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Alternative Dispute Resolution in Laos

Alternative Dispute Resolution in Laos


Phoudthida Soukaloun

Soudalath Limmany


ALSA National Chapter: Laos

  1. Introduction

Laos is in the midst of relatively rapid economic growth and development. The economic growth generates various problems in the term of economic sector and in another area therefore it is needed to look for significant methods to resolve the disputes effectively.

These are the key issues that this country has been facing; in particular, the disputes between parties in their business operations are considered to be a serious issue for their business. Laos, in common with most other countries, does have an alternative dispute resolution includes dispute resolution processes and proceeding that act as a means for disagreeing parties to combat each other to reach an agreement without disagreement on the justice system for both party.

Alternative dispute resolution is the best way that parties can settle their disputes. Salient features of the alternative dispute resolution settle disputes without resorting to the court that is generally classified into three main types which consists of:

  • Negotiation,
  • Mediation, and
  • Arbitration

The basic element of arbitration is that there must be a dispute or difference between parties who agree to submit their dispute to arbitration. Although parties may enter into an arbitration agreement, an arbitration proceeding never comes into existence until a dispute arises between the parties.[1] The choice of arbitration as a dispute resolution mechanism has risen in popularity as a time and cost-effective option to resolve commercial disputes. By including an arbitration clause in contractual arrangements, contracting parties may agree in advance on the seat and rules of arbitration, the size of the arbitration panel and even the rules to appoint an arbitrator in the event of a contractual dispute. This is particularly attractive to investors who are unfamiliar with the judicial processes of the local jurisdiction and wish to preserve the confidentiality of proceedings and final award.

  1. Background

In recent years, the Lao PDR has established the Centre of Economic Dispute Resolution (CEDR) and the Office of Economic Dispute Resolution (OEDR) as mediation or arbitration center for commercial disputes in Lao PDR. The CEDR and OEDR are gradually gaining the attention of local investors as an alternative dispute resolution mechanism to the Lao PDR court system but the vast majority of matters referred have been for mediation rather than arbitration.[2] The Lao PDR also set up the OEDR to manage and govern dispute resolution through an arbitration system. Arbitration proceedings in the Lao PDR are conducted in accordance with the Law on Resolution of Economic Disputes.

Disputes that falls under the jurisdictions of the OEDR must be economic disputes. In this regard, economic disputes are the disputes between organizations and other organizations, organizations and individuals, both domestic and international, which arise from a breach of contract or business operations.[3]

In order to submit a dispute to the OEDR, the following conditions must be met:[4]

  • The dispute is an economic dispute;
  • The submission is specified in a control between the parties;
  • The parties mutually agree for submission;
  • The dispute is not in the proceeding of the People’s Court or already has a final judgment rendered by the People’s Court; and the dispute does not concern national security or peace of the society and environment. Upon submission of a dispute to the OEDR, the parties shall have the right to decide the form of settlement, i.e. mediation or arbitration.

On the other hand, Mediation is a dispute resolution by negotiation by the parties with one or more mediators acting as a neutral person. Mediation will be terminated in the following circumstances:

  • The disputing parties are able to come to an agreement;
  • One or both of the disputing parties fail to participate in the mediation without having a valid reason;
  • The disputing parties are unable to come to an agreement;
  • The death of the disputing party without a successor.[5]

In the event that the parties are unable to reach an agreement, the parties may decide to bring the dispute to the OEDR for arbitration. In this regard, a mediator who was involved in the mediation of a dispute cannot perform as arbitrator in the same dispute. On the other hand, if the parties do not wish to submit the dispute for arbitration, they may bring their dispute to the people’s court.[6]

Arbitration is a method of dispute resolution by the arbitrators who will render an award. The request to amend the arbitral award must be submitted to the OEDR that issued the award within fifteen days from the date the parties become aware[7]. However, even after the arbitration panel has accepted the dispute of the parties, the parties still have the right to come to a settlement before an arbitral award is rendered. In addition, after the arbitral award is rendered, the parties may oppose the award to the people’s court within 45 days. However, an arbitral awards that can be opposed to the people’s court are limited by law.

The results of the OEDR may be reached by:[8]

  • Mediation settlement agreement,
  • Settlement agreement before the issuance of an arbitral award, or
  • Arbitral award.

In the event that the result of the OEDR has not been implemented, the party which is at a disadvantage has the right to request the people’s court to issue a final judgment for the implementation and enforcement of the result of the OEDR. In such event, the court shall consider and issue a judgment within 15 days after receiving a request. If the result is in compliance with the laws and regulations of the Lao PDR, international conventions which the Lao PDR is a party to, and not involved with the law relating to national security or peace and social order, the people’s court will render a judgment for the enforcement of such results of the OEDR. Such judgment is final and may not be appealed. On the contrary, if the court finds that the result of the OEDR does not conform to the law of the Lao PDR, the parties shall have the right to request the OEDR to re-examine the dispute or to file a complaint to the people’s court for adjudication.[9]

Apart from this, the Lao PDR is a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention 1958) which was countersigned on the date of 17 June 1998 and was put into effect on 15 September 1998. In this regard, the Lao PDR shall recognize and implement an arbitral award of foreign or international economic dispute resolution organization when it meets three conditions as follows:

  • The parties must have a nationality of the country which is a party to the New York Convention 1958;
  • Such arbitral award is not contrary to the Constitution or any laws relating to the national security or peace and social order of the Lao PDR; and
  • The party who has the obligation to pay the debt has assets, businesses, shares, deposits or other property in the Lao PDR.

After such arbitral awards of foreign or international economic dispute resolutions organization has already been recognized by the People’s Court of the Lao PDR, it shall be implemented according to the law on judgment enforcement. The fees for the dispute resolution by the OEDR shall be collected according to the value of the claims that is rank between 200,000 – 1,000,000 kip.

  1. Legal Basis

All organizations and citizens must conduct their activities based on laws and legations. The Lao government has made substantial progress towards developing policies, strategies and legal frameworks to protect the rights and freedom of people. The principle legal instrument covering several matters including resolving various disputes in term of economic sector and society. The law on dispute resolution specifies necessary principles, rules and measures for protecting as well as promoting justice for Lao people and foreigner in order to ensure the sustainable socioeconomic development of the nation.

The Amended 2015 Constitution said:

“The state manages the society by the provisions of the Constitution and law. All party and state organizations, mass organizations, social organizations and all citizens must function within the bounds of the Constitution and laws”.[10]

The decree on the economic dispute resolution said:

“The State promotes individuals, business organizations both state and private to resolve economic disputes peacefully by mediation or arbitration. The State creates favorable conditions for the Centre and the Offices of Economic Dispute Resolution to be able to successfully perform their powers and duties in accordance with laws and regulations. The State promotes individuals and private organizations to participate in the development of activities related to the resolution of economic disputes. The State authorizes the establishment of private institutions for economic dispute settlement or ad hoc resolution of economic disputes to be determined by specific regulations”.[11]

Some key legislation and Prime Ministerial decrees that cover the dispute resolution include:

  • The Penal Law 2005;
  • The Civil Law 2005.

  1. Authorities

Lao PDR has several specialist law enforcement bodies responsible for the enforcement of laws. Even though, the Supreme Court does not have a specific unit that is devoted to the prosecution of alternative dispute resolution. The investigation into the cases according to the allocation of individual cases is determined by the penalty that the matter attracts. If the dispute carries on between parties, it is dealt with at the unit of economic dispute resolution. Individual law enforcement authority will be mainly responsible for making a decision on the case. Only the most serious matter is under the jurisdiction of the Supreme Court.

  1. Challenges

Although Laos has already implemented a few laws to prevent disputes, Now the government is trying to make additional measures relating to the protection and promotion of effectively dispute resolution. However, the government and the judiciary are facing some challenges as follow:[12]

  • The criminal justice system has little experience in dealing with dispute. For example, some organs of government investigators and prosecutors have difficulty in detecting and processing the case,
  • Lack of funding, equipment and facilities is one of the difficulties in delaying the case,
  • People are not willing to take legal action and presidential decree,
  • The majority of dispute occurring in remote areas. It is difficult to follow up,
  • The specific office to resolve the dispute is not yet to establish at local level.

  1. Conclusion

Although the increase in the level of trade openness, industrial extensions shows positive impacts on business operation especially dispute resolution. The growth is important for the economic development of Laos, if high rate of growth carry out on the basic of law, regulation and effective measure would make the mechanism of dispute resolution because this is the only decisive factor to ensure the achievement of sustainable development and making the society to the transparency. The best solution for fair of dispute resolution has concentrated on criminal enforcement. It is to be stressed that enforcement is only one aspect the process of better solution of dispute. One further point to be made is that the implementations of the preventive measures strictly whatever resolving dispute with any method such as negotiation, mediation and arbitration the important thing both parties should make consideration on the transparency and justice.

[1] Thawatchai Suvanpanich, ‘International Commercial Arbitration in Laos, Thailand and Vietnam: Comparative Perspectives in The light of The Uncitral Model Law, and with Reference to The Arbitration Laws in England and The People’s Republic of China’ (University of London, January 2001), 56 <> Accessed 24 March 2018 .

[2] Florence Lo, ‘Arbitration in Lao PDR’ (Arion Legal, 24 May 2017)  para 3 <> Accessed 24 March 2018

[3] Law on Resolution of Economic Disputes (n 1) pt. 1, art. 2. (Lao People’s Democratic Republic).

[4] ibid art. 4.

[5] ibid ch. 4, art. 26.

[6] ibid ch. 2, art. 21.

[7] ibid pt. 4, art. 36.

[8] ibid pt. 4, art. 37.

[9] ibid pt. 5, art. 38 – 40.

[10] Constitution of Lao People’s Democratic Republic (2015), ch. 1, art. 10.

[11] Law on Resolution of Economic Disputes (n 1) pt. 1 art. 4.

[12] ‘Country Report on the Alternative dispute resolution in Laos’ (Regional Training for Chief Justice on the Alternative dispute resolution, February 2015, Manila, Phillippine) <> accessed 24 March 2018.

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