Due to Cambodia’s growing economy, more and more companies are registering in the Kingdom every year. As with any increase in commercial transactions there is increasing potential for dispute – it’s the law of averages with a bit of Murphy’s Law thrown in! Due to this dispute potential, foreign investors are always interested in the mechanisms to deal with such disputes and for decades in Asia, Europe and the US a popular mode of dispute resolution has been arbitration.
Since 2013 Cambodia has had a National Commercial Arbitration Center (NCAC) to arbitrate such disputes, or aid settlement. The NCAC is composed of independent elected members, who have been selected and trained in arbitration at Singapore International Arbitration Centre (SIAC) and Singapore Institute of Arbitrators. The General Assembly has adopted the NCAC’s Rules of Arbitration. Also, internationally recognized foreign arbitrators with relevant experience can be appointed by the NCAC to preside over cases.
By being a part of the 1958 New York Convention, Cambodia courts have the power to enforce Cambodia foreign arbitral awards. However, through the NCAC, the aim is that Cambodia handles its own cases. For increasing its activity and to be trusted, in 2015 the NCAC adopted a Code of Ethics to ensure arbitrators’ neutrality, independence and transparency.
Despite all good intentions and the general readiness to embrace a growing arbitration center, the NCAC has suffered from lack of sufficient funds – the intention being that it will eventually be self-sufficient and generate a thriving case portfolio. An encouraging sign of impending growth might be that in May 2015 the NCAC received its first complaint, concerning a commercial landlord and tenant dispute with a foreign element. Little more information about this first case has been divulged, which shows the NCAC’s and the disputing parties’ respect for the confidential nature of the proceedings.
This first case is a significant step for the NCAC, and under the Law on Commercial Arbitration the arbitral award can be enforced by Cambodian Courts. In fact, in an earlier case in 2014, the Supreme Court of Cambodia had previously affirmed a decision of the Court of Appeal to enforce an arbitral award from the Korean Commercial Arbitration Board award, by rejecting a motion to annul the Court of Appeal’s decision.
Therefore, although still in its infancy, the NCAC is gradually showing signs of growth and the perceived increase in regional business brought on by the Asian Economic Community (AEC) might, possibly, lead to growth in commercial arbitration in Cambodia. However, it is feared that the pre-established arbitration power-houses such as Singapore and Hong Kong might still be the preferred choice of many large multi-nationals doing business in the AEC market. Nevertheless, advantages in cost and location may yet enable the NCAC to offer a viable alternative, at least where all disputants are based in Cambodia – whether through a head office or branch based here.
By Julie Rouas (Legal Intern)
Co-written with Peter Mewes (English Solicitor and Senior Consultant)
HBS Law, Phnom Penh, Cambodia