Options for dispute resolution are:
- Mediation – Cambodia’s traditional legal system is based on mediation rather than adversarial conflict where duties, rather than rights, are emphasized. Compromise solutions representing a balance between social duties/relationships and legal rights are the norm. This traditional method of dispute resolution still has significant influence on Cambodian courts, particularly in civil and domestic matters.
- Cambodian court – The courts are the only judicial forum available in Cambodia for the resolution of commercial disputes. Certain ministries may occasionally act as mediators, but such mediation has no legal authority and must be accepted contractually by the disputing parties. Even when a ministry has the legal authority to mediate a dispute, such as the Ministry of Labor & Vocational Training (in employment disputes) or the Ministry of Land Management, Urban Planning & Construction through different cadastral commissions in relation to unregistered land disputes, a party dissatisfied with the result may subsequently bring the matter to court. The Government is currently working on establishing other judicial and quasi-judicial forums, specifically for the resolution of commercial disputes. A current draft law proposes to create a Commercial Court to take sole jurisdiction over commercial disputes.
- Arbitration in Cambodia
The Law on Commercial Arbitration was adopted on March 06, 2006 (the “LCA”) and provides for the establishment of the National Commercial Arbitration Centre (the “NCAC”). The rules and procedures to be followed by the NAC are determined by a Sub-Decree. The LCA formally recognizes private arbitration as a form of dispute resolution in Cambodia and closely mirrors the UNCITRAL Model Law and specifically provides for the enforcement of private arbitration awards by the courts.
- Foreign Arbitration- Since the NCA is newly established, for contracts of high value or where there is a foreign party involved, mandatory and binding arbitration clauses requiring offshore arbitration of all disputes are highly recommended for any business operating in Cambodia. A foreign arbitral award may be enforced under the Law on the Ratification of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the LCA and the Code of Civil Procedure (these laws entrust the jurisdiction over recognition and enforcement of foreign arbitral awards to the Court of Appeal), or under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The enforcement of foreign arbitral award has not yet been tested in Cambodia.
Due to weaknesses in the Cambodian courts, we generally recommend that disputes be resolved via regional foreign arbitration, possibly in Singapore. As to dispute resolution, there is no conflict between opting for Cambodia governing law and with the arbitration forum in Singapore. Because the court system in Cambodia is slow, unpredictable and potentially expensive, we usually recommend Singapore as the venue for dispute resolution.
Once a foreign arbitral decision is issued and final, an action to enforce the decision would be filed in Cambodia, seeking a court order to enforce the award.
Article 45 of the Arbitration Law provides as follows:
An arbitral award, regardless of the country in which it was issued, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this Article and Article 44 of this Law.
The party relying on an award or applying for its enforcement shall supply the duly authenticated original award or a duly certified copy thereof, and the original arbitration agreement referred to in Article 7 of this Law or a duly certified copy thereof. If the award or agreement is not made in Khmer, the party shall supply a duly certified translation thereof into Khmer.
Because court proceedings and awards are not publicly available in Cambodia, to the best of our knowledge a foreign arbitration award has never been submitted to the Cambodian courts for execution. Also, current judicial practice indicates the courts of Cambodia may have difficulty in recognizing or enforcing a foreign arbitral award without a re-examination of the merits of the case in a full proceeding in the courts of Cambodia.
However, the Law on Approval and Practice of the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards sets procedures as well as criteria for the recognition and enforcement of foreign arbitral awards by the Cambodia courts. Additionally, the Law on Commercial Arbitration provides an arbitral award is binding and enforceable by the court, irrespective of the country in which it is made.
Furthermore, the Code of Civil Procedure provides for Cambodian courts to enforce foreign arbitral awards without examining the merits of the matter except where:
- the arbitration agreement is not valid under the law governing that agreement, if;
- notice of arbitration was not properly given;
- the award is given in relation to disputes or matters falling outside the scope of the arbitration agreement;
- the composition of the arbitration tribunal is not in accordance with the arbitration agreement or alternatively, the laws of the country where the arbitration was held;
- the award is not final and binding under the laws of the country in which the award was given;
- the subject matter is not capable of being settled by arbitration; or
- the recognition or enforcement of the award would be contrary to public policy.
While Cambodian law recognizes the enforceability of arbitration awards, whether local or foreign, the award must be enforced through the Cambodian courts. It is possible a Cambodian judge would reconsider the facts of a case, even though the law provides otherwise.