AN issue of paramount importance to Cambodia's investment climate is whether a foreign
arbitral award or judgment will be respected and enforced in a Cambodian court.
Enforcement of a foreign judgment is a judical act in which the party who won a judgment
in a foreign court (i.e. French Court) brings an action in a Cambodian court, requesting
the Cambodian court to implement the foreign judgment against assets located in Cambodia
or against a Cambodian resident.
A foreign arbitral award is similar to a foreign judgment in that it is the final
decision of a foreign forum.
It is different from a foreign judgment in that it is made by a private arbitration
tribunal instead of a foreign state court.
Effect of Foreign Judgments in Cambodia
Cambodia does not have laws dealing with enforcement of foreign judgments. However,
there is a clause in a 1982 law which deals with situations where there is an absence
of law. It states that "In civil cases, if the law is not clearly set forth
or has not been set forth, it shall be adjudicated in accordance with custom, tradition,
good sense or equity."
In accordance with the custom and practice of the Cambodian courts, one can make
the argument that Cambodia will not enforce any foreign judgments.
For instance, enforcing a foreign judgment violates Cambodia's independence and sovereignty
over its territory. According to international law, a foreign country may not impose
or force a sovereign nation to accept a foreign country's law or judgment except
under the terms of a treaty.
Since Cambodia has no international agreement with foreign countries regarding this
matter, foreign judgments will not be recognized.
Even if such agreements existed, Cambodian courts would not be obligated to honor
According to Article 55 of the Cambodian Constitution: "Any treaty and agreement
incompatible with the independence, sovereignty, territorial integrity, neutrality
and national unity of the Kingdom of Cambodia shall be annulled."
Effect of Foreign Arbitral Awards in Cambodia
Countries that recognize foreign arbitral awards are signatories to the New York
Convention on the Enforcement of Arbitral Awards.
Cambodia acceded to this convention in 1960.
However, Cambodia has not yet implemented laws to bring the New York Convention into
At this stage, a commercial arbitration law is being drafted which would make the
New York Convention effective in Cambodia.
Implementing the New York Convention and enforcing arbitral awards does not mean
that a Cambodian party is forced to be subjected to foreign laws or a foreign forum.
Most arbitration proceedings exist because parties willingly agree and contract to
have an arbitration tribunal resolve any disputes between the parties.
Enforcing arbitral awards does not mean Cambodian courts will completely lose control.
Most likely, Cambodian courts will be able to maintain control over the enforcement
of arbitral awards by invalidating awards which violate some overriding public policy
concern or which falls within one of the exceptions to enforcement contained in the
In the absence of relevant laws, the general principles of custom, tradition, good
sense and equity may be used by the Cambodian court to determine whether arbitral
awards will be enforced against residents of Cambodia.
Recent case history shows a tendency by Cambodian courts to protect its citizens
by invalidating provisions which are considered prejudicial to a Cambodian resident.
However, since arbitration is usually agreed to by the litigants in a contract a
Cambodian court may arguably have a duty to enforce the contractual rights and obligations
of the contracting parties.
If the contracting parties agree that arbitration shall bind them, then the intent
of the parties must be enforced unless there is some serious public policy violation.
Under this argument, good sense and equity would require Cambodian courts to enforce
the contractual rights of the parties involved.
The benefit of enforcing arbitral awards outweighs any disadvantages since foreign
investments will be greatly increased if investors feel secure that their contracts
have a legally enforceable recourse for any investment dispute that arises in Cambodia
or relates to any assets in Cambodia.
If an arbitral award or a foreign judgment is not enforced by the Cambodian court,
it should be used as evidence to show how another forum decided the issue.
Given the Cambodian courts' wide discretion to evaluate a case and the lack of expertise
in Cambodian courts, this would be very useful even though not definitive.
In order for Cambodia to continue to attract foreign investment, Cambodia needs to
take steps to provide an efficient and equitable means to resolve disputes in Cambodia.
The first step is to pass the commercial arbitration law in order to explicitly recognize
the enforcement of arbitral awards in Cambodia.
Foreign judgments, however, are more complicated since they involve the issue of
a nation's sovereignty.
In the future, Cambodia may choose to enter into bilateral or multilateral agreements
with other sovereign nations in order to enforce such judgments.
- (Ratha L. Panh is an associate lawyer in the Phnom Penh office of Dirksen Flipse
Doran & Le.)