Interpretation of the Korea-Laos Investment Protection Agreement: Investor Rights Protection and Practical Points

韩国-老挝投资保护协定解读：投资者权益保障与实务要点

ການຕີຄວາມສັນຍາສົ່ງເສີມ ແລະ ປົກປ້ອງການລົງທຶນ ສ.ເກົາຫຼີ-ສປປ ລາວ: ການຄ້ຳປະກັນສິດທິນັກລົງທຶນ ແລະ ຂໍ້ຄວນຮູ້ພາກປະຕິບັດ

Published: 2026-07-04 · LaoPaniti legal guides

Scenario: You are a Korean factory owner in Laos and suddenly receive a government notice to expropriate your land. What would you do?

Don't panic. The Agreement between the Government of the Republic of Korea and the Government of the Lao People's Democratic Republic for the Promotion and Protection of Investments, effective since 1996, is your "talisman." Although this agreement is old, it remains in force and specifically protects the rights of investors from both countries.

1. Treatment of Investments: No "Discrimination"

Article 3 of the Agreement stipulates that your investment in Laos must enjoy "fair and equitable treatment," and the treatment shall not be less favorable than that accorded to Lao domestic investors or investors from any third country (whichever is more favorable). That is, if Laos grants more favorable policies to Japanese investors, you are equally entitled to enjoy them.

2. Expropriation Compensation: Must Be "Prompt, Adequate, and Effective"

Article 5 clearly states that your investment shall not be expropriated unless for a public purpose, on a non-discriminatory basis, and in accordance with legal procedures. Even if expropriated, compensation must:

Equal the fair market value immediately before expropriation;
Include interest from the date of expropriation;
And be freely transferable out of Laos.

3. Free Transfer: Funds Can Be Transferred Out Anytime

Article 6 guarantees that your investment capital, profits, dividends, loan repayments, and other sums can be freely converted into freely usable currencies (such as US dollars) at the market exchange rate and transferred out without undue delay or restriction.

4. Dispute Resolution: Go to International Arbitration

If an investment dispute arises with the Lao government, Article 8 provides: first, amicable consultations for 6 months; if unresolved, it may be submitted to ICSID (International Centre for Settlement of Investment Disputes) arbitration. Note: Laos has not yet acceded to the Washington Convention, so currently, the applicable procedure is the conciliation or arbitration procedure agreed upon by both parties.

Implications for Lao Investors

Conversely, when Lao investors invest in Korea, they equally enjoy national treatment and most-favored-nation treatment under Korean law, as well as the same expropriation protection and free transfer rights.

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Want to know more details about investment protection? Visit 老法智 LaoPaniti now to consult the AI legal assistant for free and get personalized answers!

This article is compiled by 老法智 LaoPaniti for reference only and does not constitute legal advice.

FAQ

What types of investments are protected under this agreement?

According to Article 1, investments include movable and immovable property, company shares, intellectual property rights, business concessions, and virtually all forms of assets. A change in the form of investment does not affect its character as an investment.

If the Lao government expropriates my factory, how much compensation can I get?

Under Article 5, compensation shall equal the fair market value immediately before expropriation, plus interest from the date of expropriation, and must be paid promptly, effectively realized, and freely transferable. The compensation standard shall not be less than that accorded to Lao domestic or third-country investors.

If I have a dispute with the Lao government, can I go directly to international arbitration?

According to Article 8, you must first engage in amicable consultations for 6 months. If unresolved, the dispute may be submitted to ICSID arbitration, provided that Laos has acceded to the Washington Convention. Currently, Laos has not yet acceded, so other arbitration procedures agreed upon by both parties apply.

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