The aftermath of the 2018 dam collapse in Laos continues. SK Ecoplant, the South Korean construction company responsible for the dam, has demanded that the compensation and repair costs it initially shouldered be shared with the co-investing companies, asserting joint responsibility. The Singapore International Arbitration Centre (SIAC) has received submissions from the investment firms involved, with a court session scheduled for October to hear their stances directly.
According to the construction and international arbitration industry on March 28, the SIAC plans to discuss the issue of compensation and restoration costs for the collapse of an auxiliary dam of the Xe-Pian Xe-Namnoy hydroelectric power plant that occurred in July 2018.
SK Ecoplant (formerly SK E&C), the constructor of the dam, initially advanced $110 million for compensation and repair costs through insurance and shareholder loans. Subsequently, it demanded that members of the Xe-Pian Xe-Namnoy Power Company (PNPC), a dam construction and operation consortium, share the financial burden equitably. PNPC is a joint investment venture established by SK Ecoplant (26%), Korea Western Power (25%), Lao Holding State Enterprise (LHSE) (24%), and the Thai company RATCH (24%). The dam collapse resulted in 71 deaths and displaced approximately 6,600 people.
“The statements from each company regarding the arbitration content have already been submitted earlier this year,” an official in the international arbitration industry said. “Hearings from the involved parties are planned for October.”
Such conflict was inevitable after the dam collapse since each party offered differing accounts regarding the cause of the collapse. The Lao government blamed the collapse on poor construction by SK Ecoplant. The Lao National Investigation Committee concluded, citing the International Expert Panel (IEP) findings, that the dam collapse cannot be considered a “force majeure” event and could have been prevented with proper measures. While SK Ecoplant claims the collapse was due to an unavoidable natural disaster, it did not formally contest the findings of the IEP investigation.
An SK Ecoplant official said, “Arbitration is underway with PNPC, the project owner, due to disagreements over the cause of the accident, including whether it was a force majeure, and who is responsible for the cost of the restoration work.”
In Laos, considerable internal conflicts have persisted since the dam collapse. Foreign media reports until June last year indicated that among six categories of compensation, an agreement had not been reached on the amount for “unverified losses,” leaving the disaster victims uncompensated. In January this year, some Lao officials reportedly embezzled a portion of the compensation for houses and land entrusted to the Lao government.
