Enforcement of Contracts in Laos

Enforcement of contracts in Laos

Lao PDR operates a system of notarising and registering various documents that are used in everyday life and for business purposes to certify their adherence to Lao PDR law.

Notarisation

A “notary” is generally defined as a person with legal training (but not a law degree necessarily) who is licensed by the state to perform acts in legal affairs, in particular witnessing signatures on documents. Each legal system has its own rules for notaries.

In Lao PDR, the Notary Law (Amended) No. 11/NA, 26 November 2009 provides for notaries and Notary Offices in Laos. Notary Offices are established within justice divisions at each province or prefecture and there are no independent notaries operating outside of those established Notary Offices.

The law requires notaries to review the correctness of the documents and events in detail before certifying them. This is a much more onerous obligation than is imposed in other jurisdictions for the witnessing of signatures or certifying true copies of documents. The benefit of the notary system, opposed to just having a signature on a document witnessed and certified, is that having a document notarised in Lao PDR also ensures that the document will be held enforceable before a Lao PDR court without having to meet any other standard of proof on its enforceability.

Notarising a document also means that the Ministry of Justice then has a copy of that document in the event of there being a dispute over the existence or contents of that document.

Documents in Laos

In Laos, many contractual documents are required to be notarised and registered in some way to ensure recognition of their legal validity. This is especially important if there is a dispute about the enforcement of a contract, most commonly contracts such as lease agreements, sale of land agreements, loan and mortgage documents and project documents.

Lao law also requires that notarised contracts are entered into in the Lao language.

For the purposes of notarisation and registration, a Lao language version must be produced. There are some exceptions to this, for example project documents entered into with the Government will sometimes explicitly state that they will only be in the English language. As a matter of practice, but not actually required by the law, the Notary Office requires both parties to sign the document in front of Notary Office officials. This is not always practical, especially if a contract is signed in counterparts, and the Notary Office will accept a representative of the absent party with a power of attorney attesting to the validity of the document.

Common document types such as leases, for example, must be notarised at the Notary Office and registered at the District Office and the District Land Management Authority.

Bank documents such as loan agreements and mortgages must be notarised at the Notary Office and registered at the Vientiane Land Management Authority.

Project documentation must be notarised at the Notary Office and registered at the State Property Management Department of the Ministry of Finance.

Enforcement of Contracts in Laos

The legal system in Laos is evolving rapidly, but it is still not as robust as other jurisdictions. In the meantime, the enforcement of contractual obligations requires the translation, notarisation and registration of the contracts themselves before courts will be willing to accept submissions in relation to them.

For more information on the enforcement of contracts in Laos please contact one of our experienced commercial lawyers.