Calvin Ayre | 5 October 2016
Sanum Investments wins casino court fight with Laos government
by Steven Stradbrooke
Sanum Investments has won its legal case against the government of Laos for what it claimed was the unjust cancellation of its casino business.
This week, the Straits Times reported that the Appeal Court in Singapore ruled that Macau was subject to a bilateral investment treaty (BIT) signed by China and Laos in 1993, and thus Sanum has the right to seek redress under the BIT for capital investment benefit losses.
If you’re just joining us, Sanum used to operate the Savan Vegas Hotel & Entertainment Complex in Savannakhet province along Laos’ border with Cambodia. In 2012, the Laotian government seized the property, claiming that Sanum owed $23m in back taxes and penalties. Sanum lost control of the Thanaleng Slot Machine Club near Laos’ capital Vientiane under similar circumstances.
The Laotian government eventually sold Savan Vegas to Macau Legend Development for $42m earlier this year. But Sanum has continued to pursue its legal fight with the Laotian government, and an independent arbitration panel in Singapore ruled that it had jurisdiction over the matter.
Laos had submitted diplomatic letters from the governments of both Laos and China attesting to their belief that the 1993 BIT couldn’t apply to Macau because it predated the former Portuguese colony’s return to Chinese hands in 1999. The Singapore High Court agreed with this assessment.
But the Court of Appeal dismissed these letters, claiming that the ‘moving treaty frontier’ rule “presumptively provides for the automatic extension of a treaty to a new territory as and when it becomes part of that state.”
Sanum has argued that the price Macau Legend paid for Savan Vegas represented less than 17% of what the property was actually worth. In May, Sanum’s John Sario claimed his company “will only support a sale that is for maximum value, estimated to be $250m.” Sanum believes it is entitled to 80% of the sale price.
Sanum and its parent company Lao Holdings also filed multiple lawsuits this summer against San Marco Capital Partners, the company the Laos government hired to manage Savan Vegas and later find a buyer for the property. Sanum accused San Marco and its president Kelly Gass of failing to conduct an open bid process.
Located on a 50-hectare property, Savan Vegas features 92 gaming tables, just under 500 slot machines, a 476-room hotel as well as retail, dining and nightclub options.