BRIDGE Capital LLC and its principal, John Baldwin, have requested the federal court to dismiss the lawsuit of the Laos government or the Lao People’s Democratic Republic’s petition to enforce foreign arbitral in the total amount of $5.026 million.
Baldwin and Bridge Capital, represented by attorney Michael Dotts, on Monday filed a notice and motion to dismiss the complaint.
According to Dotts, the petition is an improper attempt to enforce three international arbitral costs awards.
He said his clients were not involved in those arbitrations and are not subject to those awards.
The Laos government, through attorney Colin M. Thompson, filed the petition in September 2022 and also named Lao Holdings N.V. and Sanum Investments Limited as defendants.
Dotts, in the 19-page motion to dismiss, stated that Lao Holdings N.V. and Sanum Investments, which are parties to the arbitrations, have not been served by the complaint.
The District Court for the NMI will likely find it lacks personal jurisdiction over them if they are brought before this court, Dotts said.
“What is going on here is an attempt by [Laos] to improperly bypass the award debtors Sanum and LHNV [and] to instead go after the U.S.-based assets of Baldwin and Bridge on an untenable alter ego theory,” the attorney said.
“Plaintiff’s backwards strategy of going after alleged alter egos without first attempting to collect from the actual award debtors fails for three reasons,” Dotts added.
“First, Baldwin and Bridge were not parties to the arbitrations and are not debtors on the arbitral costs awards that incidentally have never been confirmed, recognized, or enforced in any jurisdiction,” Dotts said.
“Baldwin and Bridge simply have no obligation to pay the Laos government. Moreover, they have never been adjudged by any court or tribunal to be alter egos of either LHNV or Sanum.
“Requiring a fact-intensive alter ego resolution in what is supposed to be a summary proceeding under the New York Convention regarding awards that have never been confirmed, recognized, or enforced in any jurisdiction, is legally inappropriate.
“There is also no allegation in the Petition to Enforce Foreign Arbitral Awards that the Laos government has sought to enforce the awards against Sanum and LHNV and that neither of those companies were able to pay.”
Moreover, Dotts said, the petition “fails to state a claim for veil piercing on which this court could grant relief.”
“LHNV is an Aruba company,” he added. “Sanum is a Macau company. The laws of Aruba apply to LHNV, and the laws of Macau apply to Sanum with regard to piercing the corporate veils of these two companies. Foreign laws are to be determined as a matter of fact and the applicable laws of Aruba and Macau have not been pled as factual allegations in the petition.”
Instead, Dotts said, the plaintiff “relies exclusively on Idaho law that has no bearing on this case, and even under which the Laos government still fails to state a claim.”
Specifically, he said, “should Idaho law apply (and it doesn’t) the petition fails to sufficiently allege a unity of interest or ownership between Baldwin and Bridge on the one hand and LHNV and Sanum on the other, and it does not allege any inequity in refusing to pierce the veils,” Dotts added.
“Because plaintiff has not pled and cannot show that Sanum and LHNV could not pay the costs awards or that the Laos government would suffer some extraordinary inequity, injustice, or fraud if corporate separateness is maintained, this fatal defect cannot be cured by amendment.”
According to Dotts, Baldwin is not estopped — or prevented — from disputing the petitioner’s alter ego allegations.
“The Laos government’s estoppel argument is overreaching and was flatly rejected by the Idaho District Court where the same plaintiff earlier filed a virtually identical action seeking to collect cost awards from Baldwin and Bridge,” Dotts said.
“Instead of proceeding with this problematic and flawed action, nothing is stopping the plaintiff from seeking to enforce the costs awards before courts with jurisdiction over Sanum and LHNV,” he added.
“If the awards are confirmed and then if the petitioner cannot collect on them, the courts with jurisdiction over Sanum and LHNV are in the best position to determine under their own laws alter ego liability. The Laos government can return to the CNMI and seek to enforce the foreign judgments if the actual award debtors do not pay and if the Macau or Dutch courts determine that Baldwin or Bridge are their alter egos. Plaintiff has gone about enforcing the costs awards backwards by coming to the CNMI first to go after the assets of alleged alter egos, when no effort had been made to enforce the awards against the award debtors,” Dotts said.
Background
According to the Laos government’s lawsuit, Baldwin claims his residence is in Saipan and for many years used real property in Saipan as a residence, purchased and maintained real property in Saipan for investment purposes, operated his business in Saipan through the company he and Sean Scott own, Bridge Capital, and conducted banking business in Saipan relating to his business activities.
Bridge Capital was formed in CNMI in 2005 and conducted business in Laos for many years and conducts business in Saipan, the lawsuit added.
Baldwin formed Lao Holdings NV or LHNV as a corporation in 2012 under the laws of Aruba, the Netherlands Antilles. LHNV has a registered office in Aruba, but no employees are located there and no business activities are conducted there, the lawsuit stated.
As for Sanum Investments, it was incorporated in Macau in 2005.
Baldwin established Sanum to use as a corporate vehicle for his gaming investments in Asia, the lawsuit stated.
It added that Sanum’s registered office is in Macau, but no employees are located there and no business is conducted there.
According to the lawsuit, LHNV and Sanum’s principal place of business is in Saipan, at and through the offices of Bridge Capital — LHNV and Sanum’s “nerve center.”
Investments in Laos
In 2007, Baldwin learned of an opportunity to invest in new gaming projects in Laos. Baldwin agreed with a local Laos partner, the ST Group, to invest in gaming businesses in Laos. Baldwin used Sanum to hold his interests in the Laotian gaming businesses. He funded the investments through loans from Bridge to Sanum, the lawsuit stated.
Baldwin obtained a contractual interest in a slot club controlled by ST Group in Thanaleng, Laos using Bridge funds, and developed a casino, the Savan Vegas Casino at Savannakhet, Laos, the lawsuit added.
Claims against Laos
On Aug. 14, 2012, Baldwin filed two Bilateral Investment Treaty or BIT claims against the Laotian government.
The treaty between the People’s Republic of China and Laos, which Sanum could invoke as a Macau corporation, was an “early phase BIT” which provided investors a narrow range of rights, limited to expropriation.
Intending to use newer international law claims, including “unfair and inequitable treatment,” and “denial of justice,” Baldwin used a well-established treaty shopping plan and created LHNV to take advantage of the more favorable Netherlands/Laos Bilateral Investment Treaty in its arbitration over the Thanaleng slot club against Laos, the lawsuit stated.
Baldwin inserted LHNV into the corporate ownership chain between himself and Sanum for this purpose, the lawsuit added.
In both arbitrations, LHNV and Sanum brought claims against the Laotian government for alleged violations of its international responsibilities to protect foreign investors under the relevant treaties.
The collective total of the claims asserted against Laos amounted to $1 billion.
But the BIT Tribunals dismissed all of LHNV’s claims and all of Sanum’s claims and awarded Laos its fees, expenses, and costs of the arbitrations, the lawsuit stated.
The LHNV Tribunal awarded Laos over $1.94 million while the Sanum Tribunal awarded Laos over $1.77 million for the total sum of over $3.72 million.
On Dec. 19, 2017, LHNV/Sanum initiated another international arbitration under an arbitration agreement between LHNV/Sanum and San Marco Capital Partners LLC, and its owner, Kelly Gass, under the rules of the Singapore International Arbitration Center or SIAC.
The SIAC Tribunal dismissed all LHNV/Sanum claims and awarded San Marco and Kelly Gass the sum of $437,200.
That tribunal further awarded the Laotian government the sum of $862,425 — the total award against LHNV and Sanum is over $1.29 million.
On Nov. 6, 2019, LHNV and Sanum filed an action in the High Court of Singapore to “set aside” the two BIT awards.
The Singapore International Commercial Court dismissed LHNV and Sanum’s set aside action on Sept. 9, 2021.
LHNV/Sanum nonetheless appealed that decision to the Singapore Court of Appeal and a decision is pending.
Likewise, LHNV/Sanum filed an action in the High Court of Singapore to set aside the SIAC award on Nov. 12, 2021.
That action was dismissed on June 1, 2022, by the Singapore International Commercial Court.
On June 29. 2022, LHNV and Sanum filed an appeal with the Singapore Court of Appeal and a decision is pending.
According to the Laotian government’s lawsuit, there is a unity of interest and ownership between Baldwin and his companies.
Baldwin completely dominates and controls Bridge Capital, LHNV and Sanum, the lawsuit stated.
The BIT Tribunals each found as fact that Baldwin was the “directing mind’’ of LHNV and Sanum.
“His conduct throughout was to advance their corporate interests. His bad faith conduct is their conduct,” the lawsuit stated.
