The Amended Law on the Resolution of Economic Disputes (Nº 51/NA, 22 June 2018) (the “Amended Law”) came into effect on 6 December 2018 and replaced the previous Law on Economic Dispute Resolution (Nº 06/NA, 17 December 2010) (the “2010 Law”). A key highlight of the Amended Law is the inclusion of more detailed procedures relating to arbitration and mediation and the commencement, suspension, postponement and withdrawal of dispute resolution proceedings.
The Amended Law has shortened the time periods applicable to the Center or Office for the Resolution of Economic Disputes (“CRED” and “ORED” respectively) in certain instances. For example, if the parties failed to appoint a mediator or a mediation panel, the CRED or ORED will have 5 business days to select one or more mediators instead of the previous 10 days.
Enforcing Foreign Arbitral Awards
Unlike the 2010 Law which set out conditions for recognizing and enforcing a foreign or international arbitral award in the Lao PDR, the Amended Law now states that such recognition and enforcement is to be undertaken in accordance with the Law on Civil Procedure.
Ad Hoc Tribunals
Pursuant to the Amended Law, parties may also establish ad hoc arbitration in the Lao PDR, subject to government approval. Although the Amended Law makes no mention of the conditions which parties need to meet in order to receive the green light, this provision opens the possibility for disputants to conduct a recognized arbitration outside the auspices of CRED or ORED.
Refusal to Accept Summons
Another welcome development in the Amended Law is that failure by the respondent to receive a summons or to participate in the hearing no longer renders the proceedings null and void. Indeed, if the parties have agreed to domestic arbitration in the Lao PDR contractually, then proceedings will take place despite a respondent’s refusal to accept the summons or to participate in the hearing.
Recusal of Arbitrator
Under the Amended Law, the parties may also request recusal of an arbitrator in the event that the arbitrator is or may be subject to a conflict of interest. Previously, the 2010 Law simply granted the arbitrator the right to recuse himself or herself if he or she was of the view that a recusal was necessary.
Matters Capable of Arbitration
On the other hand, the Amended Law has now broadened the scope of those matters not capable of arbitration. Under the 2010 Law, grounds which would render a matter non-arbitrable were limited to matters in violation of laws on national security, social stability, or environmental protection. In contrast, under the Amended Law, any matters that relate to national security, social stability, or environmental protection may not be arbitrable whether or not a law is contravened.
While foreign citizens may now register as a foreign arbitrator (or mediator) with the Ministry of Justice, the use of a foreign arbitrator (or mediator) is only permitted when at least one of the disputing parties are foreign individuals, legal entities or organizations. Therefore, an economic dispute involving two Lao entities – even if they are owned or controlled by foreign shareholders – may not be able to appoint a foreign arbitrator (or mediator). Foreign-owned or controlled entities which are incorporated in Lao PDR may consider obtaining some further guidance that they would be entitled to appoint a foreign arbitrator if they intend to proceed with a domestic arbitration. Further, the parties may only select their arbitrators (or mediators) from a list prepared by the Ministry of Justice. One of the requirements to qualify as an authorized arbitrator or mediator in the Lao PDR (for both Lao and foreign nationals) is knowledge of the Lao language. In practice, this requirement will disqualify many foreign professionals who may be otherwise qualified.
The Ministry of Justice is currently working on implementing regulations for the Amended Law and we look forward to the development of the CRED and ORED in 2019.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
Country Managing Director
DFDL Lao PDR