King & Spalding has acted on a significant $73 million arbitration in the UK Commercial Court over a dispute between two Asian coal companies and the government of the Lao People’s Democratic Republic.
The case stems from a 2009 arbitration order made against the Laos government in favor of Thai-Lao Lignite (Thailand) Co., Ltd. and Hongsa Lignite (Lao PDR) Co., Ltd. The two companies entered into an agreement in 1994 with the Laos government regarding the Hongsa project, which was for the construction of a coal mine and a mine-mouth power plant intended to sell electricity to Thailand. The Laos government improperly terminated the agreement, prompting TLL and HLL to launch arbitration proceedings under the UNCITRAL Rules.
The arbitration, conducted in Kuala Lumpur, Malaysia, saw the tribunal award TLL and HLL $57.21 million, plus interest at nine percent. Laos, however, refused to honour the award, prompting enforcement proceedings in the United States, England, France and Singapore. Laos commenced proceedings in the Malaysian courts to set aside the award.
The U.S. District Court for the Southern District of New York confirmed the Malaysian award in August 2011, which was affirmed by the U.S. Court of Appeals for the Second Circuit on October 18, 2012. Laos still refused to honour the judgment, which now totals approximately $73 million.
On October 26, 2012, the Commercial Court of London issued an order requiring Laos to post security for the entire amount, with $35 million due in 21 days, and the remainder due seven days later. By the terms of the London court’s order, Laos’ refusal to post the required security will result in the award being made immediately enforceable in England.
King & Spalding’s cross-border international arbitration team serves as global enforcement counsel to TLL and HLL. London arbitration partner Tom Sprange worked on the most-recent English law aspects, following on from New York-based James Berger, who worked for the clients on the US hearings. Singapore-based arbitration partner John Savage, in collaboration with Chelva Rajah and Kei Jin Chew of Tan Rajah & Cheah, is handling the Singapore proceedings.
