Malaysian High Court sets aside Hongsa case
The High Court of Malaysia in Kuala Lumpur has decided that Laos is not required to pay compensation to the previous concession holders of the lignite deposit in Hongsa district, Xayaboury province.
The previous concession was terminated by the Lao government in 2006 due to lengthy project delays.
According to a press release from the Ministry of Planning and Investment, the High Court of Malaysia, which is the initial trial court for this case, reached a judgment on 27 December 2012 to set aside an arbitration award which had instructed the Lao government to compensate Thai-Lao Lignite (Thailand) Co., Ltd. to the amount of US$56 million together with the accrued interest.
The arbitral tribunal was appointed by the government of the Lao PDR and Thai-Lao Lignite (Thailand) Co., Ltd. in accordance with the UN Commission on International Trade Law (UNCITRAL). It was agreed that the arbitration proceedings would take place in Kuala Lumpur.
The arbitral proceedings were initiated to resolve the dispute, which had arisen from the exercise of the right by the government of Laos to terminate (a) the Coal Mining Prospecting and Exploitation Agreement, which granted Thai-Lao Lignite (Thailand) Co., Ltd. the right to conduct a prospecting research, to survey and to distribute the lignite reserves located in Hongsa district, Xayaboury province which was entered into in 1992; and (b) the Project Development Agreement which gave Thai-Lao Lignite (Thailand) Co., Ltd. the right to exploit the lignite reserve and to conduct a feasibility study of the power plant project since 1994.
The reason the Lao government decided to exercise its rights to terminate those agreements is due to the Lao government's determination that Thai-Lao Lignite (Thailand) Co., Ltd was not able to start the implementation of the concession agreements due to difficulties created by Thai-Lao Lignite (Thailand) Co., Ltd., themselves.
Finally, the Lao government was concerned that if the development of the project in Hongsa district which was considered as an essential natural resource of the country was further delayed, it would affect any benefits that Laos would obtain from the project in the future.
Moreover, the Lao government had given plenty of time and opportunities for Thai-Lao Lignite (Thailand) Co., Ltd to commence the project, 13 years in total, yet the project still did not commence.
In addition, Thai-Lao Lignite (Thailand) Co., Ltd ignored the notices from the Lao government issued pursuant to the terms of the concession agreement for Thai-Lao Lignite (Thailand) Co., Ltd to propose any plans to remedy the defaults or breaches within the timeline set by the Lao government in the notices.
Therefore, the termination of both the Concession Agreements in 2006 was necessary for the Lao government, which considering the timely commencement of the project to be of utmost benefit to the country.
Thereafter, in order to ensure the actual commencement of the project's operation, the Lao government arranged an auction for the coal-fired power project development in Hongsa district, in order to find a company with the capability and suitability to conduct a feasibility study of the project. The auction was held transparently with participation from many private entities.
Thai-Lao Lignite (Thailand) Co., Ltd. did not participate in this auction. Yet, in 2007, Thai-Lao Lignite (Thailand) Co., Ltd petitioned the arbitration panel in Kuala Lumpur, Malaysia requesting for compensation from the Lao government to the amount of US$170 million, due to the termination of the concession agreements.
The arbitration panel reached an initial decision at the end of 2009 and ordered, in the award, for the Lao government to compensate Thai-Lao Lignite (Thailand) Co. Ltd., to the amount of US$56 million t ogether with other accrued interest.
The Lao government disagreed with the arbitration award rendered since the government of Laos believed the award of the arbitration panel was based on an important jurisdictional error.
Thus, the Lao government filed a petition to the High Court of Malaysia in Kuala Lumpur in 2010, requesting the revocation of the arbitration award.
Finally, on December 27 2012, the High Court of Malaysia in Kuala Lumpur, which is the initial trial court for this case, reached a judgment to set aside the arbitration award.
The Lao government would like to affirm that the development of the coal mine in Hongsa district, Xayaboury province is a project which will create the utmost benefits not only for Laos but also to Thailand. Furthermore, this project will help strengthen the relationship be tween Laos and Thailand in the years to come.
The decision to terminate the Concession Agreements given to Thai-Lao Lignite (Thailand) Co. Ltd., in 2006 was based on what would fundamentally be of utmost benefit to the country.
Moreover, the auction to find new individual developers to develop the project was transparent and justified, whereby the capability and ability of the new developers to conduct and further develop the coal mine development project were taken into consideration.
ByTimes Reporters
(Latest Update January 29, 2013)
Banpu and Thai Laos lignite
The High Court of Malaysia in Kuala Lumpur has decided that Laos is not required to pay compensation to the previous concession holders of the lignite deposit in Hongsa district, Xayaboury province.
The previous concession was terminated by the Lao government in 2006 due to lengthy project delays.
According to a press release from the Ministry of Planning and Investment, the High Court of Malaysia, which is the initial trial court for this case, reached a judgment on 27 December 2012 to set aside an arbitration award which had instructed the Lao government to compensate Thai-Lao Lignite (Thailand) Co., Ltd. to the amount of US$56 million together with the accrued interest.
The arbitral tribunal was appointed by the government of the Lao PDR and Thai-Lao Lignite (Thailand) Co., Ltd. in accordance with the UN Commission on International Trade Law (UNCITRAL). It was agreed that the arbitration proceedings would take place in Kuala Lumpur.
The arbitral proceedings were initiated to resolve the dispute, which had arisen from the exercise of the right by the government of Laos to terminate (a) the Coal Mining Prospecting and Exploitation Agreement, which granted Thai-Lao Lignite (Thailand) Co., Ltd. the right to conduct a prospecting research, to survey and to distribute the lignite reserves located in Hongsa district, Xayaboury province which was entered into in 1992; and (b) the Project Development Agreement which gave Thai-Lao Lignite (Thailand) Co., Ltd. the right to exploit the lignite reserve and to conduct a feasibility study of the power plant project since 1994.
The reason the Lao government decided to exercise its rights to terminate those agreements is due to the Lao government's determination that Thai-Lao Lignite (Thailand) Co., Ltd was not able to start the implementation of the concession agreements due to difficulties created by Thai-Lao Lignite (Thailand) Co., Ltd., themselves.
Finally, the Lao government was concerned that if the development of the project in Hongsa district which was considered as an essential natural resource of the country was further delayed, it would affect any benefits that Laos would obtain from the project in the future.
Moreover, the Lao government had given plenty of time and opportunities for Thai-Lao Lignite (Thailand) Co., Ltd to commence the project, 13 years in total, yet the project still did not commence.
In addition, Thai-Lao Lignite (Thailand) Co., Ltd ignored the notices from the Lao government issued pursuant to the terms of the concession agreement for Thai-Lao Lignite (Thailand) Co., Ltd to propose any plans to remedy the defaults or breaches within the timeline set by the Lao government in the notices.
Therefore, the termination of both the Concession Agreements in 2006 was necessary for the Lao government, which considering the timely commencement of the project to be of utmost benefit to the country.
Thereafter, in order to ensure the actual commencement of the project's operation, the Lao government arranged an auction for the coal-fired power project development in Hongsa district, in order to find a company with the capability and suitability to conduct a feasibility study of the project. The auction was held transparently with participation from many private entities.
Thai-Lao Lignite (Thailand) Co., Ltd. did not participate in this auction. Yet, in 2007, Thai-Lao Lignite (Thailand) Co., Ltd petitioned the arbitration panel in Kuala Lumpur, Malaysia requesting for compensation from the Lao government to the amount of US$170 million, due to the termination of the concession agreements.
The arbitration panel reached an initial decision at the end of 2009 and ordered, in the award, for the Lao government to compensate Thai-Lao Lignite (Thailand) Co. Ltd., to the amount of US$56 million t ogether with other accrued interest.
The Lao government disagreed with the arbitration award rendered since the government of Laos believed the award of the arbitration panel was based on an important jurisdictional error.
Thus, the Lao government filed a petition to the High Court of Malaysia in Kuala Lumpur in 2010, requesting the revocation of the arbitration award.
Finally, on December 27 2012, the High Court of Malaysia in Kuala Lumpur, which is the initial trial court for this case, reached a judgment to set aside the arbitration award.
The Lao government would like to affirm that the development of the coal mine in Hongsa district, Xayaboury province is a project which will create the utmost benefits not only for Laos but also to Thailand. Furthermore, this project will help strengthen the relationship be tween Laos and Thailand in the years to come.
The decision to terminate the Concession Agreements given to Thai-Lao Lignite (Thailand) Co. Ltd., in 2006 was based on what would fundamentally be of utmost benefit to the country.
Moreover, the auction to find new individual developers to develop the project was transparent and justified, whereby the capability and ability of the new developers to conduct and further develop the coal mine development project were taken into consideration.
ByTimes Reporters
(Latest Update January 29, 2013)