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Contracts law set for Council of Ministers

THE long-awaited law on contracts will go before the Council of Ministers for consideration in mid-October, Ministry of Commerce Secretary of State Mao Thora said.

Legal experts from the Commerce Ministry are currently doing last edits on the final draft of the law, he said, adding that he hoped the new legislation would boost confidence in the Kingdom’s legal environment among the business and investment community.

“We hope that the law’s approval will help build up trust in trade and business in Cambodia,” he said.

The proposed law, which consists of 10 chapters and 240 articles, will replace an existing law on contracts, known as Decree 38, that has been in place since October 1988.

Mao Thora said the new law would make it easier for the court to rule on cases involving breach of contract and would also determine appropriate penalties.

Cambodia is required to pass 42 trade laws, including the law on contracts, under the terms of its 2004 admission to the World Trade Organisation.

Mao Thora said Cambodia had so far approved half of the required laws, with the remainder at various stages of completion.

The ministry was scheduled to meet with the International Monetary Fund today to review progress made to date and determine priorities for action, he added.

SRP says Decree 38 not enough
Sam Rainsy Party lawmaker Son Chhay said Decree 38 was insufficient for the needs of the Kingdom’s commercial environment but added that an overhaul of the country’s judiciary was also needed, as it was not sufficiently independent to hear cases fairly.

“I think that the new law is of vital importance, but the government must also make sure that the law is practised fairly in its justice system in order to build up confidence among businessmen and traders,” he said.

The World Bank has also noted the lack of certainty in dispute resolution in Cambodia.

In a 2009 country memorandum, it wrote that many firms took measures to avoid having to enter dispute-resolution processes, such as insisting on payment up front for sales and maintaining high inventories of key inputs.

Eang Sopheak, a lawyer at the Asia Cambodia Law Firm in Phnom Penh, said the absence of many laws made it difficult for judges to make accurate and fair decisions.

“Once we have a law on contracts, judges will have a legal framework to depend on when judging business cases,” he said.

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