)); see also Respondent's Counter-Memorial, ↩

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120. The third anticipated joint venture described in the Master Agreement, the Slot Club JV, was to include three different slot clubs: (i) the “Thanaleng Slot Club" at the Friendship Bridge near Vientiane (sometimes referred to as the “Vientiane Friendship Bridge Slot Club”), (ii) the “Lao Bao Slot Club" at the border crossing with Vietnam in eastern Savannakhet Province, and (iii) the "Ferry Terminal Slot Club" in western Savannakhet/Daensaven at the ferry border checkpoint with Thailand.¹³

121. The Master Agreement provided that ST and Sanum would have an “exclusive gaming relationship," to be reflected in the three joint ventures and in possible additional joint ventures to be developed in future. In other words, ST “shall not be involved in any present or future gaming activity without the direct participation” of Sanum.¹⁴ The Master Agreement further provided that while additional agreements would be needed to implement the parties' understandings, those "shall express the exact meaning of all terms of this Agreement,” such that “this Agreement rules and is authoritative."¹⁵

B. SANUM'S INITIAL DISPUTES WITH ST

(1) Thanaleng Slot Club Dispute, Case 52, and Initiation of the ST SIAC Case

122. Between 2007 and 2009, Sanum and ST entered into certain agreements with respect to the three slot clubs ST owned. For the Ferry Terminal and Lao Bao Slot Clubs, this included a 6 August 2007 Participation Agreement (the “Ferry Terminal/Lao Bao Participation Agreement”), which provided inter alia that Sanum would supply and maintain certain gaming machines, and would manage the clubs, in exchange for receiving a 60% share of the clubs' revenues.¹⁶

123. With respect to the Thanaleng Slot Club, however, the 2007 Master Agreement had acknowledged that ST already had three existing slot machine contracts with other suppliers: one with RGB expiring "in less than 5 years,” another “with approximately 2 years remaining,” and a third “with approximately 1 year left.”¹⁷ The Master Agreement had provided that ST would not extend those existing contracts beyond their various expiration dates, although the other suppliers could submit

¶ 353.

¹³ Claimants' Memorial, ¶ 32 (citing C-26, Master Agreement, Art. 1); Respondent's Counter-Memorial, n.550, ¶ 412. ↩

¹⁴ C-26, Master Agreement, Art. 1. ↩

¹⁵ C-26, Master Agreement, Art. 1(5). ↩

¹⁶ C-27, Lao Bao/Ferry Terminal Participation Agreement; Claimants' Memorial, ¶ 64 (citing inter alia Baldwin Witness Statement, ¶ 21). ↩

¹⁷ C-26, Master Agreement, Art. 1. ↩

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proposals thereafter to continue a relationship with the new ST/Sanum joint venture.¹⁸ In any event, the Master Agreement provided that as the other contracts expired, Sanum could step in and provide slot machines on a profit participation basis.¹⁹ Once the last supplier contract expired (which the Claimants refer to as the “Turnover Date"), the Thanaleng Slot Club would be turned over to the new joint venture (which Sanum would manage and in which it would have a 60% interest), in exchange for Sanum's payment to ST of US$500,000.²⁰ ST also was to use its best efforts to acquire additional land for expansion of the Thanaleng Slot Club, and Sanum would pay up to US$1 million of the acquisition costs.²¹

124. On 4 October 2008, Sanum and ST entered into the first of several agreements specifically relating to the Thanaleng Slot Club (the “Thanaleng Participation Agreement”). This agreement provided that Sanum would supply slot machines exclusively to the Thanaleng Slot Club, “on a generated revenue sharing/participation basis,” and ST agreed to operate the machines with Sanum.²² The parties' revenue generated from the slot machines would be reduced by 30% (called the “Costs Contribution") and US$5,000 (called the “Overhead Contribution”), which would be provided to ST for costs, and the remaining amount would be split 60% for ST and 40% for Sanum.²³ Article 6 of the Thanaleng Participation Agreement stated that "[t]his Agreement shall terminate on October 11, 2011, which is the termination date of the Participation Agreement between” ST and RGB, the one remaining legacy slot machine supplier.²⁴

125. On 23 February 2010, Sanum and ST entered into an agreement to expand the Thanaleng Slot Club (the "First Thanaleng Expansion Agreement”).²⁵ This Agreement provided that ST had acquired a new land lease and would construct a new building extension; the land and facilities had an agreed value of US$500,000, and the construction also had an agreed value of US$500,000. In order for Sanum "to have rights, interests and benefits in this new expansion," Sanum eventually would make certain payments to ST. Those payments would entitle Sanum to maintain with respect to the extension project the same 40% interest in generated revenues (less certain renovation and investment expenses) that had been agreed in the Thanaleng Participation Agreement. The First

¹⁸ C-26, Master Agreement, Art. 1. ↩

¹⁹ C-26, Master Agreement, Art. 1(3)(d). ↩

²⁰ C-26, Master Agreement, Art. 1(3)(d). ↩

²¹ C-26, Master Agreement, Art. 1(3)(b). ↩

²² C-29 and R-35, Thanaleng Participation Agreement, preamble. ↩

²³ C-29 and R-35, Thanaleng Participation Agreement, Art. 4. ↩

²⁴ C-29 and R-35, Thanaleng Participation Agreement, preamble and Art. 6. ↩

²⁵ C-30, First Thanaleng Expansion Agreement. ↩

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Thanaleng Expansion Agreement anticipated that after ST's supply contract with RGB expired in 2011, Sanum's share of generated revenues would be converted to 60%, as anticipated in the Master Agreement.²⁶

126. On 16 November 2010, ST and Sanum agreed to amend the Thanaleng Participation Agreement to provide for a “second expansion” of the Thanaleng Slot Club (the “Second Thanaleng Expansion Agreement").²⁷ This Agreement provided that the total cost of construction, land and an operating license for the additional facility would be US$1,500,000, and that Sanum would pay US$900,000 to ST in three installments. The first two payments were tied respectively to the progress of a land assignment and to the opening of the additional facility, and the last payment was due on 11 October 2011.²⁸ The Agreement provided that once the additional facility was completed, it would be "operated by the parties as one slot club" in accordance with the provisions of the Thanaleng Participation Agreement and the Master Agreement.²⁹ As for ownership, Sanum's participation percentage in the Thanaleng Slot Club and the additional facility would be 40% from the date of the Second Thanaleng Expansion Agreement and 60% from 11 October 2011.³⁰

127. Subsequent to these various agreements, there was a falling out between Sanum and ST. On 24 August 2011, ST notified Sanum that it had made a mistake regarding the expiration date of the final third-party supply contract, with RGB; it had previously understood this to be five years from the RGB contract date, or 11 October 2011, but after reviewing the contract and other evidence submitted by RGB, it now realized that it had committed to RGB for five years "starting first day of operation," or 12 April 2012.³¹ On 10 October 2011, Sanum protested this change and suggested that it defer at least part of its payment due to ST, until such time as it could place its further slot machines in the club; it also asked to receive 75% of the income generated by RGB's machines.³² The same day, ST responded that the "misunderstanding” about the date of the RGB contract expiration had been a mutual one, since the Master Agreement had not specified the exact Turnover Date (simply that it was pegged to expiry of pre-existing supply contracts), and ST had provided Sanum with the underlying contracts before negotiating the Thanaleng Participation Agreement.

²⁶ C-30, First Thanaleng Expansion Agreement Arts. 1, 2. ↩

²⁷ C-31, Second Thanaleng Expansion Agreement, preamble. ↩

²⁸ C-31, Second Thanaleng Expansion Agreement, Art. 1. ↩

²⁹ C-31, Second Thanaleng Expansion Agreement, Art. 2. ↩

³⁰ C-31, Second Thanaleng Expansion Agreement Art. 2. ↩

³¹ C-116, 24 August 2011 Email from ST to Sanum re: Thanaleng Slot Club Issue. ↩

³² C-117, 10 October 2011 Letter from Sanum to ST. ↩

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ST stated that it had “made assumption that [Sanum] did its own review and study and came up with draft participation agreement as was later signed by both parties," but in fact “there was a mistake caused by both parties who agreed to put a wrong date of expiration" of the RGB contract in the Participation Agreement. ST proposed that Sanum "should not pay ST" until a further agreement was reached, and instructed Sanum that it “should not bring the machines to the slot club since there is no places for installation of such machines.”³³

128. The Parties to this arbitration both put their own spin on what happened next. Claimants' witness Mr. Baldwin contends that "[w]hile I believed that we had negotiated a compromise ..., on 12 April 2012, ST locked Sanum out of the Thanaleng Slot Club and contended that the parties' agreement with respect to Thanaleng had terminated on 10 October 2011.”³⁴ The Respondent contends that Sanum defaulted on its payment obligations under the Second Thanaleng Expansion Agreement – making none of the installment payments totaling US$900,000 – and “[t]hus, the conditions of [that] agreement were never met. ... Therefore, all that remained was the 2008 Participation Agreement which expired by its express terms on October 11, 2011." The Respondent claims that ST thereafter refused to accept payment from Sanum on the grounds that it was untimely, and refused to accept Sanum's further machines. According to the Respondent, Sanum nonetheless took the position that the Master Agreement had “unlimited duration.”³⁵

129. In any event, it is undisputed that all cooperation between Sanum and ST came to a halt, and that Sanum and ST ultimately engaged in extensive litigation before the Lao PDR courts. Some of the Claimants' later treaty claims in the BIT I Cases against the Lao PDR relate to the way in which the Lao PDR courts handled that Sanum-ST litigation, as discussed in Section III.B below. For purposes of this Section, the Tribunal simply identifies the key events and court findings.

130. First, on 1 March 2012, Sanum petitioned for arbitration with the Ministry of Justice Office of Economic Dispute Resolution (“OEDR”), invoking the first paragraph in the Master Agreement's tiered dispute resolution clause.³⁶ ST challenged Sanum's invocation of this mechanism, arguing

³³ C-410, 10 October 2011 Letter from ST to Sanum. ↩

³⁴ Baldwin Witness Statement, ¶ 110. ↩

³⁵ Respondent's Counter-Memorial, ¶ 416. ↩

³⁶ C-26, Master Agreement, Art. 2(10) provided as follows: ↩

"If any dispute shall arise, the Parties agree to conduct an amicable negotiation. If such dispute cannot be settled by mediation, the Parties may submit such disputes to the [OEDR] or Courts of the Lao PDR according to the provision and law of Lao PDR in accordance with this Agreement. ...
Before settlement by the arbitrator under the rules of the [OEDR], the Parties shall use all efforts to assist

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that there was “no legal basis” for bringing such disputes to the OEDR.³⁷ On 12 April 2012, Sanum sought an injunction from the OEDR to block ST from moving any of Sanum's slot machines out of the Thanaleng Slot Club,³⁸ and the OEDR referred the matter to the Vientiane People's Court; on 20 April 2012, that Court issued a “Sequestering Order" requiring maintenance of the status quo.³⁹ ST appealed the Sequestering Order, and demanded in the meantime that Sanum be required to remove its machines from the Thanaleng Slot Club, failing which ST would be forced to store them in a warehouse “in the presence of governmental representatives as witnesses.”⁴⁰ The OEDR accepted this proposal on 26 April 2012 and instructed ST and Sanum to “implement it accordingly."⁴¹ On 29 April 2012, the machines were transported to a Government-owned warehouse.⁴² The Commercial Court of Vientiane thereafter accepted ST's appeal and rescinded the Sequestering Order.⁴³

131. On 8 June 2012, ST filed a court case against Sanum, beginning proceedings that the Parties in this arbitration refer to as “Case 52." ST sought an order affirming that the Thanaleng Participation Agreement had terminated by its terms on 11 October 2011, even though ST had permitted Sanum "to jointly continue running the business” until 12 April 2012, in the hope that a new Participation Agreement might be signed. ST claimed that a further agreement was not possible "due to a bad faith of Sanum in sharing operation of such business," with the result that ST "no longer had more obligations to abide by towards Sanum.”⁴⁴ On 25 June 2012, Sanum filed its defense and counterclaims, contending that "[o]nly the Participation Agreement which was meant to cover the transition period from the old machine suppliers to the slot machines provided by Sanum, expired," but the Master Agreement and First and Second Thanaleng Expansion Agreements “remain valid

the dispute resolution in accordance with the laws of Lao PDR.
If one of the Parties is unsatisfied with the results of the above procedure, the Parties shall mediate and, if necessary, arbitrate such dispute using an internationally recognized mediation/arbitration company in Macau, SAR PRC."

³⁷ C-411, Defense filed by ST before OEDR, 23 March 2012. ↩

³⁸ C-126, Sanum Petition to OEDR for Injunction, 12 April 2012. ↩

³⁹ C-127, Sequestering Order No. 07/PC.VTE, 20 April 2012. ↩

⁴⁰ C-128, ST Notice to Remove Machines from Thanaleng, 25 April 2012. ↩

⁴¹ C-129, OEDR Notice No. 38/MoJ, 26 April 2012. Claimants contend that this was an “abrupt[]" reversal of course due to ST's political connections with the Lao PDR Government. Claimants' Memorial, ¶ 88. ↩

⁴² Baldwin Witness Statement, ¶ 110. ↩

⁴³ C-130, Appeal Decision No. 06/AC.CR, 30 May 2012. Claimants contend that this ruling was actually issued on 30 April 2012-not 30 May 2012 as reflected on the document-and that Sanum was not provided an opportunity to be heard. Claimants' Memorial, ¶ 90. ↩

⁴⁴ C-470, ST Petition in Case 52, 8 June 2012. ↩

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and in full force and effect.”⁴⁵ Sanum contended that it therefore was entitled to a majority interest in and management control over the Thanaleng Slot Club, and sought damages estimated in the "tens of millions US$" because of its eviction from the Club, the removal of its machines, and alleged other wrongs.⁴⁶

132. On 25 July 2012, the Commercial Court of Vientiane issued a Seizure Order which froze a number of Sanum's bank accounts as security for certain court fees associated with its counterclaim against ST.⁴⁷ The total sums in these accounts was US$135,375.76, which was considerably less than the court fees at issue.⁴⁸

133. Following a trial on 26 July 2012 (which Sanum contends lacked due process),⁴⁹ the Commercial Court of Vientiane (the court of first instance) ruled the same day in ST's favor (the “Case 52 First Instance Decision"). The Court determined that ST had sent Sanum three notices of the termination of the Participation Agreement, the last one dated 11 April 2012, to which Sanum had failed to respond; that Sanum's refusal to recognize the termination was a breach of the Participation Agreement; that Sanum's invocation of the Master Agreement did not change these facts, because "[t]he contents of MA [don't] cover the contents of PA"; that Sanum's invocation of the later Thanaleng Expansion Agreements did not modify the expiration of the Participation Agreement; and accordingly that all obligations between ST and Sanum under the Participation Agreement had ended, with ST therefore free to resume operations on its own at the Thanaleng Slot Club. The Court rejected Sanum's counterclaim for more than US$240 million on the basis that ST had not breached the Participation Agreement.⁵⁰

134. Sanum filed an appeal, and on 11 December 2013, the Court of Appeal affirmed the Decision of the Commercial Court in Case 52 (the “Case 52 Appeal Decision”).⁵¹ Inter alia, the Court of Appeal rejected Sanum's contention that termination of the Thanaleng Participation Agreement related only to a particular temporary allocation of shares and profit sharing, noting that the Section

⁴⁵ C-121, Sanum Defense and Counterclaim, 25 June 2012, p. 5; see also id., p. 3. ↩

⁴⁶ C-121, Sanum Defense and Counterclaim, 25 June 2012, pp. 8-9. According to the eventual Court judgment, Sanum's damages demand was later quantified as in excess of US$ 240 million. C-123, Case 52 First Instance Decision, p. 4. ↩

⁴⁷ C-169, Commercial Chamber, the People's Court, No. 11/PC.VTC, Order to Seize Sanum Assets, 25 July 2012. ↩

⁴⁸ Claimants' Memorial, ¶¶ 279-280. ↩

⁴⁹ Claimants' Memorial, ¶¶ 92-94. ↩

⁵⁰ C-123 and R-118, Case 52 First Instance Decision, pp. 4-6. ↩

⁵¹ C-124 and R-129, Case 52 Appeal Decision, 11 December 2013. ↩

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6 of the Participation Agreement referred generally to termination of the companies' business participation.⁵² As for Sanum's argument that “the Master Agreement will take precedence,” the Court of Appeal considered as follows:

After considering these assertions, the Court deems that they are not justified because the content of the Master Agreement ... does not define clearly the rights and obligations of the two parties concerning business operations [at the Thanaleng Slot Club]. To ensure fairness to both parties ..., the two parties agreed to make the October 4, 2008 Participation Agreement, which was to terminate on October 4, 2011.... [Sanum] should not consider that because there is a Master Agreement, [it] has the automatic right to continue joint business operations .... If the intent was to operate the business ... based on the Master Agreement, as claimed by Sanum ..., both Sanum ... and ST ... really should not have made the [Participation Agreement]."⁵³

135. The Court of Appeal added that upon expiration of the Participation Agreement, ST and Sanum would have to take affirmative steps to agree on a new Participation Agreement if they wished to continue a business partnership. It accepted ST's evidence that despite three notices of termination over more than six months which requested a meeting to discuss possible future arrangements, Sanum "gave no response to inform ST... of its intent to continue joint business operations ...."⁵⁴ The Court of Appeal concluded that "[t]herefore, ST ... and Sanum ... no longer have the status of being business partners in the Slot Machine Club ...."⁵⁵

136. The Lao Supreme Court affirmed the Court of Appeal's decision on 4 April 2014 (the “Case 52 Supreme Court Decision”).⁵⁶ Inter alia, the Supreme Court rejected Sanum's argument that once the Participation Agreement expired, the Master Agreement “should be effective immediately to cover the obligations" between Sanum and ST, since the Master Agreement itself provided that it "has no intent to be a strict contract, as it is only to support the parties toward having an overall understanding of their own relationship," which would be implemented in subsequent necessary contracts. "This shows that the parties cannot consider the [Master Agreement] as a completed business joint venture agreement .... Therefore, the parties need to renew the contract to be in compliance with the [Master Agreement].” They ultimately did not do so.⁵⁷

⁵² C-124 and R-129, Case 52 Appeal Decision, 11 December 2013, p. 8. ↩

⁵³ C-124 and R-129, Case 52 Appeal Decision, 11 December 2013, p. 9. ↩

⁵⁴ C-124, and R-129, Case 52 Appeal Decision, 11 December 2013, pp. 8, 9-10. ↩

⁵⁵ C-124 and R-129, Case 52 Appeal Decision, 11 December 2013, p 9. ↩

⁵⁶ C-125 and R-135, Case 52 Supreme Court Decision, 4 April 2014. ↩

⁵⁷ C-125 and R-135, Case 52 Supreme Court Decision, 4 April 2014, p. 7. ↩

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137. Almost eighteen months later, in September 2015, Sanum initiated a SIAC arbitration against ST (the "ST SIAC Case”), invoking the third paragraph of the Master Agreement's tiered dispute resolution clause and raising various claims related to the Thanaleng Slot Club. Sanum's initial Notice of Arbitration proposed a SIAC arbitration seated in Macau; ST objected to SIAC arbitration on several grounds.⁵⁸ The SIAC noted ST's objections but declared itself satisfied prima facie that there was a valid SIAC arbitration clause, following which ST did not proceed further in the arbitration; SIAC appointed all three tribunal members.⁵⁹ The tribunal in that case (the “ST SIAC Tribunal") later determined, following consultation with Sanum's counsel, that the seat of the arbitration should be Singapore rather than Macau, since the dispute resolution clause in the Lao Bao/Ferry Terminal Participation Agreement – which specifically provided for a SIAC Rules arbitration seated in Singapore – “amplifie[d] and supplement[ed] the dispute resolution clause in the Master Agreement.”⁶⁰

138. On 22 August 2016, the ST SIAC Tribunal issued the 2016 ST SIAC Award, finding breach of contract by ST and awarding Sanum some US$200 million for deprivation of a 60% interest in the Thanaleng Slot Club.⁶¹ This development was at the root of LHNV's ancillary claim in the parallel arbitration for the Respondent's non-recognition of the 2016 ST SIAC Award. Pursuant to PO3, the ancillary claim is not a part of these proceedings by Sanum under the China-Laos BIT.

(2) Savan Vegas Dispute and Initiation of Case 48

139. Meanwhile, and separate from the Sanum-ST dealings regarding the Thanaleng Slot Club, a separate dispute arose between Sanum and ST regarding the Savan Vegas Casino in Savannahket.

140. As discussed above, the Master Agreement had envisioned a joint venture between Sanum and ST with respect to the Savan Vegas Casino for which ST already had a concession. The casino was owned by SVCC, an ST company, in which the Lao PDR had a 20% ownership stake. On 27 July 2007, Sanum and ST (and certain ST affiliates) executed a Share Transfer Agreement by which

⁵⁸ R-266, 2019 ST Appeal Decision, ¶¶ 20-21. ↩

⁵⁹ R-266, 2019 ST Appeal Decision, ¶¶ 22-23. ↩

⁶⁰ R-266, 2019 ST Appeal Decision, ¶ 24. ↩

⁶¹ C-122 and R-76, ST SIAC Award No. 097/16 re ARB/184/15/JJ, Sanum v. ST Group et al., 22 August 2016 (“2016 ST SIAC Award"). ↩

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Sanum acquired sufficient shares to give it a 60% stake in SVCC, leaving ST with a remaining 20% interest.⁶²

141. On 10 August 2007, Sanum, ST, SVCC and the Lao PDR entered into a Project Development Agreement (the "Savan Vegas PDA"), which confirmed the ownership structure of the joint venture (Sanum 60%, ST 20% and the Lao PDR 20%),⁶³ and established certain parameters for the development of the casino. The same day, a similar Project Development Agreement was executed for the Paksong Vegas casino (the “Paksong Vegas PDA”).⁶⁴ Claimants contend that Sanum subsequently (in June 2012) acquired ST's remaining 20% interest in SVCC, after ST failed to make a capital contribution, bringing its ownership stake in the Savan Vegas project to 80%.⁶⁵

142. The Savan Vegas Casino opened on 20 December 2008. The Paksong Vegas casino was never built.

143. By 2012, the relationship between Sanum and ST had seriously deteriorated, and on 3 May 2012, ST filed suit against Sanum and SVCC in the Commercial Court of Vientiane.⁶⁶ The Parties in this arbitration refer to those proceedings as “Case 48." ST's 2012 petition alleged breaches by Sanum of the Master Agreement, a Shareholders' Agreement dated 31 October 2007 between ST and Sanum, and SVCC's Articles of Association, “along with the violation of laws and regulations of Lao PDR.”⁶⁷ Among other things, ST alleged that:

a. Sanum had breached the Master Agreement by entering into business agreements with others for gaming in Laos;⁶⁸

b. Sanum and SVCC had breached their obligation to provide ST with full access to SVCC's financial records, which was particularly concerning given SVCC's unexplained disbursement of US$26 million as “other expenditures”, while failing to report profits in any year;⁶⁹

⁶² C-32, Share Transfer Agreement, 27 July 2007. ↩

⁶³ C-7, Savan Vegas PDA, 10 August 2007, Art. 6(3). ↩

⁶⁴ C-406, Paksong Vegas PDA, 10 August 2007. ↩

⁶⁵ Claimants' Memorial, ¶ 37 & n. 39. ↩

⁶⁶ C-325, ST Petition in Case 48, 3 May 2012. ↩

⁶⁷ C-325, ST Petition in Case 48, 3 May 2012, p. 2. ↩

⁶⁸ C-325, ST Petition in Case 48, 3 May 2012, Section 8. ↩

⁶⁹ C-325, ST Petition in Case 48, 3 May 2012, Section 9. ↩

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c. Sanum had failed to construct the Paksong Vegas casino within the allotted timeframe, leading to the loss of the concession the Lao PDR had previously granted;⁷⁰

d. Sanum violated its agreement that ST would take the lead in seeking necessary government approvals and licenses, by sending unilateral notices to the Lao PDR (including a threat of litigation) regarding the joint Paksong Vegas project;⁷¹

e. Sanum and SVCC violated their contractual and legal obligations of good faith towards ST as its partner;⁷²

f. Sanum and SVCC breached their contractual obligation to distribute profits and/or dividends to ST, while making unexplained expenditures to their own benefit;⁷³

g. Sanum wrongfully interfered with ST's gaming operations in the Thanaleng Slot Club, by asking the OEDR to seize slot club assets and prevent ST from operating the club as was its right;⁷⁴

h. Sanum sought to avoid resolution of disputes by the Lao PDR courts, and unfairly threatened ST in letters to Lao and U.S. officials;⁷⁵ and

i. The dispute resolution clauses in the Master Agreement conflicted with Lao law.⁷⁶

144. Based on these claims, ST asked the Court to terminate all agreements between Sanum and ST (including the Master Agreement, the Savan Vegas and Paksong Vegas PDAs, and the Thanaleng Participation Agreement), in accordance with ST's notification of termination sent on 11 April 2012, and declare that the companies are no longer obliged to maintain any exclusive relationships in casino businesses and slot clubs.⁷⁷ ST also sought, inter alia, (a) compensation from Sanum for losses incurred in the failure of Paksong Vegas; (b) an order of liquidation or calculation of SVCC's assets and liabilities, followed by distribution to ST of any profits that were illegally retained; (c)

⁷⁰ C-325, ST Petition in Case 48, 3 May 2012, Section 10. ↩

⁷¹ C-325, ST Petition in Case 48, 3 May 2012, Section 11. ↩

⁷² C-325, ST Petition in Case 48, 3 May 2012, Section 12. ↩

⁷³ C-325, ST Petition in Case 48, 3 May 2012, Section 13. ↩

⁷⁴ C-325, ST Petition in Case 48, 3 May 2012, Section 14. ↩

⁷⁵ C-325, ST Petition in Case 48, 3 May 2012, Section 15. ↩

⁷⁶ C-325, ST Petition in Case 48, 3 May 2012, Section 16. ↩

⁷⁷ C-325, ST Petition in Case 48, 3 May 2012, p. 17 (“Suggestions for Consideration," point 1). ↩

[Page 29]

an order that Sanum should remove its slot machines from the Thanaleng warehouse, based on the
termination of the Thanaleng Participation Agreement; and (d) other relief, including regarding the
Lao Bao and Ferry Terminal Slot Club.⁷⁸

145. On 8 June 2012, Sanum filed a short Defense in Case 48, claiming that the Petition was “indistinct
and complicated” because its scope overlapped with Case 52 (the Thanaleng dispute) and a separate
records access proceeding (Case 15) pending between the parties. Sanum asked the Court to order
ST to separate its claims, and to allow it to respond further after the Petition had been rectified.⁷⁹

146. Claimants contend that after filing that Defense, Sanum "heard nothing about Case 48 until nearly
4 years later," until March 2016.⁸⁰

147. In the interim, ST purportedly filed an Additional Statement of Claim dated 28 November 2014,
asserting numerous additional claims against Sanum and SVCC and again requesting termination
of the Savan Vegas PDA.⁸¹ These included claims not only about Sanum's alleged failure to
perform obligations under the PDA, but also claims about unregistered transfers of cash into the
Lao PDR and SVCC's non-payment of outstanding taxes.⁸² ST sought additional relief, including
an order that Sanum should be solely liable for SVCC's outstanding tax liability and that any
undistributed SVCC profits should be distributed as dividends based on the "proportion that ...
should be deserved.”⁸³ Claimants say Sanum never received this additional pleading until the case
was concluded, and assert that it was backdated from 2016.⁸⁴

148. Be that as it may, Case 48 remained quiet until early 2016. Further developments at that time are
discussed in Section III.H.(12) below.

C. SANUM'S INITIAL DISPUTES WITH THE LAO PDR

149. As is apparent from the above summary of Sanum's disputes with ST, these unfolded against the
backdrop of separate (but closely connected) disputes between Claimants and the Lao PDR, which
eventually ripened into investment treaty claims asserted in the BIT I Cases. This Section describes

⁷⁸ C-325, ST Petition in Case 48, 3 May 2012, pp. 17-18 (“Suggestions for Consideration,” points 2-7). ↩
⁷⁹ C-326, Defense by Sanum and SVCC in Case 48, 8 June 2012. ↩
⁸⁰ Claimants' Memorial, ¶ 223. ↩
⁸¹ C-331, ST Statement of Additional Claims, 28 November 2014, pp. 3-4 (stating fourteen new claims). ↩
⁸² C-331, ST Statement of Additional Claims, 28 November 2014, pp. 3-4. ↩
⁸³ C-331, ST Statement of Additional Claims, 28 November 2014, pp. 4-5. ↩
⁸⁴ Claimants' Memorial, ¶¶ 243-244, 251. ↩

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certain key aspects of these initial Sanum-Lao PDR disputes, although other issues also arose that
featured in various proceedings.

1) The Tax Rate Dispute

150. One of the key disputes between Claimants and the Lao PDR concerns the Respondent's alleged
abrogation of a 1 September 2009 agreement between its Ministry of Finance and SVCC to
implement a beneficial "flat tax" arrangement for an “experimental period" of 5 years (the "Savan
Vegas FTA”).⁸⁵ The Savan Vegas FTA provides that for the years 2009-2013, SVCC would pay a
flat sum of US$745,000 per year, in quarterly installments,⁸⁶ rather than the taxes otherwise
applicable based on general tax laws then in effect. After the first five years, the Parties would
discuss whether to continue with such an arrangement, with the extent of future tax obligations
pegged to SVCC's revenue performance.⁸⁷

151. During 2011, Sanum sought to begin negotiations with the Lao Ministry of Finance to extend the
2009 Savan Vegas FTA, which was set to expire at the end of 2013. Claimants say that while certain
progress initially was made in the negotiations, in the end all of Sanum's proposals were rejected.⁸⁸

152. In December 2011, the Lao National Assembly passed a new tax law (the “2011 Tax Law") that
dramatically increased the tax rate on casinos from the previous 25% of “Gross Gaming Revenues"
plus 10% VAT (applicable under the prior “2005 Tax Law") to a new 80% of Gross Gaming
Revenues plus 10% VAT.⁸⁹ Claimants complain that other gaming companies were protected from
the 2011 Tax Law because they already had long-term flat tax agreements in effect, whereas the
Savan Vegas FTA was only for an initial short-term, with any extension subject to further
negotiation. Claimants allege that the “new law certainly looked like a strategic move by the
Government designed to shut down Savan Vegas, seize the asses, and reclaim its valuable gaming
monopoly.”⁹⁰ Respondent denies any such intent, and notes that well before the 2009 Savan Vegas
FTA, Sanum had agreed in the 2007 Savan Vegas PDA to abide by tax obligations in Lao PDR
law, and also agreed that non-payment of taxes would be a basis for the Government's termination

⁸⁵ C-17, Savan Vegas FTA, 1 September 2009, Preamble. ↩
⁸⁶ C-17, Savan Vegas FTA, 1 September 2009, Art. 1. ↩
⁸⁷ C-17, Savan Vegas FTA, 1 September 2009, Art. 5. ↩
⁸⁸ Claimants' Memorial, ¶ 107. ↩
⁸⁹ C-74, Presidential Decree 058/NA on the Promulgation of the Tax Law, 16 January 2012; Claimants' Memorial, ¶ ↩
108.
⁹⁰ Claimants' Memorial, ¶ 110. ↩

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of the PDA.⁹¹ Respondent adds that “the Claimants' objective expectations must have been to pay
tax according to Lao law; that is the contract they signed.”⁹²

153. The Savan Vegas FTA was to expire by its terms on 31 December 2013. Well before that time, as
discussed further below, Claimants initiated the BIT I Cases, alleging inter alia that discriminatory
tax levies were set to take place at the end of 2013.

(2) The Tax Audit Dispute

154. A second early dispute between Claimants and the Lao PDR concerned a tax audit of SVCC's
books and records from 2009 to 2012, which the Ministry of Finance launched on 21 May 2012,
naming an audit committee that included Ernst & Young.⁹³

155. On 7 June 2012, the Ministry of Finance issued a "Report on information collection and Inspection
of Business Operation and Accounts of SVC.”⁹⁴ The report identified preliminary findings, which
included several alleged breaches of the Savan Vegas PDA, including a failure to submit operation
reports to the Government as required, a failure to "fully implement" a required construction tax, a
failure to use Lao PDR accounting rules, and “[l]ack of consultation between the parties regarding
financial status or other provisions in this Agreement.”⁹⁵ In addition, the report suggested that
SVCC had violated several Lao PDR laws, including (a) the Law on Investment Promotion (failure
to use Lao PDR accounting rules, use of a foreign auditor that was not registered in the Lao PDR,
and failure to pay construction and immigration taxes in full and on time); (b) the Law on Enterprise
(failure to issue share certificates within the applicable time period); (c) the Law on Accounting
(not keeping books and accounts in Lao language and currency, but using international standard
accounting systems which were not approved by Lao authorities); (d) the Law on Tax and Law on
Value Added Tax (failure to collect turnover tax or VAT from contractors and suppliers and to pay
such taxes forward to the government); (e) the Law on Audit (use of a foreign auditor which was
unregistered in the Lao PDR); and (f) the Presidential Decree on Fees and Service Fees (failure to

⁹¹ Respondent's Counter-Memorial, ¶¶ 261-263. ↩
⁹² Respondent's Counter-Memorial, ¶ 263. ↩
⁹³ C-152, Notice No. 1157/MoF, 14 May 2012. ↩
⁹⁴ C-155, Report 1586/MoF, 7 June 2012. ↩
⁹⁵ C-155, Report 1586/MoF, 7 June 2012, ¶ 2.1. ↩

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pay overtime fees).⁹⁶ The report concluded that SVCC had outstanding tax obligations of
100,132,025,719 kip for 2008-2011.⁹⁷

156. The 7 June 2012 report recommended that the inspection be continued for another 30 days. In the
meantime, it recommended that the government issue a notice requiring SVCC to "temporar[il]y
stop any movement of its asset including financial asset ... during the inspection," and that SVCC
pay its tax obligations within three months. Finally, it suggested that "[u]pon completion of the
Inspection, if there are comprehensive and sufficient evidence," then the Lao PDR should consider
filing criminal claims against the responsible directors, management or employees of SVCC.⁹⁸

157. Claimants contend that this 7 June 2012 report was issued even before the audit committee had
commenced the onsite fieldwork portion of its work, and therefore was based on preordained
conclusions.⁹⁹ Claimants also contend that that Ernst & Young's audit fieldwork was abruptly
terminated on 10 July 2012.¹⁰⁰ On 25 September 2012, Ernst & Young reported its suspicion that
the head of the inspection team was unhappy with Ernst & Young's work because did "not support
MoF on the law [is]sue.”¹⁰¹

158. Respondent offers a different view of why the audit fieldwork was stopped in mid-July 2012. In its
view, Ernst & Young had come to “quickly question[]" the structure of two loans Sanum extended
to SVCC between 2008 and 2009, reflected in two Credit Facility Agreements (the “CFA
Loans").¹⁰² According to Respondent, Sanum had “created [the CFA Loans] as a way of (1) never
making an equity investment in Savan Vegas (despite an 80% ownership stake) and (2) to avoid
paying taxes and minority shareholders while still extracting money out of the casino."¹⁰³
Respondent contends that in July 2012, after beginning the onsite inspection, Ernst & Young
submitted a request to SVCC for additional documents about “the loan structure, certain “VIP
payments, and other irregularities.”¹⁰⁴ Shortly thereafter, the head of the inspection committee
instructed Ernst & Young to produce a "first progress report" in two days and to complete its work

⁹⁶ C-155, Report 1586/MoF, 7 June 2012, ¶¶ 2.1(1)-(6). ↩
⁹⁷ C-155, Report 1586/MoF, 7 June 2012, ¶ 2.2. ↩
⁹⁸ C-155, Report 1586/MoF, 7 June 2012, ¶ III. ↩
⁹⁹ Claimants' Memorial, ¶ 112. ↩
¹⁰⁰ Claimants' Memorial, ¶ 114. ↩
¹⁰¹ C-156, 25 September 2012 Ernst & Young email, 25 September 2012. ↩
¹⁰² Respondent's Counter-Memorial, ¶ 363. ↩
¹⁰³ Respondent's Counter-Memorial, ¶ 362; see also id., ¶¶ 368-370. ↩
¹⁰⁴ Respondent's Counter-Memorial, ¶¶ 363-364. ↩

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within a week, so the committee in turn could make a final report to the Ministry of Finance on 24
July 2012.¹⁰⁵ This effectively meant Ernst & Young would not be able to review the documents it
had sought to collect from SVCC's files. Respondent contends that Claimants were behind these
developments, specifically that they “paid a bri[b]e to stop the E&Y Audit,”¹⁰⁶ in the form of a cash
payment that was channeled through the bank account of a Mme. Sengkeo.¹⁰⁷ Respondent adds that
Ernst & Young's initial suspicions of the CFA Loans were later borne out a forensic audit BDO
conducted after SVCC was removed from Sanum's control in April 2015.¹⁰⁸

159. Claimants in turn deny the bribery allegations, admitting that a payment was made to Mme.
Sengkeo but insisting this was “a personal loan, granted to a long-time business colleague who did
not hold a position in the Government, and not a bribe of any kind," much less one connected to
the Ernst & Young audit.¹⁰⁹ Claimants contend that they “wanted the E&Y audit to proceed to
completion because they were confident that the result would be favourable."¹¹⁰

160. In any event, Ernst & Young promised to deliver a report with its "preliminary findings and/or
observations" based on its work to date,¹¹¹ and did so on 20 July 2012.¹¹² On 3 August 2012, the
audit committee then issued its final audit report, which Claimants describe as “largely a verbatim
copy" of the preliminary findings from early June 2012.¹¹³

161. These events also featured prominently in the BIT I Cases.

(3) The Thakhek Dispute

162. On 20 October 2010, Sanum entered into a Memorandum of Understanding with a Government
Committee for the Laos-Thailand Friendship Bridge III Economic Zone Development (the

¹⁰⁵ R-42, Letter from the Head of the Inspection Committee, Ministry of Finance, to Ernst & Young, 11 July 2012. ↩
¹⁰⁶ Respondent's Counter-Memorial, ¶ 364. ↩
¹⁰⁷ Respondent's Counter-Memorial, ¶¶ 302, 304; Respondent's Rejoinder, ¶ 159. ↩
¹⁰⁸ Respondent's Counter-Memorial, ¶¶ 366-367 (stating that BDO concluded Sanum had “grossly overstated the ↩
amount actually loaned to Savan Vegas; ... applied unconscionable terms for what the law considers a 'shareholder
loan';... doctored and falsified financial records and, ... used the loan as a mechanism for self-dealing and to pay
unrelated parties huge sums under bogus consulting agreements at the expense of the minority shareholders").
¹⁰⁹ Claimants' Reply, ¶¶ 384-385, 388. ↩
¹¹⁰ Claimants' Reply, ¶ 389. ↩
¹¹¹ R-43, Letter from Ernst & Young to the Ministry of Finance, 12 July 2012. ↩
¹¹² R-46, First Interim Report to Inspection Committee by Ernst & Young, 20 July 2012. ↩
¹¹³ Claimants' Memorial, ¶ 115. ↩

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“Thakhek MOU”),¹¹⁴ for a land concession for a potential development in the Thakhek Special
Enterprise Zone (the “SEZ"), an area some distance from the Savan Vegas hotel and casino
complex. The Thakhek MOU provided that Sanum would complete and submit within 180 days a
feasibility study, master plan, and social-economic and environmental impact study for the
"Concession Land" (as defined), and that a land concession agreement covering that land would be
signed within 30 days after those "required documents” were approved by the Government. Sanum
would then complete the clearing of the land and start construction of the project within 6 months
after signing of the land construction agreement.¹¹⁵

163. The "Concession Land" which the Government agreed to allocate was described in the MOU as
"one (1) plot of land ... located on the South of the Bridge and on the West of Road No. 13 South,
with the land area of about 90 hectares more or less (see the land area drawing surveyed in May-
August 2009 for the detail).”¹¹⁶ The drawing attached showed the entire Special Enterprise Zone
as approximately 1000 hectares, divided into various plots, one of which was labelled as “E-1" and
intended for “Entertainment: Five Star Hotel, Casino, Night Club, Spa.”¹¹⁷ Notwithstanding this
drawing, the Thakhek MOU also suggested that further work was required to confirm precise
contours: "Once the exact location of the Concession Land has been agreed upon, [Sanum] will
confirm its acceptance of the Concession land” to the Government.¹¹⁸ It was also understood that
at least some of the Concession Land was under private ownership, and Sanum agreed to pay
US$900,000 – US$400,000 upfront and US$500,000 later – for the Government to “compensate
the people for the Concession Land; resolve the problems; and spend on the survey, measurement,
and allocation of the Concession Land in order for the Government to take ownership of the
Concession Land so that the Government will be able to grant the Concession Land” to Sanum.
This amount was to be adjusted if the actual land area granted to Sanum turned out to be “more or
less than 90 hectares."¹¹⁹

¹¹⁴ C-100 and R-107, Memorandum of Understanding between Sanum and the Committee for the Laos-Thailand ↩
Friendship Bridge III, 20 October 2010 (“Thakhek MOU”). The submissions and documents in this case variously
use the translation Thakhek, Thakhaek and Thakhet, but all refer to the same MOU and underlying issue. The Parties'
joint index to the record adopts the spelling "Thakhek.”
¹¹⁵ C-100 and R-107, Thakhek MOU, Arts. 1.3, 1.4. ↩
¹¹⁶ C-100 and R-107, Thakhek MOU, Art. 2.1. ↩
¹¹⁷ C-100 and R-107, Thakhek MOU, p. 7. ↩
¹¹⁸ C-100 and R-107, Thakhek MOU, Art. 3.1. ↩
¹¹⁹ C-100 and R-107, Thakhek MOU, Arts. 2.2, 2.3. ↩

[Page 35]

164. On 4 February 2011, SVCC filed a one-page application with the Ministry of Information and
Culture ("MIC") to build and operate a welcome center and slot club license in the Thakhek area.¹²⁰
On 21 February 2011, the MIC issued an authorization.¹²¹ The Respondent contends that this was
procured by a bribe, with Sanum recording a US$25,000 expense allowance in its general ledger
related to obtaining the license,¹²² and in any event that the MIC did not have authority to grant slot
club licenses without the Prime Minister's approval.¹²³ In any event, on 2 March 2011 – ten days
after the MIC approved the application – the Prime Minister's Office directed MIC to cancel it,
claiming sole authority to issue slot club licenses.¹²⁴ On 29 March 2011, Sanum and SVCC
petitioned the Prime Minister's Office for permission to proceed with a slot club in the SEZ, which
was rejected in October 2011.¹²⁵

165. Subsequently, a dispute arose regarding the precise contours of the Thakhek land concession, and
specifically whether it included a 16 hectares portion of land fronting National Road 13, which the
Claimants contended were critical to the success of the contemplated development. Claimants
contend that they had been promised this portion in the Thakhek MOU, and the Government
“reneged on its prior agreement.”¹²⁶ The Lao PDR contends that these 16 hectares were never
conclusively included in the Concession Land, and were privately owned and the owners had not
agreed to yield it.¹²⁷ The Claimants further contend that in late 2015 they proposed an alternative
plan with a different plot of land, but the Lao PDR rejected that proposal in early 2016 and refused
to negotiate further.¹²⁸ The Lao PDR contended that the Claimants' alternate proposal contained
improper conditions that were not reflected in the original MOU, and that it acted reasonably in its
approach to negotiations.¹²⁹

¹²⁰ R-109, Letter of Intent No. 01/2011, 4 February 2011. ↩
¹²¹ R-111, Authorization No. 63 from the Ministry of Information and Culture to Savan Vegas Casino Co., Ltd., 21 ↩
February 2021.
¹²² Respondent's Rejoinder, ¶¶ 228-229, citing R-108, General Ledger, 3-10 February 2011. ↩
¹²³ Respondent's Rejoinder, ¶ 230. ↩
¹²⁴ R-112 and C-104, Notice Letter No. 415 from the Prime Minister's Office, 2 March 2011. ↩
¹²⁵ R-264, ICSID BIT I Award, ¶ 217. ↩
¹²⁶ Claimants' Memorial, ¶¶ 124-127, 206. ↩
¹²⁷ Respondent's Counter-Memorial, ¶ 117 (referring to SIAC Award findings). ↩
¹²⁸ Claimants' Memorial, ¶¶ 209-211. ↩
¹²⁹ Respondent's Counter-Memorial, ¶¶ 118-119 (referring to SIAC Award findings). ↩

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D. THE BIT I CASES (INITIAL STAGES)

166. Claimants commenced the BIT I Cases in August 2012, with LHNV seeking arbitration under the
Lao PDR-Netherlands BIT and Sanum seeking arbitration under the China-Lao PDR BIT. The BIT
I Cases alleged that Claimants had invested in the Lao PDR based on various government
assurances, including of a favorable and certain tax regime and of protection for its investment in
partnership with ST. Claimants alleged numerous treaty breaches by the Lao PDR which, together
with other actions Claimants alleged to be impending, threatened to culminate in the total loss in
value of Claimants' investments. Among the acts Claimants challenged were the 80% tax on casino
revenues which would apply to Savan Vegas after 2013, under the 2011 Tax Law and in the absence
of a new flat tax agreement;¹³⁰ the tax audits of SVCC, which Claimants described as unfair and
oppressive;¹³¹ and various tax debts alleged by Lao tax authorities, including the construction tax,
brokerage tax and overtime charge demands at issue in the audit.¹³² Claimants expressed concern
that the Lao PDR would take enforcement actions based on various taxes said to be due, which
could result in the seizure of all of Sanum's assets.¹³³

167. In addition, as the ICSID BIT I Award later noted, Claimants alleged that the Government “abused
its sovereign authority to assist ST Holdings to acquire other assets which belonged in whole or in
part, to the Claimants.”¹³⁴ For example, Claimants challenged the conduct of the Lao courts in Case
52 related to the Thanaleng Slot Club, including their cancellation of all contracts between Sanum
and ST regarding that club.¹³⁵ The BIT I Cases also alleged treaty breaches in connection with the
Thakhek land concession,¹³⁶ and in connection with several other events not discussed in detail

¹³⁰ See C-61, Sanum Amended Notice of Arbitration in PCA BIT I Case, 7 June 2013, ¶¶ 105-109; C-62, LHNV ↩
Amended Notice of Arbitration in ICSID BIT I Case, 23 May 2012, ¶¶ 8(7), 88-92, 96.
¹³¹ See C-61, Sanum Amended Notice of Arbitration in PCA BIT I Case, 7 June 2013, ¶¶ 79-84; C-62, LHNV ↩
Amended Notice of Arbitration in ICSID BIT I Case, 23 May 2012, ¶¶ 62-67.
¹³² See C-61, Sanum Amended Notice of Arbitration in PCA BIT I Case, 7 June 2013, ¶¶ 85-98; C-62, LHNV ↩
Amended Notice of Arbitration in ICSID BIT I Case, 23 May 2012, ¶¶ 8(1), 68-81.
¹³³ See C-61, Sanum Amended Notice of Arbitration in PCA BIT I Case, 7 June 2013, ¶ 110; C-62, LHNV Amended ↩
Notice of Arbitration in ICSID BIT I Case, 23 May 2012, ¶¶ 8(2), 94.
¹³⁴ R-264, ICSID BIT I Award, ¶ 69. ↩
¹³⁵ See, e.g., C-61, Sanum Amended Notice of Arbitration in PCA BIT I Case, 7 June 2013, ¶ 66 (alleging "behind the ↩
scenes manipulation of the legal process by senior Government officials in order to favor ST over Sanum"), ¶¶ 67-76;
C-62, LHNV Amended Notice of Arbitration in ICSID BIT I Case, 23 May 2012, ¶¶ 8(3)-(6), 51-61.
¹³⁶ See C-61, Sanum Amended Notice of Arbitration in PCA BIT I Case, 7 June 2013, ¶ 58; C-62, LHNV Amended ↩
Notice of Arbitration in ICSID BIT I Case, 23 May 2012, ¶¶ 8(10)-(11), 36-39.

[Page 37]

above, concerning the collapse of the Paksong Vegas casino project¹³⁷ and the Paksan Slot Club
Project,¹³⁸ and the Lao Bao and Ferry Terminal Slot Clubs.¹³⁹

168. On 17 September 2013, the ICSID BIT I Tribunal issued a provisional measures decision which,
based in part on a suggestion by the Respondent, ordered that in return for LHNV depositing into
escrow certain further tax payments that allegedly would become due beginning January 2014, the
Respondent would refrain from demanding payment of taxes allegedly due under the 2011 Tax
Law; from seeking to seize or interfere in the operations of the Lao Bao and Ferry Terminal Slot
Clubs based on disputed tax amounts; and from taking any action to freeze or seize funds in
Claimants' bank accounts.¹⁴⁰

169. On 13 December 2013, the PCA BIT I Tribunal issued a decision on jurisdiction, rejecting
Respondent's objections that the China-Lao BIT did not apply to Macao where Sanum was
incorporated, that Sanum was not a protected investor with investment-related claims under that
BIT, and that Sanum's claims were barred by lis pendens or were an abuse of process based on the
overlap with LHNV's claims in the ICSID BIT I Case. The decision upheld Respondent's objection
to Sanum's attempted invocation of the most-favored-nation (“MFN”) clause of the China-Lao
BIT to bring treaty claims other than for expropriation.¹⁴¹

170. On 21 February 2014, the ICSID BIT I Tribunal issued a decision on jurisdiction, rejecting
Respondent's ratione temporis objection to LHNV's claims about the imposition of the 2011 Tax
Law, following the failure of negotiations to renew the Savan Vegas FTA.¹⁴²

171. Following further proceedings in the BIT I Cases, a combined hearing on the merits in both cases
was scheduled to begin on 16 June 2014. Shortly before then, the Parties reached an agreement
intended to result in the sale of Claimants' remaining gaming assets in the Lao PDR (i.e., Savan

¹³⁷ See C-61, Sanum Amended Notice of Arbitration in PCA BIT I Case, 7 June 2013, ¶¶ 38, 41-47; C-62, LHNV ↩
Amended Notice of Arbitration in ICSID BIT I Case, 23 May 2012, ¶ 8(9), 33 (stating that the "Paksong Project ...
is the subject of a separate arbitral proceeding”).
¹³⁸ See C-61, Sanum Amended Notice of Arbitration in PCA BIT I Case, 7 June 2013, ¶¶ 51-55; C-62, LHNV ↩
Amended Notice of Arbitration in ICSID BIT I Case, 23 May 2012, ¶ 8(9), 34-35 (stating that the “Paksan Slot Club
Project is also a subject of the other arbitral proceeding").
¹³⁹ See C-61, Sanum Amended Notice of Arbitration in PCA BIT I Case, 7 June 2013, ¶¶ 101-104; C-62, LHNV ↩
Amended Notice of Arbitration in ICSID BIT I Case, 23 May 2012, ¶¶ 8(8), 40, 84-87.
¹⁴⁰ R-49; ICSID BIT I Decision on Claimant's Amended Application for Provisional Measures, 17 September 2013. ↩
¹⁴¹ C-399, PCA BIT I Award on Jurisdiction, 13 December 2013. Respondent challenged the PCA BIT I Award on ↩
Jurisdiction in the courts of Singapore and initially prevailed with respect to the China-Lao BIT's applicability to
Macao, but jurisdiction ultimately was upheld by the Singapore Court of Appeal.
¹⁴² C-398, ICSID BIT I Decision on Jurisdiction, 21 February 2014. ↩

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Vegas and the Ferry Terminal and Lao Bao Slot Clubs) and to resolve the BIT I Cases. The
agreement was set forth in a Deed of Settlement signed on 15 June 2014 and in a Side Letter signed
on 17 June 2014.¹⁴³ On 19 June 2014, the BIT I Tribunals suspended the BIT I Cases pending
completion of the steps outlined in the settlement documents.¹⁴⁴

E. THE DEED OF SETTLEMENT AND SIDE LETTER

172. The Deed of Settlement provided a plan for the sale of Claimants” “Gaming Assets" to an unrelated
third party.¹⁴⁵ As clarified in the Side Letter, the Gaming Assets were defined to include the Savan
Vegas PDA and the various licenses and land concessions issued in connection with the Savan
Vegas Casino and the Lao Bao and Ferry Terminal Slot Clubs.¹⁴⁶ The sale would take place “on a
basis that will maximize Sale proceeds,"¹⁴⁷ and the sale proceeds (less sales costs which the
Claimants would bear) to be shared in accordance with the equity ownership of the various assets.
For SVCC this was confirmed to be 80% by the Claimants and 20% by the Lao PDR, while for the
Lao Bao and Ferry Terminal Slot Clubs, ST still owned 40%.¹⁴⁸

173. In order to maximize the sale value of the assets, the Parties agreed that:

1. the Savan Vegas PDA and the various licenses and land concessions would be considered
   reinstated as of the effective date of the Deed of Settlement, for a further term of 50
   years;¹⁴⁹
2. the Lao PDR would "forgive and waive" any taxes due in connection with the Gaming
   Assets up to 1 July 2014, provided that taxes would become due from 1 July 2014
   onward;¹⁵⁰

¹⁴³ C-4, Deed of Settlement, 15 June 2014, and Side Letter, 18 June 2014; R-5, Deed of Settlement, 15 June 2014; R- ↩
6, Side Letter to the Deed of Settlement, 18 June 2014.
¹⁴⁴ C-415, ICSID BIT I Case Order on Consent, 19 June 2014; C-416, PCA BIT I Case Order on Consent, 19 June ↩
2014.
¹⁴⁵ R-5, Deed of Settlement, 15 June 2014, Sections 10, 14. ↩
¹⁴⁶ R-5, Deed of Settlement, 15 June 2014, Section 5. ↩
¹⁴⁷ R-5, Deed of Settlement, 15 June 2014, Section 13. ↩
¹⁴⁸ R-5, Deed of Settlement, 15 June 2014, Section 16, as clarified by Side Letter to the Deed of Settlement, 18 June ↩
2014, p. 1.
¹⁴⁹ R-5, Deed of Settlement, 15 June 2014, Section 6. ↩
¹⁵⁰ R-5, Deed of Settlement, 15 June 2014, Section 7. Funds already paid into escrow pursuant to the provisional ↩
measures decision in the ICSID BIT I Case would be released to the Lao PDR. Id., Section 17.

[Page 39]

3. the future taxes would be calculated on the basis of a "new flat tax" to be established
   through a three-member “Flat Tax Committee" to which both Claimants and the Lao PDR
   could appoint a member, and the tax rate set by the committee would be applied retroactive
   to 1 July 2014 and for the next 50 years with a defined escalation mechanism;¹⁵¹
4. the sale of the Gaming Assets would occur expeditiously after the new flat tax was
   established, and generally within ten months of the Deed of Settlement;¹⁵²
5. until the sale was completed, Claimants could continue to manage and operate the Gaming
   Assets in compliance with applicable laws, subject to monitoring and oversight by the Lao
   PDR's agent, RMC Gaming Management LLC (“RMC”), but if no sale had materialized
   at the end of ten months, then Claimants and the Lao PDR could appoint RMC or "any
   other qualified operator” to take over management until the sale was completed;¹⁵³ and
6. "[t]ime shall be of the essence of this Deed,”¹⁵⁴ given the Parties' mutual interest in
   expeditiously concluding a sale of the Gaming Assets and bringing to an end the Claimants'
   involvement in the gaming sector of the Lao PDR.

174. The Deed of Settlement provided that following the sale of the Gaming Assets, Claimants thereafter
would not engage in any further gaming investments in the Lao PDR, although they could engage
in certain specified non-gaming activities. Specifically, and subject to Claimants' payment of
US$500,000 to the Lao PDR, “the Parties will negotiate in good faith and conclude" a land
concession and project development agreement with respect to the 90 hectares of land at Thakhek
that had previously been discussed in the Thakhek MOU of 20 October 2010, “on the basis that no
gaming activities whatsoever will be allowed at or in connection with” that site.¹⁵⁵

175. The Parties also agreed that the Lao PDR would discontinue certain criminal investigations then
pending against Sanum, SVCC and their personnel, and would not reinstate such investigations
provided the Claimants duly implemented the agreed terms and conditions.¹⁵⁶

¹⁵¹ R-5, Deed of Settlement, 15 June 2014, Sections 8, 9. ↩
¹⁵² R-5, Deed of Settlement, 15 June 2014, Sections 10, 11. ↩
¹⁵³ R-5, Deed of Settlement, 15 June 2014, Sections 11, 12. ↩
¹⁵⁴ R-5, Deed of Settlement, 15 June 2014, Section 48. ↩
¹⁵⁵ R-5, Deed of Settlement, 15 June 2014, Section 22. ↩
¹⁵⁶ R-5, Deed of Settlement, 15 June 2014, Section 23. ↩

[Page 40]

176. With respect to dispute resolution, the Deed of Settlement provided for two different potential
procedures, depending on which party was alleged to have violated it and which provisions were
involved:

1. First, if the Lao PDR was in material breach of certain sections of the agreement,¹⁵⁷ then
   Claimants could revive the suspended BIT I arbitrations, after notice and expiration of a
   cure period. The BIT I Tribunals themselves would determine whether a material breach
   had occurred which could justify revival of the original treaty claims.¹⁵⁸ If those claims
   were revived, then they would go forward on the existing record; the Parties were not
   permitted to add any new claims or evidence nor seek any additional relief.¹⁵⁹ As a result,
   the BIT I Cases would only decide treaty claims about events that predated the Deed of
   Settlement, even though as a predicate to reviving those proceedings, the same tribunal
   members would have to make contract determinations about subsequent events, namely
   deciding whether a material breach of the specified sections had occurred.
2. Second, if Claimants failed to comply with their obligations under the Deed of Settlement,
   then the Lao PDR could commence a new contract-based arbitration to enforce the terms
   of the Deed. That commercial arbitration would proceed under the SIAC Rules, with the
   Settlement Deed governed by New York law.¹⁶⁰

177. As will become apparent below, these dispute resolution provisions ultimately resulted in a
multiplicity of further proceedings, further complicating the already complicated history of two
separate but significantly overlapping BIT I Cases.

F. CLAIMANTS' FIRST MATERIAL BREACH APPLICATIONS TO THE BIT I TRIBUNALS

178. On 27 June 2014 – just twelve days after the Deed of Settlement was signed, ten days after the Side
Letter was executed, and eight days after the BIT I Tribunals suspended their proceedings –
Claimants served a notice on the Lao PDR, alleging that it had committed a material breach which
would entitle Claimants to revive the BIT I Arbitrations. The claim concerned reports that Lao
officials had approved construction for an "integrated entertainment resort” in “Site A” located

¹⁵⁷ As clarified in the Side Letter, this included Sections 5-8, 15, 21-23, 25, 27, 28 and the obligation in Section 30 to ↩
grant any necessary approvals with regard to the Sale. R-5, Deed of Settlement, 15 June 2014, Section 23; Side Letter
to the Deed of Settlement, 18 June 2014, p. 1.
¹⁵⁸ R-5, Deed of Settlement, 15 June 2014, Section 32. ↩
¹⁵⁹ R-5, Deed of Settlement, 15 June 2014, Section 34. ↩
¹⁶⁰ R-5, Deed of Settlement, 15 June 2014, Section 35, 42. ↩

[Page 41]

across the street from Savan Vegas, which Claimants asserted would breach its monopoly rights
under the Savan Vegas PDA and also would breach Section 6 of the Deed of Settlement, which
required the Government to treat the Savan Vegas PDA as reinstated.¹⁶¹ On 4 July 2014, Claimants
applied to the BIT I Tribunals (the “First Material Breach Application") (i) to determine whether
the Government was in material breach of Section 6 of the Deed, and (ii) upon finding a material
breach, to revive the underlying arbitration proceedings.¹⁶²

179. Pending resolution of this claim, Claimants (by their own description) suspended performance
under the Deed of Settlement,¹⁶³ taking the position that all deadlines in that document were
extended by the length of time required to cure the Lao PDR's alleged breach.¹⁶⁴ On account of
this position, Claimants declined to participate in the selection of a chair of the Flat Tax Committee
envisioned by the Deed of Settlement, and it also declined to pay taxes as calculated under the
otherwise applicable tax laws of the Lao PDR.¹⁶⁵

180. The Lao PDR contested jurisdiction by the BIT I Tribunals, and on 11 August 2014, it commenced
the separate SIAC Case, alleging that Claimants had breached their own obligations under the Deed
of Settlement (see Section III.G below).

181. On 10 June 2015, the ICSID BIT I Tribunal denied LHNV's First Material Breach Application,
finding that LHNV had not established that the Lao PDR had granted or approved the construction
of a casino in Site A.¹⁶⁶

G. RESPONDENT'S SIAC CASE AGAINST SANUM

182. As discussed above, while Claimants' First Material Breach Application was pending before the
BIT I Tribunals, the Lao PDR commenced the SIAC Case against Claimants,¹⁶⁷ contending that
they were the ones who had breached the Deed of Settlement. Specifically, the Lao PDR:

¹⁶¹ C-417, Claimants' Material Breach Notice, 27 June 2014. ↩
¹⁶² C-419, Application for Finding of Material Breach of Deed of Settlement and for Reinstatement of Arbitration, ↩
ICSID BIT I Case, 4 July 2014, ¶¶ 1, 26; see also C-420, Application for Finding of Material Breach of Deed of
Settlement and for Reinstatement of Arbitration, PCA BIT I Case, 4 July 2014, ¶¶ 1, 26.
¹⁶³ Claimants' Memorial, ¶ 148. ↩
¹⁶⁴ C-417, Claimants' Material Breach Notice, 27 June 2014. ↩
¹⁶⁵ See, e.g., R-13, Decision on Claimant's Second Application for Provisional Measures, ICSID BIT I Case, 18 March ↩
2015, ¶¶ 31-32; R-27, SIAC Award, ¶ 79.
¹⁶⁶ C-421, Decision on the Merits, ICSID BIT I Case, 10 June 2015, ¶ 10. ↩
¹⁶⁷ The Lao PDR's SIAC Case against Claimants (which was initiated on 11 August 2014 and concluded with the ↩
SIAC Award of 29 June 2017) must be distinguished from Sanum's SIAC arbitration against ST, which-as discussed

[Page 42]

sought an order directing Sanum to comply with their obligations under
the Deed; a declaration that Sanum breached the Deed by refusing to
perform its obligations; a declaration that the waiver of overdue taxes
contained in Paragraph 7 of the Deed was no longer binding because
Sanum refused to comply with the requirements of Paragraphs 8 and 9 (to
proceed with the setting of a flat tax committee and cooperating with
RMC's monitoring of the sale of the Casino); and an order requiring
payment of certain money damages, fees, costs and interest on all moneys
due.¹⁶⁸

183. On 16 September 2014, Claimants presented counterclaims in the SIAC Case, alleging that the Lao
PDR had breached the Deed of Settlement by granting a license to another casino in violation of
Sanum's monopoly rights. Claimants contended that if the BIT Arbitrations were revived based on
a finding of material breach, the Deed of Settlement would be "of no further force and effect,
eliminating the basis for proceeding" with the SIAC Case. Alternatively, Claimants sought a
declaration that the Deed of Settlement was void ab initio as a result of fraudulent inducement, or
in the alternative rescission of the Deed in light of the Government's material breach, or an award
of monetary damages.¹⁶⁹

184. Following additional events described further in Section III.H below, the claims and counterclaims
in the SIAC Case were amended, and ultimately “spann[ed] the period starting from the execution
of the Deed to the conclusion of the sale of Savan Vegas" to Macau Legend Development Ltd.
("Macau Legend”).¹⁷⁰ The ultimate scope of the SIAC Case, as well as its outcome, is described
further in Section III.H(13) below.

H. FURTHER DEVELOPMENTS FOLLOWING THE DEED OF SETTLEMENT

185. Events on the ground did not remain static while the First Material Breach Application was pending
before the BIT I Tribunals, and the SIAC Case was getting under way. Unfortunately, numerous
other developments ensued, which gave rise to further proceedings in the BIT I Cases, the SIAC
Case, and eventually before this Tribunal. These included the following.

above-Sanum initiated on 23 September 2015, and which was resolved with the 2016 ST SIAC Award against ST.
Compare C-481 and R-27, SIAC Award, 29 June 2017, with C-122 and R-76, 2016 ST SIAC Award.
¹⁶⁸ C-481 and R-27, SIAC Award, SIAC Award No. 077 of 2017, 29 June 2017 (“2017 SIAC Award", ¶ 91. ↩
¹⁶⁹ C-481 and R-27, 2017 SIAC Award, ¶¶ 92-93. ↩
¹⁷⁰ C-481 and R-27, 2017 SIAC Award, ¶ 142. In general, the Claimants alleged the Lao PDR had breached the Deed ↩
of Settlement by the actions it took to operate, tax and sell Savan Vegas; by refusing to negotiate in good faith to
conclude a land concession at Thakhek; and by failing to terminate certain criminal investigations against Sanum and
its affiliates. C-481 and R-27, 2017 SIAC Award, ¶¶ 212-215.

[Page 43]

(1) The 2014 Tax Law Amendments

186. First, in October 2014, the Lao PDR enacted amendments to the 2011 Tax Law (the "2014 Tax
Law Amendments”) which lowered the statutory excise tax rates for entertainment and casino
activities. In the absence of a direct agreement with the Government on an alternate rate, the 2014
Tax Law Amendments would have resulted for casinos a 35% tax on gross gaming revenues plus
10% VAT.¹⁷¹ This was a reduction from the 2011 Tax Law rate of 80% of gross gaming revenues
plus 10% VAT,¹⁷² which had figured prominently in Claimants' initial filings in the BIT I Cases.

(2) The Dispute Over Whether Deed of Settlement Obligations Were Suspended

187. Second, on 24 December 2014, the Lao PDR notified Claimants that in its view – and contrary to
the view Claimants had taken since June 2014 – the Parties' dispute over alleged breaches of the
Deed of Settlement did not suspend Claimants' obligation under the Deed to sell SVCC within 10
months, or to assign control to operators agreeable to the Government so that the property and sale
process could be managed by them. The Lao PDR insisted that Claimants cooperate in an "orderly
process of the exchange of control due on 15 April 2015."¹⁷³

(3) The Dispute Over SVCC's Tax Obligations

188. Five days later, on 29 December 2014, the Lao PDR informed Claimants that it viewed them to be
in breach of its tax-related obligations under the Deed of Settlement, the PDA and Lao law, by
refusing to participate in the establishment of a new Flat Tax Committee and also refusing to pay
taxes in the interim. It took the position that “[i]t is not acceptable to the Government of the Lao
PDR that a large gaming establishment operating under the good licenses of the Government simply
refuses to pay taxes to the Government.” The Lao PDR demanded that SVCC file its final 2013
audited financial statements (which were due in March 2014) and working financial reports for the
first three quarters of 2014, to determine the appropriate tax due. The Government advised that in
the absence of a new Flat Tax Agreement, taxes would be assessed under the 2014 Tax Law

¹⁷¹ C-73, Presidential Decree #001 on Amendment of Lao Casino Tax Law, Art. 1, 24 October 2014; C-72, Presidential ↩
Decree 46/OP on Lao Tax Law, Art. 17.
¹⁷² C-74, Presidential Decree 058/NA on the Promulgation of the Tax Law, 16 January 2012, Art. 20.2, 16 January ↩
2012.
¹⁷³ R-12, Letter from Dr. Bounthavy Sisouphanthong, Vice Minister Ministry of Planning and Investment, to John ↩
Baldwin and Christopher Tahbaz, 24 December 2014.

[Page 44]

Amendments (at a rate of 35% of gross gaming revenues plus 10% VAT) for all revenues since 1
July 2014, pursuant to the Deed of Settlement.¹⁷⁴

189. The Lao PDR subsequently sent SVCC three notices of delinquency regarding tax obligations,
dated respectively 27 January 2015, 27 March 2015, and 20 April 2015.¹⁷⁵

(4) The Provisional Measures Applications

190. On 19 January 2015, LHNV applied for provisional measures from the ICSID BIT I Tribunal, to
preserve what it considered to be the status quo ante pending the Tribunal's consideration of the
merits of the First Material Breach Application. Specifically, LHNV sought to enjoin the Lao PDR
from (a) taking any steps towards control or sale of its gaming assets, (b) applying the 2014 Tax
Law Amendments to Savan Vegas' gross gaming revenues; and (c) declaring that it would treat
LHNV's rights to obtain a land concession and project development agreement for Thakhek as
forfeited and void.¹⁷⁶

191. On 18 March 2015, the ICSID BIT I Tribunal denied the provisional measures request. Among
other things,¹⁷⁷ the ICSID BIT I Tribunal found that LHNV had “not established a case for relief
from the collection of the 45% tax on gross gaming revenues enacted in October 2014," particularly
in circumstances where “the Government was quite prepared to proceed with the renegotiation of
a Flat Tax Agreement under the Terms of the Settlement," but Claimants “refused to participate as
part of [their] broader disagreement with the Government of Laos over the status of the Deed of
Settlement.”¹⁷⁸ The ICSID BIT I Tribunal noted that when the prior Savan Vegas FTA expired by
its terms, Savan Vegas “became subject to the applicable tax laws of Laos," but it "is common
ground that although Savan Vegas has continued to do business in Laos, it has not paid taxes either

¹⁷⁴ R-54, Letter from Director General, Ministry of Finance, Sithisone Thepphasy, to John Baldwin and Christopher ↩
Tahbaz, 29 December 2014.
¹⁷⁵ R-55, Tax Notice to SVCC, 27 January 2015; R-57, Tax Notice to SVCC, 27 March 2015; R-59, Tax Notice to ↩
SVCC, 20 April 2015.
¹⁷⁶ R-13, Decision on Claimant's Second Application for Provisional Measures, ICSID BIT I Case, 18 March 2015, ¶ ↩
12.
¹⁷⁷ With respect to the Thakhek issue, the ICSID BIT I Tribunal found the application to be moot, as the Respondent ↩
“is not now proposing to take any unilateral action concerning the Thakhaek property," but rather to await the SIAC
Tribunal's decision on the Respondent's claim that Claimants had waived any rights to the property. R-13, Decision
on Claimant's Second Application for Provisional Measures, ICSID BIT I Case, 18 March 2015, ¶ 14. Id., ¶¶ 42-44,
49.
¹⁷⁸ R-13, Decision on Claimant's Second Application for Provisional Measures, ICSID BIT I Case, 18 March 2015, ↩
¶¶ 27, 31.

[Page 45]

directly or in escrow since 1 January 2015."¹⁷⁹ Yet “for so long as the Claimant continues to do
business in Laos, it can reasonably expect to be bound by the Laotian income tax laws applicable
to gaming casinos unless and until a new Flat Tax Agreement is negotiated."¹⁸⁰

192. With respect to control of the gaming assets, the ICSID BIT I Tribunal in March 2015 found no
urgency to decide this issue prior to its upcoming hearing on the First Material Breach Application,
given that the Respondent intended to have a new gaming operator take over control only after that
hearing. Following the hearing, on 14 April 2015 the ICSID BIT I Tribunal denied Claimants'
additional provisional measures application with regard to control of the gaming assets.¹⁸¹

193. On 16 April 2015, Sanum filed a provisional measures application before the SIAC Tribunal, “that
essentially mirrored the Application filed before the BIT tribunal.”¹⁸² Given intervening
developments that are discussed in the next section, Sanum subsequently amended the application
to seek inter alia an order that the Lao PDR return Savan Vegas to Sanum's control.¹⁸³ As discussed
below, the SIAC Tribunal denied this application on 30 June 2015.¹⁸⁴

(5) The Change in Control of Savan Vegas and Various Gaming Assets

194. Meanwhile, on 6 January 2015, RMC – which had declined to act as the "qualified gaming
operator" of Savan Vegas were Sanum to fail to sell the casino by the Deed of Settlement's deadline
of 15 April 2015 – recommended that the Government appoint San Marco Capital Partners LLC
(“San Marco”) in its place to manage and sell the Savan Vegas gaming assets.¹⁸⁵

195. On 30 March 2015, the Government reiterated to Claimants that it intended to take control of Savan
Vegas on 15 April 2015, as per the Deed of Settlement, in the absence of any sale or binding MOU
with a purchaser of Savan Vegas.¹⁸⁶

¹⁷⁹ R-13, Decision on Claimant's Second Application for Provisional Measures, ICSID BIT I Case, 18 March 2015, ↩
¶ 32.
¹⁸⁰ R-13, Decision on Claimant's Second Application for Provisional Measures, ICSID BIT I Case, 18 March 2015, ↩
¶ 34.
¹⁸¹ R-14, Email from Judge Ian Binnie to Christopher Tahbaz, 14 April 2015. ↩
¹⁸² R-17, Order on Respondents' Amended Application for Provisional Measures, SIAC Case, 30 June 2015, ¶ 15. ↩
¹⁸³ R-17, Order on Respondents' Amended Application for Provisional Measures, SIAC Case, 30 June 2015, ¶ 22. ↩
¹⁸⁴ R-17, Order on Respondents' Amended Application for Provisional Measures, SIAC Case, 30 June 2015. ↩
¹⁸⁵ See C-509, Decision on the Merits of the Claimants' Second Material Breach Application, ICSID BIT I Case, 15 ↩
December 2017 (“ICSID 2MBA Decision"), ¶ 49.
¹⁸⁶ R-152, Letter from Dr. Bounthavy Sisouphanthong to John Baldwin and Christopher Tahbaz, 30 March 2015. ↩

[Page 46]

196. On the evening of 14 April 2015 – shortly after the ICSID BIT I Tribunal denied Claimants'
additional provisional measures request to prohibit the Lao PDR from proceeding with the take-
over of the Savan Vegas Casino, and less than an hour before the expiry of the deadline to sell the
casino, Sanum provided the Government a MOU signed with a Mr. Angus Noble (the “Noble
MOU"), for his company MaxGaming Consulting Services, Ltd. (“MaxGaming") to purchase the
Casino. The Government did not consider this a real agreement, and the tribunal in the SIAC Case
(the "SIAC Tribunal") later vindicated that view, finding that the Noble MOU was a sham
designed simply to extend the time of Sanum's operation of the Casino.¹⁸⁷

197. On 16 April 2015, the Lao PDR took control of the Casino and appointed San Marco to manage
and operate the gaming assets pending a sale, in accordance with RMC's recommendation of
January 2015.¹⁸⁸ Claimants describe this as a seizure, alleging that government officials entered the
premises on 22 April 2015; that the Lao PDR seized money in SVCC's operating bank account
(US$100,000) and the cash in the Casino cage and vault (US$1.95 million), of which Sanum's
proper share was 80%; and that soon after the Lao PDR terminated SVCC's CFO and other
employees.¹⁸⁹ Claimants contend that the Lao PDR made further impermissible management
changes and mismanaged Claimants' gaming assets.¹⁹⁰ Respondent by contrast describes these
events as implementation of the process reflected in the Deed of Settlement.

198. On 16 April 2015, the same day the Lao PDR took control of the Savan Vegas Casino, it also took
control of the Ferry Terminal and Lao Bao Slot Clubs.¹⁹¹ Claimants complain that the Lao PDR
subsequently refused to return the slot machines and other equipment in these clubs, which they
value at more than US$390,000.¹⁹²

199. On 5 May 2015, the Claimants changed direction and proposed to try to work together with the
Government to sell the assets; the Government declined the offer.¹⁹³

200. On 30 June 2015, the SIAC Tribunal denied another provisional measures application by Sanum,
which had sought inter alia a reversion of the operation of the Savan Vegas Casino to Sanum, a

¹⁸⁷ R-27, 2017 SIAC Award, ¶¶ 189-191. ↩
¹⁸⁸ R-27, 2017 SIAC Award ¶ 124; C-509, ICSID 2MBA Decision, ¶ 59. ↩
¹⁸⁹ Claimants' Memorial, ¶¶ 18, 151, 157, 286; Claimants' Reply, ¶ 24 ↩
¹⁹⁰ Claimants' Memorial, ¶¶ 152, 158-162. ↩
¹⁹¹ C-147, Letter from Vice Minister Bounthav Sisouphanthong, 16 April 2015. ↩
¹⁹² Claimants' Memorial, ¶¶ 282, 409. ↩
¹⁹³ C-509, ICSID 2MBA Decision, ¶ 60. ↩

[Page 47]

prohibition of the termination of the 2007 Savan Vegas PDA, and a ban on assessment of taxes
under the 2014 Tax Law Amendments.¹⁹⁴ The SIAC Tribunal did order the Government to provide
Sanum with regular information about the sale process, and observed that both it and San Marco
had fiduciary duties to Sanum in managing the casino and making efforts to obtain the maximum
sale price.¹⁹⁵

(6) The Ad Valorem Tax Rate of Mr. Va

201. Meanwhile, in the absence of the Claimants' initial cooperation in constituting the Flat Tax
Committee, the Government asked the President of the Macau Society of Registered Accountants
for assistance with an appointment. On his recommendation, the Government formally retained Mr.
Quin Va, a Macau registered accountant and qualified auditor, on 15 May 2015, to be the sole
member of the Flat Tax Committee and to determine the tax to be paid by Savan Vegas.¹⁹⁶ The
Government provided Mr. Va with certain documents for consideration, but the Claimants – who
were unaware at the time of his appointment – did not provide any additional materials.¹⁹⁷

202. On 29 May 2015, the Government informed the SIAC Tribunal that in connection with its plan to
proceed unilaterally with the sale of the Savan Vegas Gaming Assets it would have an independent
expert set a flat tax, which would be enshrined in a new 50 year concession agreement with a
“Newco,” to be signed upon termination of the Savan Vegas PDA. The Government also explained
that upon completion of the audit of Savan Vegas, it would put Newco on the market for sale by
auction, and having selected the highest bid and completed the sale, the Government would pay
Sanum its share of the proceeds.¹⁹⁸

203. On 9 June 2015, Mr. Va recommended that Savan Vegas be taxed on an ad valorem basis at the
rate of 28% of gross gaming revenue.¹⁹⁹ It appears that this recommendation was made without
giving weight (or perhaps without awareness of) the 2009 Savan Vegas FTA which had provided
for a flat tax in the fixed amount of US$745,000 per year for five years, ending 31 December

¹⁹⁴ R-17, Order on Respondents' Amended Application for Provisional Measures, SIAC Case, 30 June 2015; ↩
Respondent's Counter-Memorial, ¶¶ 22, 33.
¹⁹⁵ R-17, Order on Respondents' Amended Application for Provisional Measures, SIAC Case, 30 June 2015; ↩
Respondent's Counter-Memorial, ¶ 34.
¹⁹⁶ C-509, ICSID 2MBA Decision, ¶ 51 (citing exhibit). ↩
¹⁹⁷ C-509, ICSID 2MBA Decision, ¶¶ 62-63 (citing exhibits). ↩
¹⁹⁸ C-509, ICSID 2MBA Decision, ¶ 66 (citing exhibit). ↩
¹⁹⁹ C-509, ICSID 2MBA Decision, ¶ 68. ↩

[Page 48]

2013.²⁰⁰

204. As discussed in para. 218 below, the Government ultimately applied the 28% tax on Savan Vegas'
gross gaming revenue between 1 July 2014 and 31 August 2016, when it eventually sold Savan
Vegas to Macau Legend.

(7) The Termination of the Savan Vegas PDA

205. On 18 June 2015, the Lao PDR notified Sanum of its decision to terminate the Savan Vegas PDA,
and "all permits, licenses, concessions, certificates, leases, approvals and registrations” issued in
connection with the PDA, for the following stated reasons:

This termination results from (i) your failure to comply with applicable tax
obligations, (ii) your and your affiliates', officers' and agents' engagement
in illegal and prohibited acts under the laws of the Lao PDR, including but
not limited to bribery and attempted corruption of public officials of the
Lao PDR in connection with the matters and activities that are the subject
of the PDA and (iii) your and your affiliates' officers; and agents'
demonstrated unsuitability to own, operate or in any way participate in
gaming operations in the Lao PDR, including in respect of the actions
referred to in items (i) and (ii) above as well as actions undertaken in other
jurisdictions.²⁰¹

206. On 1 July 2015 – the day after the SIAC Tribunal denied the Sanum's provisional measures
application which had sought inter alia an order enjoining termination of the 2007 Savan Vegas
PDA²⁰² – the Lao PDR sent a second notification, effective from 18 June 2015, confirming the
termination pursuant to the Government's rights under "the terms of the PDA, the provisions of
Law on Investment Promotion (2009) and other applicable laws of the Lao PDR.”²⁰³

(8) The Cessation of CFA Loan Repayments

207. Following the change in control of Savan Vegas, SVCC made no further payments to Sanum under
the CFA Loans. In July 2015, Sanum sent a default notice to SVCC, to which the Lao PDR's
counsel responded by stating that “no further payments will be made.”²⁰⁴

²⁰⁰ C-509, ICSID 2MBA Decision, ¶ 70; C-17, Savan Vegas FTA, 1 September 2009. ↩
²⁰¹ R-64, PDA Termination Notice, 18 June 2015. ↩
²⁰² R-17, Order on Respondents' Amended Application for Provisional Measures, SIAC Case, 30 June 2015; ↩
Respondent's Counter-Memorial, ¶¶ 22, 33.
²⁰³ R-65, Letter regarding PDA Termination, 1 July 2015. ↩
²⁰⁴ Claimants' Memorial, ¶¶ 170-171; C-56, Letter from David Branson to Sanum, 15 July 2015, p. 5. ↩

[Page 49]

208. To recall, the CFA Loans had been extended under two Credit Facility Agreements between Sanum
and SVCC, concluded in 2008 and 2009.²⁰⁵ Under both Credit Facility Agreements, the CFA Loans
were secured only by SVCC's rights in two contracts (the Savan Vegas PDA and a 2006 land lease
agreement), not by a mortgage on any physical assets.²⁰⁶ The first Credit Facility Agreement was
approved by SVCC's Board, and the second by its shareholders, including a representative of the
Lao PDR participating in recognition of the State's 20% shareholding in SVCC.²⁰⁷ Several months
after this shareholders' meeting, Sanum and SVCC concluded a Mortgage Agreement under which
SVCC also granted Sanum security in the Savan Vegas buildings and equipment, which had not
been pledged as collateral in the original Credit Facility Agreements.²⁰⁸

209. Under the terms of the Credit Facility Agreements, interest would accrue at 10% annually on any
amounts disbursed as loan principal; there was no fixed repayment schedule but interest payments
were due monthly.²⁰⁹ In addition, SVCC was obligated to pay Sanum an ongoing “Maintenance
Fee" of another 10% of the outstanding principal, in addition to a fixed monthly “Administrative
Fee.”²¹⁰ Further, SVCC was obligated to pay Sanum a separate “Disbursement Fee” each time
SVCC drew on funds, in an amount equal to 10% of each drawdown. If SVCC was late in making
any payments due on either principal or accrued interest, it would incur a separate obligation to pay
"Overdue Interest" at an additional 3%, as well as a “Late Fee" equal to 10% of the value of the
late payment.²¹¹

210. As discussed in Section VI.C below, the Parties dispute how much money actually was disbursed
to SVCC under the CFA Loans. Claimants contend it was approximately US$50 million, while
Respondent observes that this includes various sums charged to the CFA Loans for services that

²⁰⁵ R-34, Credit Facility Agreement between Sanum Investments Limited and Savan Vegas & Casino Co., Ltd., 1 ↩
January 2008 (“CFA I”); R-36, 2nd Credit Facility Agreement between Sanum Investments Limited and Savan Vegas
& Casino Co., Ltd., 4 March 2009 (“CFA II").
²⁰⁶ R-34, CFA I, Art. 10; R-36, CFA II, Art. 10; see also C-460, Agreement for Pledge of Rights under the Project ↩
Development Agreement and the Land Lease Agreement between SVCC and Sanum, 22 May 2008. The CFA Loans
were also initially secured by a pledge of ST's 20% shares in SVCC, which Claimants say Sanum later acquired in
June 2012. Claimants' Memorial, ¶ 37 & n. 39.
²⁰⁷ C-41, SVCC Board of Directors Meeting Minutes, 7 December 2007, pp. 1, 3; C-42, SVCC and Paksong Vegas ↩
Shareholders Meeting Minutes, 18 March 2009, pp. 1, 3.
²⁰⁸ C-141, Mortgage Agreement between Sanum and Savan Vegas, 2 June 2009. It is not clear if the addition of this ↩
collateral was separately approved by SVCC's shareholders, including the State as minority shareholder.
²⁰⁹ R-34, CFA I, Art. 3.1; R-36, CFA II, Art. 3.1; Claimants' Opening Presentation, slide 150. ↩
²¹⁰ R-34, CFA I, Arts. 3.3(a), 3.3(b), 21.1; R-36, CFA II, Arts. 3.3(a), 3.3(b), 21.1; Claimants' Opening Presentation, ↩
slide 149.
²¹¹ R-34, CFA I, Arts. 3.3(c), 8.6(a), 8.7, 21.1; R-36, CFA II, Arts. 3.3(c), 8.6(a), 8.7, 21.1; Claimants' Opening ↩
Presentation, slide 149.

[Page 50]

were not truly performed on SVCC's behalf or were not properly documented. The Parties agree,
however, that (a) SVCC ultimately paid more than US$85 million back to Sanum over a period of
years, but (b) all of this was attributed by Sanum to accumulated interest and fees, with not a single
dollar treated as reducing the outstanding principal.²¹² According to Claimants' expert, Sanum
charged roughly US$50 million in fees against the CFA Loans, and also calculated interest accrual
of roughly US$40 million more. The result was that, notwithstanding SVCC's payment of more
than US$85 million to Sanum, the principal debt remained entirely due and owing as of April
2015.²¹³ In criticizing this outcome, the Respondent's expert observes inter alia that the 10% “Late
Fee" was applied on almost all of the loan repayments, despite these being shareholder loans on
which Sanum (through Mr. Baldwin) effectively controlled the timing of repayments.²¹⁴

211. The Lao PDR's suspicions about Sanum's handling of the CFA Loans began to percolate as early
as the aborted Ernst & Young audit in 2012 (see Section III.C.(2) above). These suspicions
accelerated after the Lao PDR took control of Savan Vegas in 2015 and instructed BDO to begin a
more detailed audit.

(9) The Transfer of SVCC's Gaming Assets and Properties to SVLL

212. On 28 September 2015, the Government issued a declaration transferring all assets owned by SVCC
(but not its corporate liabilities) to Savan Vegas Lao Ltd. (“SVLL”), a new entity that was solely
owned by the Government, in order to accomplish the sale – essentially, the “Newco” described in
prior dealings.²¹⁵ Claimants contend that this transfer was also an attempt to prevent SVLL or any
future purchaser of the gaming assets from being required to repay the CFA Loans.²¹⁶

213. After reviewing draft marketing materials prepared by San Marco for purposes of the sale, Sanum
objected to the SIAC Tribunal that the potential sale price was being reduced in at least two
respects, namely that (a) the assets on offer to potential purchasers did not include the Ferry
Terminal and Lao Bao Slot Clubs, and (b) the draft of the new PDA to be executed with the eventual
purchaser contained less favorable terms than the 2007 Savan Vegas PDA. The SIAC Tribunal
however declined to intervene with the sale process, considering that any harm later proven to be

²¹² Claimants' Opening Presentation, slides 166-167 (citing Second Dass Report, Table 5); Respondent's Opening ↩
Presentation, slide 115 (citing BDO Expert Report, ¶¶ 40, 42, 46).
²¹³ Claimants' Opening Presentation, slide 167 (citing Second Dass Report, Table 5). ↩
²¹⁴ BDO Expert Report of Kenneth Yeo, ¶ 53. ↩
²¹⁵ C-509, ICSID 2MBA Decision, ¶ 75; C-58, Declaration of the Ministry of Planning and Investment 2324/2325 ↩
regarding putting SVCC assets into SVLL, 28 September 2015.
²¹⁶ Claimants' Memorial, ¶ 173. ↩

[Page 51]

actionable could be satisfied by financial compensation.²¹⁷ As discussed in para. 242(a) below, the
SIAC Tribunal later found that the exclusion of the Ferry Terminal and Lao Bao Slot Clubs from
the sale of Savan Vegas was justified,²¹⁸ and also rejected Claimants' claim based on differences
between the 2007 Savan Vegas PDA and the new PDA with Savan Vegas' buyer.²¹⁹

214. In January and February 2016, the deeds to certain properties – two shophouses near Thakhek and
two houses near Savan Vegas, referred to as the Guard House and the River House – were
transferred from SVCC to SVLL. The Parties dispute whether the properties were later included in
the sale to the ultimate buyer (Macau Legend, as described below),²²⁰ or whether they were
excluded from the sale and retained by the Government for its own use.²²¹

(10) The Failed Auction Process and the Sale to Macau Legend

215. In March 2016, six prospective buyers were approved to bid on Savan Vegas, including the eventual
purchaser, Macau Legend. However, Macau Legend proposed to develop not only the Savan Vegas
Casino, but also an adjacent 300-hectare land parcel, known as “Site A,” and linked its development
of Site A to the purchase of the casino. Specifically, it offered to purchase Savan Vegas for US$40
million, provided the auction was cancelled and Macau Legend was given development rights in
Site A.²²² Claimants argued in the various proceedings that the proposed development of Site A
diluted the market value of the Savan Vegas Casino itself, by creating the prospect of additional
facilities in competition with it.²²³

216. As the SIAC and BIT I Tribunals later accepted, some potential bidders pulled out of the auction
process, and the Lao PDR Government became alarmed that Macau Legend might be left as the
only bidder at the auction, and in consequence be in a position to offer a low bid. The Government
decided to accept Macau Legend's offer to cancel the auction and close a deal directly with it,
provided the sale price was increased by US$2 million, to a total US$42 million. On 6 May 2016,
Macau Legend accepted this counter-offer, and Macau Legend and Laos executed certain initial

²¹⁷ C-509, ICSID 2MBA Decision, ¶ 76. ↩
²¹⁸ C-481 and R-27, 2017 SIAC Award, ¶¶ 220-228. ↩
²¹⁹ C-481 and R-27, 2017 SIAC Award, ¶¶ 229-232. ↩
²²⁰ Respondent's Rejoinder, ¶¶ 223-224. ↩
²²¹ Claimants' Memorial, ¶¶ 82, 283-285. ↩
²²² C-509, ICSID 2MBA Decision, ¶¶ 77, 79-80 (citing exhibits). ↩
²²³ See, e.g., C-509, ICSID 2MBA Decision, ¶ 79. ↩

[Page 52]

deal documentation on or about 13 May 2016.²²⁴

217. On 19 August 2016, Macau Legend and the Lao PDR Government executed a final Project
Development Agreement (“Macau Legend PDA”),²²⁵ along with a new tax agreement (see Section
III.H.(11) below) and a land concession. On 31 August 2016, Macau Legend funded the agreements
and took possession of the Savan Vegas Casino under a new legal entity, “Savan Legend
Casino.”²²⁶ Macau Legend did not take possession of the Ferry Terminal and Lao Bao Slot Clubs,
which as discussed above had been excluded from the sale of Savan Vegas assets.²²⁷

218. Of the US$42 million sale proceeds, the Lao PDR designated and collected US$26,659,000 as
Savan Vegas' unpaid tax liability, which was equivalent to 28% of Savan Vegas' gross gaming
revenue between 1 July 2014 and 31 August 2016, the date of the sale. The Lao PDR designated
the remaining US$15,341,000 as the purchase price, and placed it an escrow account to be released
and divided between the Parties as per the instructions of the SIAC Case tribunal.²²⁸

(11) The Macau Legend Flat Tax Agreement

219. On 19 August 2016, before closing the sale to Macau Legend, the Lao PDR Government and Macau
Legend concluded a flat tax agreement, providing that Macau Legend would pay a flat tax of US$10
million per year for three years following the closing of the purchase, with increases for two
extensions of one year each. Macau Legend also committed to invest in certain infrastructure
projects in Laos.²²⁹

220. Claimants argued in the various proceedings that the agreed tax payments of US$10 million were
in fact part of a plan to defer and disguise additional consideration for the purchase of Savan Vegas.
According to Claimants, the purpose of deferring part of the purchase price was to ensure that the
deferred portion would go entirely to the Government, instead of being split 80/20 in Sanum's favor
as per the terms of the Deed of Settlement.²³⁰

²²⁴ C-509, ICSID 2MBA Decision, ¶¶ 81-82 (citing exhibits). ↩
²²⁵ R-75, Macau Legend PDA, 19 August 2016. ↩
²²⁶ C-509, ICSID 2MBA Decision, ¶ 86. ↩
²²⁷ SVLL stopped operating these clubs in 2016. On 16 July 2016, SVLL informed ST that while ST properly owned ↩
the slot clubs and licenses, the slot machines in these clubs had been purchased and paid for by SVCC, but would be
safely stored by SVLL. C-148, SVLL letter to ST Group, 19 July 2016.
²²⁸ C-481 and R-27, 2017 SIAC Award ¶ 296. ↩
²²⁹ C-509, ICSID 2MBA Decision, ¶¶ 81-82 (citing exhibits). ↩
²³⁰ See, e.g., C-509, ICSID 2MBA Decision, ¶ 84. ↩

[Page 53]

(12) The Case 48 Decision in the Sanum-ST Dispute

221. Meanwhile, while these various disputes between Claimants and the Lao PDR were unfolding,
developments also occurred – beginning in early 2016 – in the Case 48 litigation between Sanum
and ST.

222. On 1 February 2016, the Commercial Court of Vientiane issued an order appointing a committee
to inspect SVCC facilities and accounts,²³¹ and the inspection apparently was carried out on or
around 8 February 2016.²³² On 9 March 2016, Sanum received a Summons calling for it to appear
shortly to provide testimony.²³³ Claimants contend that while Sanum did submit evidence as
requested, and thereafter attended a trial on 4 May 2016,²³⁴ the legal proceedings were badly flawed
in a number of respects, including inter alia that (a) Sanum was not provided access to the full case
file and was never served with numerous documents apparently filed by ST, (b) the trial itself was
rushed and did not permit Sanum to submit additional evidence, and (c) the result was pre-ordained
and in fact decided the day of the trial.²³⁵

223. The Commercial Court's Decision dated 4 May 2016 (the “Case 48 Decision") rendered the
following relief: (a) cancelled the Master Agreement, the Savan Vegas PDA, and the Shareholders'
Agreement between Sanum and ST; (b) cancelled Sanum's foreign investment license as well as
its enterprise registration certificates; (c) recognized land ownership and concession rights in the
name of ST's principals; (d) ordered the seizure of "all property (building, premise, money and
equipment)" of SVCC, “to become the property of the State"; (e) found Sanum liable for certain
outstanding taxes; and (f) ordered Sanum to reimburse ST for court costs.²³⁶

224. On 23 May 2016, Sanum and SVCC appealed the Case 48 Decision, raising numerous legal and
due process objections to the conduct of the trial.²³⁷ In addition to these process issues, Sanum and
SVCC argued that the relief granted was improper, because it awarded benefits to third parties

²³¹ C-327, Inspection Order No. 645/PC.VTE, 1 February 2016. ↩
²³² Claimants' Memorial, ¶ 223. ↩
²³³ Claimants' Memorial, ¶ 224. ↩
²³⁴ See C-329, Record of the Trial of First Instance in Case 48, 4 May 2016. ↩
²³⁵ Claimants' Memorial, ¶¶ 224-240, 251-260, 275. ↩
²³⁶ C-330, "Case 48" Decision No. 10/FI.C, 4 May 2016. ↩
²³⁷ C-334, Sanum and SVCC Petition of Appeal, 23 May 2016; Claimants' Memorial, ¶ 258 (summarizing grounds ↩
for appeal).

[Page 54]

(ST's individual principals) and to the Lao PDR Government, even though they had not participated
in the case and made claims of their own.²³⁸

225. On 1 August 2016, the Public Prosecutor submitted a Statement to the Court of Appeal,
recommending that the Case 48 Decision be affirmed as valid and in accordance with Lao PDR
law, and that the appeal accordingly should be dismissed.²³⁹

226. On 16 September 2016, while the appeal was pending, the Lao PDR's Ministry of Planning and
Investment (the “MPI”) wrote to the Court of Appeal, noting that there were certain inconsistencies
between the Commercial Court's Decision in Case 48 (as between Sanum and ST) and the Deed of
Settlement by which the Lao PDR had agreed to resolve the BIT I Cases with the Claimants.²⁴⁰ The
MPI expressed concern about three issues of which the Commercial Court evidently had not been
aware:

1. First, the Government already had terminated the Savan Vegas PDA (on 1 July 2015) on
   account of non-payment of taxes, but had not withdrawn foreign investment licenses and
   enterprise registration certificates, because “it needed to maintain the legal status of
   [SVCC] in order to levy the outstanding tax"; if these were now cancelled as the Case 48
   Decision announced, then “[t]his will create an obstacle for the Government to levy the
   outstanding tax and file the lawsuits in accordance with the laws.”²⁴¹
2. Second, the Deed of Settlement provided for the sale of SVCC assets, including land and
   concession rights, as part of the consideration for resolving the BIT I Cases; this sale had
   now been completed to Macau Legend Development. The Case 48 Decision, which
   provided that land and concession rights would be returned to the ST Group, was
   inconsistent with these facts, and if the Case 48 Decision were enforced, the sale to Macau
   Legend Development could unravel, which in turn would unravel one of the conditions of
   the Deed of Settlement, causing a potential reopening of the BIT I Cases.²⁴²
3. Third, the Case 48 Decision had provided for seizure of all SVCC property “to become the
   property of the State." The MPI warned that this relief would adversely affect the Lao

²³⁸ Claimants' Memorial, ¶¶ 258-260. ↩
²³⁹ C-341, Statement of Public Prosecutor, 1 August 2016. ↩
²⁴⁰ C-336, MPI Letter No. 2270/MPI.IPD, 16 September 2016. ↩
²⁴¹ C-336, MPI Letter No. 2270/MPI.IPD, 16 September 2016, p. 4. ↩
²⁴² C-336, MPI Letter No. 2270/MPI.IPD, 16 September 2016, pp. 4-5. ↩

[Page 55]

PDR's reputation and investment promotion climate, would place the Lao PDR into breach
of the Deed of Settlement, and could create further exposure under the applicable
investment treaty.²⁴³

The MPI's letter closed by reminding the Court of Appeal that the Government had not been a
disputing party in the case between ST and Sanum, and asked the Court of Appeals to adjudicate
the case so as not to adversely affect the Government.²⁴⁴

227. The Court of Appeal held hearings on 12 and 19 September 2016, which the Claimants contend
were also riddled with process errors.²⁴⁵ On 19 September 2016, the Court of Appeals rendered its
Judgment (the “Case 48 Appeal Judgment”), upholding the Case 48 Decision.²⁴⁶ On 18 October
2016, Sanum filed a Petition of Cassation with the Supreme Court.²⁴⁷

228. Shortly thereafter, on 24 October 2016, the MPI sent a letter to the Public Prosecutor, expressing
further concerns about the Case 48 Decision that was upheld by the Case 48 Appeal Judgment.²⁴⁸
In particular, the MPI expressed concern about the following:

1. The Case 48 Decision had purported to terminate not only the Master Agreement, which
   was signed between Sanum and ST (the private parties who participated in the litigation),
   but also to terminate the Savan Vegas PDA, which impacted the rights and duties of the
   Government without the Government's having participated in the case;²⁴⁹
2. The Case 48 Decision had purported to cancel investment licenses and enterprise
   registration certificates, in connection with the termination of the Savan Vegas PDA, but
   such licenses and certificates were subject to the authority of the Government;²⁵⁰
3. The Case 48 Decision had purported to grant rights over concession land to an ST principal,
   but the land belongs to the State and had been assigned to SVCC for a concession term; if
   the Savan Vegas PDA were terminated, the land should be returned to the State, not

²⁴³ C-336, MPI Letter No. 2270/MPI.IPD, 16 September 2016, p. 5. ↩
²⁴⁴ C-336, MPI Letter No. 2270/MPI.IPD, 16 September 2016, p. 6. ↩
²⁴⁵ Claimants' Memorial, ¶¶ 266-270. ↩
²⁴⁶ C-338, 19 September 2016, Court of Appeal Judgment No. 19/CC.A. ↩
²⁴⁷ C-339, Sanum and SVCC Petition of Cassation, 18 October 2016. ↩
²⁴⁸ C-337, MPI Letter No. 2585/MPI.IPD, 24 October 2016. ↩
²⁴⁹ C-337, MPI Letter No. 2585/MPI.IPD, 24 October 2016, p. 2. ↩
²⁵⁰ C-337, MPI Letter No. 2585/MPI.IPD, 24 October 2016, p. 2. ↩

[Page 56]

reassigned to one of the three SVCC shareholders (or an individual associated with one of
them);²⁵¹ and

4. The Case 48 Decision had purported to garnish all assets of SVCC to be the property of
   the State, but "[t]his decision is very sensitive because [a] criminal action" had not
   proceeded yet, and the garnishment of assets could violate the Lao PDR's obligations under
   its foreign investment law and the BIT.²⁵²

The MPI also cautioned that a final affirmance of the Case 48 Decision could imperil the Deed
of Settlement and risk further BIT claims against the Lao PDR.²⁵³

229. On 10 January 2017, the Public Prosecutor submitted a Statement to the Supreme Court, opining
that the MPI's letter of 24 October 2016 had not been timely submitted and therefore could not
properly be considered. The Public Prosecutor also expressed the view that Sanum's appeal was
not well founded, because the Case 48 Decision was valid and in accordance with law and the Case
48 Appeal Judgment was reasonable.²⁵⁴

230. On 13 March 2017, the Supreme Court rendered its Judgment (the "Case 48 Supreme Court
Judgment").²⁵⁵ The Supreme Court generally affirmed the Case 48 Appeal Judgment (and in turn
the Case 48 Decision), including regarding termination of the Master Agreement and the
Shareholder Agreement between Sanum and ST.²⁵⁶ It rejected however the lower court ruling that
purported to transfer a land concession to an ST principal, on the basis that the Lao PDR
Government was not a participant in the case and the distribution of concessions was not properly
part of the case.²⁵⁷ The Supreme Court also rejected the lower court's garnishment of all SVCC
assets "to become the property of the state" as inconsistent with the Deed of Settlement agreed
between Sanum and the Lao PDR, and ordered instead that the SVCC assets be “possessed by the
State," presumably for purposes of disposal in accordance with the Deed of Settlement.²⁵⁸

²⁵¹ C-337, MPI Letter No. 2585/MPI.IPD, 24 October 2016, p. 2. ↩
²⁵² C-337, MPI Letter No. 2585/MPI.IPD, 24 October 2016, pp. 2-3. ↩
²⁵³ C-337, MPI Letter No. 2585/MPI.IPD, 24 October 2016, p. 3. ↩
²⁵⁴ C-342, Statement of Public Prosecutor to Supreme Court, 10 January 2017. ↩
²⁵⁵ C-340, Case 48 Supreme Court Judgment, 13 March 2017. ↩
²⁵⁶ C-340, Case 48 Supreme Court Judgment, 13 March 2017, pp. 7-8. ↩
²⁵⁷ C-340, Case 48 Supreme Court Judgment, 13 March 2017, p 8. ↩
²⁵⁸ C-340, Case 48 Supreme Court Judgment, 13 March 2017, p 8. ↩

[Page 57]

(13) The 2016 ST SIAC Award in Sanum's Favor

231. The year 2016 also brought a major development in the SIAC arbitration that Sanum had brought
against ST in September 2015 regarding the Thanaleng Slot Club. On 22 August 2016, the arbitral
tribunal issued the 2016 ST SIAC Award in Sanum's favor.²⁵⁹ To recall, ST did not participate in
the ST SIAC Case, after initially protesting that SIAC was without jurisdiction.²⁶⁰

232. The 2016 ST SIAC Award found breach of contract by ST and awarded Sanum US$200 million
for deprivation of its joint venture interest in the Thanaleng Slot Club. Specifically, the 2016 ST
SIAC Award found that the contractual arrangements between Sanum and ST did not come to an
end on 11 October 2011, as ST had contended based on the Thanaleng Participation Agreement,
but rather continued to operate beyond that date, governed by the Master Agreement and the Slot
Club JV Agreement.²⁶¹ By insisting otherwise, ST breached its contractual obligations as they
concerned the Thanaleng Slot Club, which obligations entitled Sanum to a 40% revenue share until
11 October 2011 and a 60% revenue share thereafter, with the Thanaleng Slot Club joint venture
to continue for 50 years.²⁶²

233. As discussed further in Section III.M. below, Sanum then began efforts before the Lao PDR courts
to obtain recognition of the 2016 ST SIAC Award. These efforts, which were unsuccessful, are at
the root of LHNV's ancillary claim in the parallel arbitration arising from the Respondent's non-
recognition of the 2016 ST SIAC Award.

I. CLAIMANTS' SECOND MATERIAL BREACH APPLICATIONS TO THE BIT I TRIBUNALS

234. On 26 April 2016, LHNV filed a second material breach Application in the ICSID BIT I case,²⁶³
and on 23 February 2017, Sanum submitted a similar application in the PCA BIT I Case²⁶⁴
(collectively the “Second Material Breach Applications"). In these applications, Claimants
sought revival of the BIT I Cases on the basis that the Lao PDR had materially breached various
provisions of the Deed of Settlement. As described by the BIT I Tribunals in their eventual 15

²⁵⁹ C-122 and R-76, 2016 ST SIAC Award. ↩
²⁶⁰ C-122 and R-76, 2016 ST SIAC Award, ¶¶ 5.5, 7.8; R-266, 2019 ST Appeal Decision, ¶ 22. ↩
²⁶¹ C-122 and R-76, 2016 ST SIAC Award, ¶¶ 10.20, 10.21. ↩
²⁶² C-122 and R-76, 2016 ST SIAC Award, ¶ 11. ↩
²⁶³ R-19, LHNV's Second Material Breach Application, ICSID BIT I Case, 26 April 2016. ↩
²⁶⁴ R-26, Sanum's Second Material Breach Application, PCA BIT I Case, 23 February 2017. ↩

[Page 58]

December 2017 decisions,²⁶⁵ the Second Material Breach Applications were based on the following
alleged breaches:

1. "The Government willfully breached Section 5 of the Settlement by physically seizing and
   unilaterally operating Savan Vegas, by expropriating the Casino's assets by decree and
   structuring the sale of the Casino so as to deprive Claimant of the 80% value of the
   proceeds";
2. "The Government willfully breached Section 6 of the Settlement by terminating the Savan
   Vegas PDA" and executing a new PDA with Macau Legend, purportedly as part of the
   auction process, which “provided for fewer rights and more obligations than the original
   2007 PDA with Sanum," and thus “made Savan Vegas less valuable as a going concern";
3. "The value of the 'Gaming Assets' was further reduced by failing to include in the sale the
   Lao Bao Slot Club and the Savannakhet Ferry Terminal Slot Club. The Claimants reject
   the Government's contention that it could not sell the 'slot clubs' as the licenses were
   actually held by the Claimants' former Laotian partner, ST .... "
4. "The Government breached Sections 7 and 8 of the Settlement in respect of the 'new flat
   tax' by abandoning the mutually agreed procedure, and imposing a tax which is not a flat
   tax but an ad valorem tax of 28% of gross gambling revenues...."
5. "The 28% ad valorem tax is discriminatory as it has only been applied to Savan Vegas and
   not to other casinos in Laos. ...";
6. "Furthermore, the Government misused the ad valorem tax to justify seizing a substantial
   part of the Claimants' share of the purchase price paid by Macau Legend for payment of
   supposed back taxes";
7. "The Government accepted a lower price for the sale of the Casino in exchange for Macau
   Legend's agreement to pay post-purchase inflated flat-tax payments";
8. "The Government also breached Section 15 of the Settlement by depositing all of the sale
   proceeds in its own bank accounts or those of its wholly-owned entity [SVLL] rather than

²⁶⁵ C-509, Decision on the Merits of the Claimants' Second Material Breach Application, ICSID BIT I Case, 15 ↩
December 2017 (“ICSID 2MBA Decision”), ¶ 92; see also C-562, Decision on the Merits of the Claimants' Second
Material Breach Application, PCA BIT I Case, 15 December 2017 (“PCA 2MBA Decision"), ¶ 84.

[Page 59]

a joint escrow account," and by diverting more than US$26 million of the US$42 million
purchase price "to satisfy the Claimants' alleged tax liability which was not lawfully
imposed";

9. "The Government breached Section 25 of the Settlement" by informing prospective
   purchasers that expansion of a runway at the Savannakhet Airport was not feasible, which
   impacted the value of the casino;
10. "The Government breached Section 22 of the Settlement in respect of Thakhaek
    development site," by refusing to negotiate in good faith and refusing to include "the most
    valuable 16 hectares of the site on the basis that it was private property" and rejecting
    Claimants' proposal for an alternative concession arrangement; and
11. "The Government materially breached Sections 23 and 27 of the Deed" by pursuing
    criminal investigations in U.S. courts, based on allegations of bribery and corruption that
    were supposed to have been suspended.

235. The BIT I Tribunals held a joint hearing on 3 and 4 July 2017 regarding the Second Material Breach
Applications, and as discussed further below in Section III.L., on 15 December 2017, they each
issued their decisions on those applications.

J. THE 2017 SIAC AWARD IN RESPONDENT'S FAVOR

236. Meanwhile, while the Second Material Breach Applications were pending before the BIT I
Tribunals, the SIAC Case was proceeding apace before its separate tribunal.

237. As ultimately framed, the Lao PDR maintained in the SIAC Case that Sanum had breached its
obligations under the Deed of Settlement by (a) refusing to cooperate in the establishment of a Flat
Tax Committee, (b) failing to pay taxes beyond 1 July 2014, (c) taking no steps to sell Savan Vegas
during the ten months they retained control of the Casino, and (d) failing to accept and pay RMC
as an agent to monitor the operation and sale of Savan Vegas.²⁶⁶ The Lao PDR also claimed that
Claimants had committed various frauds both upon it and upon the SIAC Tribunal, including (a)
fraudulently inducing the Lao PDR to execute the Deed by asserting it already had a "credible
buyer" for Savan Vegas, (b) misappropriating approximately US$24 million from Savan Vegas by
having Savan Vegas pay that amount to Sanum, ostensibly pursuant to the terms of the two

²⁶⁶ C-481 and R-27, 2017 SIAC Award, ¶ 149. ↩

[Page 60]

allegedly fraudulent CFA Loans, and (c) continually asserting the validity of the Noble MOU when
overwhelming evidence established it to be fraudulent.²⁶⁷ The Lao PDR sought specific
performance for the division of the costs and proceeds of the sale of Savan Vegas, indemnification
for damages, and costs.²⁶⁸

238. For their part, Claimants maintained numerous counterclaims in the SIAC Case, alleging that the
Lao PDR had breached the Deed of Settlement by taking unilateral action to operate, tax, and
ultimately sell Savan Vegas. The SIAC Case tribunal organized the counterclaims into three
separate categories. “First and primarily," Claimants alleged that the Lao PDR failed to maximize
the sale proceeds of Savan Vegas, by (a) excluding the Lao Bao and Ferry Terminal Slot Clubs
from the sale; (b) failing to restate the terms of the 2007 PDA in the New PDA that it formed with
the new buyer of Savan Vegas; (c) failing to grant the new buyer the right to extend the runway at
Savannakhet Airport; (d) mismanaging the Casino; (e) arranging a “sweetheart deal" with Macau
Legend; (f) imposing an unreasonable tax rate of 28% on Savan Vegas; and (g) selling the Casino
for less than its value.²⁶⁹ Second, Claimants alleged that the Lao PDR breached the Deed of
Settlement by failing to negotiate in good faith regarding a land concession and project
development agreement with respect to land at Thakhek, because it excluded 16 hectares from what
Claimants alleged was the concession area designated in the MOU signed on 20 October 2010.²⁷⁰
Finally, Claimants alleged that the Lao PDR failed to terminate criminal investigations and
proceedings against Claimants and their affiliates, as required under the Deed of Settlement.²⁷¹ For
these various counterclaims, Claimants sought either monetary damages or alternatively rescission
of the Deed and restoration to their position prior to the Deed.²⁷²

239. On 29 June 2017, the SIAC Tribunal issued an Award by majority in favor of the Lao PDR, with
an opinion by Ms. Carolyn Lamm dissenting in part. The majority concluded, first, that Claimants
had breached the Deed of Settlement by suspending all performance pending the BIT I Tribunal's
resolution of the First Material Breach Application; “there is nothing in the plain language of the
Deed suspending [Claimants'] performance while a Material Breach Application is pending,” nor
was a suspension reasonable based on the thin evidence Claimants invoked about the supposed

²⁶⁷ C-481 and R-27, 2017 SIAC Award, ¶¶ 192-194. ↩
²⁶⁸ C-481 and R-27, 2017 SIAC Award, ¶ 143. ↩
²⁶⁹ C-481 and R-27, 2017 SIAC Award, ¶ 213. ↩
²⁷⁰ C-481 and R-27, 2017 SIAC Award, ¶ 214. ↩
²⁷¹ C-481 and R-27, 2017 SIAC Award, ¶ 215. ↩
²⁷² C-481 and R-27, 2017 SIAC Award, ¶ 144. ↩

[Page 61]

grant of a competing gaming license, which the Government refuted (and thus effectively cured)
two weeks after receiving Sanum's notice alleging a material breach.²⁷³ For these reasons, the
majority concluded that Claimants materially breached their obligations with respect to (a)
formation of the Flat Tax Committee;²⁷⁴ (b) failing to pay any taxes to Laos between 1 July 2014
and 15 April 2015, the ten months Claimants were in control of Savan Vegas;²⁷⁵ (c) failing to pay
and cooperate with RMC;²⁷⁶ and (d) failing to take steps to carry out the sale of Savan Vegas during
the ten months they were control of the Casino (which period was not extended by the Noble MOU,
a document the SIAC majority considered “not valid or bona fide”).²⁷⁷

240. The SIAC Tribunal also concluded that Claimants had misled the Lao PDR by claiming to have a
viable and credible buyer for the Casino prior to signing the Deed of Settlement, although no
specific damages flowed from this misrepresentation.²⁷⁸ The SIAC Tribunal did not address the
Lao PDR's allegations of "loan fraud" related to the CFA Loans, finding these to be outside its
jurisdiction because the issue was not encompassed by the Deed.²⁷⁹ With respect to the Noble
MOU, the SIAC Tribunal found by majority that Claimants' repeated reliance on the document
throughout the case “must be construed as a fraud on the Tribunal” itself.²⁸⁰

241. Finally, the SIAC Tribunal found that many of the Claimants' counterclaims alleging breach of the
Deed of Settlement by the Lao PDR were precluded by the Claimants' own non-performance of
the Deed. The SIAC Tribunal nonetheless considered several counterclaims which it found could
exist independently of the Deed, based on obligations of good faith.

242. First, with respect to the Lao PDR's duty as joint owner of Savan Vegas to act in good faith to
maximize the sale proceeds, the SIAC Tribunal (sometimes unanimously, sometimes by majority):

1. rejected Claimants' claim based on exclusion of the Lao Bao and Ferry Terminal Slot Clubs
   from the sale of Savan Vegas, finding this to have been justified both by the language of

²⁷³ C-481 and R-27, 2017 SIAC Award, ¶¶ 154-167. ↩
²⁷⁴ C-481 and R-27, 2017 SIAC Award, ¶¶ 169-173. ↩
²⁷⁵ C-481 and R-27, 2017 SIAC Award, ¶¶ 176-180. ↩
²⁷⁶ C-481 and R-27, 2017 SIAC Award, ¶¶ 181-183. ↩
²⁷⁷ C-481 and R-27, 2017 SIAC Award, ¶¶ 184-191. ↩
²⁷⁸ C-481 and R-27, 2017 SIAC Award, ¶¶ 195-203. ↩
²⁷⁹ C-481 and R-27, 2017 SIAC Award, ¶ 204. ↩
²⁸⁰ C-481 and R-27, 2017 SIAC Award, ¶¶ 205-210. ↩

[Page 62]

the Side Letter and by the absence of approval by ST, which was required under Sanum's
2007 Participation Agreement with ST;²⁸¹

2. rejected Claimants' claim based on differences between the 2007 Savan Vegas PDA and
   the new PDA with Savan Vegas' buyer, on the basis that the Lao PDR was permitted to
   unilaterally terminate the 2007 PDA based on Claimants' failure to have Savan Vegas pay
   any taxes;²⁸²
3. rejected Claimants' claim regarding breach of an obligation to provide the new buyer a
   right to extend the runway at Savannakhet;²⁸³
4. rejected claims based on alleged mismanagement of Savan Vegas by San Marco, finding
   that the disagreements regarding management decisions were insufficient to support a
   claim of breach;²⁸⁴
5. rejected claims about the sale process to Macau Legend, finding that the decision to pre-
   empt the auction process and sell directly to Macau Legend was made to ensure the highest
   price rather than in bad faith;²⁸⁵
6. rejected Claimants' claims based on the unilateral appointment of Mr. Va in lieu of a three-
   member Flat Tax Committee,²⁸⁶ as well as its claims regarding the 28% tax rate set by Mr.
   Va, finding as to the latter that it was not unreasonable for Mr. Va to interpret the "flat tax"
   requirement as including a “fixed tax rate” rather than a "fixed, unchanging, periodic
   amount," and the amount set was lower than the default rates that otherwise would be
   imposed under Laotian tax law;²⁸⁷ and
7. rejected Claimants' claim that the Lao PDR had failed to maximize the sale proceeds of
   Savan Vegas, on the basis that they had not effectively rebutted the Lao PDR's valuation

²⁸¹ C-481 and R-27, 2017 SIAC Award, ¶¶ 220-228. ↩
²⁸² C-481 and R-27, 2017 SIAC Award, ¶¶ 229-232. ↩
²⁸³ C-481 and R-27, 2017 SIAC Award, ¶¶ 233-239. ↩
²⁸⁴ C-481 and R-27, 2017 SIAC Award, ¶¶ 240-246. ↩
²⁸⁵ C-481 and R-27, 2017 SIAC Award, ¶¶ 247-265. ↩
²⁸⁶ C-481 and R-27, 2017 SIAC Award, ¶¶ 266-272. ↩
²⁸⁷ C-481 and R-27, 2017 SIAC Award, ¶¶ 273-288. ↩

[Page 63]

of US$30 million to US$39 million, which was less than the US42 million that Macau
Legend paid for the Casino.²⁸⁸

243. The SIAC Tribunal also rejected by majority Claimants' counterclaim that the Lao PDR had
breached the Deed of Settlement by failing to negotiate a land concession at Thakhek in good faith,
pursuant to the Thakhek MOU. It observed that Claimants were aware even before the Deed of
Settlement that the Lao PDR considered 16 hectares of the area depicted in the MOU drawings to
be private property, which could not be leased to Claimants without permission from the owner;
that an independent survey of the land showed 88.9 hectares remaining in the plot even excluding
these 16 hectares, which met the Thakhek MOU's size requirement of “about 90 hectares more or
less"; and that the Thakhek MOU itself was ambiguous as to whether these 16 hectares were
included in the E-1 Parcel, as these were shaded in the a different color than the remaining 88.9
hectares of available land in the E-1 Parcel. Accordingly, the majority found that "good faith
differences in the negotiation of the opening issues .. prevent[ed] a reaching of a final contract,"
which under New York law did not constitute breach of an obligation to negotiate in good faith.²⁸⁹
The majority further found that after the Lao PDR offered to provide another site to Sanum, Sanum
countered with a proposal which was not consistent with the requirements of the Deed of
Settlement, and which the Lao PDR therefore was not required to accept; the Lao PDR offered to
consider any other proposal by Sanum, which Sanum refused to make. These circumstances did
not support a conclusion that the Lao PDR did not negotiate in good faith.²⁹⁰

244. Finally, the SIAC Tribunal by majority rejected Claimants' counterclaim that the Lao PDR had
violated the Deed of Settlement by bringing criminal investigations against Claimants and their
affiliates, finding that the obligation in the Deed not to reinstate previously pending criminal
investigations by its terms was contingent on Claimants "duly and fully implement[ing]" their
obligations under the Deed, which they had failed to do. The majority noted additionally that the
undertaking in the Deed only related to specific prior criminal investigations and not to new ones.²⁹¹

245. Based on these detailed findings, the SIAC Tribunal concluded by majority – over a spirited dissent
by Arbitrator Lamm²⁹² – that LHNV and Sanum “did not perform their obligations under the Deed,

²⁸⁸ C-481 and R-27, 2017 SIAC Award, ¶¶ 289-295. ↩
²⁸⁹ C-481 and R-27, 2017 SIAC Award, ¶¶ 297-305. ↩
²⁹⁰ C-481 and R-27, 2017 SIAC Award, ¶¶ 306-307. ↩
²⁹¹ C-481 and R-27, 2017 SIAC Award, ¶¶ 308-311. ↩
²⁹² C-481, 2017 SIAC Award, Dissenting Opinion of Carolyn B. Lamm. ↩

[Page 64]

nor were any deadlines for performance extended"; that "[e]ach breach was material and substantial
and frustrated the Deed's fundamental purposes"; that the Lao PDR accordingly “did not receive
the benefit of its bargain to have the Casino sold within 10 months and taxes paid during the
interim"; and that by contrast, the Lao PDR "performed its obligations under the Deed to the extent
possible," given the Claimants “intransigence." The majority found that the Lao PDR was entitled
to collect US$26,659,000 of the sale proceeds of Savan Vegas as taxes, and that the remaining
US15,341,000 was to be shared proportionate to their respective ownership interest in Savan
Vegas.²⁹³ While this ordinarily would result in Claimants receiving 80% or US$12,272,800 (and
the Lao PDR receiving 20% or US$3,068,200), it was necessary to shift US$4,162,339.49 from
Claimants' share to the Lao PDR's, since under the Deed of Settlement Claimants were supposed
to bear the all cost of the sale but did not.²⁹⁴ Claimants also were obligated to pay certain arbitration
costs and fees,²⁹⁵ with the ultimate outcome that they were entitled to receive only
US$1,932,939.21 of the amount placed into escrow, while the Lao PDR was entitled to receive
US$13,408,060.79.²⁹⁶

246. The SIAC Award was submitted to the BIT I Tribunals shortly before their scheduled hearing on
the Second Material Breach Applications.²⁹⁷ As discussed below, the BIT I Tribunals agreed with
certain aspects of the SIAC Award but not with others.

K. THE BIT I TRIBUNALS' DECISIONS ON THE SECOND MATERIAL BREACH APPLICATIONS

247. On 15 December 2017, the BIT I Tribunals issued their decisions on the Claimants' Second
Material Breach Applications.

248. First, the BIT I Tribunals rejected the Lao PDR's argument that principles of res judicata and issue
preclusion barred the Second Material Breach Applications, because of the legal claims decided
against the Claimants by the SIAC Tribunal on 29 June 2017.²⁹⁸ In the view of the BIT I Tribunals,
the Deed of Settlement “confers two distinct and separate arbitral mandates without creating any
preclusive hierarchy in their authority to decide issues with their respective spheres. The Settlement
creates no rule of paramountcy between the SIAC Tribunal and this Treaty Tribunal. The

²⁹³ C-481 and R-27, 2017 SIAC Award, ¶ 312. ↩
²⁹⁴ C-481 and R-27, 2017 SIAC Award, ¶¶ 314-318. ↩
²⁹⁵ C-481 and R-27, 2017 SIAC Award, ¶¶ 320-325. ↩
²⁹⁶ C-481 and R-27, 2017 SIAC Award, ¶¶ 326-327. ↩
²⁹⁷ C-509, ICSID 2MBA Decision, ¶ 22; C-562, PCA 2MBA Decision, ¶ 16. ↩
²⁹⁸ C-509, ICSID 2MBA Decision, ¶¶ 105-117; C-562, PCA 2MBA Decision, ¶¶ 97-108. ↩

[Page 65]

application in these circumstances of res judicata or issue preclusion would be contrary to the
freedom of contract exercised by the parties."²⁹⁹

249. Second, the BIT I Tribunals rejected the Lao PDR's argument that the Claimants' own breaches of
the Deed of Settlement precluded them from making the Second Material Breach Applications. The
BIT I Tribunals agreed that during the pendency of the First Material Breach Applications, the
Claimants had “repeatedly violated important obligations under the Settlement," including by
refusing to cooperate with establishing a Flat Tax Committee, to cooperate with RMC's monitoring
of Casino matters pending a sale, and to cooperate in an orderly change of control of the unsold
casino on 15 April 2015.³⁰⁰ At the same time, the Lao PDR in various ways “clearly affirmed and
relied on the terms of the Settlement to sell the Gaming Assets and to rid Laos of the Claimants and
their managers and principals.”³⁰¹ The BIT I Tribunals found that by opting to affirm the
Settlement, the Government “obliged itself to accept the burden as well as the benefit of its terms,
however distasteful it may have found the obligation to continue to deal with the officers and
principals of the Claimants," a point that the dissenting arbitrator in the SIAC Tribunal had
emphasized.³⁰² Yet the Government did not comply with that obligation. In particular, even after
Claimants belatedly renewed offers of cooperation with the Flat Tax Committee and the Casino
sale process following the denial of their First Material Breach Application, the Government
declined those offers, explaining to Claimants' counsel that it refused to have “any dealings with
the criminals you represent.”³⁰³ The BIT I Tribunal found that the Government had “erred in
treating the Claimants as having forfeited important ongoing rights to renewed participation in the
sale of the Gaming Assets.”³⁰⁴ It was “not open to the Government to simultaneously affirm and
rely on the Settlement while attempting to ban the Claimants from seeking a remedy" set forth in
the same Deed of Settlement.³⁰⁵

250. On the merits of the Second Material Breach Applications, the BIT I Tribunals found that the
Respondent had breached Sections 8 and 23 of the Deed of Settlement. It violated Section 8 by
imposing a 28% ad valorem tax in place of a "new flat tax" contemplated by the Deed of Settlement;

²⁹⁹ C-509, ICSID 2MBA Decision, ¶ 109; C-562, PCA 2MBA Decision, ¶ 100. ↩
³⁰⁰ C-509, ICSID 2MBA Decision, ¶ 118; C-562, PCA 2MBA Decision, ¶ 109. ↩
³⁰¹ C-509, ICSID 2MBA Decision, ¶ 127; C-562, PCA 2MBA Decision, ¶ 117. ↩
³⁰² C-509, ICSID 2MBA Decision, ¶ 128; C-562, PCA 2MBA Decision, ¶ 117. ↩
³⁰³ C-509, ICSID 2MBA Decision, ¶¶ 127, 138; C-562, PCA 2MBA Decision, ¶¶ 117, 127. ↩
³⁰⁴ C-509, ICSID 2MBA Decision, ¶ 132; C-562, PCA 2MBA Decision, ¶ 121. ↩
³⁰⁵ C-509, ICSID 2MBA Decision, ¶ 140; C-562, PCA 2MBA Decision, ¶ 129. ↩

[Page 66]

the BIT I Tribunals disagreed with the SIAC Tribunal that it was "reasonable" to consider the
former as a form of the latter. Rather, the Deed of Settlement's reference to a "new flat tax" referred
back to the previous 2009 Savan Vegas FTA, which provided for a “fixed unchanging periodic"
lump sum payment, not for a tax based on a percentage of revenue.³⁰⁶ The imposition instead of an
ad valorem tax was a material breach of Section 8, particularly given that “every other casino in
Laos also pays a flat tax established as a lump sum annually” and “the Claimants regarded a flat
tax as essential to the successful marketing of the Casino" in the auction process.³⁰⁷

251. The BIT I Tribunals also found that the Government had materially breached Section 23 of the
Deed of Settlement by failing to discontinue previously pending applications in the U.S. courts, for
information related to allegations of bribery that the Government had asserted as grounds for
terminating the 2007 Savan Vegas PDA. The BIT I Tribunals acknowledged that Government's
commitment to do this was conditional on the Claimants themselves observing the “terms and
conditions" of the Deed of Settlement (which they had not), but observed that the Government
nonetheless "continues to pursue the benefits of the Settlement” that it wished to achieve (e.g., the
sale of the Gaming Assets), and thus “is not entitled to resile from a major benefit of the Settlement”
to the Claimants.³⁰⁸ At the same time, the BIT I Tribunals emphasized that the Deed of Settlement
did not restrict the Government from opening new investigations into facts that were not the subject
of any ongoing investigation at the time of the Settlement.³⁰⁹ The Tribunal emphasized that this
allowed the Government to continue to investigate the allegedly fraudulent Noble MOU and
various other alleged bribes of Government officials.³¹⁰

252. Because the BIT I Tribunals found material breaches of Sections 8 and 23 of the Deed of
Settlement, they considered that Claimants were entitled to revive the previously suspended BIT I
proceedings, pursuant to Section 32 of the Deed of Settlement.³¹¹

253. At the same time, the BIT I Tribunals made clear that they rejected Claimants' contentions
regarding alleged material breaches of other Sections of the Deed of Settlement, including Sections
7, 15, 22 and 25. For example, with respect to Section 7 and the Government's withholding of more

³⁰⁶ C-509, ICSID 2MBA Decision, ¶¶ 168-174; C-562, PCA 2MBA Decision, ¶¶ 156-162. ↩
³⁰⁷ C-509, ICSID 2MBA Decision, ¶¶ 175-178; C-562, PCA 2MBA Decision, ¶¶ 163-166. ↩
³⁰⁸ C-509, ICSID 2MBA Decision, ¶ 216; C-562, PCA 2MBA Decision, ¶ 204. ↩
³⁰⁹ C-509, ICSID 2MBA Decision, ¶ 217; C-562, PCA 2MBA Decision, ¶ 205. ↩
³¹⁰ C-509, ICSID 2MBA Decision, ¶ 217; C-562, PCA 2MBA Decision, ¶ 205. ↩
³¹¹ C-509, ICSID 2MBA Decision, ¶¶ 179, 222; C-562, PCA 2MBA Decision, ¶¶ 167, 210. ↩

[Page 67]

than US$26 million from the sale on account of alleged tax arrears, the BIT I Tribunals found that
the Government had miscalculated the amount due, based on an application of the 28% ad valorem
tax rate. But at the same time, some amount of taxes indisputably was due at that time, as Savan
Vegas had paid no taxes whatsoever since 31 December 2013, and the Government's waiver of
taxes under the Deed of Settlement ended on 30 June 2014. The BIT I Tribunals noted that "[t]he
Casino had no right to operate in Laos free of tax," a point they had emphasized in rejecting the
Claimants' earlier provisional measures request regarding tax obligations.³¹² Accordingly, the
Government's departure from its obligations under Section 7 was “not material because there is an
accumulating tax debt owed by the Claimants, and any recalculation of the precise amount of tax
owing does not in any sense rob the Claimants of the substantial benefit of their Section 7
bargain."³¹³

254. The BIT I Tribunals found no material breach of the obligation under Section 15 of the Deed of
Settlement to establish a jointly controlled escrow account to receive the proceeds of the sale,
finding that the deposit of the funds instead into an escrow account under the control of the
President of the SIAC Tribunal “accomplished its functional purpose.”³¹⁴ The BIT I Tribunals also
rejected Claimants' claims of material breach of Section 25 due to a failure to include a right to
extend the Savannakhet Airport runway as part of the Gaming Assets offered for sale,³¹⁵ and of
Section 22 regarding negotiation in good faith of a Thakhek land concession.³¹⁶ With regard to the
latter, the BIT I Tribunals found that Claimants had “not established a land entitlement that includes
the disputed 16 hectares, and there is no undertaking by the Government in Section 22 to use its
powers of eminent domain to expropriate the existing private owners for the financial benefit of
the Claimants. Refusal to [do so] does not constitute evidence of 'bad faith." Nor did Section 22
oblige the Government to negotiate an alternate concession.³¹⁷

³¹² C-509, ICSID 2MBA Decision, ¶¶ 184-185; C-562, PCA 2MBA Decision, ¶¶ 172-173. ↩
³¹³ C-509, ICSID 2MBA Decision, ¶ 186; C-562, PCA 2MBA Decision, ¶ 174. ↩
³¹⁴ C-509, ICSID 2MBA Decision, ¶¶ 191-192; C-562, PCA 2MBA Decision, ¶¶ 179-180. ↩
³¹⁵ C-509, ICSID 2MBA Decision, ¶ 201; C-562, PCA 2MBA Decision, ¶ 189. ↩
³¹⁶ C-509, ICSID 2MBA Decision, ¶ 207; C-562, PCA 2MBA Decision, ¶ 195. ↩
³¹⁷ C-509, ICSID 2MBA Decision, ¶¶ 207-208; C-562, PCA 2MBA Decision, ¶¶ 195-196. ↩

[Page 68]

L. THE 2019 BIT I AWARDS IN RESPONDENT'S FAVOR

255. Following the revival of the BIT I Cases, those cases proceeded to evidentiary hearings. On 6
August 2019, the BIT I Tribunals rendered their respective awards (the BIT I Awards). These are
described briefly below.

(1) The ICSID BIT I Award

256. The ICSID BIT I Award described the allegations in that case as follows:

The Claimants allege expropriation without compensation and Treaty
breaches in respect of their investment in gambling projects described in
the [Savan Vegas PDA] in respect of the Savan Vegas Casino, as well as
the three slot clubs, Thanaleng, Lao Bao and Savannakhet Ferry. The
claims also relate to the expected expansion of the Savannakhet Airport
and opportunities for development in the Special Economic Zone at
Thakhet.³¹⁸

257. In particular, the ICSID BIT I Award said, LHNV:

maintained the expropriation claim pursuant to Article 6 of the Treaty as
well as the following Treaty claims:
(a) denial of fair and equitable treatment and prohibitions on impairment
by unreasonable and discriminatory measures in respect of Savan Vegas,
Thakhet, Paksan, Thanaleng, Ferry Terminal and Lao Bao (Article 3(1) of
the Treaty);
(b) breach of contractual obligations regarding Savan Vegas and Paksong
Hotel and Casino (Article 3(4) of the Treaty);
(c) national treatment regarding Savan Vegas, Lao Bao and Ferry Terminal
(Articles 3(2) and 4 of the Treaty);
(d) Most Favoured Nation claims regarding Savan Vegas, Thanaleng,
Ferry Terminal and Lao Bao concerning full protection and security, most
constant protection and security and access to justice (Article 3(2) of the
Treaty).³¹⁹

258. Before deciding the substantive claims, the ICSID BIT I Tribunal noted the following with respect
to the Lao PDR's allegations of corruption on the part of Claimants:

³¹⁸ R-264, ICSID BIT I Award, ¶ 65. ↩
³¹⁹ R-264, ICSID BIT I Award, ¶ 75. ↩

[Page 69]

At the threshold of its argument, the Respondent contends that the claims should be dismissed in their entirety, in part because of corruption in the creation of the investments, and in part because of corruption in the course of performance of the various PDAs and unsuccessful initiatives by the Claimants to obtain licenses for new gambling facilities.³²⁰

259. Specifically, the Lao PDR presented five corruption allegations, which the BIT I Tribunal categorized as the following:

(i) Bribes to Obtain the 2009 Flat Tax Agreement (“First Allegation").

(ii) Bribes to Extend the Flat Tax Agreement After Expiry of the 5-Year Term (“Second Allegation").

(iii) Claimants Paid US $500,000 in Bribes in 2012 to (i) Shut Down the E&Y Audit of Savan Vegas and (ii) to Cause the Government to Shut Down the Thanaleng Slot Club to the Disadvantage of ST Holdings (“Third Allegation").

(iv) The Claimants Arranged for a Further US $575,000 Transfer to Madam Sengkeo to Prevent Her from Testifying in These Proceedings ("Fourth Allegation").

(v) Bribery Scheme in June 2015 to Restore Control of Savan Vegas to the Claimants ("Fifth Allegation").

(vi) Miscellaneous Acts of Bribery and Corruption (“Sixth Allegation").

260. The ICSID BIT I Tribunal rejected the First and Second Allegations because the evidence presented by Respondent was neither clear nor convincing.³²¹ As regards the Third Allegation, with respect to both the E&Y Audit and the Thanaleng Slot Club shutdown, the ICSID BIT I Tribunal explained that it was unable to find "clear and convincing evidence" that a bribe was made, but it was satisfied on the lesser standard of probabilities that there were financial illegalities.³²²

261. In connection with the Fourth Allegation, the ICSID BIT I Tribunal explained that it was unable to find through “clear and convincing” evidence that a bribery was committed, but it was "nevertheless satisfied on the lower standard of balance of probabilities that Mr. Baldwin and Madam Sengkeo were involved in channeling funds illicitly to Lao Government officials, and further that she was paid to secure her loyalty and to avoid her testifying on behalf of the

³²⁰ R-264, ICSID BIT I Award, ¶ 90. ↩

³²¹ R-264, ICSID BIT I Award, ¶¶ 123, 127; see similarly R-265, PCA BIT I Award, ¶¶ 122, 126. ↩

³²² R-264, ICSID BIT I Award, ¶¶ 139, 148; see similarly R-265, PCA BIT I Award, ¶¶ 138, 147. ↩

[Page 70]

Government, thereby obstructing justice."³²³ The ICSID BIT I Tribunal explained that its "conclusion that corruption of Government officials is established to the lower standard of 'balance of probabilities' is relevant to the issue of the Claimants' good faith and the legitimacy of the Claimants' alleged ‘legitimate' expectations of fair and ‘equitable' treatment.”³²⁴

262. Regarding the Respondent's Fifth Allegation of corruption, the ICSID BIT I Tribunal found that that "bribery and corruption, as opposed to fraud and chicanery, is not established.”³²⁵ Finally, with respect to the Sixth Allegation, the ICSID BIT I Tribunal explained that “[t]here is no ‘clear and convincing' evidence against the Claimants in support of any of these additional claims of bribery and corruption.”³²⁶

263. With respect to the merits of LHNV's claims, the ICSID BIT I Tribunal found as follows.

264. First, in connection with the Thanaleng Slot Club and Case 52 between Sanum and ST, “Claimants argue that they were deprived of their investment by flawed court proceedings tainted by interference by the Respondent and without payment of compensation.”³²⁷ The ICSID BIT I Tribunal noted that the underlying dispute was one between private parties, which concerned the Lao PDR only to the extent it was alleged to have interfered in court proceedings in violation of international law.³²⁸ The Claimants focused their BIT claims on alleged interference in the Lao Commercial Court proceedings in 2012, but the BIT I Tribunal observed that this was of limited impact, since the tiered dispute resolution provision in the Master Agreement provided in any event for recourse to arbitration if a party was unsatisfied with the result of Lao court proceedings, "without the need to demonstrate a breach of due process or other violations in the conduct of the court proceedings.”³²⁹ Sanum had exercised the various levels of remedies provided in the Master Agreement, with the ultimate result that in 2016, it obtained the 2016 ST SIAC Award against ST for US$200 million.³³⁰ While Claimants now “say that they have not been able to enforce” the 2016 ST SIAC Award,³³¹ the ICSID BIT I Tribunal found that the “alleged inability to enforce the [2016

³²³ R-264, ICSID BIT I Award, ¶ 157; see similarly R-265, PCA BIT I Award, ¶ 156. ↩

³²⁴ R-264, ICSID BIT I Award, ¶ 162. ↩

³²⁵ R-264, ICSID BIT I Award, ¶ 167; see similarly R-265, PCA BIT I Award, ¶ 166. ↩

³²⁶ R-264, ICSID BIT I Award, ¶ 168; see similarly R-265, PCA BIT I Award, ¶ 167. ↩

³²⁷ R-264, ICSID BIT I Award, ¶ 175. ↩

³²⁸ R-264, ICSID BIT I Award, ¶ 182. ↩

³²⁹ R-264, ICSID BIT I Award, ¶ 183. ↩

³³⁰ R-264, ICSID BIT I Award, ¶ 185. ↩

³³¹ R-264, ICSID BIT I Award, ¶ 186. ↩

[Page 71]

ST SIAC Award] is not before this Tribunal"; the only question before it was whether Claimants' exercise of rights under the Master Agreement – and in particular, their recourse to SIAC arbitration against ST – was impeded by the Lao PDR's alleged interference in the Lao lower court proceedings. The ICSID BIT I Tribunal found “no persuasive evidence” that this was the case.³³² In consequence, it concluded that “the claim for expropriation in respect of the Thanaleng investment lacks any merit."³³³

265. Second, the ICSID BIT I Tribunal considered certain issues related to the 2007 Paksong Vegas PDA between Sanum, ST and the Lao PDR, which originally had contemplated the building and operating of a new casino and golf resort in Champasak Province, but which for various reasons was never effectively implemented. The reasons for this are not summarized here as they are not particularly pertinent for this proceeding. However, the ICSID BIT I Tribunal found that "not only has LHNV failed to demonstrate any lack of good faith on the part of the [Lao PDR] in respect of Paksong Vegas but, on the contrary, concludes that Mr. Baldwin negotiated throughout his dealings with the Respondent in bad faith," which was to be attributed to LHNV, Sanum's parent, on the basis that Mr. Baldwin was “the directing mind of LHNV.”³³⁴

266. The ICSID BIT I Tribunal was likewise unimpressed with Claimants' claims related to the Paksan Slot Club, which are not discussed here at any length. Essentially, it found that by the time the Lao PDR ordered that slot club closed, its license already had expired on its own terms and Claimants had not shown Savan Vegas had a right to a license renewal or even that it attempted to obtain one. The BIT I Tribunal found no demonstration of bad faith on the part of the Lao PDR, but on the contrary bad faith activity by Mr. Baldwin, to be attributed to LHNV, Sanum's parent.³³⁵

267. With respect to the Thakhek concession, the ICSID BIT I Tribunal found that Claimants not only had failed to negotiate in good faith regarding the disputed 16 hectares in the land concession (as established in their ruling on the Second Material Breach Application), but also had "failed to establish rights to the remainder of the land referred to in the MOU.” Negotiations with the SEZ Committee regarding the land concession never resulted in a final PDA, nor did Sanum complete various plans and studies that were a prerequisite for obtaining necessary approvals from all government authorities. “In the overall picture," the ICSID BIT I Tribunal found, “whether or not

³³² R-264, ICSID BIT I Award, ¶ 187. ↩

³³³ R-264, ICSID BIT I Award, ¶ 190. ↩

³³⁴ R-264, ICSID BIT I Award, ¶ 206. ↩

³³⁵ R-264, ICSID BIT I Award, ¶¶ 207-214. ↩

[Page 72]

Sanum had obtained a license [to operate slot clubs in the area] had no impact on the viability of its Thakhaek project."³³⁶

268. As for the issuance and revocation of a new slot club license for Thakhek, the ICSID BIT I Tribunal observed that “the license was effective for less than ten days and that the revocation was justified on the lack of the authority of the [Ministry of Information and Culture] to grant it," a position of which by 2011 Sanum should have been fully aware, since “the Prime Minister's Office was the essential authority on the Claimants' gambling ventures in Laos." The Prime Minister's Office never approved the Claimants' gambling project in Thakhek, which was not unreasonable given that by 2011, "[t]he Claimants had demonstrated themselves not to be good faith investors" in connection with their Paksong commitments.³³⁷

269. More broadly, the ICSID BIT I Tribunal considered the Claimants' lack of good faith to be fatal to the whole range of their treaty claims. It expressed its overall view of the case as follows:

Much of the Claimants' case rests on the allegation that it proceeded in all respects in good faith but was thwarted at every turn by a corrupt and devious Government acting in bad faith. On the contrary, in the Tribunals view the evidence is clear that the Claimants dealt in bad faith with the Government from the initial signing of the Paksong Hotel and Casino PDA calling for a US$ 25 million hotel and casino and thereafter included the financial irregularities in the operation of the Savan Vegas Hotel and Casino. The Claimants never intended to build a US$25 million facility in Paksong. From the Claimants' perspective, the benefit of the Paksong PDA was a monopoly to block other more serious investors from offering gambling facilities in Champaska and Salavan Provinces. Having obtained the monopoly, the Claimants attempted to force the Government's hand in relocating the project to what, from the Government's perspective, was a much less attractive site. The bad faith continued through the disputes over the Savan Vegas Hotel and Casino, which was built but operated in defiance of Sanum's reporting obligations to the Government (and, when the books were eventually opened, revealed significant financial irregularities). The bad faith continued with Mr. Baldwin's recent efforts to deter Madam Sengkeo's appearance to testify at the merits proceeding and the sham MaxGaming offer to purchase Savan Vegas in April of 2015.³³⁸

³³⁶ R-264, ICSID BIT I Award, ¶¶ 219-220. ↩

³³⁷ R-264, ICSID BIT I Award, ¶ 222. ↩

³³⁸ R-264, ICSID BIT I Award, ¶ 233. ↩

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270. The ICSID BIT I Tribunal observed that "the bad faith conduct of the investor is relevant to the grant of relief under an investment treaty.”³³⁹ But even apart from this, the Claimants' allegations of other treaty violations “also fail on the facts.”³⁴⁰

271. For example, as regards Claimants' denial of justice argument in connection the Lao courts' handling of the Thanaleng Slot Club dispute between Sanum and ST (i.e., Case 52), the ICSID BIT I Tribunal found that "[t]he decision of three levels of Laotian courts on the interpretation of the Master Contract went against Sanum, and in the Tribunal's view, neither the interpretation given by those Courts to the agreements nor the judicial process offended international standards.”³⁴¹ The ICSID BIT I Tribunal rejected as unproven the Claimants' allegations that this was a "directed case" whose outcome was “mandated by high ranking Government officials." It concluded that "[o]n the evidence, there was no breach of fair and equitable treatment or other Treaty violation, and no wrongful treatment by the judiciary of the Claimant's Thanaleng investment by denial of justice or otherwise.”³⁴²

272. With respect to Claimants' treaty allegations regarding the E&Y Audit, the ICSID BIT I Tribunal noted that the Lao PDR "had good cause for concern about the accounts of Savan Vegas," not least because "Sanum had not complied with its reporting obligations." Claimants failed to establish bad faith or arbitrariness by the Lao PDR in pushing for an audit in furtherance of its rights as a significant shareholder in Savan Vegas; the request for an audit was not abusive; and “in the end the Government's suspicions were vindicated by the disclosure of serious financial irregularities.”³⁴³ There was also no credible evidence that audit was conducted in an unreasonable manner prior to its abrupt stop, which the Tribunal considered most likely attributable to illicit payments by Mr. Baldwin.³⁴⁴

273. The ICSID BIT I Tribunal rejected LHNV's umbrella clause claims under Article 3(4) of the Lao-Netherlands BIT on the basis that it had not established that construction and brokerage taxes and overtime fees were wrongfully imposed, or that the Government's document and information requests during the audit of Savan Vegas were unreasonable in violation of the Shareholders'

³³⁹ R-264, ICSID BIT I Award, ¶ 237. ↩

³⁴⁰ R-264, ICSID BIT I Award, ¶ 239. ↩

³⁴¹ R-264, ICSID BIT I Award, ¶ 254. ↩

³⁴² R-264, ICSID BIT I Award, ¶ 258. ↩

³⁴³ R-264, ICSID BIT I Award, ¶¶ 265-266. ↩

³⁴⁴ R-264, ICSID BIT I Award, ¶¶ 265-268. ↩

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Agreement and PDA.³⁴⁵ With respect to alleged discriminatory treatment, the Tribunal found no factual foundation for complaints related to Thanaleng and Savan Vegas, and found a complaint regarding the Ferry Terminal Slot Club to have been foreclosed by the Deed of Settlement.³⁴⁶

274. Finally, the ICSID BIT I Tribunal concluded as follows:

While the Tribunal has already rejected the Claimants' allegations for the reasons detailed above, the Claimants' bad faith initiation of some investments and bad faith performance of other investment agreements (as detailed above) and the attempt of Mr. Baldwin to compromise the integrity of this arbitration through an inducement to Madam Sengkeo not to testify provide added reasons to deny the Claimant LHNV the benefit of Treaty protection.³⁴⁷

275. The ICSID BIT I Tribunal accordingly dismissed all of LHNV's claims, finding that it had "failed to meet the evidentiary onus of establishing facts necessary to support its legal arguments.”³⁴⁸

(2) The PCA BIT I Award

276. The PCA BIT I Award differed from the ICSID BIT I Award primarily in that it covered expropriation claims only, pursuant to Article 4 of the China-Lao BIT. Specifically, following a March 2018 letter by Claimants that “notionally divided and separated their claims" between the two proceedings, Sanum maintained expropriation claims regarding the Thanaleng Slot Club, Paksan, Thakhek and the Pakson Vegas Hotel and Casino. At the same time, Claimants asserted that the "totality of the facts" remained relevant to both the BIT I Cases, and the Lao PDR conjoined its "clean hands" defense to all claims by both Claimants in the ICSID and PCA proceedings.³⁴⁹

277. The PCA BIT I Tribunal reached the same conclusions as the ICSID BIT I Tribunal regarding the Respondent's allegations of corruption against Claimants and their affiliates, which are therefore not repeated here (the citations to those findings are included above). The PCA BIT I Tribunal likewise found that Mr. Baldwin (the directing mind of both Claimants) had “proceeded in bad faith from the outset," whereas Sanum had failed to establish bad faith by the Lao PDR, even if its conduct was “at times aggressive and inappropriate.”³⁵⁰ According to the PCA BIT I Tribunal,

³⁴⁵ R-264, ICSID BIT I Award, ¶¶ 272-273. ↩

³⁴⁶ R-264, ICSID BIT I Award, ¶¶ 274-277. ↩

³⁴⁷ R-264, ICSID BIT I Award, ¶ 280. ↩

³⁴⁸ R-264, ICSID BIT I Award, ¶ 293. ↩

³⁴⁹ R-265, PCA BIT I Award, ¶¶ 71-73. ↩

³⁵⁰ R-265, PCA BIT I Award, ¶¶ 173-176. ↩

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while Sanum's claims for expropriation failed on the facts, “the Tribunal wishes to leave in no doubt its conclusion that Mr. Baldwin and Sanum exhibited manifest bad faith in various efforts not only to manipulate the Government to advance their gambling initiatives but, in the instance of Madam Sengkeo, to manipulate the arbitration process itself.”³⁵¹

278. With regard to the Thanaleng Slot Club, the PCA BIT I Tribunal recited findings that largely tracked those of the ICSID BIT I Tribunal, leading to the conclusion that Sanum's expropriation claim - which is that it was deprived of its investment by “flawed court proceedings tainted by interference by the Respondent” lacked any merit.³⁵²

279. With regard to the Paksong Vegas Hotel and Casino, the PCA BIT I Tribunal denied expropriation claims on the following basis:

Claimant lost its rights under the PDA because it breached its terms and, by its own admission, the Paksong site could not be developed. This Claimant's admission contradicts its argument that work was being done and, if not done, was due to the Government order to stop the work. The loss of Paksong was not an expropriation, it was termination for breach of contract. The monopoly rights cherished by Sanum had a concomitant obligation to invest, which Sanum admits it did not fulfil.³⁵³

280. In connection with the Paksan Slot Club, the PCA BIT I Tribunal concluded as follows:

At the time of the Paksan slot club's closure, the club was operating without a license and there is no documentary evidence that the Respondent had created any legitimate expectation in the Claimant that the license would be renewed or that it may operate de facto as if it had a license. The Claimant's argument about a de facto license begs the question of why Sanum had applied for the license's renewal in the preceding years. The Tribunal concludes that the license expired on its own terms and had terminated when the slot club was ordered to be closed.³⁵⁴

³⁵¹ R-265, PCA BIT I Award, ¶ 177. ↩

³⁵² R-265, PCA BIT I Award, ¶¶ 181, 188-196. ↩

³⁵³ R-265, PCA BIT I Award, ¶ 218. ↩

³⁵⁴ R-265, PCA BIT I Award, ¶ 233. ↩

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281. Finally, with respect to the Thakhek project, the PCA BIT I Tribunal found that Claimants had failed to establish rights relating either to the 16 disputed hectares of land or to the remainder of the land referred to in the MOU.³⁵⁵

282. Accordingly, the PCA BIT I Tribunal decided that “the Claimants have failed to meet the evidentiary onus of establishing facts necessary to support their legal arguments. The claims are therefore dismissed."³⁵⁶

M. THE LAO COURTS' NON-RECOGNITION OF THE 2016 ST SIAC AWARD

283. Between January and August 2017 – while the disputes between Claimants and the Lao PDR were proceeding before the BIT I Tribunals – Sanum separately was seeking recognition in the Lao courts for the 2016 ST SIAC Award of US$200 million that they had obtained against ST.

284. Claimants contend that Lao PDR officials first obstructed service of their request for recognition of the award, insisting on certain procedures that were not consistent with Lao law; the Commercial Court of Vientiane then accepted written testimony from ST and the public prosecutor, of which Sanum was not informed and therefore had no opportunity to address; and finally that court held a hearing on 14 June 2017 without notifying Sanum. The same day, Claimants say, the Vientiane Court issued its decision No. 25/2017, denying recognition in Laos of the 2016 ST SIAC Award.³⁵⁷

285. The Vientiane Court found that the Master Agreement's multi-tiered dispute resolution clause,³⁵⁸ upon which the 2016 ST SIAC Award was based, contradicted the Lao Constitution and Lao law by providing for arbitration after final court litigation. As discussed in Section III.H.(12) above, the Thanaleng disputes between Sanum and ST were litigated before the Commercial Court of Vientiane and affirmed by the Court of Appeal and the Lao Supreme Court, the latter rendering its

³⁵⁵ R-265, PCA BIT I Award, ¶ 244. ↩

³⁵⁶ R-265, PCA BIT I Award, ¶ 264. ↩

³⁵⁷ Claimants' Memorial, ¶¶ 178-191. ↩

³⁵⁸ C-26, Master Agreement, Section 2, Art. 10 provided as follows: ↩
If any dispute shall arise, the Parties agree to conduct an amicable negotiation. If such dispute cannot be settled by mediation, the Parties may submit such disputes to the [OEDR] or Courts of the Lao PDR according to the provision and law of Lao PDR in accordance with this Agreement. ...
Before settlement by the arbitrator under the rules of the [OEDR], the Parties shall use all efforts to assist the dispute resolution in accordance with the laws of Lao PDR.
If one of the Parties is unsatisfied with the results of the above procedure, the Parties shall mediate and, if necessary, arbitrate such dispute using an internationally recognized mediation/arbitration company in Macau, SAR PRC."

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decision on 4 April 2014, roughly eighteen months before Sanum initiated the ST SIAC arbitration. The Commercial Court of Vientiane noted in part as follows:

[This dispute] is not valid and is in conflict with the Constitution and the laws of the Lao PDR as provided in the Article 366 Clause 4 of the 2012 amended Civil Procedure Law due to the dispute has been adjudicated and final by the Court(s) of Lao PDR, in which the Article 98 of the 2015 Constitution of Lao PDR provided: ‘Decisions reached by the People's Court, which final, must be respected by ... all citizens, and must be implemented by the concerned individuals and organization[s].'³⁵⁹

286. On appeal, Sanum alleged various procedural breaches and violations of due process.³⁶⁰ Substantively, it argued that since Sanum and ST had explicitly agreed to arbitration if either was left unsatisfied with the result of domestic court litigation, the Lao courts were required to accept any resulting foreign arbitral award, it, regardless of what Lao law otherwise might say about the finality of court decisions.³⁶¹

287. On 4 August 2017, the Lao Court of Appeal affirmed the lower court decision. Among other things, it referred (as had the court below) to Article 98 of the 2015 Constitution, and also to Article 185, Clause 2 of the Amended 2012 Law of Civil Procedure, providing that "[t]he [C]ourt will not consider a case that the court issued a final decision." In the Court of Appeal's reasoning, Sanum's recognition proceedings were “not reasonable” because “when this Case has been decided and enforced finally, the Court cannot consider the case again.” On the same basis, it stated that the 2016 ST SIAC Award conflicted with Lao law, because the underlying dispute between Sanum and ST "has been settled and decided already and its decision is final.”³⁶²

288. Claimants say that the Court of Appeal affirmed the lower court decision on 4 August 2017 without taking Sanum's arguments into account, or for that matter affording it the opportunity to learn ST's position or to make substantive oral arguments following the written pleading stage.³⁶³

³⁵⁹ R-94, No. 25/1 Commercial Chamber of the People's Court in the Central Part, Sanum Investment Limited v. ST Group, Ltd. et al., 14 June 2017, p. 4; see also C-360, p. 4 (same). ↩

³⁶⁰ Claimants' Memorial, ¶¶ 196, 201. ↩

³⁶¹ R-96, Sanum Petition on Appeal, Commercial Case No. 48IFI.C, 10 July 2017, ¶ 42. ↩

³⁶² R-97, Judgment of the Court of Appeals, 4 August 2017, p. 6; see also C-380, p. 6 (same). ↩

³⁶³ Claimants' Memorial, ¶¶ 202-203. ↩

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N. THE 2019 ST APPEAL DECISION IN SINGAPORE

289. While Sanum and ST were litigating in Lao courts about recognition of the 2016 ST SIAC Award, they were also litigating in the Singapore courts regarding enforcement of the same award.

290. On 28 June 2018, the Singapore High Court found that the dispute between Sanum and ST arose solely under the Master Agreement – not the Lao Bao/Ferry Terminal Participation Agreement or other agreements between them – and that the proper construction of the Master Agreement's dispute resolution clause should have resulted in an arbitral seat in Macau (not Singapore), and in a one-member tribunal (rather than a three-member tribunal). Despite these "procedural irregularities," the High Court found that the ST needed to demonstrate prejudice to justify non-recognition of the 2016 ST SIAC Award, which they had vailed to do. On this basis, the High Court affirmed Sanum's right to enforce the 2016 ST SIAC Award in Singapore and dismissed ST's application to refuse enforcement.³⁶⁴

291. However, on 20 November 2019, the Singapore Court of Appeal issued its 2019 ST Appeal Decision, which reversed the High Court ruling.

292. The appeals panel – chaired by Chief Justice Sundaresh Menon and including Judges Judith Prakash and Quentin Loh – unanimously agreed with the High Court that the dispute between Sanum and ST about an “alleged failure ... to hand over the Thanaleng Slot Club to Sanum on 11 October 2011"³⁶⁵ properly arose only under the Master Agreement, which therefore provided the only relevant arbitration clause to be construed.³⁶⁶

293. The Singapore Court of Appeal noted a threshold question about the validity, under Lao law, of a tiered arbitration clause “that seems to contemplate that it could leave the parties with a decision of the Supreme Court of Laos and then the parties can go to arbitration after that,” with the consequence that “the arbitral tribunal would in effect be hearing an appeal against that decision."³⁶⁷ ST argued that this was not a valid arbitration clause, while Sanum argued that it was.³⁶⁸ The Court of Appeal expressed concern that in the absence of any expert opinion on Lao

³⁶⁴ 2019 ST Appeal Decision, R-266, ¶¶ 33-34, 95. ↩

³⁶⁵ 2019 ST Appeal Decision, R-266, ¶ 15. ↩

³⁶⁶ 2019 ST Appeal Decision, R-266, ¶¶ 47, 53. ↩

³⁶⁷ 2019 ST Appeal Decision, R-266, ¶¶ 45, 63-64. ↩

³⁶⁸ 2019 ST Appeal Decision, R-266, ¶¶ 66-67. ↩

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law on this question, it did not have sufficient evidence to make a positive determination; however, ST bore the onus of proving invalidity under Lao law and had not done so.³⁶⁹

294. The Court of Appeal went on, however, to find that while the arbitration clause was valid, the arbitration that took place was not in accordance with the requirements of the clause. That was because "[n]either Singapore nor the SIAC are mentioned” in the Master Agreement, which had “no connection at all” to Singapore; “the correct seat of arbitration is Macau.”³⁷⁰ Moreover, even if the SIAC Rules had applied, they would require a one-member panel rather than a three-member panel.³⁷¹

295. Unlike the High Court Judge, however, the Court of Appeal considered the error as to seat to be fundamental, and not simply a procedural irregularity that could be overlooked in the absence of demonstrated prejudice.³⁷² In its view:

once an arbitration is wrongly seated, in the absence of waiver of the wrong seat, any award that ensues should not be recognised and enforced by other jurisdictions because such award had not been obtained in accordance with the parties' arbitration agreement. ...

We have concluded that it is not necessary for a party who is resisting enforcement of an award arising out of a wrongly seated arbitration to demonstrate actual prejudice arising from the wrong seat.³⁷³

296. The Court of Appeals concluded that ST had never waived the agreement to seat any arbitration in Macau, and “[i]n fact they objected to the SIAC's appointment as the arbitral institution to conduct the arbitration." In these circumstances, “we must refuse leave to Sanum to enforce the Award...."³⁷⁴

³⁶⁹ 2019 ST Appeal Decision, R-266, ¶¶ 68-71. ↩

³⁷⁰ 2019 ST Appeal Decision, R-266, ¶¶ 84-85. ↩

³⁷¹ 2019 ST Appeal Decision, R-266, ¶¶ 86-89. ↩

³⁷² 2019 ST Appeal Decision, R-266, ¶¶ 95-96. ↩

³⁷³ 2019 ST Appeal Decision, R-266, ¶¶ 102-103. ↩

³⁷⁴ 2019 ST Appeal Decision, R-266, ¶ 104. ↩

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IV. OVERVIEW OF CLAIMS, OBJECTIONS AND DEFENSES

297. This lengthy history of events has been necessary to put into context the Parties' respective clams, objections and defenses, and requests for relief. Below, the Tribunal summarizes what is sought in this latest chapter of the Parties' long and litigious history.

A. SANUM'S CLAIMS AND REQUEST FOR RELIEF

298. Sanum presents claims under the China-Lao BIT relating to eight separate events.³⁷⁵ These may be summarized as follows:

a. Seizure of the Savan Vegas Casino (alleged to violate BIT provisions on expropriation);³⁷⁶

b. Termination of Payments under the CFA Loans (alleged to violate BIT provisions on expropriation);³⁷⁷

c. Tax Measures (alleged to violate BIT provisions on expropriation);³⁷⁸

d. Slot Club Measures (alleged to violate BIT provisions on expropriation);³⁷⁹

e. Frustration of Thakhek Concession Development (alleged to violate BIT provisions on expropriation);³⁸⁰

³⁷⁵ Letter from Claimants to Tribunal, 24 June 2019, distinguishing between Sanum's claims in this proceeding and LHNV's claims in the accompanying case, ICSID Case No. ARB(AF)16/2. In the other case, LHNV brings claims related to the same events, but also pursues an ancillary claim for a ninth event, arising out of non-recognition of the 2016 ST SIAC Award. (LHNV contends that certain elements of that claim survive the 2019 ST Appeal Decision; see Claimants' comments on ST Appeal Decision, 9 December 2019.) For each of the events in common between the two cases, LHNV asserts that multiple provisions of the Lao-Netherlands BIT were violated, but Sanum alleges only expropriation in violation of the China-Lao BIT and a failure to pay ICSID costs. See Letter from Claimants to Tribunal, 24 June 2019. ↩

³⁷⁶ Letter from Claimants to Tribunal, 24 June 2019; Claimants' Memorial, Section IV.C; Claimants' Reply, Section IV.D. ↩

³⁷⁷ Letter from Claimants to Tribunal, 24 June 2019; Claimants' Memorial, Section IV.D; Claimants' Reply, Section IV.B. ↩

³⁷⁸ Letter from Claimants to Tribunal, 24 June 2019; Claimants' Memorial, Section IV.E; Claimants' Reply, Section IV.C. ↩

³⁷⁹ Letter from Claimants to Tribunal, 24 June 2019; Claimants' Memorial, Section IV.F; Claimants' Reply, Section IV.E. This claim is primarily described as for “seizure and closure of the Ferry Terminal Slot Club," but alternatively Claimants claim for the physical assets (mainly slot machines) allegedly seized from that club and from the Lao Bao Slot Club. Crawford WS ¶ 87. ↩

³⁸⁰ Letter from Claimants to Tribunal, 24 June 2019; Claimants' Memorial, Section IV.G; Claimants' Reply, Section IV.H. ↩

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f. Conversion of Bank Accounts and Cage/Vault Cash (alleged to violate BIT provisions on expropriation);³⁸¹

g. Taking of Shophouses, Guard Houses and River House (alleged to violate BIT provisions on expropriation);³⁸² and

h. Failure to Pay ICSID Costs (alleged to violate the BIT's arbitration clause together with ICSID Rules).³⁸³

299. The Claimants' request for relief at this stage of the proceedings is that the Tribunal find they prevail on all issues of jurisdiction and the merits, and the case should proceed to a hearing on quantum.³⁸⁴

B. RESPONDENT'S OBJECTIONS, DEFENSES AND REQUEST FOR RELIEF

300. The Respondent's Counter-Memorial and Rejoinder presented four threshold objections to the Tribunal's competence, which may be summarized as follows:

a. Preclusion: Starting from the proposition that “the facts and circumstances here are identical to [those] placed before and decided by the SIAC Tribunal,”³⁸⁵ the Respondent objects that the claims are “barred by the application of the 'preclusion doctrines,”' a term it defines as including both “res judicata and issue estoppel.”³⁸⁶ Following issuance of the BIT I Awards, Respondent also asserts that the BIT I Tribunals' "findings of bribery and corruption are res judicata on this Tribunal.”³⁸⁷ Following issuance of the 2019 ST Appeal

³⁸¹ Letter from Claimants to Tribunal, 24 June 2019; Claimants' Memorial, Section IV.H; Claimants' Reply, Section IV.F. ↩

³⁸² Letter from Claimants to Tribunal, 24 June 2019; Claimants' Memorial, Section IV.I; Claimants' Reply, Section IV.G. ↩

³⁸³ Letter from Claimants to Tribunal, 24 June 2019; Claimants' Memorial, Section IV.J; Claimants' Reply, Section IV.J. ↩

³⁸⁴ Claimants' Reply, ¶ 485. ↩

³⁸⁵ Respondent's Counter-Memorial, Section III.A; Respondent's Rejoinder, Section III. Claimants respond to this proposition in Claimants' Reply, Section III.B. ↩

³⁸⁶ Respondent's Counter-Memorial, Section III.B and ¶ 126; Respondent's Rejoinder, Section II. Claimants respond to this objection in Claimants' Reply, Section III.A and B. ↩

³⁸⁷ Respondent's Submission on the BIT I Awards, Section II. Claimants respond to this objection in Claimants' Response on the BIT I Awards, Section II. ↩

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Decision, the Respondent states that this “once and for all, disposes of [LHNV's] ancillary claim” for non-recognition of the 2016 ST SIAC Award.³⁸⁸

b. Abuse of Process: The Respondent objects that “Claimants' multiple successive claims arising from the same measures and for the same relief are inadmissible as an abuse of process."³⁸⁹

с. Contract Claims: The claims are “contract claims, not treaty claims";³⁹⁰ and

d. Material Jurisdiction: Claimants lack “material jurisdiction" over certain specific claims.³⁹¹

301. Following issuance of the BIT I Awards, the Respondent asserted an additional threshold admissibility objection, namely that the BIT I Tribunals' "[a]ffirmative findings on bribery and corruption warrant dismissal of all claims,”³⁹² and their findings regarding obstruction of justice in the BIT I Cases render Claimants not entitled to substantive treaty protection in this proceeding and their claims therefore inadmissible.³⁹³

302. On the merits, the Respondent rejects each of the claims as unfounded. Its defenses may be summarized as follows:

a. The Respondent lawfully terminated the Savan Vegas PDA, which bars claims related to the seizure of Savan Vegas and the CFA Loans;³⁹⁴

³⁸⁸ Respondent's comments on the 2019 ST Appeal Decision, 25 November 2019, p.3. Claimants respond to this objection in Claimants' comments on the 2019 ST Appeal Decision, 9 December 2019. ↩

³⁸⁹ Respondent's Counter-Memorial, Section III.C; Respondent's Rejoinder, Section IV; Respondent's Submission on the BIT I Awards, Section V.1. Claimants respond to this objection in Claimants' Reply, Section III.A.2.3, and Claimants' Response on the BIT I Awards, Section V.A. ↩

³⁹⁰ Respondent's Counter-Memorial, Section III.D; Respondent's Rejoinder, Section V. Claimants respond to this objection in Claimants' Reply, Section III.A.1. ↩

³⁹¹ Respondent's Counter-Memorial, Section III.E; Respondent's Rejoinder, Section VI. Claimants respond to this objection in Claimants' Reply, Section III.C. ↩

³⁹² Respondent's Submission on the BIT I Awards, Sections IV.1 and V.2. Claimants respond to this objection in Claimants' Response on the BIT I Awards, Section IV and V.B. ↩

³⁹³ Respondent's Submission on the BIT I Awards, Section III. Claimants respond to this objection in Claimants' Response on the BIT I Awards, Section III. ↩

³⁹⁴ Respondent's Counter-Memorial, Section IV; Respondent's Rejoinder, Section VII; Respondent's Submission on the BIT I Awards, Section IV.2. ↩

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b. Claimants' failure to collect on the CFA Loans was a direct and proximate consequence of that PDA termination and Claimants' malfeasance;³⁹⁵ and

с. Claimants' "discriminatory" taxation arguments fail on the merits;³⁹⁶

d. Claimants' arguments regarding “seizure and closure” of the Ferry Terminal Slot Club fail on the merits;³⁹⁷

e. Claimants' arguments regarding “conversion of seized bank accounts and cage and vault cash" fail on the merits;³⁹⁸

f. Claimants' arguments regarding a taking of Thakhek and Savannakhet properties fail on the merits;³⁹⁹

g. Claimants' arguments regarding termination of the Thakhek concession fail on the merits;⁴⁰⁰ and

h. LHNV's claim regarding non-recognition of the 2016 ST SIAC Award is meritless, because that award is "facially unenforceable in the Lao PDR” and the Lao court proceedings do not constitute denial of justice,⁴⁰¹ and because more recently, the Singapore Court of Appeal declared that the 2016 ST SIAC Award should not be recognized and enforced.⁴⁰²

303. Respondent's request for relief at this stage of the proceedings is that the Tribunal should dismiss all claims as a matter of either jurisdiction or merits, and award Respondent all associated costs.⁴⁰³

³⁹⁵ Respondent's Counter-Memorial, Section VI; Respondent's Rejoinder, Section VIII. ↩

³⁹⁶ Respondent's Rejoinder, Section IX. ↩

³⁹⁷ Respondent's Rejoinder, Section X. ↩

³⁹⁸ Respondent's Rejoinder, Section XI. ↩

³⁹⁹ Respondent's Rejoinder, Section XII. ↩

⁴⁰⁰ Respondent's Rejoinder, Section XIII; Respondent's Submission on the BIT I Awards, Section VI. ↩

⁴⁰¹ Respondent's Counter-Memorial, Section VI; Respondent's Rejoinder, Section XIV. ↩

⁴⁰² Respondent's comments on the 2019 ST Appeal Decision, pp. 2-3. As noted above, Claimants by contrast contend that certain elements of this claim survive the 2019 ST Appeal Decision. See Claimants' comments on ST Appeal Decision, 9 December 2019. ↩

⁴⁰³ Respondent's Rejoinder, ¶ 279. ↩

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V. JURISDICTION AND ADMISSIBILITY

304. As noted above, the Respondent objects to jurisdiction on the following grounds: (a) the claims presented are barred by the “preclusion doctrines,” i.e., res judicata and issue estoppel; (b) the claims are an abuse of process; (c) the claims are contractual rather than treaty claims; and (d) the Tribunal lacks material jurisdiction over certain claims. Following issuance of the BIT I Awards, the Respondent also objected that (e) their findings regarding bribery and corruption warrant dismissal of all claims, and their findings regarding obstruction of justice render Claimants not entitled to substantive treaty protection and their claims therefore inadmissible. Claimants reject each of these objections. The Parties' arguments are summarized below.

A. THE PRECLUSION DOCTRINES

305. The Parties' arguments about preclusion were briefed on several occasions, as decisions in other arbitrations were issued during the life of this proceeding. The summaries below of their positions are thus grouped into: (1) the implications of the 2017 SIAC Award, (2) the implications of the BIT I Awards, and (3) the implications of the 2019 ST Appeal Decision.

(1) The Implications of the 2017 SIAC Award

a. Respondent's Position

306. The Respondent maintains that the application of the preclusion doctrines (including res judicata and issue estoppel), along with the current trend of decisions in investment arbitration cases, bar Claimants' claims, because these claims rely on factual predicates which have already been decided by the SIAC Tribunal.⁴⁰⁴

307. The Respondent relies on the Grynberg case – an ICSID proceeding – to argue that the Tribunal should dismiss the Claimants' claims based on issue estoppel.⁴⁰⁵ According to the Respondent, the Grynberg tribunal acknowledged that the doctrine of issue estoppel is a well-established principle of international law, and employed a three-part test, under which a right, question or fact may not be re-litigated if, in a prior proceeding: (a) it was distinctly put in issue; (b) the court or tribunal actually decided it; and (c) the resolution of the question was necessary to resolving the claims

⁴⁰⁴ Respondent's Memorial on Competence, ¶ 48. ↩

⁴⁰⁵ Respondent's Memorial on Competence, ¶ 49, citing RL-51, Rachel S. Grynberg, Stephen M. Grynberg, Miriam Z. Grynberg and RSM Production Corporation v. Grenada, ICSID Case No. ARB/10/6, Award, 10 December 2010 (“Grynberg”), ¶ 1.4.1. ↩

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before that tribunal.⁴⁰⁶ In applying this test, the Grynberg tribunal held that the RSM Award – the award resulting from a prior arbitration between the parties – precluded the claims before it, specifically finding that:

an essential predicate to the success of each of Claimants' [treaty] claims is an ability for the Tribunal to re-litigate and decide in Claimants' favour conclusions of fact or law concerning the parties' contractual rights that have already distinctly been put in issue and distinctly determined by the Prior Award. Because the Tribunal has concluded, in the answer to the first question it has considered [issue estoppel], that it cannot properly revisit those conclusions, the Tribunal therefore finds that each of Claimants' claims is manifestly without merit.⁴⁰⁷

308. The Respondent suggest that close adherence to the reasoning of the Grynberg tribunal is warranted in this case, because the procedural history, claims, legal issues, and parties' arguments in Grynberg are “nearly identical to those before this Tribunal.”⁴⁰⁸ The Respondent rejects Claimants' attempts to distinguish Grynberg from this dispute.⁴⁰⁹ Among other things, it says, Grynberg cannot be distinguished on the basis of the fork-in-the-road clause in the BIT at issue there, because the Grynberg tribunal expressly noted that it never reached this issue because the traditional preclusion doctrine applied.⁴¹⁰ Moreover, the Respondent notes that because the 2017 SIAC Award is dispositive as to the allegations supporting the Claimants' claims, the Grynberg analysis is determinative in the present dispute as per the Claimants' own admission.⁴¹¹

309. The Respondent submits that the 2017 SIAC Award's central finding – that the Respondent did not breach any obligation under the Deed of Settlement – applies to every allegation before the Tribunal.⁴¹² More specifically, because the Respondent did not breach any obligation under the Deed, it also did not breach its BIT obligations in light of the fact that the alleged treaty breaches arise from the Deed's terms.⁴¹³ Otherwise stated, the Respondent maintains that since the 2017

⁴⁰⁶ Respondent's Memorial on Competence, ¶ 57, citing RL-51, Grynberg, ¶¶ 7.1.1-7.1.2. ↩

⁴⁰⁷ Respondent's Memorial on Competence, ¶ 58; Respondent's Counter-Memorial, ¶ 136, citing RL-51, Grynberg, ¶ 7.2.1. ↩

⁴⁰⁸ Respondent's Memorial on Competence, ¶¶ 52-54, 59; Respondent's Counter-Memorial, ¶ 137. ↩

⁴⁰⁹ Respondent's Memorial on Competence, ¶ 60; Respondent's Counter-Memorial, ¶ 138. ↩

⁴¹⁰ Respondent's Memorial on Competence, ¶ 62; Respondent's Counter-Memorial, ¶ 140, citing RL-51, Grynberg, ¶ 4.6.9. ↩

⁴¹¹ Respondent's Memorial on Competence, ¶ 63; Respondent's Counter-Memorial, ¶ 141. ↩

⁴¹² Respondent's Memorial on Competence, ¶ 64, citing R-27, 2017 SIAC Award, ¶ 328(f). ↩

⁴¹³ Respondent's Memorial on Competence, ¶ 64. ↩

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SIAC Award found that it had fulfilled its contractual obligations, this resolves the dispute before the Tribunal and each allegation is thereby covered by res judicata.⁴¹⁴

310. Specifically, with respect to the various claims in this case, the Respondent maintains as follows:

a. Savan Vegas Seizure: Regarding the alleged seizure of Savan Vegas amounting to expropriation under the Treaty, the Respondent contends that the 2017 SIAC Award interpreted the relevant provisions of the Deed – Sections 11, 12, 19, and 32 – and concluded that the seizure took place after the expiration of Claimants' permitted period of control without any extension of the sale deadline, and that there was no evidence of mismanagement or damages arising from the Government's assumption of control.⁴¹⁵ That these claims already have been decided is proven, the Respondent says, by Claimants' (1) "cut[ting] and past[ing]" the witness statements and pleadings from the SIAC arbitration into this proceeding's submissions, (2) its recycling of exhibits; and (3) its identical attacks on the appointment of San Marco.⁴¹⁶ The Respondent submits that even if Sanum reformulates its claim in treaty terms, it is apparent that the Lao PDR could not have impaired or interfered with Claimants' rights by taking control of Savan Vegas if the Deed permitted such action, as the 2017 SIAC Award determined.⁴¹⁷ Further, Sanum has not provided any evidence suggesting that the Respondent violated the China-Lao BIT even though it complied with the Deed, and has distorted the BIT I Tribunals' material breach findings, to the extent they disagreed with the 2017 SIAC Award; the areas of disagreement concerned other issues, and the BIT I Tribunals denied Claimants' allegations of material breach with respect to the issues relevant to the Savan Vegas seizure.⁴¹⁸

b. Savan Vegas PDA Termination: Regarding the alleged expropriation based on the Government's termination of the Savan Vegas PDA, the Respondent argues that the 2017 SIAC Award interpreted Section 6 of the Deed and found that the Respondent's obligation had been met.⁴¹⁹ The Respondent rejects Claimants' argument that the SIAC Tribunal did

⁴¹⁴ Respondent's Memorial on Competence, ¶¶ 64, 93. ↩

⁴¹⁵ Respondent's Memorial on Competence, ¶¶ 68-71; citing R-27, 2017 SIAC Award, ¶¶ 157, 159, 212, 244-246. ↩

⁴¹⁶ Respondent's Counter-Memorial, ¶¶ 67-76. ↩

⁴¹⁷ Respondent's Rejoinder, ¶ 57; Respondent's Counter-Memorial, ¶ 78. ↩

⁴¹⁸ Respondent's Rejoinder, ¶¶ 58-59. ↩

⁴¹⁹ Respondent's Memorial on Competence, ¶¶ 72-73, citing R-27, 2017 SIAC Award, ¶ 231. ↩

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not have jurisdiction over the Savan Vegas PDA, noting that its findings about termination of the PDA were necessary to resolving Claimants' own counterclaims in the case.⁴²⁰

c. New 28% Tax Rate: The Respondent notes that the 2017 SIAC Award found the Respondent had complied with the Deed of Settlement's requirement to impose a new flat tax because its appointment of the Flat Tax Committee was not unreasonable and the tax ultimately imposed was flat and not “unfair or unreasonable.”⁴²¹ The Respondent adds that the Deed embodied a bargain whereby the Respondent waived its right to determine taxes based on general Lao laws, and Claimants “agreed to be bound to that procedure and the contract as a whole (including its dispute resolution clause).”⁴²² The Respondent stresses that regardless of Claimants' formulation of its tax claim, the lawfulness of the tax arises directly out of the Deed and the Flat Tax Committee's actions, which the SIAC Tribunal analyzed and decided.⁴²³

d. Tax Assessments: The Respondent contends that the allegations of unfair taxation arising from its imposition of taxes based on the 2014 Tax Law Amendments were dealt with by the 2017 SIAC Award's conclusions that Section 7 of the Deed did not excuse Sanum from paying taxes at the rates imposed by Lao law.⁴²⁴ Claimants' relitigation of the same issue is also demonstrated, the Respondent says, by its reuse of Mr. Crawford's witness statement and Mr. Bryson's expert report from the SIAC proceedings, and its reliance on the same factual exhibits.⁴²⁵ The Respondent concludes that Claimants do not add anything in this case which has not already been dealt with by the 2017 SIAC Award.⁴²⁶

e. Sale of Savan Vegas: The Respondent notes that the 2017 SIAC Award found that Claimants had failed to show any failure to maximize the sale price pursuant to Section 13 of the Deed, and that the Respondent's exclusion of the Slot Clubs from the sale was

⁴²⁰ Respondent's Rejoinder, ¶¶ 60-65. ↩

⁴²¹ Respondent's Memorial on Competence, ¶¶ 75-76; Respondent's Counter-Memorial, ¶¶ 80, 84-92, citing R-27, 2017 SIAC Award, ¶¶ 271, 285, 287. ↩

⁴²² Respondent's Counter-Memorial, ¶ 81 (emphasis in original). ↩

⁴²³ Respondent's Counter-Memorial, ¶¶ 79-80; Respondent's Rejoinder, ¶¶ 69-70. ↩

⁴²⁴ Respondent's Memorial on Competence, ¶ 78; Respondent's Counter-Memorial, ¶¶ 95, 98, citing R-27, 2017 SIAC Award, ¶¶ 180, 280. ↩

⁴²⁵ Respondent's Counter-Memorial, ¶¶ 100-101. ↩

⁴²⁶ Respondent's Counter-Memorial, ¶¶ 102-106. ↩

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justified and therefore could not have damaged the Claimants.⁴²⁷ Again citing the reuse of arguments, witness statements, expert reports, and exhibits, the Respondent submits that this claim has been presented to and decided by the SIAC Tribunal, and that without a violation of Claimants' contract rights (which the SIAC Tribunal rejected), no treaty claim can exist.⁴²⁸ The Respondent notes that Claimants “volte face” on the ownership of the Slot Clubs is no more than an effort to avoid application of preclusion doctrines.⁴²⁹ Further, the Respondent submits that because the Deed prohibited Claimants from holding interests indefinitely, its participation interest in the Slot Clubs was divested pursuant to the 2017 SIAC Award and the issue is therefore precluded in the present dispute.⁴³⁰

f. Thakhek Concession: The Respondent observes that the 2017 SIAC Award determined that the Respondent did not negotiate the Thakhek land concession in bad faith in violation of Section 22 of the Deed as Claimants now allege.⁴³¹ Further, the arguments, witness statement, and exhibits on which Claimants rely show the "identical nature of the Thakhet issue before both tribunals."⁴³² To the extent that Claimants reformulated their claim about the Thakhek concession in the Reply – to focus on the exclusion of 16 hectares rather than negotiation in bad faith – that issue was pleaded before the BIT I tribunals, so will be precluded by res judicata either under the 2017 SIAC Award or the BIT I Awards, and cannot be relitigated before the Tribunal.⁴³³

g. Lao judiciary: The Respondent argues that even though the alleged violations arising from the actions of the Lao judiciary were not before the SIAC Tribunal, the 2017 SIAC Award nevertheless addressed them in finding that the Respondent "respected Claimants' rights under the Deed."⁴³⁴

h. Bank accounts, cash and property: Finally, the Respondent says that the claims for conversion of seized bank accounts and Savan Vegas' cage and vault cash, and for the

⁴²⁷ Respondent's Memorial on Competence, ¶¶ 79-80, 82, 84-85; Respondent's Counter-Memorial, ¶ 108, citing R-27, 2017 SIAC Award, ¶¶ 222, 226-228, 495. ↩

⁴²⁸ Respondent's Counter-Memorial, ¶¶ 109-111. ↩

⁴²⁹ Respondent's Rejoinder, ¶¶ 71-73. ↩

⁴³⁰ Respondent's Rejoinder, ¶ 74. ↩

⁴³¹ Respondent's Memorial on Competence, ¶¶ 86-87; Respondent's Counter-Memorial, ¶ 112; citing R-27, SIAC Award, ¶¶ 303, 305, 307. ↩

⁴³² Respondent's Counter-Memorial, ¶¶ 114-119. ↩

⁴³³ Respondent's Rejoinder, ¶¶ 77-78. ↩

⁴³⁴ Respondent's Memorial on Competence, ¶¶ 90-91. ↩

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Thakhek and Savannakhet properties, are barred by the 2017 SIAC Award because these assets were accounted for in the sale price as evidenced by the Asset Purchase Agreement.⁴³⁵

311. The Respondent submits that ICSID tribunals regularly employ the preclusion doctrines of res judicata and issue estoppel in circumstances similar to the present dispute.⁴³⁶ Relying on the Apotex tribunal's in-depth examination of these two doctrines in the context of international investment law, the Respondent contends that the essence of their broad and historic application is that “'a right, question or fact' once decided ‘may not be disputed again.'”⁴³⁷

312. Regarding res judicata specifically, the Respondent maintains that the growing trend in investment arbitration favors a flexible approach to its elements – persona, petitum, and causa petendi – because under a restrictive approach, the doctrine would seldom apply.⁴³⁸ Further, the effect of res judicata, once employed, extends not only to the dispositive aspects of the award but also to the findings that are essential to that decision which, in turn, counsels in favor of relaxing the petitum and causa petendi requirements in the present dispute.⁴³⁹ The Respondent points out that the Apotex tribunal bypassed the causa petendi element, thereby bringing res judicata within the realm of issue estoppel, and noted that “past international tribunals have routinely applied 'issue estoppel' either, with or without, directly using the term.”⁴⁴⁰

313. That investment tribunals have been confronted with the precise dilemma now before the Tribunal – i.e., whether to give preclusive effect to a prior commercial award in the context of investment arbitration with claims arising out of a BIT – is further evidenced by both doctrine and arbitral jurisprudence.⁴⁴¹ Specifically, the Respondent contends that the principle established in Helnan,

⁴³⁵ Respondent's Memorial on Competence, ¶¶ 80-82; Respondent's Counter-Memorial, ¶¶ 123-124. ↩

⁴³⁶ Respondent's Memorial on Competence, ¶ 94. ↩

⁴³⁷ Respondent's Memorial on Competence, ¶ 96; Respondent's Counter-Memorial, ¶¶ 142-144, citing RL-7, Apotex Holdings Inc., Apotex Inc. v. United States of America, ICSID Case No. ARB(AF)/12/1, Award, 25 August 2014 (“Apotex”), ¶ 7.12. ↩

⁴³⁸ Respondent's Memorial on Competence, ¶¶ 97-99; Respondent's Counter-Memorial, ¶¶ 145-146, 149. ↩

⁴³⁹ Respondent's Memorial on Competence, ¶¶ 100, 104; Respondent's Counter-Memorial, ¶ 148. ↩

⁴⁴⁰ Respondent's Memorial on Competence, ¶ 105; Respondent's Counter-Memorial, ¶ 153; citing RL-7, Apotex, ¶ 7.18. ↩

⁴⁴¹ Respondent's Memorial on Competence, ¶ 106, citing RL-17, Charles Brower and Paula Henin, Res Judicata, in Building International Investment Law: The First 50 Years of ICSID, edited by Meg Kinnear and Geraldine Fischer, et al. (ed) (Kluwer law International 2015), Chapter 5; RL-30, Helnan International Hotels A/S v. The Arab Republic of Egypt, I CSID Case No. ARB/05/19, Award, 3 July 2008 (“Helnan”), ¶¶ 123-125; RL-51, Grynberg, ¶¶ 7.1.2, 7.1.3, 7.1.8; RL-24, Desert Line Projects LLC v. Republic of Yemen, ICSID Case No. ARB/05/17, Award, 6 February 2008 (“Desert Line"), ¶ 138. ↩

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namely, that it is not "appropriate for an international tribunal to replace the decision of the local court on a contractual issue subject to local law," is directly applicable to the present dispute, as Claimants' claims “hinge entirely on the supposition that this Tribunal will reopen and decide each factual finding and legal conclusion set forth in the [2017] SIAC Award differently.”⁴⁴²

314. As to Claimants' argument that preclusion does not apply because the 2017 SIAC Award and this dispute arise in the context of different legal orders, the Respondent argues that it is “demonstrably incorrect.”⁴⁴³ First, the Respondent observes that Claimants rely on a passage of Professor McLachlan's treatise, but that passage only states that treaty obligations cannot be abrogated by a state court through national decisions, which is not the context of the issue here.⁴⁴⁴ Indeed, the same treatise later provides that investment tribunals may refer and rely on prior decisions made by contract tribunals, thereby undermining Claimants' argument.⁴⁴⁵ That this is the accurate position of Professor McLachlan is evidenced by his decision in Ampal, an ICSID case, to apply issue estoppel based on an ICC commercial arbitration decision.⁴⁴⁶

315. Second, the Respondent submits that "recent landmark investment decisions" contradict Claimants' position regarding the implications of different legal orders.⁴⁴⁷ Specifically, the Respondent rejects Claimants' analysis of the Grynberg and Helnan tribunals and notes that Ampal lends additional support to its position.⁴⁴⁸ In particular, in the Respondent's view:

a. Grynberg applied collateral estoppel based on decisions from different legal orders, as the first arbitration obtained its jurisdiction from a contract while the second did so from a bilateral investment treaty.⁴⁴⁹ That both cases were administered by ICSID does not change the fact that a commercial arbitration decision served as the underlying basis for collateral estoppel in a treaty arbitration proceeding.

⁴⁴² Respondent's Memorial on Competence, ¶¶ 115-116; Respondent's Counter-Memorial, ¶¶ 154-164, citing RL-30, Helnan, ¶ 108. ↩

⁴⁴³ Respondent's Rejoinder, ¶ 10. ↩

⁴⁴⁴ Respondent's Rejoinder, ¶ 11. ↩

⁴⁴⁵ Respondent's Rejoinder, ¶ 12, citing CL-136, Campbell McLachlan, International Investment Arbitration: Substantive Principles, § 4.95, p. 120. ↩

⁴⁴⁶ Respondent's Rejoinder, ¶¶ 12-13, citing RL-129, Ampal-American Israel Corporation and others v. Arab Republic of Egypt, ICSID Case No. ARB/12/11, Decision on Liability and Heads of Loss, 21 February 2017 (“Ampal”), ¶ 259. ↩

⁴⁴⁷ Respondent's Rejoinder, ¶ 10. ↩

⁴⁴⁸ Respondent's Rejoinder, ¶ 15. ↩

⁴⁴⁹ Respondent's Rejoinder, ¶¶ 18-19. ↩

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b. The facts and outcome of Helnan, as well as the annulment proceedings that followed, directly support the Respondent's position that a "commercial arbitral award has preclusive effect on every right, question, or fact that has previously been put at issue by the parties and decided by a tribunal of competent jurisdiction.”⁴⁵⁰

c. Ampal conclusively undermines the Claimants' position that no investment treaty arbitration case has given preclusive effect to a commercial arbitration award even on the dispositif, since. Ampal rejected a strict approach to the three-part identity test and affirmed collateral estoppel as a principle of public international law, while ultimately giving preclusive effect to an ICC decision.⁴⁵¹

316. The Respondent rejects as inapplicable and unpersuasive the four decisions on which Claimants rely, contending that each is missing “an essential element necessary for a tribunal to apply res judicata/collateral estoppel.”⁴⁵² Specifically, identity of the parties was lacking in Fraport,⁴⁵³ the Petrobart circumstances involved the failure to bring a claim in prior proceedings rather than preclusion of a litigated and decided claim,⁴⁵⁴ there was no final commercial award to provide the basis for preclusion in SGS Pakistan,⁴⁵⁵ and Al Tamini involved a criminal decision rendered by a state court rather than a commercial arbitration award.⁴⁵⁶

317. While the Respondent agrees with Claimants that collateral estoppel exists in public international law as a subset of res judicata, it rejects the notion that the same “strictures” apply.⁴⁵⁷ Relying on Apotex, Respondent submits that the Tribunal should conclude that international tribunals have employed the doctrine of collateral estoppel, although not expressly, even when one of the three elements of res judicata were not present, and therefore that this Tribunal should do the same.⁴⁵⁸

⁴⁵⁰ Respondent's Rejoinder, ¶¶ 20-24. ↩

⁴⁵¹ Respondent's Rejoinder, ¶¶ 25, 28-29. ↩

⁴⁵² Respondent's Rejoinder, ¶ 30. ↩

⁴⁵³ Respondent's Rejoinder, ¶ 31, citing CL-267, Fraport AG Frankfurt Airport Services Worldwide v. Philippines, ICSID Case No. ARB/11/12, Procedural Order No. 1, 17 May 2012 (“Fraport"), ¶ 83. ↩

⁴⁵⁴ Respondent's Rejoinder, ¶ 32, citing CL-51, Petrobart Limited v. Kyrgyzstan, SCC Case No. 126/2003, Award, 29 March 2005 ("Petrobart"), ¶ 365. ↩

⁴⁵⁵ Respondent's Rejoinder, ¶ 33, citing CL-27, SGS Société Générale de Surveillance SA v. Pakistan, ICSID Case No ARB/01/13, Decision on Objections to Jurisdiction, 6 August 2003 (“SGS Pakistan"), ¶ 2. ↩

⁴⁵⁶ Respondent's Rejoinder, ¶ 34, citing CL-268, Adel A Hamadi Al Tamimi v. Sultanate of Oman, ICSID Case No. ARB/11/33, IIC 745 (2015), Award, 3 November 2015 (“Al Tamimi”), ¶ 359. ↩

⁴⁵⁷ Respondent's Rejoinder, ¶ 36, citing Claimants' Reply, ¶ 79. ↩

⁴⁵⁸ Respondent's Rejoinder, ¶¶ 37-39. ↩

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318. The Respondent also denounces Claimants' reformulation of their claims between the Notice of Arbitration and Claimants' Memorial on the Merits, stating that the "transparent motive” for doing so was to avoid the preclusive effect of the 2017 SIAC Award.⁴⁵⁹ The Respondent notes that Claimants' Notices of Arbitration portrayed the Deed of Settlement as at the center of this dispute, but the Claimants later backtracked from this position after the 2017 SIAC Award clearly decided the Parties' performance of the Deed.⁴⁶⁰

319. For these reasons, the Respondent submits that the Tribunal must declare the claims before it as being inadmissible pursuant to res judicata and issue estoppel.⁴⁶¹

b. Claimants' Position

320. Claimants reject the suggestion that res judicata prevents the Tribunal from presiding over the claims presented in this case. In its view, for findings of fact or law from previous proceedings to bar future litigation, then all three conditions of res judicata must be present, namely, identity of the parties, subject matter, and cause of action.⁴⁶² That test is met for the jurisdictional rulings against the Respondent by the BIT I Tribunals, the Claimants, say, because those decisions were rendered in investment arbitration disputes between the Parties over similar claims.⁴⁶³ By contrast, the 2017 SIAC Award does not satisfy the identity of subject matter requirement, since it was rendered in a contract-based arbitration which is not within the same legal order as investor-State arbitration.⁴⁶⁴

321. Claimants reject the Respondent's preclusion argument as being grounded in a dubious trend and failing to articulate the proper tests, opting instead for a "nebulous preclusion 'principle”' that in Claimants' view improperly blends the doctrines of res judicata and common law collateral estoppel.⁴⁶⁵ Claimants note that of the three decisions on which the Respondent relies – Grynberg, Helnan, and Apotex – only the latter was based on res judicata, while the second used issue preclusion based on a previous ICSID proceeding and the first rejected altogether jurisdictional

⁴⁵⁹ Respondent's Rejoinder, ¶¶ 42-48. ↩

⁴⁶⁰ Respondent's Rejoinder, ¶¶ 42-48. ↩

⁴⁶¹ Respondent's Memorial on Competence, ¶ 116. ↩

⁴⁶² Claimants' Memorial, ¶ 300. ↩

⁴⁶³ Claimants' Memorial, ¶¶ 303-305. For example, Claimants say, the Respondent could not raise a ratione temporis jurisdictional objection in this case, since that was resolved in the BIT I Cases. Claimants' Memorial, ¶ 305. ↩

⁴⁶⁴ Claimants' Memorial, ¶¶ 301-302. ↩

⁴⁶⁵ Claimants' Reply, ¶¶ 55-57. ↩

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objections based on res judicata before dismissing the claims on their merits.⁴⁶⁶ The Respondent's proposed approach is also flawed in that it ignores the requirement that the legal order must be the same in both decisions and fails to provide any authority for doing so, despite the fact that the Respondent's own cases adequately address the matter.⁴⁶⁷

322. Claimants point out that no investment treaty arbitration tribunal has permitted a commercial arbitral award to serve as the basis for preclusion pursuant to res judicata or collateral estoppel.⁴⁶⁸ To the contrary, investment tribunals – including those in Fraport, Petrobart, SGS Pakistan, and Al Tamimi – have reached the opposite conclusion.⁴⁶⁹

323. Claimants submit that res judicata continues to apply in public international law only in the context of claim preclusion and under an orthodox approach applying the three-factor test, as evidenced by recent decisions of the International Court of Justice (“ICJ") as well as the Apotex award upon which Respondent relies.⁴⁷⁰ As for Helnan, which Respondent contends did apply res judicata to a commercial award, "[t]hat is simply not true”: the tribunal explicitly refused to give an earlier commercial arbitral award binding effect on the international plane under res judicata and made no reference to collateral estoppel.⁴⁷¹ Claimants thus maintain that the Respondent has failed to provide any authority on which the Tribunal could support a decision to replace the traditional res judicata test with the Respondent's proposed approach.⁴⁷²

324. Claimants argue that neither res judicata nor collateral estoppel can properly apply in this case to the 2017 SIAC Award. First, res judicata can apply only when all of its elements, including identity

⁴⁶⁶ Claimants' Reply, ¶¶ 57-58. ↩

⁴⁶⁷ Claimants' Reply, ¶¶ 64-65. ↩

⁴⁶⁸ Claimants' Reply, ¶ 66. ↩

⁴⁶⁹ Claimants' Reply, ¶ 66, citing CL-267, Fraport, ¶¶ 79-84; CL-51, Petrobart, ¶¶ 363-369; CL-27, SGS Pakistan, ¶¶ 175-177; CL-268, Al Tamimi, ¶ 358. ↩

⁴⁷⁰ Claimants' Reply, ¶ 60, citing CL-322, Question of the Delimitation of the Continental Shelf Between Nicaragua and Colombia Beyond 200 Nautical Miles From the Nicaraguan Coast (Nicaragua v. Colombia), ICJ, Preliminary Objections, Judgment of 17 March 2016, ¶¶ 59-61 (applying the traditional tripartite test and indicating that res judicata applies only to the decision of the Court “in the operative clause of the judgment”) and CL-323, Separate Opinion of Judge Greenwood, ¶¶ 4, 7 (“the identity of these three elements is a necessary, but not a sufficient, condition for the application of res judicata. It is also essential that the matter at issue must have been decided in the earlier proceedings. [...] Strictly speaking, it is only the dispositif of a judgment which can have the force of res judicata"); CL-359, Question of the Delimitation of the Continental Shelf Between Nicaragua and Colombia Beyond 200 Nautical Miles From the Nicaraguan Coast (Nicaragua v. Colombia), ICJ, Joint Dissenting Opinion of Vice-President Yusuf, Judges Cançado Trindade, Xue, Gaja, Bhandari, Robinson and Judge Ad Hoc Brower, 17 March 2016, ¶¶ 6-7 ("[R]es judicata may attach to the reasons of a judgment of the Court if those reasons are ‘inseparable' from the operative clause of a judgment [...] or if they constitute a ‘condition essential to the Court's decision."). ↩

⁴⁷¹ Claimants' Reply, ¶¶ 67-71. ↩

⁴⁷² Claimants' Reply, ¶ 72. ↩

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of legal order, are met and “under international law the proceeding must be, or must have been, conducted before courts and tribunals in the international legal order," with the starting point that "decisions and judgments of municipal courts do not have res judicata effect on the international level.”⁴⁷³ Moreover, even where all three elements are met, Claimants submit that res judicata in international law would extend only to the “operative part of a judgment," not all of the underlying reasons.⁴⁷⁴

325. Second, Claimants say that even if collateral estoppel exists within international law, it is only as a "sub-species" of res judicata, with the result that its application is subject to the same three-part test.⁴⁷⁵ However, Claimants contend that it is far from clear, as advanced by the Grynberg tribunal, that collateral estoppel is an established principle of international law in the first place; Grynberg based its argument in a “century-old judgment rendered by the U.S. Supreme Court.”⁴⁷⁶ Claimants add that collateral estoppel is not generally accepted in civil law systems, such as that which Laos has adopted.⁴⁷⁷

326. After reviewing how past investment tribunals have dealt with collateral estoppel, Claimants reiterate the need to satisfy the three-part test of res judicata and concludes that as a result, contract-based arbitration “will not bind a later tribunal convened under an investment treaty," such as this one.⁴⁷⁸ Nevertheless, even if collateral estoppel were well established in public international law without the application of the res judicata doctrine, it still would not apply in the present circumstances,⁴⁷⁹ because – in the common law jurisdictions where collateral estoppel is followed – it is still subject to various exceptions and the discretion of the presiding court, especially in the context of arbitral awards.⁴⁸⁰ Specifically, Claimants say that a four-part “gateway test" is applied, followed by an examination of whether any of the exceptions apply, and in some jurisdictions identity of the parties is also required before preclusion can be deemed appropriate to a given issue.⁴⁸¹

⁴⁷³ Claimants' Reply, ¶¶ 74, 76, citing CL-269, K. Hobér, Res Judicata and Lis Pendens in International Arbitration, Recueil des Cours 366 (2013) (“Hober”), pp. 311-312. ↩

⁴⁷⁴ CL-269, Hober, p. 321. ↩

⁴⁷⁵ Claimants' Reply, ¶ 79. ↩

⁴⁷⁶ Claimants' Reply, ¶¶ 80-82. ↩

⁴⁷⁷ Claimants' Reply, ¶ 83. ↩

⁴⁷⁸ Claimants' Reply, ¶¶ 84-89. ↩

⁴⁷⁹ Claimants' Reply, ¶ 90. ↩

⁴⁸⁰ Claimants' Reply, ¶ 91. ↩

⁴⁸¹ Claimants' Reply, ¶¶ 92-94. ↩

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327. Claimants maintain that several of the exceptions available in common law jurisdictions are applicable to the issues decided by the SIAC majority, thereby preventing preclusion from applying in this case.⁴⁸² These include the unavailability of review on the merits of the 2017 SIAC Award; the differing jurisdiction of the SIAC Tribunal and this Tribunal; the inadequate opportunity Claimants had to obtain a full and fair adjudication in the SIAC Case because of the SIAC majority's unfair and discriminatory discovery rulings, as emphasized by Ms. Lamm's dissents; the lack of identity of subject matter and identity of legal grounds; and the failure to identify any specific issue in this case that was also an identical and “essential” issue in the SIAC Tribunal's conclusions.⁴⁸³

328. Claimants say it would be inappropriate to give preclusive effect to the 2017 SIAC Award for two further reasons: several of the claims before this Tribunal were not before the SIAC Tribunal, and the present claims are grounded in different facts and/or law.⁴⁸⁴ Specifically, Claimants point out that at least three of the claims before the Tribunals in this case and the accompanying LHNV case were not presented to the SIAC Tribunal:

a. Non-recognition of the 2016 ST SIAC Award: Claimants note that this claim (presented by LHNV as an ancillary claim but not a subject of a claim in this case) was not before the SIAC Tribunal and therefore was not decided by the 2017 SIAC Award; as a result, the claim is beyond the reach of the Respondent's preclusion arguments and squarely within the Tribunal's jurisdiction.⁴⁸⁵

b. Non-payment of the CFA Loans: Claimants say that the claim grounded on the Respondent's interference with the repayment of the CFA Loans was also not presented to the SIAC Tribunal.⁴⁸⁶ The Respondent's argument that the claim nevertheless is precluded by 2017 SIAC Award's determination on the termination of the 2007 Savan Vegas PDA fails because (1) the SIAC Tribunal's decision was not dependent on its determination regarding the PDA;⁴⁸⁷ (2) the SIAC Tribunal misinterpreted the scope of the issue before it, which was whether the termination breached the Deed of Settlement rather than whether

⁴⁸² Claimants' Reply, ¶ 94. ↩

⁴⁸³ Claimants' Reply, ¶ 94. ↩

⁴⁸⁴ Claimants' Reply, ¶ 114. ↩

⁴⁸⁵ Claimants' Reply, ¶ 115. ↩

⁴⁸⁶ Claimants' Reply, ¶ 116. ↩

⁴⁸⁷ Claimants' Reply, ¶ 117. ↩

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it was lawful overall;⁴⁸⁸ (3) because Claimants could not have expected the SIAC Tribunal to reach that broader issue, which was beyond its jurisdiction, they were not provided the opportunity to present broader arguments and evidence;⁴⁸⁹ and (4) the SIAC majority's conclusion - that Sanum's failure to pay any taxes justified the Respondent's unilateral termination of the PDA – was directly contradicted by five other arbitrators (Ms. Lamm's dissent in the SIAC Case and the four arbitrators who decided the second material breach applications in the ICSID and PCA BIT I Cases).⁴⁹⁰

c. ICSID Arbitration Costs: Claimants point out that Respondent's memorials have completely ignored its claim for the Respondent's failure to pay half of the costs of this arbitration, an issue that obviously was not before the SIAC Tribunal.⁴⁹¹

329. Claimants argue that the rest of the claims in this case also were not decided by the 2017 SIAC Award, as evidenced by the SIAC Tribunal's statement that it “did not consider any issues of public international law treaty obligations.”⁴⁹² Claimants add that the Respondent repeatedly mischaracterizes the treaty claims that are before this Tribunal, by referencing Claimants' initial Notices of Arbitration rather than Claimants' Memorial.⁴⁹³ By contrast, an accurate analysis of Claimants' treaty claims would prove that they turn on different facts and law than those which were decided by the 2017 SIAC Award.⁴⁹⁴ In particular:

a. Seizure and Sale of Savan Vegas: Claimants note that the 2017 SIAC Award ruled on the Claimants' decision to suspend performance under the Deed of Settlement, the Respondent's appointment of San Marco and whether San Marco acted in good faith.⁴⁹⁵ However, these questions are neither directly before the Tribunal nor are they relevant to Claimants' claim.⁴⁹⁶ Instead, the question before this Tribunal is whether the Respondent violated Article 4 of the China-Lao BIT by expropriating the operations of Savan Vegas

⁴⁸⁸ Claimants' Reply, ¶¶ 118-120. ↩

⁴⁸⁹ Claimants' Reply, ¶¶ 121-125. ↩

⁴⁹⁰ Claimants' Reply, ¶ 128. ↩

⁴⁹¹ Claimants' Reply, ¶¶ 130-131. ↩

⁴⁹² Claimants' Reply, ¶ 132, citing C-481, 2017 SIAC Award, ¶140. ↩

⁴⁹³ Claimants' Reply, ¶¶ 135-137. ↩

⁴⁹⁴ Claimants' Reply, ¶¶ 138-139. ↩

⁴⁹⁵ Claimants' Reply, ¶¶ 140, 145-146. ↩

⁴⁹⁶ Claimants' Reply, ¶¶ 142-144. ↩

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without meeting the specified conditions for such an expropriation.⁴⁹⁷ Because contractual good faith with respect to management of a property is not an element of any of these claims, a finding regarding that issue under New York law, such as that of the 2017 SIAC Award, is irrelevant.⁴⁹⁸ Claimants argue that the overlap of legal propositions is what matters, not merely that a proposition arises from the same facts as another proposition.⁴⁹⁹ The Respondent conflates the two by emphasizing the use of many of the same exhibits from the SIAC Case, without acknowledging that they are presented for different propositions.⁵⁰⁰ Thus, the Tribunal is entitled to, and should, decide the claim regarding the Respondent's seizure of Savan Vegas independent from determinations made by the SIAC Tribunal.⁵⁰¹

b. Tax Claim: Claimants submit that the Respondent mischaracterizes its tax claim so as to confuse the Tribunal into thinking that it is based on the Deed of Settlement.⁵⁰² Claimants clarify that the claims pursued by LHNV and Sanum are not "based on the Deed or the Flat Tax Committee.”⁵⁰³ Given the nature of the actual claims before the Tribunal, the 2017 SIAC Award's findings on the appropriateness of the tax are irrelevant.⁵⁰⁴ Issues that are relevant to Sanum's tax claim – including whether the Respondent expropriated Claimants' property by withholding sale proceeds, and the effect of the Respondent's refusal to place the sale proceeds in escrow – were not decided and are therefore not precluded by the 2017 SIAC Award.⁵⁰⁵

c. Ferry Terminal Slot Club: on the claim arising out of the seizure and closure of the Ferry Terminal Slot Club, Claimants argue that the Respondent mischaracterizes the underlying issues as well as the extent to which the 2017 SIAC Award dealt with them.⁵⁰⁶ Specifically,

⁴⁹⁷ Claimants' Reply, ¶ 147 (discussing LHNV's broader claims under the Lao-Netherlands BIT); see also Letter from Claimants to Tribunal, 24 June 2019, distinguishing between LHNV's claims and Sanum's claims. ↩

⁴⁹⁸ Claimants' Reply, ¶ 147. ↩

⁴⁹⁹ Claimants' Reply, ¶ 148. Claimants cite the Tribunal's Procedural Order No. 2, which requested that the Respondent clarify in connection with its various preclusion arguments whether it "contends that proposition was presented to the SIAC Tribunal,” rather than “whether Respondent contends that certain facts were before the SIAC Tribunal." Id. (citing PO2, ¶ 48(a)) (emphasis added by Claimants). ↩

⁵⁰⁰ Claimants' Reply, ¶¶ 150, 155. ↩

⁵⁰¹ Claimants' Reply, ¶ 159. ↩

⁵⁰² Claimants' Reply, ¶ 161. ↩

⁵⁰³ Claimants' Reply, ¶¶ 162-163. ↩

⁵⁰⁴ Claimants' Reply, ¶ 163. ↩

⁵⁰⁵ Claimants' Reply, ¶¶ 164-167. ↩

⁵⁰⁶ Claimants' Reply, ¶¶ 174-176. ↩

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the SIAC Tribunal's findings on whether the Deed of Settlement required the sale of the Slot Clubs is irrelevant to whether the Respondent expropriated them.⁵⁰⁷

d. Thakhek claim: Claimants say the Respondent falsely characterizes the Thakhek claim as being based on commitments in the Deed of Settlement, whereas it is actually based on the Thakhek MOU signed on 20 October 2010.⁵⁰⁸ The distinction is important because the 2017 SIAC Award ruled only on whether the Respondent complied with the Deed, whereas the Tribunal in this case is being asked to determine whether the Respondent violated Article 4 of the China-Lao BIT by failing to compensate Sanum for extinguishing its concession rights.⁵⁰⁹ Claimants reiterate that overlapping facts and utilization of the same exhibits does not prevent the Tribunal from deciding different claims.⁵¹⁰

e. Savan Vegas Cash: Regarding Savan Vegas' cage and vault cash, Claimants reject the Respondent's argument that the 2017 SIAC Award dealt with the "Case 48 claim" already by establishing that the Respondent respected Claimants' rights under the Deed.⁵¹¹ To the contrary, the questions before this Tribunal is whether the Respondent "expropriated the assets without due compensation,” which was not before the SIAC Tribunal.⁵¹² The Claimants say the Respondent's argument ignores the contrary findings of the BIT I Tribunals,⁵¹³ and the fact that the Deed of Settlement covered different assets and rights.⁵¹⁴ Thus, Claimants submit that the Tribunal can and should exert jurisdiction over this claim.⁵¹⁵

f. Thakhek and Savannakhet properties: Finally, Claimants maintain that the claim arising out of the taking of Thakhek and Savannakhet properties was not presented, much less decided, by the SIAC Tribunal.⁵¹⁶ Respondent does not contend otherwise. Nor does

⁵⁰⁷ Claimants' Reply, ¶ 177. ↩

⁵⁰⁸ Claimants' Reply, ¶¶ 190-191. ↩

⁵⁰⁹ Claimants' Reply, ¶¶ 194-195 (discussing LHNV's broader claims under the Lao-Netherlands BIT); see also Letter from Claimants to Tribunal, 24 June 2019, distinguishing between LHNV's claims and Sanum's claims. ↩

⁵¹⁰ Claimants' Reply, ¶¶ 197-200. ↩

⁵¹¹ Claimants' Reply, ¶ 205. ↩

⁵¹² Claimants' Reply, ¶¶ 201-202 (discussing LHNV's broader claims under the Lao-Netherlands BIT); see also Letter from Claimants to Tribunal, 24 June 2019, distinguishing between LHNV's claims and Sanum's claims. ↩

⁵¹³ Claimants' Reply, ¶ 206. ↩

⁵¹⁴ Claimants' Reply, ¶ 207. ↩

⁵¹⁵ Claimants' Reply, ¶ 208. ↩

⁵¹⁶ Claimants' Reply, ¶ 209. ↩

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Respondent provide documentation proving that the properties were included in the sale to Macau Legend.⁵¹⁷ Because the taking of these properties is unaltered by the Deed of Settlement, this claim is also well within the Tribunal's jurisdiction.⁵¹⁸

330. For these reasons, Claimants submit that the Respondent's proposed approach to the preclusion doctrines is unfounded and inapplicable to the Tribunal's authority to preside over the claims.

(2) The Implications of the BIT I Awards

a. Respondent's Position

331. The Respondent asserts that the ICSID BIT I Award and the PCA BIT I Award are “relevant, material, and dispositive of the claims that remain pending before this Tribunal.”⁵¹⁹ In particular, it says, the BIT I Awards' findings regarding bad faith, and in particular obstruction of justice, are res judicata, “tarnish and contaminate all of Claimants' present claims arising out of these same investments, same facts, same parties, and same investment treaties," and should bring the Tribunal to "dismiss Claimants' claims as inadmissible, an abuse of process, and contrary to established international public policy.”⁵²⁰ These arguments are summarized below.

332. The Respondent first submits that the BIT I Awards' findings regarding bribery and corruption are res judicata on this Tribunal.⁵²¹ The Respondent recalls its prior submission that a decision as to an issue or fact is entitled to preclusive effect regardless of whether an identity of causa petendi exists.⁵²² In any event, the application of res judicata to the BIT I Awards would satisfy even the

333. Claimants' restrictive understanding of the triple-identity test, because the Claimants previously asserted – in the context of arguing that jurisdictional findings against the Respondent in the BIT I Cases should be considered res judicata – that the BIT I Cases “generally satisfy [the] three-part test," as they “involved the same parties, essentially the same subject matter, and essentially similar claims."⁵²³ The Claimants also stated, in that context, that “the preclusive effect of the res judicata doctrine can and should be applied to issues already resolved by either the Rigo Tribunal or the

⁵¹⁷ Claimants' Reply, ¶¶ 210-213. ↩

⁵¹⁸ Claimants' Reply, ¶ 214. ↩

⁵¹⁹ Respondent's Submission on the BIT I Awards, ¶ 1. ↩

⁵²⁰ Respondent's Submission on the BIT I Awards, ¶ 7. ↩

⁵²¹ Respondent's Submission on the BIT I Awards, ¶¶ 9-17. ↩

⁵²² Respondent's Submission on the BIT I Awards, ¶ 10. ↩

⁵²³ Respondent's Submission on the BIT I Awards, ¶¶ 11-12, citing Claimants' Memorial, ¶ 303. ↩

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Binnie Tribunal which are unaffected by [the] temporal distinction” between pre-Deed and post-Deed conduct.⁵²⁴ The Respondent says that the same rationale should be applicable against the Claimants with respect to the Respondent's defenses of bribery and corruption in this case, since those issues were decided in the BIT I Awards. Indeed, the Claimants should be estopped from denying that the BIT I Award's findings on bribery and corruption are not binding on the Parties, given their previous acceptance that the jurisdictional findings in those cases constitute res judicata.⁵²⁵

334. With respect to the BIT I Awards' findings regarding obstruction of justice, the Respondent contends that this renders Claimants unentitled to substantive treaty protection.⁵²⁶ The Respondent invokes the public international law principle that no party should be allowed to benefit from its own wrongful act, and relying on Churchill, submits that investors who attempt to manipulate the arbitration process cannot benefit from the substantive protections provided in the same treaties, such that their claims should be deemed inadmissible.⁵²⁷ The Respondent notes that the BIT I Tribunals considered it "well established that the bad faith conduct of the investor is relevant to the grant of relief under an investment treaty,”⁵²⁸ and that such conduct “is not without Treaty consequences, both in relation to their attempt to rely on the guarantee of fair and equitable treatment, as well as their entitlement to relief of any kind from an international tribunal.”⁵²⁹

335. The Respondent also contends that bribery and corruption are a defense to the merits of the claims asserted, and must result in dismissal of the Claimants' claims.⁵³⁰ In particular, the BIT I Tribunals found that the Claimants had most probably engaged in two illegal acts: (i) paying a bribe to stop the 2012 E&Y forensic audit of Savan Vegas; and (ii) paying a bribe to advance the Claimants' agenda at the Thanaleng Slot Club. These findings warrant dismissal of all claims,⁵³¹ and in particular refute the Claimants' argument on the merits that the Savan Vegas PDA was terminated

⁵²⁴ Respondent's Submission on the BIT I Awards, ¶ 12, citing Claimants' Memorial, ¶ 304. ↩

⁵²⁵ Respondent's Submission on the BIT I Awards, ¶¶ 16-17. ↩

⁵²⁶ Respondent's Submission on the BIT I Awards, ¶¶ 18-35. ↩

⁵²⁷ Respondent's Submission on the BIT I Awards, ¶ 20, citing RL-186, Churchill Mining PLC and Planet Mining Pty Ltd v. Republic of Indonesia, ICSID Case No. ARB/12/14 and 12/40 (Annulment Proceedings), Decision on Annulment (excerpt), 18 March 2019 (“Churchill Annulment"), ¶ 257, and RL-185, Churchill Mining PLC and Planet Mining Pty Ltd v. Republic of Indonesia, ICSID Case No. ARB/12/14 and 12/40, Award (excerpt), 6 December 2016 ("Churchill Award"), ¶ 528. ↩

⁵²⁸ Respondent's Submission on the BIT I Awards, citing R-264, ICSID BIT I Award, ¶ 237, and R-265, PCA BIT I Award, ¶ 175. ↩

⁵²⁹ Respondent's Submission on the BIT I Awards, ¶¶ 24-35. ↩

⁵³⁰ Respondent's Submission on the BIT I Awards, ¶¶ 36-42. ↩

⁵³¹ Respondent's Submission on the BIT I Awards, ¶¶ 39-42. ↩

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as a pretext and not because of genuine concerns about illegal conduct as well as non-payment of taxes.⁵³²

336. The Respondent also contends that in light of the BIT I Cases, LHNV's claim in the accompanying case regarding non-enforcement of the 2016 ST SIAC Award claim, which arises in connection with the Thanaleng Slot Club, is an abuse of process and moreover tainted by corruption.⁵³³ First, relying on Orascom,⁵³⁴ the Respondent asserts that "[t]he pursuit of damages in multiple investment arbitrations arising out of Claimants' alleged contractual interest in the Thanaleng Slot Club is an abuse of process,”⁵³⁵ because LHNV is seeking the same economic relief requested by the Claimants in the BIT I Cases.⁵³⁶ LHNV continues in this quest notwithstanding that the ICSID BIT I Award held that “the claim for expropriation in respect of the Thanaleng investment lacks any merit," and that “neither the interpretation given by [the Laotian courts] to the agreements nor the judicial process offended international standards.”⁵³⁷ LHNV's tactics have forced the Respondent to defend itself in three separate arbitrations, because the Claimants keep asserting in different fora their alleged rights to seek redress for the same harm.⁵³⁸ Moreover, the BIT I Tribunals have now found that the Thanaleng claim is tainted by corruption, specifically because of Mr. Baldwin's provision of US$200,000 to Madam Sengkeo's son-in-law, to try (unsuccessfully) to get the Government to suspend the Thanaleng Slot Club's license as a “pressure tactic to force ST Holdings to negotiate a solution rather than continue with litigation."⁵³⁹

337. The Respondent submits that the Claimants' Thakhek claims also must be dismissed in light of the BIT I Awards, which held that Thakhek “was simply a commercial possibility that never reached the stage of agreement” and that the Claimants were not entitled to recover on those grounds.⁵⁴⁰ This finding echoed those of the 2017 SIAC Award, which determined (i) that the Claimants were not entitled to recover with respect to Thakhek; (ii) that the Claimants had no rights to a concession, but only a right to negotiate in "good faith” a “potential” concession; and (iii) that the Government

⁵³² Respondent's Submission on the BIT I Awards, ¶¶ 43-51. ↩

⁵³³ Respondent's Submission on the BIT I Awards, ¶¶ 52-61. ↩

⁵³⁴ RL-47, Orascom TMT Investments S.à.r.l. v. People's Democratic Republic of Algeria, ICSID Case No. ARB/12/35, Award, 31 May 2017 (“Orascom"), ¶ 543. ↩

⁵³⁵ Respondent's Submission on the BIT I Awards, ¶ 52. ↩

⁵³⁶ Respondent's Submission on the BIT I Awards, ¶ 53. ↩

⁵³⁷ Respondent's Submission on the BIT I Awards, ¶ 55, citing R-264, ICSID BIT I Award, ¶ 190. ↩

⁵³⁸ Respondent's Submission on the BIT I Awards, ¶ 57. ↩

⁵³⁹ Respondent's Submission on the BIT I Awards, ¶¶ 58-61 (quoting R-264, ICSID BIT I Award, ¶ 141; R-265, PCA BIT I Award, ¶ 140). ↩

⁵⁴⁰ Respondent's Submission on the BIT I Awards, ¶¶ 62-70. ↩

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had not breached its contractual obligations in denying the Claimants a concession.⁵⁴¹ The Respondent contends that the findings of both the BIT I Awards and the 2017 SIAC Award are res judicata on this Tribunal, which therefore should dismiss the Claimants' Thakhek claims on the merits.⁵⁴²

338. The Respondent also suggests that this Tribunal take into account the BIT I Awards' findings that most of Mr. Baldwin's testimony lacked credibility, which render unreliable the Claimants' assertions based on his testimony, with no way of verifying the validity of Claimants' remaining assertions of "fact.” This is in addition to the Respondent's argument that the BIT I Awards are res judicata with respect to Claimants' perpetration of bribery, obstruction of justice and bad faith. Taken together, the result is that the Claimants' entire case lacks credibility, and their claims for investment treaty protection accordingly should be dismissed.⁵⁴³

b. Claimants' Position

339. The Claimants submit that the BIT I Awards have no preclusive effect here.⁵⁴⁴ They note that the BIT I Tribunals found the Respondent "has not established bribery and corruption against the Claimants on 'clear and convincing evidence,”' which they considered to be the applicable standard, but simply commented in dicta that the evidence regarding a few illegality allegations sufficed on a lesser standard of the balance of probabilities.⁵⁴⁵

340. First, Claimants reiterate the arguments about the preclusion standards that they offered in connection with the 2017 SIAC Award, distinguishing res judicata from collateral estoppel in national legal systems and international arbitration. They contend that if issue preclusion applies at all in international arbitration, it should be subject to the extensive limitations and exceptions that apply in common law jurisdictions.⁵⁴⁶

341. Second, Claimants contend that res judicata does not apply with respect to any findings regarding bribery and corruption. Even aside from the fact that the BIT I Awards held that bribery and corruption were not established by the required clear and convincing evidence standard, the

⁵⁴¹ Respondent's Submission on the BIT I Awards, ¶ 64. ↩

⁵⁴² Respondent's Submission on the BIT I Awards, ¶ 70. ↩

⁵⁴³ Respondent's Submission on the BIT I Awards, ¶¶ 71-74. ↩

⁵⁴⁴ Claimants' Submission on the BIT I Awards, Section II. ↩

⁵⁴⁵ Claimants' Submission on the BIT I Awards, ¶ 2 & nn. 2, 3. ↩

⁵⁴⁶ Claimants' Submission on the BIT I Awards, ¶¶ 8-24 (discussing a four-part “gateway test” and relevant exceptions that apply in U.S. courts). ↩

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Claimants' claims are different here than in the BIT I cases, and the BIT I Awards' commentary on bribery and corruption arose instead in commentary on some of the Respondent's defenses. That makes issue preclusion principles (i.e., collateral estoppel) the relevant doctrine to consider, not claim preclusion doctrine (i.e., res judicata).⁵⁴⁷

342. Third, Claimants say that collateral estoppel does not apply either with respect to any of the findings that the Respondent invokes, because the BIT I Tribunals themselves found the evidence did not satisfy the required standard of proof significantly higher than a balance of probabilities.⁵⁴⁸ The BIT I Tribunals' commentary about certain allegations meeting that lower threshold was “mere obiter dicta that [is] not entitled to be accorded preclusive effect," particularly since this Tribunal should find that “clear and convincing evidence is the correct standard" to apply.⁵⁴⁹ Moreover, Claimants say they did not have a full and fair opportunity to litigate the Respondent's allegations of bribery, corruption and other illegal conduct, because while the BIT I Tribunals had allowed the Lao PDR to present fresh evidence regarding such alleged conduct (notwithstanding the Deed of Settlement's express “frozen record agreement" limiting the revived BIT I cases to the existing record), it rejected Claimants' request to introduce a rebuttal expert report from Mr. Kurlantzick.⁵⁵⁰ By contrast, since Mr. Kurlantzick's reports were received in evidence on the merits in this arbitration, this Tribunal should independently evaluate the issues and reach its own conclusions.⁵⁵¹

343. Claimants add that even if a balance of probabilities were the applicable standard for the matters of issue, none of the particular findings in the BIT I Awards that the Respondent invokes are entitled to be given collateral estoppel effect here.⁵⁵² That includes, for various different reasons, the statements about (a) the Noble MOU,⁵⁵³ (b) a supposed bribe to obstruct Madame Sengkeo's testimony,⁵⁵⁴ (c) a supposed bribe to stop the Ernst & Young audit,⁵⁵⁵ (d) a supposed bribe to

⁵⁴⁷ Claimants' Submission on the BIT I Awards, ¶¶ 26-32. ↩

⁵⁴⁸ Claimants' Submission on the BIT I Awards, ¶¶ 33-34. ↩

⁵⁴⁹ Claimants' Submission on the BIT I Awards, ¶¶ 34-36. ↩

⁵⁵⁰ Claimants' Submission on the BIT I Awards, ¶¶ 37-40. ↩

⁵⁵¹ Claimants' Submission on the BIT I Awards, ¶ 40. ↩

⁵⁵² Claimants' Submission on the BIT I Awards, ¶ 41. ↩

⁵⁵³ Claimants' Submission on the BIT I Awards, ¶¶ 42-61. ↩

⁵⁵⁴ Claimants' Submission on the BIT I Awards, ¶¶ 62-74. ↩

⁵⁵⁵ Claimants' Submission on the BIT I Awards, ¶¶ 75-85. ↩

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advance Claimant's Thanaleng agenda,⁵⁵⁶ and (e) alleged bad faith relating to Paksong Vegas and Thakhek.⁵⁵⁷

344. Claimants say the BIT I Awards' statements regarding Claimants' supposed financial impropriety, manifest bad faith and related findings are not entitled to preclusive effect for similar reasons as those concerning alleged bribery and corruption, namely that Claimants were not provided a full and fair opportunity to litigate these contentions and because the Tribunals applied the wrong standard of proof.⁵⁵⁸

345. Claimants also deny that the BIT I Awards' findings about Thakhek are entitled to any preclusive effect, for two reasons. First, the “frozen record agreement" in the Deed of Settlement prevented Claimants from adducing evidence in the BIT I Cases that should have been key facts in any merits analysis. Second, the claims in this case are somewhat different from those in the BIT I Cases (concerning the value of the land and business opportunities without gaming, not the value of the concession for gaming activities).⁵⁵⁹

346. Separate from the preclusion issues, the Claimants reject the Respondent's new assertion that their alleged conduct in other proceedings should deprive them of substantive Treaty protection for purposes of the claims in this case. This “boils down to an assertion that Claimants have in effect become outlaws disentitled to the protection of the law, because none of their evidence, in any proceeding, can be credited ... .”⁵⁶⁰ This argument should be rejected for three reasons. First, it is an entirely new defense raised in post-hearing submissions;⁵⁶¹ second, the blanket disregard of all of Claimants' evidence would deny due process;⁵⁶² and third, the forfeiture of claims that the Respondent seeks is impermissible, particularly given that the Claimants' alleged procedural wrongdoing did not take place in this proceeding.⁵⁶³ In these circumstances, the Respondent's allegations of fraud on the BIT I Tribunals and obstruction of justice – even in the event that they were substantiated – would not justify the relief that it seeks.⁵⁶⁴

⁵⁵⁶ Claimants' Submission on the BIT I Awards, ¶¶ 86-92. ↩

⁵⁵⁷ Claimants' Submission on the BIT I Awards, ¶¶ 93-94. ↩

⁵⁵⁸ Claimants' Submission on the BIT I Awards, ¶¶ 95-100. ↩

⁵⁵⁹ Claimants' Submission on the BIT I Awards, ¶¶ 101-120. ↩

⁵⁶⁰ Claimants' Submission on the BIT I Awards, ¶ 122. ↩

⁵⁶¹ Claimants' Submission on the BIT I Awards, ¶¶ 123-128. ↩

⁵⁶² Claimants' Submission on the BIT I Awards, ¶¶ 123, 129-136. ↩

⁵⁶³ Claimants' Submission on the BIT I Awards, ¶¶ 123, 137-139. ↩

⁵⁶⁴ Claimants' Submission on the BIT I Awards, ¶¶ 140-156. ↩

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347. The Claimants further assert that the Respondent's allegations of bribery and corruption by the Claimants do not insulate it from liability. Tribunals should be wary in general of States abusing corruption allegations,⁵⁶⁵ and in this case, there are huge gaps and flags in the evidence that undermine the Respondent's allegations with respect to alleged wrongdoing in connection with the Ernst & Young audit⁵⁶⁶ and the activities of Madam Sengkeo's son-in-law in connection with the Thanaleng investment.⁵⁶⁷ In any event, remedies for any wrongdoing must be proportionate – there is no one remedy that fits all for allegations of corruption – and such proportionality is particularly required when a State is complicit in the alleged illegality.⁵⁶⁸ Finally, to the extent any consequences in this case should derive from the Claimants' alleged conduct, that determination properly should be handled at the quantum stage, after this Tribunal has issued its decision on liability.⁵⁶⁹

348. The Claimants also reject the Respondent's argument that the BIT I Awards dispose of the Claimants' arguments about a pretextual termination of the Savan Vegas PDA. According to the Claimants, the BIT I findings in 2019 regarding bribery and corruption do not establish why the Lao PDR terminated the Savan Vegas PDA in 2015, and thus do not refute Claimants' argument that the PDA was terminated as a pretext.⁵⁷⁰

349. Finally, the Claimants contend that LHNV's ancillary claim arising out of the Respondent's refusal to recognize the 2016 ST SIAC Award cannot be considered as an abuse of process, given that it could not have been included in any prior proceedings,⁵⁷¹ and it is not “tainted by corruption" as the Respondent contends.⁵⁷²

350. To conclude, the Claimants contend that there is no basis for Respondent's suggestion that they be stripped of Treaty protection because of findings in the BIT I Awards: “Claimants deserve their day in court on the claims in this proceeding, on which this Tribunal can and should evaluate the evidence and the law for itself."⁵⁷³

⁵⁶⁵ Claimants' Submission on the BIT I Awards, ¶¶ 157-166. ↩

⁵⁶⁶ Claimants' Submission on the BIT I Awards, ¶¶ 167-173. ↩

⁵⁶⁷ Claimants' Submission on the BIT I Awards, ¶¶ 174-178. ↩

⁵⁶⁸ Claimants' Submission on the BIT I Awards, ¶¶ 187-201. ↩

⁵⁶⁹ Claimants' Submission on the BIT I Awards, ¶¶ 202-204. ↩

⁵⁷⁰ Claimants' Submission on the BIT I Awards, ¶¶ 205-209. ↩

⁵⁷¹ Claimants' Submission on the BIT I Awards, ¶¶ 210-212. ↩

⁵⁷² Claimants' Submission on the BIT I Awards, ¶¶ 213-219. ↩

⁵⁷³ Claimants' Submission on the BIT I Awards, ¶ 220. ↩

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(3) The Implications of the 2019 ST Appeal Decision

a. Respondent's Position

351. The Respondent contends that the 2019 ST Appeal Decision “once and for all, disposes of [LHNV's] ancillary claim” for non-recognition of the 2016 ST SIAC Award,⁵⁷⁴ by finding that Award not entitled to recognition and enforcement even in the courts of its stated (but wrong) seat, Singapore. The Respondent states that the 2019 ST Appeal Decision “not only bars liability, but would also annul any causal connection between the ancillary claim and the quantum sought from that claim."⁵⁷⁵ The Respondent adds that while the 2016 ST SIAC Award is not enforceable in Singapore or any other jurisdiction, Sanum can still seek to initiate a new arbitration against ST in the proper seat (Macau) if it wishes.⁵⁷⁶

b. The Claimants' Position

352. Claimants acknowledge that the Singapore Court of Appeal has now "effectively set aside the [2016 ST SIAC Award], holding that it should not be recognized or enforced in any jurisdiction."⁵⁷⁷ Claimants maintain, however, that certain elements of its claim for the prior failure of the Lao courts to recognize and enforce the 2016 ST SIAC Award survive the 2019 ST Appeal Decision. That is "because the Lao courts improperly handled and decided the Recognition Action in order to protect the powerful” family that owned ST, not because of any finding that the SIAC Tribunal had erred in denominating Singapore as the arbitral seat.⁵⁷⁸ The Lao courts committed serious violations of due process during their proceedings, and denied recognition based on favoritism rather than on the merits of the case. These procedural abuses are not vindicated by the 2019 ST Appeal Decision, which also does not eliminate LHNV's damages: while LHNV no longer can recover the amount of the “newly unenforceable ST SIAC Award," it may still recover other damages from the Lao PDR's wrongful conduct, namely the significant costs and expenses it incurred in connection with the Lao court proceedings and with bringing the due process failures of those proceedings to this Tribunal's attention. In other words, the Claimants say, the 2019 ST

⁵⁷⁴ Respondent's comments on the 2019 ST Appeal Decision, 25 November 2019, p. 3. ↩

⁵⁷⁵ Respondent's comments on the 2019 ST Appeal Decision, 25 November 2019, p. 2. ↩

⁵⁷⁶ Respondent's comments on the 2019 ST Appeal Decision, 25 November 2019, p. 2. ↩

⁵⁷⁷ Claimants' comments on ST Appeal Decision, 9 December 2019, p. 1. ↩

⁵⁷⁸ Claimants' comments on ST Appeal Decision, 9 December 2019, pp. 1-2. ↩

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Appeal Decision "is not dispositive of Lao Holdings' Recognition Action claim as Respondent suggests."⁵⁷⁹

(4) The Tribunal's Analysis

353. The Tribunal is in the unenviable position of being the last of many adjudicators to consider issues related to the breakdown of the relationship between the Claimants, ST, and the Lao PDR – and also to be hearing claims for which the Parties' briefing straddled the issuance of decisions in several other cases. In consequence, the Parties' arguments in this proceeding became a “moving target," evolving with each new ruling in other cases.

354. Throughout the case, the Tribunal has sought to impose rigor on the Parties' briefing about the implications (if any) of the decisions in other cases. For example, in its PO2, the Tribunal observed that the 2017 SIAC Award did not purport to decide any claims for treaty breaches, but did decide certain contested issues of fact based on the record and arguments before it, and rendered certain findings about the Deed of Settlement under its governing law of New York. The Tribunal noted that "[t]hese findings may well be relevant to the treaty claims before this Tribunal, although the extent of their relevance and materiality is debated between the Parties," with the Respondent contending that the findings “definitively addressed every factual predicate necessary for Sanum and LHNV to establish any of their existing claims," and the Claimants contending that the 2017 SIAC Award “does not touch upon most of the facts critical to these proceedings.”⁵⁸⁰ Given this debate, the Tribunal urged the Parties to provide a more "systematic comparison between the specific propositions upon which Claimants rest their case for treaty violations and the specific findings of the SIAC Tribunal," in order to help determine “whether the propositions presented here were both fully litigated and actually decided in the proper case.'”⁵⁸¹ It also explained that such systematic analysis would be useful even if the Tribunal ultimately rejected a formal preclusive effect of the 2017 SIAC Award, because the Parties also debated "whether portions of that Award nonetheless should be deemed persuasive and therefore to be followed as a matter of logical reasoning, or alternatively should be deemed either not fully litigated or ultimately unpersuasive, and therefore to be either ignored or distinguished in this Tribunal's reasoning.”⁵⁸² For similar

⁵⁷⁹ Claimants' comments on ST Appeal Decision, 9 December 2019, p. 3. ↩

⁵⁸⁰ PO2, ¶ 43 (citations omitted). ↩

⁵⁸¹ PO2, ¶¶ 44-45. ↩

⁵⁸² PO2, ¶ 45. ↩

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reasons, the Tribunal later invited the Parties to make submissions on the implications for this case of the BIT I Awards and the 2019 ST Appeal Decision.

355. Having now reviewed the totality of the Parties' submissions, the Tribunal identifies certain unique features of this case that render problematic any proposal to resolve the current claims solely or largely based on preclusion doctrines.

356. First, it is undeniable that many of the disputed facts before this Tribunal featured in other proceedings, but often in the context of different legal claims. For example, both the SIAC Case and the material breach applications before the BIT I Tribunals adjudicated contract disputes, namely the Parties' respective compliance with contractual obligations arising from their 2014 Deed of Settlement, not treaty disputes arising from alleged breach of the Lao PDR's obligations under the BITs. By contrast, once the BIT I Cases were revived in consequence of the BIT I Tribunals' findings of material breach of the Deed of Settlement, those Tribunals did adjudicate treaty disputes arising under the BITs – but by virtue of the Parties' express agreement in the Deed of Settlement, the scope of the revived BIT I Cases was limited to the treaty claims that had been pleaded in those cases prior to the Deed of Settlement; the Parties were not permitted to add any new claims nor seek any additional relief.⁵⁸³ At least in principle, those claims also were to be decided on the evidentiary record as it existed as of the Deed of Settlement,⁵⁸⁴ although the BIT I Tribunals had been informed of subsequent events for purposes of their very different role (as contract adjudicators) in deciding the material breach applications.

357. By contrast, the claims asserted in this arbitration and the accompanying LHNV case allege treaty breaches based on State conduct that occurred after the Deed of Settlement. Of course, both Parties provide extensive briefing about prior events, but the claims are framed formally as challenges to new acts and measures that were not the subject of treaty claims in the BIT I Cases. At the same time, some of those acts and measures did feature in both the material breach proceedings before the BIT I Tribunals, which were necessary to determine whether to revive the previously pending treaty claims about earlier acts and measures, and in the contract-based arbitration before the SIAC Tribunal.

358. In the Tribunal's view, the combination of these distinctions renders this case ill-suited for any sweeping pronouncements on the applicability of preclusion doctrines in investment treaty

⁵⁸³ R-5, Deed of Settlement, 15 June 2014, Section 34. ↩

⁵⁸⁴ R-5, Deed of Settlement, 15 June 2014, Section 34. ↩

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arbitration. Even if the Tribunal were to accept in principle that such doctrines (whether framed as res judicata or some form of issue preclusion) might have a footing in international treaty cases, the different postures and scope of the prior and current cases would render it impossible to apply preclusion principles here in any clean way, at least not across the board to all claims asserted. There is strong authority for the notion that international arbitration tribunals hearing claims under international treaties are not bound by the findings of tribunals sitting in different legal orders, such as municipal courts or local commercial arbitrations; this would render it inappropriate for the Tribunal to deny jurisdiction based simply on the SIAC Case findings. While the Tribunal has greater sympathy in principle for notions of preclusion based on prior resolution of treaty claims between the same parties, this depends in large part on the relationship between the prior treaty claims and those later asserted. An investor's failure to prove that one set of government acts violated a State's treaty obligations should not prevent it, as a matter of either law or fairness, from seeking to prove that a different set of later government acts rose to the level of treaty breach.

359. Given the temporal distinctions set up by the Deed of Settlement – that the BIT I Cases (once revived) could adjudicate only claims based on pre-Deed of Settlement acts – the Tribunal is unable to find that the BIT I Awards preclude Claimants' pursuit of new claims, to the extent they are truly based on subsequent State measures. While we have considerable sympathy for the Lao PDR being put to the burden of litigating with Claimants again and again, we are unable to find sufficient identity of legal claims to deny jurisdiction outright based on res judicata or other forms of preclusion or estoppel. We consider ourselves to have both the authority and the duty to evaluate, on our own, the post-Deed of Settlement legal claims that are placed before us. These precise claims, alleging treaty violations, have not been put into arbitration before.

360. At the same time, the Tribunal does not believe it should turn a blind eye to the extensive factual findings made by the SIAC and BIT I Tribunals, to the extent that similar factual debates (based on much of the same evidence) are presented in this case – albeit now as part of a background story predating the later State acts which Claimants challenge as treaty violations. As a jurisdictional matter, the Tribunal is not precluded from examining the evidence for itself, but the record before it does include the analyses provided by the prior tribunals. Those analyses are entitled to due consideration even though they are not binding.

361. In considering the persuasiveness of prior factual findings, the Tribunal obviously distinguishes between analyses that reflect a sound, thoughtful and careful approach and those based on more cursory analysis or on a restricted evidentiary record. This does not mean that this Tribunal sits in

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judgment of prior tribunals with respect to the issues that they decided and in the circumstances that they faced. It simply means that in considering the somewhat different claims placed before this Tribunal, we are likely to find more persuasive prior assessments of evidence that involved a detailed forensic exercise than those that did not.⁵⁸⁵

362. The Parties have both cited authority that is broadly consistent with this approach. For example, Claimants cited the Ampal tribunal's statement that, “independently" of its view that the law entitled it to defer to the factual findings of a prior contract-based tribunal with respect to questions governed by the contract, “it has ... conducted its own evaluation of the evidence presented to it about the same factual matters," and "[o]n the basis of this evaluation, the present Tribunal is satisfied that the findings of fact of the ICC tribunal set out above are correct ..."⁵⁸⁶ Claimants in fact urged the Tribunal to adopt this approach, which they described as a “Practical Answer on How to Deal with Conflicting Findings by Multiple Previous Tribunals":

• First, examine the conflicting findings for factual determinations that must also be made in the instant case;
• Next, weigh the relative merits of each; and
• Finally, conduct your own evaluation of the evidence before you and come to your own decision.⁵⁸⁷

363. Respondent in turn cited a statement from the ICJ concluding that, “in principle," it accepted “as highly persuasive” certain findings of fact made after trial by the International Criminal Tribunal for the former Yugoslavia (“ICTY”), and accorded “due weight" to "any evaluation" conducted by the ICTY "on the facts as so found.”⁵⁸⁸ The notion of according “due weight" of course permits the later tribunal to determine what weight is "due,” i.e., how much persuasive value should be accorded to a prior factual analysis based on the applicable circumstances.

364. The Tribunal considers that this practical approach, rather than an inflexible doctrinal approach, is particularly warranted in the unusual circumstances of this case. As discussed above, the claims in

⁵⁸⁵ As Lord Mance explained, in the different context of how enforcement courts may “examine ... with interest" arbitral findings relevant to jurisdiction while not being bound by such findings, “Courts welcome useful assistance." Dallah Real Estate and Tourism Holding Company v. Ministry of Religious Affairs, Government of Pakistan, [2010] UKSC 46 (Nov. 3, 2010), ¶¶ 30-31 (emphasis added). ↩
⁵⁸⁶ Claimants' Closing Presentation, slide 87 (quoting RL-129, Ampal, ¶ 282). ↩
⁵⁸⁷ Claimants' Closing Presentation, slide 90. ↩
⁵⁸⁸ Respondent's Closing Presentation, slide 84 (quoting RL-31, Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Serbia and Montenegro), ICJ, Judgment, February 26, 2007, I.C.J. Reports 2007, ¶ 223). ↩

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this case rest on much the same corpus of historic events (prior to the Settlement Deed) as were examined in prior cases, but also involve certain later events (subsequent to the Settlement Deed) that were examined by tribunals only for a limited purpose – namely, to determine whether there was a breach of the Settlement Deed. The post-Settlement Deed events were not examined for the purpose of determining whether they could give rise to any viable treaty claims. There are also certain factual allegations in this case that appear not to have been examined yet by any prior tribunal, for any purpose.

365. For these reasons, while the Tribunal considers it appropriate to consider the analysis of prior tribunals, in circumstances where particular factual issues were previously adjudicated, we do not consider that we are rigidly bound by such determinations. Instead, we pose the common-sense question, "why should we come to a different conclusion, notwithstanding our legal authority to do so?" This framework cannot be applied on a global basis, but rather must be examined issue by issue. We therefore take it up in the context of our examination of the various merits claims asserted, in Section VI below.

B. SUCCESSIVE CLAIMS AND ABUSE OF PROCESS

366. Separate from the application of preclusion doctrines, the Respondent argues that the Tribunal does not have competence or the claims are inadmissible because the Claimants' claims are “successive” of those in prior proceedings and accordingly constitute an abuse of process.⁵⁸⁹ The Claimants argue that there has been no abuse of process and that the Respondent's argument is misplaced, distinguishable, and unjustifiable.⁵⁹⁰

(1) Respondent's Position

367. The Respondent maintains that because the claims repeat the same facts and occurrences, request the same relief, and allege the same financial harm as in prior proceedings, they are inadmissible and abusive.⁵⁹¹

368. The Respondent submits that abuse of process is "an applicable doctrine in international investment law" recognized by the UNCITRAL Commission on International Trade Law and arbitral

⁵⁸⁹ Respondent's Memorial on Competence, ¶ 117. ↩
⁵⁹⁰ Claimants' Reply, ¶ 96. ↩
⁵⁹¹ Respondent's Memorial on Competence, ¶ 117; Respondent's Counter-Memorial, ¶ 165. ↩

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jurisprudence.⁵⁹² Further, the current trend is to apply it in “situations where a claimant files successive and repetitious cases arising from the same dispute and same alleged economic harm."⁵⁹³ This trend is evidenced by “a growing dialogue in the international community and recent cases.⁵⁹⁴

369. The Respondent closely examines the Orascom tribunal's discussion on abuse of process, which concluded that “non-substantive procedural manipulations of the investment system should not trump the recognized objectives of avoiding multiple claims and double recovery.”⁵⁹⁵ According to the Respondent, the Orascom tribunal found the abuse of process doctrine appropriate to apply where res judicata and collateral estoppel were inapplicable due to procedural manipulation, because investors who freely exercise comparable substantive and procedural rights in prior arbitrations should be precluded from bringing subsequent claims for the same harm.⁵⁹⁶

370. The Respondent rejects Claimants' contention that the principle in Orascom should be confined to corporate restructuring, arguing that it should apply any time "a party seeks recovery for the same economic harm in multiple forums." In its view, Claimants seek to do precisely that, despite having lost before the SIAC Tribunal.⁵⁹⁷ The Respondent notes that in both the SIAC Case and here, the Claimants seek an identical measure of damages, namely the fair market value of Claimants' investments.⁵⁹⁸ The Respondent says Claimants have simply rebranded the SIAC Case claims as new treaty claims, in violation of the investment arbitration process, and that the Tribunal should therefore reaffirm Orascom by dismissing them.⁵⁹⁹

371. Following issuance of the BIT I Awards, the Respondent invoked abuse of process again, contending that LHNV's claim in the accompanying case regarding non-enforcement of the 2016 ST SIAC Award is an abuse of process because it seeks damages in connection with the same

⁵⁹² Respondent's Memorial on Competence, ¶¶ 117, 119-121; Respondent's Counter-Memorial, ¶¶ 57-58, 165, 167; citing RL-65, UNCITRAL, 48th session, Concurrent Proceedings in Investment Arbitration-Note by the Secretariat, UN Doc. A/CN.9/848, 17 April 2015, ¶ 1; RL-47, Orascom, ¶ 542. ↩
⁵⁹³ Respondent's Memorial on Competence, ¶ 118; Respondent's Counter-Memorial, ¶ 166. ↩
⁵⁹⁴ Respondent's Rejoinder, ¶¶ 84-89. ↩
⁵⁹⁵ Respondent's Memorial on Competence, ¶ 138; Respondent's Counter-Memorial, ¶ 186; citing RL-47, Orascom, ¶ 835. ↩
⁵⁹⁶ Respondent's Memorial on Competence, ¶ 138; Respondent's Counter-Memorial, ¶ 199. ↩
⁵⁹⁷ Respondent's Memorial on Competence, ¶ 140; Respondent's Rejoinder, ¶ 94. ↩
⁵⁹⁸ Respondent's Memorial on Competence, ¶¶ 140-142; Respondent's Counter-Memorial, ¶¶ 189-193. ↩
⁵⁹⁹ Respondent's Memorial on Competence, ¶ 152. ↩

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alleged contractual interest – in the Thanaleng Slot Club – as Claimants sought in the BIT I Cases under an expropriation theory.⁶⁰⁰

(2) Claimants' Position

372. Claimants say that the abuse of process objection fails in three respects.

373. First, Claimants reject the Respondent's suggestion that there is a “clear and significant trend" in favor of use of the doctrine.⁶⁰¹ They point out that the ILA Interim Report, on which Respondent relies to establish the doctrine's alleged popularity, was made in the context of commercial arbitration, "did not take into account the complexity of the policy concerns involved when differing treaty (much less treaty and contract) rights are involved," and have not been well received.⁶⁰² Abuse of process, according to Claimants, is actually still in its early stages – as the Respondent acknowledged in the ICSID BIT I Case – and therefore should be applied with caution.⁶⁰³ Specifically, the Tribunal should decline Respondent's invitation to extend the doctrine beyond the limited scope established by prior tribunals, in a manner that would prevent "entities who are entitled to treaty protection from exercising their rights," in circumstances where res judicata does not itself apply.⁶⁰⁴

374. Second, Claimants say that Orascom – the sole decision on which the Respondent relies – "is neither instructive nor persuasive ... because it relied on a 'peculiar' set of facts" and itself admitted that its decision was a result of exceptional circumstances.⁶⁰⁵ The claimant in Orascom merely asserted different damages for the same alleged treaty violations, whereas here, Claimants are asserting treaty violations based on different State acts than were at issue in either the contract- based SIAC Case or the BIT I Cases.⁶⁰⁶

375. Finally, Claimants maintain that there are no extraordinary circumstances that could warrant an abuse of process finding.⁶⁰⁷ To the contrary, Claimants observe that they sought to consolidate the

⁶⁰⁰ Respondent's Submission on the BIT I Awards, ¶¶ 52-61. ↩
⁶⁰¹ Claimants' Reply, ¶ 97. ↩
⁶⁰² Claimants' Reply, ¶¶ 98-99. ↩
⁶⁰³ Claimants' Reply, ¶¶ 100-102, citing C-398, ICSID BIT I Case, Decision on Jurisdiction, 21 February 2014, ¶¶ 82-83. ↩
⁶⁰⁴ Claimants' Reply, ¶¶ 103-104. ↩
⁶⁰⁵ Claimants' Reply, ¶¶ 96, 106-108. ↩
⁶⁰⁶ Claimants' Reply, ¶ 105. ↩
⁶⁰⁷ Claimants' Reply, ¶ 96. ↩

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BIT I claims before a single tribunal, rather than use successive claims as a litigation strategy, and it was the Respondent, not the Claimants, who insisted that the BIT I claims not be consolidated.⁶⁰⁸ Further, the original BIT I treaty claims, the Claimants' counterclaims in the SIAC Case, and the claims in the BIT I material breach proceedings were "all governed by different grants of exclusive jurisdiction."⁶⁰⁹

376. As for the Respondent's abuse of process argument about LHNV's ancillary claim related to non- recognition of the 2016 ST SIAC Award, the Claimants add that this cannot be considered as an abuse of process, given that it is based on final decisions of the Lao courts that had not been issued earlier, and therefore could not have been included in any prior proceedings.⁶¹⁰

377. For these reasons, Claimants argue that that exercising their rights under the BITs to bring the claims asserted before this Tribunal is not an abuse of process as the Respondent insists.⁶¹¹

(3) The Tribunal's Analysis

378. Respondent has presented this objection as alternatively a matter of jurisdiction or one of admissibility. It contends that, whatever lens the Tribunal adopts, Claimants' claims in this case are impermissibly “successive” of those heard in prior cases, and accordingly are abusive; the Tribunal therefore should decline to hear the dispute between the Parties on the merits.

379. The ICJ has stated that a call for dismissal of a claim on the ground of its allegedly abusive nature should be characterized as an objection related to admissibility.⁶¹² More generally, it has described objections to admissibility as involving “an assertion that, even if the Court has jurisdiction and the facts stated by the applicant ... are assumed to be correct, nonetheless there are reasons why the Court should not proceed to an examination of the merits.”⁶¹³

⁶⁰⁸ Claimants' Reply, ¶¶ 108-111. ↩
⁶⁰⁹ Claimants' Reply, ¶ 112. ↩
⁶¹⁰ Claimants' Submission on the BIT I Awards, ¶¶ 210-212. ↩
⁶¹¹ Claimants' Reply, ¶¶ 112-113. ↩
⁶¹² See Immunities and Criminal Proceedings (Equatorial Guinea v. France, ICJ, Preliminary Objections, Judgment of 6 June 2018, ¶ 145. While Judge Donahue dissented from certain findings in that case, she concurred in that respect, stating that the Court had properly characterized the abuse of process objection as one going to admissibility rather than jurisdiction. See id., Dissenting Opinion of Judge Donoghue, ¶ 2. ↩
⁶¹³ Case Concerning Oil Platforms (Islamic Republic of Iran v. United States of America), ICJ, Judgment of 6 November 2003, ICJ Reports 2003, p. 161, ¶ 29. ↩

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380. Precisely because the effect of an admissibility objection is to bar a party from proceeding even if it otherwise has met jurisdictional requirements, the ICJ has cautioned that such objections, including those premised on abuse of process, carry a high threshold of proof. Specifically, the Court required “clear evidence that [a party's] conduct could amount to an abuse of process," and stated that "[i]t is only in exceptional circumstances that the Court should reject a claim based on a valid title of jurisdiction on the ground of abuse of process.”⁶¹⁴

381. In this case, Respondent's core proposition is that the "[a]buse of process doctrine applies 'where an investor has already obtained a decision on the merits in one forum but continues to pursue the same claim in another forum.”⁶¹⁵ Relying on the Orascom decision, Respondent contends that “[i]t is abusive to proceed before multiple tribunals on the basis of overlapping assumptions and identical economic harm to maximize chances of prevailing."⁶¹⁶

382. The Orascom case was quite different from this one, however, in at least one critical respect. There, the same host State measures were challenged in successive treaty cases, with the latter case filed after the tribunal in the former case already had rejected a treaty challenge to those measures. The only difference between the two challenges to the same government measures was that the second case was filed by a different company in a vertical ownership chain ultimately owned by the same individual:

[T]he Claimant first caused one of its subsidiaries, OTH, to bring claims against Algeria. Then, it caused a different subsidiary in the chain, Weather Investments, to threaten to bring a different arbitration in relation to the same dispute. Finally, ... it pursued yet another investment treaty proceeding in its own name for the same investment ... in relation to the same host state measures and the same harm.⁶¹⁷

It was these facts which led the Orascom tribunal to find the second treaty case to be "an abuse of the system of investment protection.”⁶¹⁸

⁶¹⁴ Immunities and Criminal Proceedings (Equatorial Guinea v. France, ICJ, Preliminary Objections, Judgment of 6 June 2018, ¶ 150. ↩
⁶¹⁵ Respondent's Opening Presentation, slide 27 (quoting RL-67, UNCITRAL, 50^th session, Possible future work in the field of dispute settlement: Concurrent proceedings in international arbitration – Note by the Secretariat, UN Doc. A/CN.9/915, 24 March 2017, ¶¶ 18-19. ↩
⁶¹⁶ Respondent's Opening Presentation, slide 28 (discussing RL-47, Orascom, ¶ 543). ↩
⁶¹⁷ RL-47, Orascom, ¶ 545 (emphasis added). ↩
⁶¹⁸ RL-47, Orascom, ¶ 545. ↩

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383. This case involves a very different procedural context. To a large extent, the multiplicity of proceedings was a function of the convoluted dispute resolution process to which all Parties agreed in the Deed of Settlement. As discussed in Section III.F, the Deed of Settlement provided for two different procedures to govern allegations of breach, depending which party was accusing the other of such breach: Claimants could bring “material breach" claims before the BIT I Tribunals, and the Lao PDR could bring breach claims before a SIAC commercial tribunal. The two mechanisms had different consequences in the event of a finding of breach. The SIAC Tribunal was empowered to enforce the terms of the Deed of Settlement if Claimants failed to comply with their obligations. By contrast, if the BIT Tribunals found a material breach by the Lao PDR, then Claimants' remedy was to revive their suspended BIT I arbitrations and pursue their original treaty claims on the basis of the existing record. Claimants however could not add any new claims or evidence nor seek any additional relief.

384. This scenario was almost bound to create a tangle of concurrent proceedings, in the entirely predictable scenario in which both Parties accused the other of material breach and opted to initiate their own proceedings to obtain applicable relief. Moreover, the Parties' agreement left no room for introducing in any of the multiple proceedings they spawned any additional treaty claims arising out of new State conduct. Such conduct could be invoked as a breach of the Settlement Deed to revive the suspended BIT I Cases, but could not be added then to the revived BIT I Cases as an ancillary or additional claim. In these circumstances, the Tribunal cannot find it abusive for Claimants to bring such claims in a new proceeding, when the Parties' prior agreement left no other mechanism for them to assert treaty claims about subsequent wrongful acts.

385. As explained in the Introduction in Section I, this proceeding asserts BIT claims arising out of actions taken by the Lao PDR after the conclusion of the Deed of Settlement. Thus, while Orascom involved successive treaty claims challenging the same State conduct after a treaty-based tribunal already had rendered judgment with regard to that conduct, this case involves treaty claims challenging new State conduct which no prior tribunal has been authorized to examine as such. While some of that new State conduct was also alleged to have breached of the Deed of Settlement, neither the SIAC Tribunal nor the BIT I Tribunals (hearing the “material breach" applications) considered any consequent BIT claims.

386. Nor was this case “successive," as was the Orascom case, when it was filed. The case was initiated in May 2016, before any award was rendered in any of the other proceedings. The 2017 SIAC Award was issued on 29 June 2017, the BIT I Tribunals issued their decisions on the Claimants'

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Second Material Breach Applications on 15 December 2017, and the BIT I Awards were rendered on 6 August 2019. To be precise, therefore, this case was initiated as a parallel rather than a successive case.

387. These distinctions dispose of the two specific complaints on which Respondent focuses its abuse of process objection.

388. First, Respondent complains that Claimants have simply rebranded as treaty claims the complaints about post-Deed of Settlement conduct on which Respondent prevailed, from the standpoint of breach of contract claims, in the SIAC Case. This complaint might have had more traction had Respondent's theory of treaty breach been limited to umbrella clause claims predicated on a failure to observe undertakings in the Deed of Settlement. But as summarized in Section IV.A, Claimants in both this and the accompanying LHNV case pursue treaty claims that are not contractual in nature, and that do not turn exclusively (if at all) on the terms of the Deed of Settlement. Moreover, even for those treaty claims that challenge conduct which was also alleged to have breached the Deed of Settlement, it is of course possible for conduct to violate BIT obligations even if it does not independently violate contractual obligations.

389. Second, Respondent complains that LHNV's ancillary claim regarding non-recognition of the 2016 ST SIAC Award is an abuse of process because it seeks damages related to Sanum's alleged interest in the Thanaleng Slot Club, notwithstanding the ICSID BIT I Award's dismissal of an expropriation claim concerning the same alleged interest. Although this debate is not strictly relevant to the Sanum case where the ancillary claim was not admitted, the Tribunal notes for both cases that this complaint overlooks the critical fact that the State measures challenged in the cases were different ones. In the ICSID BIT I Case, the complaint was about alleged improprieties in Case 52, the local court proceedings that ST filed against Sanum. As discussed in Section III.L.1, the ICSID BIT I Award found that any such improprieties were of limited impact, since the tiered dispute resolution clause in the Master Agreement between ST and Sanum permitted Sanum to have recourse to SIAC arbitration if it was unsatisfied with the result of the Lao court proceedings, and Sanum had exercised that right without impediment by the Lao PDR, ultimately obtaining the 2016 ST SIAC Award against ST for US$200 million. The ICSID BIT I Award emphasized that subsequent events – including its alleged inability to enforce the 2016 ST SIAC Award – were "not before this Tribunal."⁶¹⁹ In the LHNV case, of course, those subsequent events are front-and-center: LHNV

⁶¹⁹ R-264, ICSID BIT I Award, ¶¶ 182-190. ↩

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claims treaty violations because of the Lao courts' refusal to enforce the 2016 ST SIAC Award. That award against ST is invoked as a “protected investment” in its own right,⁶²⁰ one which allegedly was expropriated by the conduct and outcome of the recognition proceedings.⁶²¹ This is not a "successive" claim, since it was never before the BIT I Tribunals to begin with.

390. Respondent nonetheless asserts "abuse of process" because the claim before the ICSID BIT I Tribunal and the one before this Tribunal both seek to recover for “essentially the same economic harm,” meaning the loss of Sanum's asserted interest in the Thanaleng Slot Club.⁶²² The abuse, Respondent says, lies in the fact that LHNV “alleges 2 different dates of expropriation for the same economic interest."⁶²³ But this argument obviates the reason why two different dates of expropriation were asserted, namely that the two cases challenged different State conduct, occurring at different times. The abuse of process doctrine cannot be expanded to forbid a claimant from challenging a later government act, simply because it previously challenged an earlier (different) government act impacting the same economic interest. As noted in Section V.A.4, an investor's failure to prove that one set of government acts violated a State's treaty obligations should not prevent it, as a matter of either law or fairness, from seeking to prove that a different set of later government acts rose to the level of treaty breach. The alternative approach which Respondent urges, focused on the underlying "economic interest" rather than the State measures at issue, would insulate States from any inquiry in the event of repeated assaults on a disfavored investment. This is not, and cannot be, the function of the abuse of process doctrine.

391. For these reasons, the Tribunal rejects the Respondent's “abuse of process” objection as applied to the circumstances of this case.

C. NATURE OF THE CLAIMS

392. The Respondent argues that the Tribunal does not have competence because the claims in essence are contractual claims rather than treaty claims.⁶²⁴ Claimants argue that the Respondent's actions,

⁶²⁰ See Claimants' Opening Presentation, slide 23. ↩
⁶²¹ See, e.g., Claimants' Opening Presentation, slide 26 (alleging that “The Lao Court Did ST's Bidding By Blocking Enforcement of Sanum's Arbitral Award"). ↩
⁶²² See, e.g., Respondent's Opening Presentation, slide 150 (quoting RL-47, Orascom, ¶ 543); Respondent's Memorial on Competence, ¶¶ 140-142; Respondent's Rejoinder, ¶¶ 94, 189-193. ↩
⁶²³ Respondent's Opening Presentation, slide 151. ↩
⁶²⁴ Respondent's Memorial on Competence, ¶ 153. ↩

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characterized by sovereign authority, are treaty claims that can and should be decided by the Tribunal.

(1) Respondent's Position

393. The Respondent argues that because its actions underlying the claims were carried out in accordance with the Deed of Settlement and in response to the Claimants' failure to abide by the Deed, the claims are not proper treaty claims, but rather “repurposed breach of contract claims.”⁶²⁵ Specifically, the Respondent maintains that contrary to the Claimants' position, neither of the two limited situations that may permit contract claims to be arbitrated in investment treaty arbitration – namely, where a breach of contract amounts to a breach of treaty obligations and where the applicable treaty contains an “umbrella clause” – apply to the present dispute.⁶²⁶

394. The Respondent submits that because the threshold for treaty claims is “activity beyond that of an ordinary contracting party," a State's action must be “in its capacity as a sovereign, and not merely as a merchant" in order for a contract claim to be elevated to a treaty claim.⁶²⁷ Further, a State's reasonable reaction to a co-contracting party's non-observance of its contractual obligations cannot give rise to a treaty claim; the Respondent cites the Bayindir decision in support.⁶²⁸ The Respondent points out that the 2017 SIAC Award has already established that it did not use its sovereign powers to interfere with the Deed of Settlement or breach the Deed itself; to the contrary, its actions were justified as reasonable responses to the Claimants' breach.⁶²⁹ Therefore, it did not cross the threshold of sovereign acts and its actions cannot amount to treaty violations because they were always motivated by compliance with the Deed.⁶³⁰

⁶²⁵ Respondent's Memorial on Competence, ¶ 154; Respondent's Counter-Memorial, ¶ 201. ↩
⁶²⁶ Respondent's Memorial on Competence, ¶ 155; Respondent's Counter-Memorial, ¶ 202. ↩
⁶²⁷ Respondent's Memorial on Competence, ¶ 156; Respondent's Counter-Memorial, ¶ 204; citing RL-69, Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/00/3, Award, 30 April 2004, ¶¶ 172-175; RL- 10, Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12, Award, 14 July 2006, ¶ 315; RL-11, Bayindir İnşaat Turizm Ticaret ve Sanayi A.Ş . v Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Award, 27 August 2009 ("Bayindir”), ¶ 180; RL-63, Tulip Real Estate Investment and Development Netherlands B.V. v. Republic of Turkey, ICSID Case No. ARB/11/28, Award, 10 March 2014, ¶ 354; RL-23, Crystallex International Corporation v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/11/2, Award, 4 April 2016, ¶ 692. ↩
⁶²⁸ Respondent's Memorial on Competence, ¶¶ 157-162; Respondent's Counter-Memorial, ¶¶ 205-210; citing RL-11, Bayindir, ¶ 461. ↩
⁶²⁹ Respondent's Memorial on Competence, ¶¶ 156, 163-164; Respondent's Counter-Memorial, ¶¶ 212-213. ↩
⁶³⁰ Respondent's Memorial on Competence, ¶¶ 164-165. ↩

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395. In addition, the Respondent says, the specific nature of the Deed and the Respondent's actions as a result of it prevent the claims from being elevated to treaty violations.⁶³¹ That is because settlement agreements are given binding force in the context of investment arbitration, “such that many arbitral tribunals refuse to hear matters within the scope of such agreements and consider related claims ‘have ceased to exist due to the settlement agreement.”⁶³² The Respondent submits that the Deed of Settlement was a unique type of settlement agreement – essentially, a contract to disinvest, given that it provides for the Claimants' exit from Laos following the sale of their assets.⁶³³ Thus, claims whose underlying issues are governed by the Deed are inadmissible.⁶³⁴

396. The Respondent argues that all of the claims now before the Tribunal are within the scope of the Deed of Settlement because they relate either to the sale process or to the mechanisms activated by the Deed to resolve disputes regarding the sale process.⁶³⁵ Because all claims fall within the Deed's scope and the 2017 SIAC Award has declared the Respondent's actions as lawful with binding effect, the Respondent posits that the claims now before the Tribunal are “prima facie inadmissible in this arbitration.”⁶³⁶ This has been confirmed by “numerous public international law sources” and Claimants have not offered any authority stating otherwise.⁶³⁷

397. The Respondent also maintains that when faced with contractual claims, an investment tribunal must decline jurisdiction if the underlying contract contains a dispute resolution clause.⁶³⁸ In support the Respondent cites the Vivendi II committee's holding that "the claimant must first submit its dispute to the contractually-agreed-upon forum and, if the claimant was unsatisfied with the outcome in that forum, it would then be allowed a single treaty claim before an investment tribunal for denial of justice.”⁶³⁹ Applying that approach to this case, the Respondent contends that the dispute resolution clauses in the Deed of Settlement provide the necessary mechanisms to resolve

⁶³¹ Respondent's Memorial on Competence, ¶ 166; Respondent's Counter-Memorial, ¶ 214. ↩
⁶³² Respondent's Memorial on Competence, ¶ 167; Respondent's Counter-Memorial, ¶ 215; citing RL-47, Orascom, ¶ 524. ↩
⁶³³ Respondent's Memorial on Competence, ¶ 168; Respondent's Counter-Memorial, ¶ 216. ↩
⁶³⁴ Respondent's Memorial on Competence, ¶ 172. ↩
⁶³⁵ Respondent's Memorial on Competence, ¶¶ 172-173; Respondent's Counter-Memorial, ¶¶ 217-220; Respondent's Rejoinder, ¶¶ 102-103. ↩
⁶³⁶ Respondent's Memorial on Competence, ¶ 173; Respondent's Counter-Memorial, ¶ 221; Respondent's Rejoinder, ¶ 105. ↩
⁶³⁷ Respondent's Rejoinder, ¶ 106. ↩
⁶³⁸ Respondent's Memorial on Competence, ¶ 174; Respondent's Counter-Memorial, ¶ 222. ↩
⁶³⁹ Respondent's Memorial on Competence, ¶ 175; Respondent's Counter-Memorial, ¶ 223; citing RL-22, Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A. (formerly Compagnie Générale des Eaux) v. Argentine Republic, ICSID Case No. ARB/97/3, Decision on Annulment, 3 July 2002 (“Vivendi II”), ¶ 98. ↩

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all disputes, as illustrated by the Claimants' own use of those mechanisms.⁶⁴⁰ This, in turn, prevents the Tribunal from serving as a "general alternative" for Claimants' dispute, given that the contractually-agreed-upon proceedings already have been utilized.⁶⁴¹

398. Regarding "umbrella clauses” – the second circumstance under which contract claims sometimes may be arbitrated in investment treaty arbitration – the Respondent argues (for purposes of the LHNV case where umbrella clause claims are pursued) that Article 3(4) of the Lao-Netherland BIT does not transform contract disputes into investment disputes.⁶⁴²

399. The Respondent maintains that an "umbrella clause" is insufficient on its own to elevate contractual claims to treaty claims.⁶⁴³ Whether the contract already provides for a dispute mechanism and whether there is a connection between the contract and the BIT are additional factors that previous tribunals have taken into account.⁶⁴⁴ Specifically, the Respondent highlights the SGS v. Pakistan committee's holding that claimants:

should not be allowed [to] rely on a contract as the basis of its claim when the contract itself refers that claim exclusively to another forum ... [and] should not be able to approbate and reprobate in respect of the same contract: if it claims under the contract, it should comply with the contract in respect of the very matter which is the foundation of its claim.⁶⁴⁵

400. The Respondent argues, therefore, that because the claims now before the Tribunal are contractual in nature and the Deed of Settlement contains a dispute resolution clause, the effect of the Lao- Netherland BIT’s potential “umbrella clause” is moot.⁶⁴⁶

401. As to the cases where tribunals have asserted jurisdiction over contract claims, the Respondent notes that they are "not the general consensus among investment tribunals" and are sustained by reasoning that is inapplicable to the present dispute, due to the "specific and exclusive” dispute

⁶⁴⁰ Respondent's Memorial on Competence, ¶¶ 176-177; Respondent's Counter-Memorial, ¶¶ 224-225. ↩
⁶⁴¹ Respondent's Memorial on Competence, ¶ 177; Respondent's Counter-Memorial, ¶ 227. ↩
⁶⁴² Respondent's Memorial on Competence, ¶ 181. ↩
⁶⁴³ Respondent's Memorial on Competence, ¶ 182; Respondent's Counter-Memorial, ¶ 230. ↩
⁶⁴⁴ Respondent's Memorial on Competence, ¶¶ 182-184; Respondent's Counter-Memorial, ¶ 230; citing RL-38, Joy Mining Machinery v. Egypt, ICSID Case No. ARB/03/11, Decision on Jurisdiction, 6 August 2004, ¶ 81; RL-58, SGS Société Générale de Surveillance S.A. v. The Philippines, ICSID Case No. ARB/02/06, Decision on Jurisdiction, 29 January 2004 (“SGS Philippines"), ¶¶ 127-128; RL-21, CMS Gas Transmission Company v. Argentine Republic, ICSID Case No. ARB/01/8, Decision on Annulment, 25 September 2007 (“CMS Annulment"), ¶ 95(c). ↩
⁶⁴⁵ Respondent's Memorial on Competence, ¶¶ 185-187; Respondent's Counter-Memorial, ¶ 235; citing RL-58, SGS Philippines, ¶ 154. ↩
⁶⁴⁶ Respondent's Memorial on Competence, ¶ 190; Respondent's Counter-Memorial, ¶ 238. ↩

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resolution clause in the Deed of Settlement. The Respondent contends that the Deed's dispute resolution clause precludes the claims now before the Tribunal from being heard.⁶⁴⁷

402. For these reasons, the Respondent submits that Claimants' claims are of contractual nature, cannot be elevated to treaty claims, and should be dismissed by the Tribunal.⁶⁴⁸

(2) Claimants' Position

403. Claimants reject the Respondent's characterization of Bayindir as suggesting that claimants must establish a State's contractual breach in order to support a treaty claim.⁶⁴⁹ The Respondent cited excerpts of the Bayindir decision without the necessary context, the Claimants say; a proper reading shows that the tribunal reviewed the State's conduct under the contract only to determine whether the State had expropriated the claimants' rights under that same contract.⁶⁵⁰ The Bayindir tribunal did not use the contract's terms as the standard against which to assess the State's conduct under the treaty, and in fact, ultimately rejected the jurisdictional challenge even though the contract contained an exclusive dispute resolution clause.⁶⁵¹

404. Claimants also note that even if the Respondent's characterization of Bayindir were accepted, the SIAC Award would not preclude the claims now before the Tribunal, given that the BIT I Tribunals unanimously decided that Respondent in fact breached the Deed.⁶⁵²

405. According to Claimants, the Respondent's actions that gave rise to the present expropriation claims were effected “under color of State authority," and the Respondent admits as much.⁶⁵³ The Respondent's position that these acts were contemplated by the Deed of Settlement does not make the claims contractual or shield the Respondent from liability under the BIT.⁶⁵⁴

406. As for the Respondent's argument regarding the binding force given to settlement agreements in the context of arbitration, the Claimants contend that the conduct challenged in this case arose after

⁶⁴⁷ Respondent's Memorial on Competence, ¶ 191; Respondent's Counter-Memorial, ¶ 239. ↩
⁶⁴⁸ Respondent's Memorial on Competence, ¶ 192; Respondent's Counter-Memorial, ¶ 240. ↩
⁶⁴⁹ Claimants' Reply, ¶ 43. ↩
⁶⁵⁰ Claimants' Reply, ¶ 44. ↩
⁶⁵¹ Claimants' Reply, ¶¶ 44-46. ↩
⁶⁵² Claimants' Reply, ¶ 43. ↩
⁶⁵³ Claimants' Reply, ¶ 47. ↩
⁶⁵⁴ Claimants' Reply, ¶¶ 47-48. ↩

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the Deed was executed, whereas in the cases the Respondent cites, the settlement agreements gave finality to claims over prior events.⁶⁵⁵

407. Claimants also reject the Respondent's position that the Tribunal must decline jurisdiction if the underlying contract includes a dispute resolution clause; that is based on the very reasoning that led to the annulment of the first Vivendi award, they say.⁶⁵⁶ Rather, Claimants submit, investment tribunals "accept jurisdiction for alleged breaches of the relevant treaty, as distinguished from alleged breaches of the contract through which the investment was established.”⁶⁵⁷

408. In this case, Claimants say, their treaty claims are not based on the Respondent's breach of the Deed of Settlement, but rather on the exercise of public authority by its executive and judicial branches, which include seizure of property, adoption of punitive tax measures, corrupt judicial proceedings, nullification of property rights, and cancellation of licenses.⁶⁵⁸ The relevant question is not whether these actions were justified by the Deed but whether they violate the Respondent's obligations under the BIT.⁶⁵⁹

409. Finally, Claimants observe that there is an important distinction between what the Deed authorized and what it compelled, and the Respondent does not, and cannot, argue that its actions fall under the latter.⁶⁶⁰ Even if arguendo that were the case, it would have no bearing on whether the conduct itself was wrongful as a violation of the China-Lao BIT.⁶⁶¹

410. For these reasons, Sanum submits that its claims in this case arise out of the Respondent's treaty violations and are therefore within the Tribunal's jurisdiction.

(3) The Tribunal's Analysis

411. The Tribunal begins with the unexceptional observation that a claim for treaty breach is analytically distinct from one for contract breach, and requires a different analysis. Demonstrating a breach of contract does not lead inexorably to a finding a treaty violation, and conversely, compliance with

⁶⁵⁵ Claimants' Reply, ¶ 49. ↩
⁶⁵⁶ Claimants' Reply, ¶¶ 50-51; citing RL-22, Vivendi II, ¶¶ 101-102. ↩
⁶⁵⁷ Claimants' Reply, ¶ 51; citing CL-141, Compañía de Aguas del Aconquija SA and Vivendi Universal SA v. Argentine Republic, ICSID Case No. ARB/97/3, Award, 20 August 2007 (“Vivendi III”), ¶¶ 7.3.8-10. ↩
⁶⁵⁸ Claimants' Reply, ¶ 52. ↩
⁶⁵⁹ Claimants' Reply, ¶ 52. ↩
⁶⁶⁰ Claimants' Reply, ¶ 53. ↩
⁶⁶¹ Claimants' Reply, ¶ 54. ↩

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contractual obligations does not equate necessarily to performance of treaty obligations. The two inquiries pose different questions and require proof of different factual and legal elements.

412. Claimants have alleged violation of several different BIT provisions in this case and the accompanying LHNV case, by virtue of several distinct instances of State conduct. These allegations do not depend, as a matter of law, on a showing that Respondent failed to observe the Deed of Settlement. Indeed, as discussed in Section IV.A, even Claimants' "umbrella clause" claims in the LHNV case do not invoke a failure to observe obligations in the Deed of Settlement; instead, they rest on alleged failures to observe obligations under local law. Claimants also allege violations of other BIT provisions, including provisions on expropriation in both cases, and in the LHNV case also provisions on fair and equitable treatment, unreasonable or discriminatory impairment, and interference with transfers. While some of those claims involve certain facts that also were at issue in prior contract proceedings (i.e., before the SIAC Tribunal and the BIT I Tribunals hearing “material breach" applications about the Deed of Settlement), such overlaps do not on their own render treaty claims inadmissible. Claimants are entitled to try to prove their treaty claims on the merits, and the Tribunal is not divested of its authority to consider those treaty claims, simply because a contract formed part of the underlying factual matrix.

413. Of course, Respondent remains free to argue on the merits that Claimants have not met their required showing under the BIT. If the Tribunal ultimately agrees, the consequence will be a failure of the treaty claims. But it would be premature for the Tribunal to dismiss the claims at the threshold stage simply because the issues raised are, to some extent, intertwined with contractual matters that have been addressed in different proceedings.

414. The Tribunal is equally unpersuaded by Respondent's jurisdictional argument that an investment treaty tribunal may not proceed to the merits if an underlying contract between the parties contains a dispute resolution clause directing disputes to another forum. First, the Deed of Settlement's dispute resolution provisions established the venues for claims alleging breach of the Deed's terms. Nothing in those provisions purported to address the venue for BIT claims challenging future State conduct, much less to waive Claimants' right to bring such claims if it wished to do so.

415. More generally, international treaty obligations, and the right to enforce them by procedures specified in such treaties, exist on a different level of the international legal order than domestic

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law rights.⁶⁶² In the investment treaty context, sovereign States agree to create procedural rights for the benefit of their respective investors, allowing them to enforce in particular fora the substantive obligations that these States undertake to one another. These procedural rights are different in kind from procedural rights created by private law contracts or other private law relationships. For that reason, there is a high standard for proving that a party intended to waive its right to bring future treaty claims, simply by entering into a contract selecting a forum to resolve breach of contract claims. As prior tribunals have found, there would have to be direct and convincing evidence that a party intended such a waiver.⁶⁶³ No such evidence exists in this case, and it cannot be inferred simply from the forum selection clauses of the Deed of Settlement.

416. For these reasons, the Tribunal rejects Respondent's objection to jurisdiction or admissibility on the grounds that the claims in essence are contractual rather than treaty claims.⁶⁶⁴ The Tribunal accepts that Claimants have pleaded BIT claims sufficiently to have them analyzed as such on the merits. Nothing in the dispute resolution clause of the Deed of Settlement deprives Claimants of their right to assert such BIT claims, particularly with respect to challenged State conduct occurring after the Deed was executed.

D. MATERIAL JURISDICTION

417. The Respondent argues that the Tribunal does not have material jurisdiction over several of the claims before the Tribunal. Specifically, the Respondent maintains that the Tribunal lacks material jurisdiction over Sanum's claims and allegations related to (a) Thakhek, (b) expropriation, or (c) criminal investigations and the use of privileged documents.⁶⁶⁵ The Claimants in turn argue that these objections are meritless, and that the Tribunal is entitled to decide the claims. The Claimants

⁶⁶² See generally CL-31, SGS Societe Generale de Surveillance S.A. v. Republic of Paraguay, ICSID Case No. ARB/07/29, Award on Jurisdiction, 12 February 2010 (“SGS Paraguay”), ¶ 178 (describing the “international law 'safety net' of protections that [BITs] are meant to provide separate from and supplementary to domestic law regimes"). ↩
⁶⁶³ See, e.g., CL-31, SGS Paraguay, ¶¶ 178, 180 (the right to access a dispute resolution forum offered in a treaty "should not lightly be assumed to be waived," and therefore "at least in the absence of an express waiver, a contractual forum selection clause should not be permitted to override the jurisdiction to hear Treaty claims"); RL-22, Vivendi II, ¶ 76 (noting that a concession contract "did not in terms purport to exclude the jurisdiction of an international tribunal arising under ... the BIT; at the very least, a clear indication of an intention to exclude that jurisdiction would be required"). ↩
⁶⁶⁴ Respondent's Memorial on Competence, ¶ 153. ↩
⁶⁶⁵ Respondent's Counter-Memorial, ¶ 241. The Respondent advanced additional material jurisdiction objections to LHNV's claims for violation of the Lao-Netherlands BIT's provisions on fair and equitable treatment, most-favoured nation treatment and discriminatory measures. ↩

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add that the Respondent grounded these objections in Claimants' Notices of Arbitration rather than their subsequent Memorial on the Merits.⁶⁶⁶

418. The Tribunal addresses separately below the Respondent's three “material jurisdiction" objections relevant to Sanum's claims.

(1) Thakhek Claims

a. Respondent's Position

419. First, the Respondent argues that the Tribunal does not have jurisdiction over claims related to Thakhek because they do not involve a qualifying “investment.”⁶⁶⁷ Because the Thakhek issue concerns only the pre-investment stage of a potential investment, it falls short of the China-Lao BIT's limit to consent to disputes “in connection with an investment in the territory of the other Contracting State." The Respondent contends that this definition concern only investments that the investment were “already made,” not those merely foreseen or discussed.⁶⁶⁸

420. According to the Respondent, the basis for the Thakhek claims is Section 22 of the Deed of Settlement, but this provision – along with a US$500,000 USD payment – merely accorded Claimants the right to discuss a future investment with the Respondent, without constituting a protected investment under the China-Lao BIT's terms.⁶⁶⁹ In support, the Respondent cites the Mihaly holding, amongst others, that:

pre-investment and development expenditures [cannot] automatically be admitted as "investments" in the absence of the consent of the host State to the implementation of the project ... The Tribunal is consequently unable to accept as a valid denomination of “investment”, the unilateral or internal characterization of certain expenditures by the Claimant in preparation for a project of investment.”⁶⁷⁰

421. The Respondent argues that Claimants' subsequent shift in its pleadings, to assert that its claims arise under the Thakhek MOU and not the Deed of Settlement, do not resolve the jurisdictional

⁶⁶⁶ Claimants' Reply, ¶ 215. ↩
⁶⁶⁷ Respondent's Memorial on Competence, ¶¶ 194-195; Respondent's Counter-Memorial, ¶ 242. ↩
⁶⁶⁸ Respondent's Memorial on Competence, ¶ 195; Respondent's Counter-Memorial, ¶ 243 (emphasis in original); Respondent's Rejoinder, ¶¶ 108, 111. ↩
⁶⁶⁹ Respondent's Memorial on Competence, ¶ 196; Respondent's Counter-Memorial, ¶ 244. ↩
⁶⁷⁰ Respondent's Memorial on Competence, ¶ 197; Respondent's Counter-Memorial, ¶ 245; Respondent's Rejoinder, ¶ 113; citing RL-45, Mihaly International Corp. v. Sri Lanka, ICSID Case No. ARB/00/2, Award, 15 March 2002 ("Mihaly"), ¶¶ 59-61; RL-167, William Nagel v. The Czech Republic, SCC Case No. 049/2002, Final Award, 9 September 2003, ¶¶ 299-300. ↩

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impediment.⁶⁷¹ Even so, neither the US$900,000 USD payment required under the Thakhek MOU, nor the rights encompassed by the MOU (i.e., the investment as pled in Claimants' Reply), meet the required standard – which the Claimants say is the production of something that can be deprived – because "both related only to a right to negotiate in good faith for a potential future investment."⁶⁷²

b. Claimants' Position

422. Claimants argue that the Respondent's objection to Thakhek's status as a protected investment under the China-Lao BIT, on the basis that it is merely a pre-investment, is undermined by the Respondent's statement that the second US$500,000 USD payment would grant Claimants a "‘contractual right to discuss a potential for further investment,' thus conceding that the payments were the initial investments.”⁶⁷³ The Claimants add that the Respondent itself acknowledges the BIT's recognition of “any performance having economic value” as a qualifying investment.⁶⁷⁴

423. As to the US$900,000 payment envisioned by the Thakhek MOU, Claimants reject the characterization of this as “pre-investment expenditures," which they say is based solely on Mihaly, a materially distinguishable case, and not on the terms of the governing BIT.⁶⁷⁵ Mihaly is distinguishable on its face because it was based on a different BIT definition of “investment” than the applicable one here, and the Mihaly tribunal held that the parties were not bound by any of the instruments presented, whereas in this case, it is undisputed that the Thakhek MOU binds the Parties.⁶⁷⁶

424. In Claimants' view, to determine whether it has jurisdiction over this claim, the Tribunal must determine whether “either the $900,000 paid by Claimants directly to Respondent under the terms of the MOU or the rights granted to Sanum under the MOU constitute an investment.”⁶⁷⁷ Claimants make the following arguments:

⁶⁷¹ Respondent's Rejoinder, ¶ 110. ↩
⁶⁷² Respondent's Rejoinder, ¶ 112. ↩
⁶⁷³ Claimants' Reply, ¶ 216; citing Respondent's Counter-Memorial, ¶ 244 (emphasis by Claimants). ↩
⁶⁷⁴ Claimants' Reply, ¶ 217; citing Respondent's Counter-Memorial, ¶ 243 (citing CL-18, Lao-Netherlands BIT, Art. 1(a)). ↩
⁶⁷⁵ Claimants' Reply, ¶¶ 218-219. ↩
⁶⁷⁶ Claimants' Reply, ¶¶ 221-222. ↩
⁶⁷⁷ Claimants' Reply, ¶ 223 (emphasis in original). ↩

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1. Because the Thakhek MOU uses the terms “concessionee" to refer to Claimants, it thereby indicates that the MOU governs how the concession land would be developed, not whether the concession would be granted in the first place;⁶⁷⁸
2. Since the Thakhek MOU granted Claimants in rem rights in relation to the land, the land qualifies as an "asset" under the China-Lao BIT,⁶⁷⁹ which defines "investments" as including "other property rights" in addition to movable and immovable property, and refers specifically to “a claim to money” and “concessions conferred by law";⁶⁸⁰
3. The rights encompassed by the MOU constitute an investment under Article 1(1) of the China-Lao BIT as “concessions conferred by law," as referenced by the MOU's denomination of Sanum as the “Concessionee,” and its reference to “the special authority the deputy prime minister exercised to approve it”;⁶⁸¹
4. The fund established via the US$900,000 contribution, as well as the rights to receive a refund or reimbursement from the fund, qualify under Article 1(1)(c) of the China-Lao BIT as “a claim to money or to any performance having an economic value”;⁶⁸² and
5. The illustrative list in the China-Lao BIT is not exclusive, but rather “wide-ranging and open," in the words of the PCA BIT I Tribunal.⁶⁸³

c. The Tribunal's Analysis

425. Sanum has asserted claims for violation of the expropriation provision of the China-Lao BIT in connection with what it calls the "Frustration of Thakhek Concession Development.”⁶⁸⁴ Respondent objects that the Tribunal does not have jurisdiction ratione materiae over these claims, because Sanum had no qualifying investment related to Thakhek.

⁶⁷⁸ Claimants' Reply, ¶ 225. ↩
⁶⁷⁹ Claimants' Reply, ¶ 229. ↩
⁶⁸⁰ CL-49, Lao-China BIT, Article 1(1). ↩
⁶⁸¹ Claimants' Reply, ¶ 229. ↩
⁶⁸² Claimants' Reply, ¶¶ 228-229 (making this argument under the equivalent Lao-Netherlands BIT, and arguing that the terms of the Lao-China BIT are "very similar"). ↩
⁶⁸³ Claimants' Reply, ¶¶ 230-231 (citing C-399, PCA BIT I Case, Award on Jurisdiction, 13 December 2013, ¶ 318). ↩
⁶⁸⁴ Letter from Claimants to Tribunal, 24 June 2019, distinguishing between Sanum's claims in this proceeding and LHNV's claims in the accompanying case. ↩

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426. In Article 8 of the China-Lao BIT, the Lao PDR consented to submit to arbitration any dispute between it and "an investor” of China, in “connection with an investment of that national in the territory" of the Lao PDR,” that “involve[s] the amount of compensation for expropriation ....”⁶⁸⁵ In order to invoke this clause as the basis for the Tribunal's jurisdiction over the Thakhek claims, Sanum therefore must establish that its expropriation claim arises “in connection with an investment" of Sanum.

427. Article 1(1) of the China-Lao BIT states, inter alia, as follows:

For the purpose of this Agreement:

(1) The term “investments” means every kind of asset invested by investors of one Contracting State in accordance with the laws and regulations of the other Contracting State in the territory of the Latter, including mainly,

1. movable and immovable property and other property rights;
2. shares in companies or other forms of interest in such companies;
3. a claim to money or to any performance having an economic value;
4. copyrights, industrial property, know-how and technological process;
5. concessions conferred by law including concessions to search for or to exploit natural resources.⁶⁸⁶

428. The structure of Article 1(1) is that it first states a general definition (“[t]he term ‘investments' means every kind of asset”), and then adds that this includes "mainly” an illustrative list of assets. The latter step shows that the Contracting Parties expected assets falling within the list to be covered by the BIT's protections, because the acquisition of such assets generally would reflect a process of investing. Thus, in the great majority of cases, all that a tribunal must do to confirm its jurisdiction ratione materiae is to satisfy itself that the claimant possesses an asset on the list.

429. Nonetheless, in rare cases further inquiry may be necessary, because the list of illustrative assets in Article 1(1) does not trump the objective, ordinary meaning of the word “investments" that precedes it. Like any other treaty, the China-Lao BIT must be interpreted pursuant to the principles

⁶⁸⁵ CL-49, China-Lao BIT, Articles 8(1), 8(3). ↩
⁶⁸⁶ CL-49, China-Lao BIT, Article 1(1). ↩

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of the Vienna Convention on the Law of Treaties (“VCLT"), and in particular VCLT Article 31(1)'s requirement that provisions of the BIT are to be interpreted and applied in accordance with the "ordinary meaning" of their terms, in the “context” in which they occur and in light of the BIT's "object and purpose.”⁶⁸⁷ The word “investment” has an ordinary meaning which is not supplanted by the Contracting Parties' identification of a list of illustrative assets that are presumed to satisfy it. The very fact that the list of assets in Article 1(1) is not exclusive – but by definition includes only the assets “mainly” expected to qualify – confirms the need for the word "investments” to be attributed an independent meaning. As several tribunals have observed,⁶⁸⁸ unless the term "investment" is recognized as bearing some intrinsic meaning, the non-exclusive nature of the list would provide no benchmark by which a tribunal could evaluate the qualifications of other forms of assets outside the illustrative list. Moreover, without some objective benchmark, Article 1(1)'s extreme generality (“every kind of asset") could be seen as encompassing even transactions that bear none of the traditional hallmarks of investment.

430. For example, it is widely accepted that a one-time purchase of goods does not constitute an "investment," but if such a sale is not for an outright payment but instead results in a receivable, then ostensibly that receivable could be characterized as a “claim to money or to any performance having an economic value." That is one of the forms of assets generally included in BIT definitions of "investment,” as it is in Article 1(1)(c) of the China-Lao BIT. Yet most observers would still maintain that a one-time sale resulting in receivables is not an "investment” in the ordinary meaning of the term, even if such receivables might be technically characterized as an “asset” falling within the broad asset list of a BIT. The illustration demonstrates, in the words of the Romak tribunal, how a "mechanical application of the categories listed" in a BIT could “eliminate any practical limitation to the scope of the concept of 'investment,” and “render meaningless the distinction between investments, on the one hand, and purely commercial transactions on the other.”⁶⁸⁹

431. The obvious conclusion is that an asset list – particularly one preceded by an unbounded "every kind of asset" phraseology – cannot function on its own as a sufficient definition of investment.

⁶⁸⁷ VCLT Article 31(1). ↩
⁶⁸⁸ See, e.g., RL-105, Romak S.A. v. The Republic of Uzbekistan, PCA Case No. AA280, Award, 26 November 2009 (“Romak"), ¶¶ 178-180 (rejecting claimant's argument that it “should simply confirm that [its] assets fall within one or more of the categories listed," because this approach would 'deprive[] the term 'investments' of any inherent meaning," an outcome which is inconsistent with the non-exhaustive nature of the categories enumerated; the tribunal explained that “there may well exist categories different from those mentioned in the list,” and “[a]ccordingly there must be a benchmark against which to assess those non-listed assets ... in order to determine whether they constitute an 'investment' within the meaning of" the BIT). ↩
⁶⁸⁹ RL-105, Romak, ¶¶ 184-185. ↩

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Rather, it requires interpretation by reference to the ordinary meaning of the concepts of "investment" and "investing."

432. Pursuant to the VCLT command to look to the "ordinary meaning" of the term, the Tribunal observes that according to common dictionary definitions, the noun “investment" refers to some contribution of resources, made in an attempt to earn a return over a period of time, a process that necessarily involves the possibility or risk of not earning a return.⁶⁹⁰ Many other tribunals, employing similar “ordinary meaning" analyses, have found these three basic elements to be inherent in any objective definition of “investment." Although some tribunals have reached this conclusion solely through an analysis of the ICSID Convention, others have stated – as does this Tribunal – that the same interpretation of the word “investment" applies independently to its use in investment treaties, whether or not a case is proceeding under the ICSID Convention.⁶⁹¹

433. The corollary implication is that protection under a BIT would not be extended to assets that did not come to be held by the putative investor through any act of real investing. Notably, “investing" in an asset is different from merely “owning” or “holding” an asset; the latter terms refer to legal title or possession, while the former refers to a form of conduct, the taking of an act. As the Quiborax tribunal explained the point, a distinction must be made between the objects (or “legal materialization”) of an investment, such as shares or title to property, and the action of investing, which requires some contribution of money or other resources⁶⁹² The Tribunal does not accept that

⁶⁹⁰ See, e.g., Merriam-Webster, https://www.merriam-webster.com/dictionary/investment#h1 (defining “investment” as "the outlay of money usually for income or profit: capital outlay"); Cambridge Dictionary, https://dictionary.cambridge.org/us/dictionary/english/investment (defining it as "the act of putting money, effort, time, etc. into something to make a profit or get an advantage, or the money, effort, time, etc. used to do this"); and Oxford Learner's Dictionaries, https://www.oxfordlearnersdictionaries.com/us/definition/english/investment?q=investment (defining it as “the act of investing money in something,” or “the money that you invest, or the thing that you invest in”). ↩
⁶⁹¹ See, e.g., CL-98, Quiborax S.A. et al. v. Plurinational State of Bolivia, ICSID Case No. ARB/06/2, Award, 16 September 2015, ¶ 215 (noting cases concluding that “the objective meaning was inherent to the term investment, irrespective of the application of the ICSID Convention”); RL-125, Romak, ¶ 207 (“The term 'investment' has a meaning in itself that cannot be ignored when considering the list contained in ... the BIT," because the term in the BIT "has an inherent meaning (irrespective of whether the investor resorts to ICSID or UNCITRAL arbitral proceedings) entailing a contribution that extends over a certain period of time and that involves some risk ..."); RL- 47, Orascom, ¶ 372 ("the use of the term 'investment' in both the ICSID Convention and the BIT imports the same basic economic attributes of an investment derived from the ordinary meaning of that term, which comprises a contribution or allocation of resources, duration, and risk”); RL-112, Vestey, ¶ 192 (“the BIT notion of investment implies that the asset falling within the list be the result of an allocation of resources made by the investor"). ↩
⁶⁹² CL-98, Quiborax, ¶ 223. See also RL-1, Abaclat et al v. The Argentine Republic, ICSID Case No. ARB/07/5, Decision on Jurisdiction, 4 August 2011, ¶ 347 (considering that a BIT's "list of examples of what is considered an investment" was focused on the "rights and values which may be endangered by measures of the Host State ... and therefore deserve protection," but “[n]evertheless, this definition is of course based on the premise of the existence of [a] contribution,” which “derives from the wording of other provisions" of the BIT) (emphasis added). ↩

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the terms can be conflated, so that a qualifying national who somehow comes to own an asset in the host State, but without having made any contribution, still can be considered to have “invested" in that asset. The term “invested,” like the term “investment," has an objective meaning, one that is not satisfied by ownership alone.

434. The point of this observation is that, in order to establish for purposes of Article 8 of the China- Lao BIT that the dispute in question arises "in connection with an investment" of Sanum in the Lao PDR, Sanum must show not only that it holds an asset that falls within the illustrative list of Article 1(1) of the BIT, but also that it invested something in the ordinary meaning of the word (i.e., that it contributed in some way) to obtain that asset or to enhance its value.

435. This brings the discussion back to the separate elements which Sanum contends constituted its "investment" in connection with Thakhek: (a) the rights granted to it under the Thakhek MOU, and (b) the Claimants' payment of US$900,000 in two tranches, pursuant respectively to the Thakhek MOU and the Deed of Settlement, the latter of which cross-referenced the Thakhek MOU.⁶⁹³

436. As discussed in Section III.C.3 above, the Thakhek MOU was signed on 20 October 2010 between Sanum (which was labeled the "Concessionee”) and a “Government Committee" with certain responsibility for development of a special enterprise zone known as the SEZ. The Thakhek MOU provided for certain preliminary and reciprocal steps which, if successfully concluded, could lead to an eventual land concession agreement for Sanum to develop a project on certain “Concession Land" (as defined) in the SEZ. Without getting too deeply in the details for present purposes, the preliminary steps included (a) Sanum's submission of various studies and plans for its use of the Concession Land;⁶⁹⁴ (b) the Government's approval of those “required documents,” followed by the signing of a land concession agreement;⁶⁹⁵ (c) Sanum's upfront payment of US$400,000 upon signing of the Thakhek MOU, with an additional US$500,000 to be paid later, for the Government to "spend on the survey, measurement and allocation of the Concession Land," and to “compensate the people for the Concession Land" if the Government was required to take ownership of certain parcels;⁶⁹⁶ (d) "[o]nce the exact location of the Concession Land has been agreed upon,” Sanum's

⁶⁹³ Claimants' Reply, ¶ 223. ↩
⁶⁹⁴ C-100 and R-107, Thakhek MOU, Arts. 1.3, 1.4. ↩
⁶⁹⁵ C-100 and R-107, Thakhek MOU, Arts. 1.3, 1.4. ↩
⁶⁹⁶ C-100 and R-107, Thakhek MOU, Arts. 2.2, 2.3. ↩

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confirmation of “its acceptance of the Concession land”;⁶⁹⁷ and (e) eventually, Sanum's clearing of the land and commencement of construction activities within a certain timetable.⁶⁹⁸

437. It appears undisputed that in October 2010, Sanum paid the initial US$400,000 pursuant to the Thakhek MOU. A dispute later arose regarding the precise contours of the land parcels contemplated for the "Concession Land.” Sanum did not submit the various studies and plans, the Government did not approve such plans, and no land concession agreement was ever signed.

438. Nonetheless, following various legal actions and as discussed in Section III.E above, the Parties agreed on 15 June 2014, in the Deed of Settlement, to revive discussions regarding a Thakhek development. The Deed of Settlement provided that "[s]ubject to the Claimants' payment” of the remaining US$500,000 that had been contemplated in the Thakhek MOU, “the Parties will negotiate in good faith and conclude a land concession and project development agreement" at Thakhek as had previously been discussed in the Thakhek MOU, “on the basis that no gaming activities whatsoever will be allowed at or in connection with that ... site."⁶⁹⁹

439. It appears undisputed that in September 2015, Sanum paid the second tranche (US$500,000) of the sums initially contemplated in the Thakhek MOU, and as subsequently agreed in the Deed of Settlement. The Parties did not, however, reach agreement on a land concession at Thakhek, leading Claimants to bring various claims in various fora. The Claimants failed in their claims before the SIAC Tribunal and the BIT I Tribunals.⁷⁰⁰ The Claimants now bring further treaty claims regarding Thakhek, which they explain as different from those rejected by the prior tribunals.⁷⁰¹

⁶⁹⁷ C-100 and R-107, Thakhek MOU, Art. 3.1. ↩
⁶⁹⁸ C-100 and R-107, Thakhek MOU, Arts. 1.3, 1.4. ↩
⁶⁹⁹ R-5, Deed of Settlement, 15 June 2014, Section 22. ↩
⁷⁰⁰ As discussed in Sections III.J, III.K and III.L, the SIAC Tribunal rejected Claimants' counterclaim that the Lao PDR had breached the Deed of Settlement by failing to negotiate a land concession in good faith, finding that "good faith differences in the negotiation" regarding the land contours "prevent[ed] the reaching of a final contract." C-481 and R-27, 2017 SIAC Award, ¶¶ 297-307. The BIT I Tribunals, considering the material breach applications, likewise found no breach of the Deed of Settlement's requirement of negotiation in good faith, noting that the Claimants "had not established a land entitlement" to certain disputed hectares and the Lao PDR had not acted in bad faith in refusing to expropriate certain private owners in that area. C-509, ICSID 2MBA Decision, ¶¶ 207-208; C-562, PCA 2MBA Decision, ¶¶ 195-196. On the merits of the Claimants' revived pre-Deed of Settlement treaty claims, the BIT I Tribunals later found that Claimants had failed to establish any rights to the disputed land portions, nor had they completed the various plans and studies required by the Thakhek MOU, as a result of which they had not established any viable project with which the Respondent had improperly interfered by its revocation of a slot club license for Thakhek that had been issued improperly ten days earlier. See R-264, ICSID BIT I Award, ¶¶ 219-220, 222; R-265, PCA BIT I Award, ¶ 244. ↩
⁷⁰¹ Specifically, Claimants say their current claims, which challenge the extinguishment of their Thakhek MOU concession rights in violation of the Lao-Netherland BIT and China-Lao BIT respectively, differ from those addressed ↩

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440. It does not appear that Respondent presented to the BIT I Tribunals any objection ratione materiae with respect to the Claimants' Thakhek claims. Nonetheless, the objection has been made in this case, and it deserves proper attention, as do all of Respondent's other jurisdictional objections in this case.

441. For ratione materiae purposes, the threshold question is whether Sanum has established, as required by Article 8 of the China-Lao BIT, that this is a dispute "in connection with an investment" of Sanum in the Lao PDR. The Respondent says “no,” characterizing the Claimants as never having moved beyond the “pre-investment” stage of a potential investment,⁷⁰², and accordingly never having obtained any “definitive rights.”⁷⁰³ The Claimants disagree, stating inter alia that the Thakhek MOU granted them a "claim to a[] performance having economic value” within the meaning of Article 1(1)(c) of the China-Lao BIT,⁷⁰⁴ and that this also constituted a “concession[] conferred by law" under Article 1(1)(e) of the BIT, particularly given the MOU's recitation in its preamble that it was “[b]ased on the Law on the Promotion of Investment.”⁷⁰⁵ The Claimants also contend that the Thakhek MOU granted them in rem rights in relation to certain land, within the meaning of Article 1(1)(a) of the BIT's reference to “immovable property and other property rights."⁷⁰⁶

442. The Tribunal certainly disagrees with the latter proposition; the Thakhek MOU did not grant any in rem rights to land. Rather, it established a process that, depending on various future contingencies, might lead to a future signing of a separate land concession agreement. These contingencies not only included Sanum's completion of various studies and the Government's approval of such,⁷⁰⁷ but also reaching a future “agree[ment]” on the “exact location" of any

in the 2017 SIAC Award because the latter ruled only on whether Respondent had complied with the Deed of Settlement. Claimants' Reply, ¶¶ 190-191, 194-195. Claimants say their claims are different from the treaty claims rejected by the BIT I Awards because the “frozen record agreement” prevented them from adducing evidence about post-Deed of Settlement events (including the Respondent's acceptance of the further US$500,000 payment), and because their claims now are for loss of non-gaming opportunities, not the value of the concession for gaming activity. Claimants' Submission on the BIT Awards, ¶¶ 101-120.
⁷⁰² Respondent's Memorial on Competence, ¶¶ 194-195; Respondent's Counter-Memorial, ¶ 243; Respondent's Rejoinder, ¶¶ 108-112, 226-227. ↩
⁷⁰³ Respondent's Rejoinder, ¶¶ 226-227. ↩
⁷⁰⁴ Claimants' Reply, ¶¶ 217, 229. ↩
⁷⁰⁵ Claimants' Reply, ¶¶ 227, 229; C-100 and R-107, Thakhek MOU, Preamble. ↩
⁷⁰⁶ Claimants' Reply, ¶¶ 226, 229. ↩
⁷⁰⁷ C-100 and R-107, Thakhek MOU, Arts. 1.3, 1.4. ↩

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“Concession Land,”⁷⁰⁸ and finally establishing the land concession agreement.⁷⁰⁹ Only at that point would Sanum have rights in rem to land.

443. Nonetheless, the Thakhek MOU did convey certain rights to Sanum, even of a conditional nature, which Sanum would not have had but for that document – and presumably that third parties did not equally have. Sanum obtained a right to a certain process which, if it ultimately fulfilled its own required steps, implicitly committed its counterpart (a government entity) to taking certain corresponding steps in good faith. An MOU is not yet a land concession, but it is still a form of preliminary agreement. In this case, the Thakhek MOU had specific provisions both for its "[i]mplementation” and for the conditions under which it “may be revoked”; it specified a period of effectiveness.⁷¹⁰ It thus had certain formalities which reflected a degree of substance beyond a mere "minuting" of preliminary non-binding discussions.

444. In any event, the Tribunal need not decide whether, in the abstract, an MOU that neither party begins to perform could ever constitute a claim to a "performance having an economic value" within the meaning of Article 1(1)(c) of the China-Lao BIT.⁷¹¹ That is because in this case, there was at least partial performance of the anticipated reciprocal undertakings, by virtue of Claimants' payment of the full US$900,000 required from Sanum under its terms, and its counterpart's apparent acceptance of that payment. Unlike the Mihaly case on which Claimants rely, in which initial expenditures were unilateral and not required by certain letters of intent which expressly recited their non-binding nature,⁷¹² here the payments were made in implementation of specific requirements of the Thakhek MOU. The Tribunal considers that, for purposes of a ratione materiae analysis, this partial performance by Sanum of at least some of the conditions established by the Thakhek MOU (which payments also constitute a “contribution” within the ordinary meaning of the term "investment") is sufficient to provide standing to make assertions about other alleged requirements of the Thakhek MOU.

445. To be clear, the Parties may still debate on the merits whether the Government was under any concrete obligations to perform under the Thakhek MOU, based on Sanum's partial performance of its obligations and before Sanum satisfied other conditions of the Thakhek MOU. To the extent

⁷⁰⁸ C-100 and R-107, Thakhek MOU, Art. 3.1. ↩
⁷⁰⁹ C-100 and R-107, Thakhek MOU, Arts. 1.3, 1.4. ↩
⁷¹⁰ C-100 and R-107, Thakhek MOU, Art. 8. ↩
⁷¹¹ Claimants' Reply, ¶ 217. ↩
⁷¹² See RL-45, Mihaly, ¶¶ 48, 59. ↩

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the Government was under any such obligation, the Parties may also debate on the merits what the scope of such obligation may have been. The Tribunal returns to these issues in Section VI.E. below. But from a jurisdictional standpoint, the Tribunal finds that Claimants' contribution of funds towards the staged implementation of the Thakhek MOU, as required of Sanum by its terms, is sufficient to qualify at least minimally as an initial investment in the MOU itself. This satisfies both the asset list in Article 1(1) of the BIT and the ordinary meaning of the word “investment,” in terms of a contribution entailing some risk for a project expected to have a reasonable duration. The Respondent's objection ratione materiae with respect to the Thakhek claims is therefore denied.

(2) Expropriation Claim

a. Respondent's Position

446. Second, regarding Claimants' expropriation claims, the Respondent submits that the facts alleged do not meet a prima facie test and are therefore beyond the Tribunal's jurisdiction.⁷¹³

447. The Respondent notes that the requisite showing of infringement on Claimants' contractual rights remains unsatisfied, given that the 2017 SIAC Award concluded that the Respondent "did not violate any obligation under the Deed.”⁷¹⁴ As to Claimants' argument regarding the standard to be used by the Tribunal in assessing these claims, the Respondent contends that the circumstances of the present dispute – where the facts pled have been found to be untrue by a prior tribunal – are not found in any of the cases Claimants cite in support, thereby warranting the application of res judicata to the SIAC Award's findings regarding compliance with the Deed of Settlement. In these circumstances, Respondent says, the expropriation claims fail prima facie and should be dismissed.⁷¹⁵

b. Claimants' Position

448. With respect to the expropriation claims, Claimants argue that the Respondent's description of the prima facie test that must be met in order for the Tribunal to assert jurisdiction is “exactly backwards.”⁷¹⁶ The cases Respondent cites show that tribunals actually conduct their jurisdiction analysis under the presumption that the facts alleged by the claimant are true.⁷¹⁷ Further, Claimants

⁷¹³ Respondent's Memorial on Competence, ¶¶ 199-200; Respondent's Counter-Memorial, ¶¶ 248-249. ↩
⁷¹⁴ Respondent's Memorial on Competence, ¶¶ 201-202; Respondent's Counter-Memorial, ¶ 250; Respondent's Rejoinder, ¶¶ 115-116. ↩
⁷¹⁵ Respondent's Rejoinder, ¶¶ 115-116. ↩
⁷¹⁶ Claimants' Reply, ¶¶ 233-234. ↩
⁷¹⁷ Claimants' Reply, ¶ 234. ↩

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reiterate that their claims are treaty claims – not Deed-based claims as the Respondent insists – such that the Tribunal has material jurisdiction over them.⁷¹⁸

c. The Tribunal's Analysis

449. In the Tribunal's view, this objection fails for the same reasons explained in Section V.C.3 above, with respect to Respondent's separate objection about the nature of the claims. As explained there, the claims in this case allege violations of the expropriation provisions of the China-Lao BIT. The alleged violations are not presented as flowing simply from an alleged breach of the Settlement Deed. Accordingly, even if the Tribunal were persuaded by all of the SIAC Tribunal's findings regarding Respondent's compliance with the Deed of Settlement, that would not necessarily dispose of the treaty claims in this case.

450. This conclusion flows more generally from the fact that treaty claims (including the expropriation claims to which this objection is addressed) are analytically distinct from contract breach claims. A party's failure to prove a breach of contract does not mean that it has no possibility of proving some other type of interference with an investment that might extinguish investment rights and value to such an extent as to give rise to a finding of expropriation. Just as breach of contract does not lead inexorably to a finding a treaty violation, compliance with contractual obligations does not equate necessarily to performance of treaty obligations. The two inquiries pose different questions and require proof of different factual and legal elements.

451. Accordingly, the Tribunal rejects Respondent's objection predicated on the notion that its victory in the SIAC Case, with respect to alleged breaches of the Deed of Settlement, prima facie implies that Claimants could not prevail on their treaty claims. The conclusion Respondent urges does not follow from its premise.

(3) Claims Regarding Criminal Investigations and Privileged Documents

a. Respondent's Position

452. Finally, the Respondent says that any claims related to criminal investigations and the use of privileged documents are beyond the scope of investment arbitration and therefore not within the Tribunal's jurisdiction because violations to a State's criminal law may only be heard by the State

⁷¹⁸ Claimants' Reply, ¶ 235. ↩

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itself.⁷¹⁹ Further, in the present dispute, the criminal investigations undertaken by Lao authorities are unrelated to Claimants' investments and alleged treaty claims.⁷²⁰

b. Claimants' Position

453. Claimants argue that by objecting to the Tribunal's jurisdiction over claims arising out of criminal investigations and the use of privileged documents, the Respondent “attacks a straw man,” because Claimants have presented no such claims in their Memorial.⁷²¹

c. The Tribunal's Analysis

454. The Tribunal agrees with Claimants on this issue. They have pleaded no claims that Respondent violated the China-Lao BIT through wrongful conduct of criminal investigations or misuse of the Claimants' privileged documents. Given the absence of any such claims, there is no need for the Tribunal to assess the decree to which an investment tribunal may consider such claims. The objection is denied.

E. INADMISSIBILITY BASED ON BIT I FINDINGS OF WRONGDOING

455. As discussed in Section V.A.2 above, following the issuance of the BIT I Awards, the Respondent took the position that even if the Tribunal has jurisdiction to hear the Claimants' various claims, it should deem them inadmissible essentially because the Claimants, by virtue of wrongdoing established in those Awards, have forfeited any entitlement to substantive treaty protection.

(1) Respondent's Position

456. In essence, the Respondent argues that the BIT I Awards' findings regarding bad faith, and in particular obstruction of justice, “tarnish and contaminate all of Claimants' present claims” and render Claimants unentitled to substantive treaty protection,⁷²² which should bring the Tribunal to dismiss all of the claims as inadmissible.⁷²³ As discussed in Section V.A.2, the Respondent invokes the principle that no party should be allowed to benefit from its own wrongful act, and relying on Churchill, submits that investors who attempt to manipulate the arbitration process (as the BIT I Tribunals found had likely occurred with respect to Mme. Sengkeo's testimony) cannot benefit

⁷¹⁹ Respondent's Memorial on Competence, ¶¶ 206-207; Respondent's Counter-Memorial, ¶¶ 254-255. ↩
⁷²⁰ Respondent's Memorial on Competence, ¶ 207; Respondent's Counter-Memorial, ¶ 255. ↩
⁷²¹ Claimants' Reply, ¶ 240. ↩
⁷²² Respondent's Submission on the BIT I Awards, ¶¶ 18-35. ↩
⁷²³ Respondent's Submission on the BIT I Awards, ¶ 7. ↩

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from the substantive protections provided in the same treaties which grant access to arbitration.⁷²⁴ The Respondent further suggests that the BIT I Awards' findings regarding Mr. Baldwin's lack of credibility should lead to a finding that the Claimants' assertions of fact throughout this case are unreliable, leading to the dismissal of all claims for investment treaty protection.⁷²⁵

(2) Claimants' Position

457. Claimants' response to this objection is likewise summarized in Section V.A.2. In essence, Claimants reject the assertion that their alleged conduct in other proceedings should deprive them of substantive Treaty protection in this case, or lead to a conclusion that none of their evidence on any issue can be credited.⁷²⁶ The BIT I Tribunals' findings were made to a “balance of probabilities," not to the “clear and convincing evidence” standard that they themselves endorsed. In any event, this is an entirely new defense raised in post-hearing submissions;⁷²⁷ the blanket disregard of all of Claimants' evidence would deny due process;⁷²⁸ and the forfeiture of claims that the Respondent seeks is impermissible, particularly given that the Claimants' alleged procedural wrongdoing did not take place in this proceeding.⁷²⁹ In these circumstances, the "Claimants deserve their day in court on the claims in this proceeding, on which this Tribunal can and should evaluate the evidence and the law for itself."⁷³⁰

(3) The Tribunal's Analysis

458. The remedy Respondent seeks is an extraordinary one: a refusal by the Tribunal to entertain Claimants' claims on the merits, even if it concludes it has jurisdiction to do so.

⁷²⁴ Respondent's Submission on the BIT I Awards, ¶ 20, citing RL-186, Churchill Annulment, ¶ 257, and RL-185, Churchill Award, ¶ 528. ↩
⁷²⁵ Respondent's Submission on the BIT I Awards, ¶¶ 71-74. ↩
⁷²⁶ Claimants' Submission on the BIT I Awards, ¶ 122. ↩
⁷²⁷ Claimants' Submission on the BIT I Awards, ¶¶ 123-128. ↩
⁷²⁸ Claimants' Submission on the BIT I Awards, ¶¶ 123, 129-136. ↩
⁷²⁹ Claimants' Submission on the BIT I Awards, ¶¶ 123, 137-139. ↩
⁷³⁰ Claimants' Submission on the BIT I Awards, ¶ 220. ↩

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459. Respondent's asserted grounds for this relief involve wrongdoing said to have occurred (a) in the performance of Claimants' investments,⁷³¹ and (b) in their conduct of the prior BIT I Cases.⁷³² Importantly, Respondent does not rest its admissibility objection on (c) any wrongdoing in Claimants' initial establishment of any investment, nor does it allege (d) any wrongdoing with respect to their conduct of this arbitration.⁷³³ These distinctions are important for the Tribunal's analysis.

460. First, it is widely accepted that illegalities in the initial establishment of an investment may preclude treaty protection, rendering a tribunal without jurisdiction to examine any merits claims. This flows directly from the wording of many investment treaties, and some tribunals have found it to be implicit even if not so specified.⁷³⁴ But wrongdoing in the subsequent performance of an investment is generally considered not to bar a tribunal from hearing a dispute, even though it may be quite relevant to the merits of the parties' respective claims or defenses or as a factor in assessing damages.⁷³⁵ In the latter scenario, where a tribunal has jurisdiction to hear treaty claims on the merits, it generally should do so – considering allegations of wrongdoing within the substantive context of the various issues that it is called upon to decide. The alternate course that Respondent urges, namely a refusal even to entertain treaty claims over which it has jurisdiction, because of

⁷³¹ Specifically, Respondent invokes the BIT I Tribunals' finding that Claimants more likely than not paid a bribe to stop the 2012 E&Y Audit of Savan Vegas, channeling funds to an unknown "Government person or persons" through an intermediary, Mme. Sengkeo. See Respondent's Submission on the BIT I Awards, ¶ 37; see also R-264, ICSID BIT I Award, ¶¶ 136-139; R-265, PCA BIT I Award, ¶¶ 135-138. Respondent also invokes the BIT I Tribunals' findings that Claimants more likely than not paid a bribe in 2012 to try to persuade officials to suspend ST's slot club license at Thanaleng. See Respondent's Submission on the BIT I Awards, ¶¶ 38, 58-61; see also R-264, ICSID BIT I Award, ¶ 148; R-265, PCA BIT I Award, ¶ 147. ↩
⁷³² Specifically, Respondent invokes the BIT I Tribunals' finding that Claimants more likely than not made payments intended to persuade Mme. Sengkeo not to testify on Respondent's behalf. See Respondent's Submission on the BIT I Awards, ¶¶ 30-34; see also R-264, ICSID BIT I Award, ¶¶ 156-157, 238(c); R-265, PCA BIT I Award, ¶¶ 155-156, 176(c). ↩
⁷³³ As Claimants observe, Respondent never contended, at any time before or during the Hearing in this case, that it wished to obtain evidence from Mme. Sengkeo in this proceeding. Claimants' Submission on the BIT I Awards, ¶¶ 74, 130. Nor did it argue that any prior interference with her testimony in the BIT I Cases had deprived it of the ability to present its case in this arbitration. ↩
⁷³⁴ See generally RL-142, J. Kalicki, M. Silberman and B. McAsey, “What are the Appropriate Remedies for Findings of Illegality in Investment Arbitration?" in A. Menaker (ed.), INTERNATIONAL ARBITRATION AND THE RULE OF LAW: CONTRIBUTION AND CONFORMITY, ICCA Congress Series 19 (2018) (“Kalicki et al., Remedies for Illegality"), p. 722 & n.5 (citing cases). ↩
⁷³⁵ See generally RL-142, Kalicki et al., Remedies for Illegality, p. 721 (“Different illegalities raise different conceptual questions, involve different procedural issues, and, accordingly, require different remedies."); id., p. 731 (explaining that improper conduct after acquisition of an investment has been treated variously as a merits defense, as a basis for a counterclaim, or as a factor in assessing damages). ↩

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certain bad acts by the investor during the life of the investment, would impose an ongoing legality qualification for dispute resolution which the BIT itself does not demand.

461. Second, wrongdoing by a party in the conduct of an arbitration should be taken very seriously by the tribunal which has authority to administer that proceeding, and by any authority called upon to enforce its award. In extreme circumstances, such wrongdoing may rise to the level of an abuse of process, resulting in a forfeiture of the wrongdoer's continued access to the arbitral forum. But it is a quantum leap from that proposition to the one Respondent posits here, namely that wrongdoing in a prior arbitration should bar a party from any right to pursue relief in a later one.⁷³⁶ The Tribunal sees no basis to accept this extreme proposition, and does not do so.

462. Respondent's admissibility objection is therefore denied.

463. Accordingly, the Tribunal need not examine for purposes of any threshold admissibility determination the other points that the Parties debate about the BIT I Tribunals' findings of wrongdoing. This includes whether to give weight to findings by those tribunals that were announced to be established on a "balance of probabilities," yet also were found expressly not to meet the higher threshold of "clear and convincing evidence” that the BIT I Tribunals stated they would require to prove bribery, corruption or other grave illegalities.⁷³⁷ It also includes the potential relevance of additional evidence that was submitted in this case but not previously in the BIT I Cases, ostensibly because of the “frozen record" agreement which applied after those cases were revived.⁷³⁸ The Tribunal understands the Parties' respective positions on these issues. In its own consideration of the merits of the Parties' dispute, it has evaluated all relevant evidence based on its own assessment of their persuasive value, bearing in mind the nature of the allegations at issue and the cogency of the proof. It has not simply deferred to the analyses of prior tribunals.

⁷³⁶ See Respondent's Submission on the BIT I Awards, ¶ 35 (contending that in light of Claimants' conduct in the BIT I Cases, "[t]his Tribunal simply cannot verify the legitimacy of the facts placed before it and relied upon by Claimants to support the merits of their claims. Through Claimants' own bad faith abuse of the arbitration process, they have forfeited ... any right to 'relief of any kind from an international tribunal.'") (citations omitted). ↩
⁷³⁷ R-264, ICSID BIT I Award, ¶¶ 7, 109-110, 278; R-265, PCA BIT I Award, ¶¶ 107-108. ↩
⁷³⁸ See, e.g., Claimants' Submission on the BIT I Awards, ¶¶ 37-40, 73 (noting submission in this case of expert evidence from Mr. Kurlantzick which Claimants were not permitted to introduce in the BIT I Cases). ↩

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VI. LIABILITY

464. As noted above, Sanum presents claims in connection with eight different events, and contends that the Respondent's actions with respect to each event violated its obligations with respect to expropriation under Article 4 of the China-Lao BIT. Unlike the LHNV case, this case does not involve any claims other than expropriation. Nor does it involve the additional event (non- recognition of the 2016 ST SIAC Award) that is addressed on its merits in the separate decision being rendered in the LHNV case today.

465. The Respondent rejects each of the claims pursued by Sanum. Below, the Tribunal summarizes each claim asserted and the Parties' respective positions on that claim, before setting out the Tribunal's analysis.

A. SEIZURE AND SALE OF THE SAVAN VEGAS CASINO

(1) The Claim Asserted

466. Sanum argues that by virtue of the seizure and sale of the Savan Vegas Casino, the Respondent expropriated its investment in breach of Article 4 of the China-Lao BIT.⁷³⁹

(2) The Parties' Positions

a. Claimants' Position

(i) Expropriation

467. Sanum argues that the Respondent violated Article 4(1) of the China-Lao BIT by a “direct expropriation" of its investment in Savan Vegas, without meeting the conditions established therein, including for compensation as further provided in Article 4(2).⁷⁴⁰ To establish its investment, Sanum submits that at all times relevant to the present dispute, it has held 80% of the shares in Savan Vegas.⁷⁴¹

⁷³⁹ LHNV presents an equivalent claim about expropriation in breach of Article 6 of the Lao-Netherlands BIT, and also claims for unreasonable impairment of its investment in violation of Article 3(1) of that BIT, and violation of Article 3(4) of that BIT, the "umbrella clause," by failing to comply with local law, in particular Article 61 of the 2009 Law on Investment Promotion and Article 15 of the Lao Constitution. See Letter from Claimants to Tribunal, 24 June 2019; Claimants' Memorial, Section IV.C; Claimants' Reply, Section IV.D. ↩
⁷⁴⁰ Claimants' Memorial, ¶ 345. ↩
⁷⁴¹ Claimants' Memorial, ¶ 346. ↩

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468. Sanum acknowledges that under Article 4(2) of the Lao-China BIT, compensation for an expropriation is to be calculated from the date that expropriation is “proclaimed.”⁷⁴² It maintains that this proclamation took place on 16 April 2015 when the Respondent announced it was going to, and subsequently did, “exercise[] [its] police power in seizing physical control over Savan Vegas"; this act was then ratified on 28 September 2015, when the Respondent issued a declaration divesting Claimants of their rights in Savan Vegas and establishing a new company to carry on its operations.⁷⁴³ Sanum adds that on 24 October 2015, the Respondent admitted in writing to the SIAC Tribunal that it had committed an expropriation.⁷⁴⁴ Sanum also complains about the subsequent sale of the new company, suggesting that the sale value was much lower than the “actual value" of the assets transferred.⁷⁴⁵

469. In Sanum's view, fixing the expropriation as the of date it was first “proclaimed” (which it claims was on 16 April 2015) is consistent with the customary international law goal ensuring that compensation will reflect the “genuine value of the investments affected.”⁷⁴⁶ To use a later date, including that on which the expropriating party officially recognized an earlier de facto expropriation, would enable the expropriating party to benefit from the “drastic [change in] valuation that would have occurred since the taking of affected investments had actually transpired."⁷⁴⁷

(ii) Response to the Respondent's Defenses

470. Sanum rejects (as “incorrect”) the Respondent's defenses regarding the seizure of Savan Vegas.⁷⁴⁸

471. First, Sanum argues that the 2017 SIAC Award does not insulate the Respondent because the claims here present a different set of issues that were not before the SIAC Tribunal, let alone decided by

⁷⁴² Claimants' Memorial, ¶ 348. ↩
⁷⁴³ Claimants' Memorial, ¶¶ 347-348. ↩
⁷⁴⁴ Claimants' Memorial, ¶ 347; Claimants' Reply, ¶ 453; citing C-15, Prof. Don Wallace, Jr. letter to SIAC Tribunal re Expropriation, 23 October 2015, p.4. ↩
⁷⁴⁵ Claimants' Reply, ¶ 147. ↩
⁷⁴⁶ Claimants' Memorial, ¶ 348, citing CL-136, Campbell McLachlan, Laurence Shore, Matthew Weiniger, International Investment Arbitration: Substantive Principle, 2d ed. (OUP: Oxford, 2017) §§ 9.10-9.12, pp. 415-416; CL-137, Thomas W. Wälde & Borzu Sabahi, Compensation, Damages, and Valuation in Muchlinski, Ortino & Schreuer, eds., The Oxford Handbook of International Investment Law (OUP: Oxford, 2008), pgs. 1082-1083; CL- 138, Michael Reisman & Robert Sloan, Indirect Expropriation and Its Valuation in the BIT Generation, 74 BYIL 115 (2003). ↩
⁷⁴⁷ Claimants' Memorial, ¶ 348. ↩
⁷⁴⁸ Claimants' Reply, ¶ 455. ↩

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it.⁷⁴⁹ According to Sanum, the question before this Tribunal is not whether Claimants rightfully suspended their performance under the Deed of Settlement, or whether the Government was contractually entitled to terminate Claimants' control over the casino and appoint a third-party gaming operator, which were issues before the SIAC Tribunal.⁷⁵⁰ Rather, the question here – which was not before the SIAC Tribunal – is whether the Respondent substantially interfered with Savan Vegas' operations so as to constitute an expropriation.⁷⁵¹ In Sanum's view, “[c]ontractual good faith with respect to management of a property is not an element of any of these claims, so a finding of contractual good faith under New York law is irrelevant to these proceedings.”⁷⁵²