Freezing Lao Government Accounts Overturned by Court: Lessons from a Cross-Border Lawsuit

冻结老挝政府账户被法院改判：一场跨国官司的教训

ການອອກຄຳສັ່ງສານໃຫ້ປົດອາກອນບັນຊີລັດຖະບານລາວຖືກປ່ຽນແປງ: ບົດຮຽນຈາກຄະດີຂ້າມຊາດ

Published: 2026-09-05 · LaoPaniti legal guides

Imagine that due to an investment dispute, you apply to a court to freeze a bank account of the Lao government. The court agrees and issues a freezing order. But unexpectedly, the Central Bank of Laos steps in and says: 'This account contains my money; on what basis do you freeze it?' A tug-of-war over sovereign immunity ensues. This is not a movie plot but a real case that occurred in a UK court.

Background: Arbitration Dispute Between Two Companies and the Lao Government

Two companies (a Joint Venture between Thai and Lao entities) had a dispute with the Lao government over a project development agreement and proceeded to international arbitration. They won the arbitration, but the Lao government did not pay. Consequently, these two companies went to a UK court, obtained and were granted a domestic freezing order against the Lao government, which also froze accounts of the Central Bank of Laos in Laos. The Central Bank of Laos objected; as a non-party, it applied to the court to discharge the freezing order, arguing: 'This account is mine; under the UK State Immunity Act, central bank property enjoys enforcement immunity, and the court cannot freeze it.'

Court Ruling: Freezing Order Maintained, but Central Bank Accounts Must Be Unfrozen

The Commercial Court of the UK High Court ruled on August 8, 2013: the freezing order remains in effect, but the provisions relating to the accounts of the Central Bank of Laos must be deleted. The court held that under the relevant provisions of the UK State Immunity Act, central bank property enjoys enforcement immunity, and unless an exception applies, it cannot be enforced. In this case, the funds in the Central Bank of Laos's accounts were central bank property, so the part of the freezing order targeting the central bank had to be revoked.

As for the Central Bank of Laos's request that the Applicant provide cross-undertakings in damages to compensate for losses, the court refused. The court stated that this would be equivalent to imposing conditions after the fact, which is inconsistent with commercial court practice.

A Reminder for Friends Doing Business in Laos

This case teaches us several things:

1. Sovereign immunity is a wall: When doing business with foreign governments, if a dispute arises, attempting to pressure them by freezing their central bank accounts is likely to fail. The law provides special protection for central bank property.
2. Winning arbitration does not mean money in hand: Enforcement of an award is another tough battle. If the opposing party is a sovereign state, enforcement procedures become more complex, involving sensitive issues such as immunity and diplomacy.
3. Contract terms must be detailed: In this case, Article 14 of the project development agreement (PDA) was the basis for arbitration. When signing a contract, the dispute resolution clause directly affects the path for future rights protection.

If you encounter similar contract disputes in Laos, it is advisable to seek professional legal advice first to assess enforcement risks.

FAQ

Can a foreign court freeze the accounts of the Central Bank of Laos in Laos?

Under the relevant provisions of the UK State Immunity Act, central bank property enjoys enforcement immunity and generally cannot be the subject of a freezing order. In this case, the UK court deleted the provisions in the freezing order relating to the accounts of the Central Bank of Laos.

Is it difficult to enforce an arbitral award in Laos?

Enforcing a foreign arbitral award involves Lao domestic law and international treaties, and the procedures are complex. In this case, although the two companies won the arbitration, they still had to apply for a freezing order in a foreign court during enforcement and faced sovereign immunity defenses. It is advisable to consult a professional lawyer in advance.

What should be noted in the dispute resolution clause when signing a contract?

It is important to clearly specify the arbitration institution, seat of arbitration, and governing law. In this case, arbitration was initiated under Article 14 of the project development agreement (PDA), and the clarity of the clause directly affects the effectiveness of rights protection. It is recommended to have legal professionals draft or review the clause.

Legal basis

《英国《国家豁免法》》第相关条款条
《项目开发协议（PDA）》第14条

需要人办？相关服务在线提交 · ບໍລິການທີ່ກ່ຽວຂ້ອງ · Get it done

合同律师快审ກວດສັນຍາໂດຍທະນາຍແບບໄວ

律师/顾问对合同关键条款、风险点和修改方向做快速复核。

在线提交需求 · ສົ່ງຄຳຂໍອອນລາຍ →

商业经营合规顾问

围绕经营事项梳理公司、用工、税费、合同收款、商标保护和门店合规风险，形成可跟进的服务清单。