Information about Asia and the Pacific Asia y el Pacífico

Appendix III Legal and Constitutional Reform

Ichiro Otani, and Chi Pham
Published Date:
May 1996
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Information about Asia and the Pacific Asia y el Pacífico
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Before the takeover in late 1975, the Kingdom of the Lao P.D.R. had the Constitution of 1947 and an essentially two-tier legal framework: civil affairs, such as family, dowry, inheritance, succession, land use, and related matters, were regulated by Lao tradition and customary law, while commercial business and administrative matters, legal procedures, and criminal justice were governed by laws closely following the French civil and criminal codes.50

With the proclamation of the Lao People's Democratic Republic on December 2, 1975 by the National Congress of People's Representatives, the monarchy was abolished. With it, the old legal system and the 1947 Constitution were also abolished. Given the resulting legal vacuum, the National Congress immediately elected a legislative body, the Supreme People's Council (later renamed the Supreme People's Assembly). However, over the next decade, the lalter's role remained largely confined to ratifying decisions of the new Government, that is, the Lao People's Revolutionary Party. Lacking a new constitution, decrees and laws issued by the Prime Minister or a “Council of Government” started to fill the vacuum, but only a few such decrees and laws were issued through the mid-1980s. Moreover, decisions and resolutions taken within the party, albeit often not published, were considered binding for all citizens and thus became part of the legal system. Nevertheless, in many important areas, such as family or contract law, the legal framework remained largely undefined, and courts often had to follow prerevolutionary law. The situation was further complicated by the cessation of enforcement—without formal repeal—of previously introduced regulations and restrictions. Thus the emerging Lao legal system was difficult to interpret during 1975–85.

In the discussions on the Second Five-Year Plan preceding and during the Fourth Congress of the Lao People's Revolutionary Party in late 1986, the shortcomings of the legal system and the general lack of legal security were clearly recognized as major obstacles to market-oriented economic reforms and private sector activity, in particular, foreign investment. Consequently, the creation of an appropriate legal system was made a top priority. In February 1988, less than two years later, the Supreme People's Assembly (the first legislative body elected on a countrywide basis) passed an electoral law, and, in June of that year, three more major laws were issued that laid the foundation for a modern tax system, substantially liberalized the foreign exchange regime, and opened the country for foreign investment.

While plans for a new constitution dated back even further, to the Third Congress of the Lao People's Revolutionary Party in 1982, a constitutional commission to begin drafting was not formed until May 1984, under the guidance of a standing committee of the Supreme People's Council. In August 1991, a finalized draft was ratified by the Supreme People's Assembly.51

New Constitution

The Constitution52 defines the Lao P.D.R. as a multiethnic (Article I) people's democracy (Article 2), with a political system led by the Lao People's Revolutionary Party (Article 3).53 In addition to the party, the Constitution acknowledges several other mass organizations, such as the Lao Front for National Construction and the Lao Federation of Trade Unions, whose role is to develop and protect the legitimate rights of their members (Article 7). Like all citizens, the party and all state and mass organizations must obey the Constitution and the laws (Article 10).

The Constitution guarantees a number of fundamental rights, including the right “to protect, preserve, and promote fine tribal customs and cultures” (Article 8), religious freedom (Articles 9 and 30), equality before the law (Article 22), equal and universal suffrage (Article 23), the right to education (Article 25), the right to work (Article 26), freedom of settlement and movement (Article 27), the right to bodily inviolability (Article 29), and freedom of speech, press, assembly, and association, insofar as it is not contrary to the law (Article 31).

The Constitution proclaims a multisecloral economy (Article 13), with all sectors encouraged to compete and cooperate with one another and all equal before the law (Article 14). Economic management is to be conducted “in tine with the mechanism of market economy with adjustment by the state” (Article 16). The slate protects “all forms of state, collective and individual ownership, as well as private ownership of domestic capitalists and foreigners” who invest in the country (Article 14), and this safeguard covers the right to govern, use, and transfer such property (Article 15). As to land, “which is property of the national community,” the state ensures the right to use, transfer the right, and inherit it in accordance with the law (Article 15).

The Constitution establishes the National Assembly as the legislative and supreme organ of state power, with the right and duty to supervise the Administration and the judicial system (Articles 39 and 40) and to decide on fundamental national issues. The National Assembly is formed in general elections for a period of five years (Article 41) and convenes ordinarily twice a year (Article 43); between sessions, it is represented by a National Assembly Standing Committee elected from its members (Article 42). The National Assembly elects, with a two-thirds majority and for a five-year term, the President, who is head of state and commander-in-chief (Articles 54, 52, and 53(6)). The President's foremost rights and duties include promulgating the Constitution and the laws passed by the National Assembly; appointing or removing, subject to approval by the National Assembly or following a no-confidence vote (Article 61), the Prime Minister and the members of Government; and appointing, transferring or removing, on recommendation of the Prime Minister, governors of provinces and mayors of municipalities (Article 53).

Although subject to scrutiny by the National Assembly, the Constitution assigns far-reaching powers to the Government and the Prime Minister as its head (Article 60). The Government is. as stipulated in Article 56, the state executive organ that implements the Constitution, the laws, and presidential decrees, submits draft laws, development plans, and the annual budget for approval by the National Assembly, and manages and supervises the Administration (Article 57). In addition, the Government is vested with substantial legislative powers, inasmuch as Article 57 (4) entitles it explicitly to “issue decrees and decisions on the management of socioeconomic, scientific and technical fields; national defence and security; and foreign affairs.”

The judiciary consists of a three-level system of People's Courts (Article 65) and Public Prosecutor Institutes (Article 72), as well as military courts and prosecutors. The People's Supreme Court, the highest judicial organ, scrutinizes the decisions reached by lower courts at the provincial, municipal, and district levels, as well as by military courts (Article 66). Both the President of the People's Supreme Court and the Public Prosecutor-General are appointed or removed by the National Assembly on recommendation of its Standing Committee (Article 40 (7)), whereas the vice-presidents and the judges at all levels are directly appointed or removed by that committee (Article 67).

System in Transition

Rather than adopt another country's legal framework and make adjustments as necessary, the Lao authorities chose to create their own legal system. By necessity, this eclectic approach implied a prolonged period of transition, characterized by an incomplete and possibly nontransparent system of laws. However, lacking extensive experience with a market-oriented economy, the authorities considered experimenting and learning essential in the process of developing an appropriate legal system. This approach in part explained why, after promulgation of the new Constitution and elections of the National Assembly members,54 certain urgent legal building blocks continued to be introduced in the form of executive decrees before a corresponding draft law was presented to the National Assembly.

Although a written constitution did not exist before August 1991, numerous laws were, in fact, enacted by the two predecessors of the National Assembly. The more important among these were the electoral laws of February 1986 and August 1991; the Foreign Investment Code of July 1988, which has been superseded by the more liberal Law on the Promotion and Management of Foreign Investment of March 1994: the tax law and the law on foreign exchange transactions of July 1988: the criminal code of November 1989; the banking law of June 1990, through which the Bank of the Lao P.D.R. was established as the central bank within a two-tier banking system; and the labor law of November 1990, which was revised in April 1994. Several other laws regulating, among other things, contracts, enterprise accounting, property ownership, and inheritance were also introduced in 1990. While most executive decrees issued during this period provided regulations to implement earlier enacted laws, two decrees issued in 1991 stood out as major steps in the reform process: the Ministry of Trade and Tourism's Regulation No. 112 of February 1991 on the Establishment and the Operations of Expot-Import Enterprises, which effectively opened foreign trade to the private sector, and the prime ministerial Decree No. 91 of December 1991 on Slate-Owned Enterprises, which established the financial and managerial autonomy of state enterprises and the Government's rights as owner or major shareholder.

While in its first two sessions the new National Assembly concentrated on establishing its own procedures, culminating in the National Assembly Law of February 1993, important new legislation continued to be issued through executive decrees.55 These include the prime ministerial decree of February 1992 on the creation of a treasury; the December 1992 decree on land use and the November 1993 decree on forestry use, which extended important property rights while securing safeguards for the prudent utilization of the country's resources: the decree on land tax of March 1993: the decree on tariff reform of March 1993, which was a precursor to the customs code law of August 1994; the decree on enterprises issued in March 1993, which was eventually followed by the business law of August 1994: the decree on arbitration, the law on guarantees, and the enterprise bankruptcy law of November 1994; and the State Budget Law of August 1994.

Although the Lao P.D.R. has undoubtedly made substantial progress toward creating a legal environment conducive to its development goals, vital areas remain incomplete. Supported in part by technical assistance provided by the World Bank, work is currently under way on laws regulating secured transactions, procurement, mortgages, bank accounting and bank supervision, and negotiable instruments. While some of these laws are expected to come into effect during 1996, much remains to be done, in particular in developing the institutions and the regulatory capacity needed to translate the emerging legal framework into a well-functioning system.

See Bogdan (1991); Norindr (1982); and World Bank (1994, pp. 98–101). Bogdan (1991, pp. 106–7) notes that in private civil suits the parties had the option to submit their case to a village chief or another local authority or to go to a state court.

See Zasloff (1992. pp. 41—4–5). The Supreme People's Council, with 46 members appointed in December 1975 by the National Congress of People's Representatives, remained in office through May 1989. It was replaced at that time by the Supreme People's Assembly on the basis of national elections held in March 1989.

The quotes in this section are taken from an undated Lao P.D.R. News Bulletin.

In its Chapter I ('The Political Regime”), the Constitution is silent about the room for other, independent political parties. However, Article 31 in Chapter III (“The Fundamental Rights and Obligations of the Citizen”) expressly grants the freedom of assembly and “to set up associations… which are not contrary to the law.”

The elections look place on December 20, 1992.

Since March 1993, the Ministry of Justice has published the texts of decrees, laws, and other important National Assembly decisions in Lao, French, and English in its monthly Official Gazette (Journal Official).

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