Government of the Lao People’s Democratic Republic v Sanum Investments Ltd [2015] SGHC 15

The key issue in Government of the Lao People’s Democratic Republic v Sanum Investments Ltd was whether the bilateral investment treaty (the “BIT”) between the People’s Republic of China (“PRC”) and the Lao People’s Democratic Republic (“Laos”) applied to the Macau Special Administrative Region of China (“Macau”). At the same time, the Singapore High Court elaborated on when new evidence could be admitted in an application to challenge a jurisdictional ruling by an arbitral tribunal.

Facts

In 1987, the PRC and Portugal signed a joint declaration which provided that the PRC would resume sovereignty over Macau with effect from 20 December 1999. Prior to the scheduled handover, Macau was considered Chinese territory over which Portugal exercised administrative power. Subsequently, on 31 January 1993, the PRC and Laos entered into the BIT. This treaty was silent on whether the provisions therein extended to Macau. On 20 December 1999, the PRC resumed its exercise of sovereignty over Macau pursuant to the 1987 joint declaration.

Sanum Investments Limited (“Sanum”) is a company incorporated in Macau. In 2007, Sanum invested in the gaming and hospitality industry of Laos through a joint venture with a Laotian entity. Disputes subsequently arose and Sanum commenced arbitration proceedings under the BIT against Laos in 2012. Laos objected to the jurisdiction of the arbitral tribunal on the basis that the BIT did not apply to Macau. Following the dismissal of its application by the arbitral tribunal, Laos brought the present application to refer the issue of jurisdiction to the Singapore High Court.

Preliminary issues decided by the Singapore High Court

As a starting point, the Singapore High Court had to determine two preliminary issues:

  • Whether the present application only raised issues of international law, which were non-justiciable; and
  • Whether two diplomatic letters shedding light on Laos’ and PRC’s views on the scope of the BIT should be admitted as evidence.

With regard to the first issue, the Singapore High Court held that the present application concerned a party’s right to invoke this court’s jurisdiction under section 10 of the International Arbitration Act to review the arbitral tribunal’s ruling on jurisdiction. The application did not relate to the exercise of sovereign or legislative prerogative in matters of high policy such as sovereign immunity, deployment of troops overseas, boundary disputes or recognition of foreign governments. Hence, the issues raised in the application were justiciable.

With regard to the second preliminary issue, the Singapore High Court opined that fresh evidence could be admitted in this application if:

  • The party seeking to admit the evidence demonstrated sufficiently strong reasons why the evidence was not adduced at the arbitration hearing  (as opposed to showing that the evidence could not have been obtained with reasonable diligence for use at the trial);
  • The evidence if admitted would probably have an important influence on the result of the case though it need not be decisive; and
  • The evidence must be apparently credible though it need not be incontrovertible.

The Singapore High Court held that the abovementioned requirements had been satisfied on the facts of the case.

Main issue: Whether the BIT applies to Macau

The Singapore High Court held that the BIT did not apply to Macau. In reaching its decision, the court considered various international instruments, documents and academic writings tendered by the parties. In particular, it found that the two diplomatic letters strongly supported Laos’ claim that the contracting states had not intended for the BIT to apply to Macau. The Singapore High Court also referred to the 2001 WTO Trade Policy Report on Macau, which stated that: “In 1999, [Macau] signed a double taxation agreement with Portugal … [Macau] also signed a bilateral agreement on investment protection with Portugal … [Macau] has no other bilateral investment treaties or bilateral tax treaties” [emphasis added].

Comments

This decision comes after the recent Singapore Court of Appeal decision of PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara International BV & Ors and another appeal [2014] 1 SLR 372 (“Astro”), where the Court of Appeal affirmed the de novostandard of judicial review which entailed a fresh examination of the issue of joinder and jurisdiction decided by the arbitral tribunal in its award on preliminary issues. Pertinently, the Singapore High Court rejected Sanum’s argument that the standard of review of the arbitral tribunal’s determination on jurisdiction should be a limited one out of deference and respect for the arbitral tribunal and affirmed the decision in Astro. It therefore appears that the Singapore courts will continue to review determinations on jurisdiction robustly and accept new evidence, where appropriate.