Donaco to appeal Cambodian arbitration court decision

Thursday 22nd of August 2019

Donaco International has filed an appeal against a decision made by a Cambodian arbitration court, which ruled in favor of the three Thai vendors who had terminated the lease of the land in which the Star Vegas casino is located.

The spat between Donaco and its Thai vendors first came about after Donaco launched legal proceedings which alleged its three Thai vendors were running a neighboring competing business in breach of their contract.

The vendors retaliated in 2018 by initiating termination of the lease agreement with Donaco, citing the casino operator’s lack of rental payment.

However, Donaco on Thursday argued that it had been attempting, with all reasonable efforts, to make rental payments to LHP since December 2017.

Donaco said that the Thai vendor blocked all means for Donaco to make the payments since the end of 2017, waited five months and then launched efforts to terminate the lease.

“In December 2017, Lee Hoe Property stopped collecting rent in cash… No bank account was ever provided, and representatives of Donaco were banned from accessing the offices of Lee Hoe Property, which were located within the competing Star Paradise/ Winsor Casino,” explained the company in a statement.

“Lee Hoe Property never sent any reminder letter, letter of demand, or any notice at all relating to the rent. Instead, Lee Hoe Property simply waited for five months, and then sent a notice of termination, and demanded that DNA Star Vegas vacate the premises,” it added.

In June 2018, Donaco sought and obtained a preliminary injunction from the Banteay Meanchey Court of First Instance, prohibiting the termination of the lease.

However, in the following month, the three Thai vendors launched an arbitration over the injunction, which has led the proceedings to where they are today.

In its Thursday filing to the ASX, Donaco said that the “arbitration award cannot be enforced until it is registered and enforced by a court in a competent jurisdiction.”

The company said it has already filed an appeal to the Appeal Court in Phnom Penh against certain procedural aspects of the arbitration process, and will now file a further appeal against the decision itself.

Donaco also noted Article 250 of the Cambodian Civil Code which provides that a registered perpetual lease can only be terminated if rent is unpaid for three years.

“However, the arbitrator has ruled that this provision of the legislation can be overridden by a private agreement between the parties. This will form as one of the grounds of appeal,” said Donaco.

Donaco said while the appeal process is pending, it will be business as usual for Donaco and its Star Vegas business.