Singapore court rules on bilateral treaty claim

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In its highly anticipated first decision concerning an investor-state arbitration, the Singapore Court of Appeal has held in Sanum Investments v Government of the Lao People’s Democratic Republic (2016) that a 1993 bilateral investment treaty (BIT) between the People’s Republic of China (PRC) and Laos applies to Macau in the wake of the former Portuguese territory’s handover to the PRC in 1999.

In 2012, a Macau-based investor, Sanum Investments, commenced United Nations Commission on International Trade Law (UNCITRAL) arbitration proceedings against Laos, bringing claims for expropriation of gaming investments under the PRC-Laos BIT. Following consultation with the parties, the tribunal designated Singapore as the place of arbitration.

with_wong_xlargeAfter the tribunal ruled that it had jurisdiction to determine Sanum’s expropriation claims, Laos filed an appeal to the Singapore High Court and produced notes verbales exchanged in 2014 (after the tribunal’s ruling) between the Laotian Ministry of Foreign Affairs and the PRC Embassy in the Laotian capital, Vientiane, which stated that the PRC-Laos BIT was not applicable to Macau. Accepting the notes verbales into evidence, the High Court concluded that the tribunal lacked jurisdiction over Sanum’s claims. When Sanum appealed, Laos produced further notes verbales sent in 2015, by which the PRC Ministry of Foreign Affairs confirmed the authenticity of the note verbale from the PRC Embassy.

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ALVIN YEO is chairman and senior partner at WongPartnership in Singapore. Co-author KOH SWEE YEN is a partner at the firm.

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