The National Commercial Arbitration Centre (NCAC) has received its second case since becoming fully operational in early 2014 – and has a lot riding on resolving the commercial dispute, its president said yesterday.
NCAC, Cambodia’s only third-party dispute resolution body, was initially established in 2013 but has lacked adequate resources, been relatively inactive and remains widely unknown.
However, the independent body seeks to manage commercial disputes without having to go through the onerous legal hurdles of typical court proceedings by bringing in independent members to handle claims.
While Ros Monin, president of the NCAC, said the first case the body heard was eventually dropped because the claims did not fit the institution’s criteria, the second case could lead to a milestone result in Cambodia’s arbitration capabilities.
The second case was brought to the centre on June 20, and involves a private company that was contracted to supply equipment to a government ministry.
However, due to the confidential nature of arbitration, Monin could not disclose the details of the ongoing case or which party had broken the contract.
“We are checking to see if this new case fits the criteria to be solved by our centre,” he said, adding that this case was a lot more substantial than the first one.
“If we can resolve this case, it provides a great opportunity for us to show our abilities and earn the confidence of businesses,” he said.
“So far, we have always claimed that we are good, but have never had the chance to prove it.”
Currently, the centre is in the process of reviewing the legal documents submitted by both parties and will inform them once they determine whether the case is valid. If that happens, the body will bring both parties together and the arbitration process will begin.
Peter Mewes, English solicitor and foreign client liaison for HBS Law, said the private sector will be more inclined to arbitrate commercial disputes once the NCAC has a few cases under its belt.
“It is kind of a catch-22 at the moment,” he said. “Many people don’t know how the arbitration centre operates, but more cases will bring more confidence to the system.”
However, he noted, the level of confidence would depend on the NCAC’s perceived impartiality in handling the cases.
“If the cases are dealt with in a proper manner and based on the law, then obviously that will be a good thing,” he said.
Mewes added that another reason why arbitration has been slow to gain a foothold in Cambodia is because it often relies on who holds a larger claim to a contract.
“For example, if a Singaporean party has more clout, it will go to a Singaporean arbitration centre – especially if a company is more familiar with that system.”
David Marshall, chairman of the Canadian Chamber of Commerce in Cambodia, said the NCAC’s success would rely on educating parties doing business in the Kingdom to put a Cambodian arbitration clause into all contracts.
“While I am sure a lot of Cambodian contracts are including that, I suspect that not many international agreements have that in place,” he said.
Nevertheless, he said with the way the Cambodian system is designed, it allows disputants to bring in outside arbitrators to ensure that international procedures are followed.