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Cambodia pushes arbitration as an alternative commercial dispute resolution mechanism

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Panelists share​ their expertise on the importance of arbitration at the workshop on Monday.

Cambodia pushes arbitration as an alternative commercial dispute resolution mechanism

The private sector has initiated efforts to further promote an alternative dispute resolution mechanism through arbitration which could help instill investor confidence and enhance the ease of doing business in the Kingdom.

A sharp rise in foreign investors and international businesses in Cambodia now demand for more sophisticated ways to deal with commercial disputes – shifting from the costly and time-consuming court battles.

A special event themed “Workshop on Deal Making and Dispute Resolution in Commercial Transactions”, was held on Monday, aimed to promote awareness about arbitration – a complementary mechanism to resolve commercial disputes – to serve the needs of the Cambodian business environment.

“This event is in response to the significant influx of foreign investment in Cambodia as well as the increase of cross-border trade between Cambodia and the rest of the world.

“Experts from Cambodia and the region with a wide range of practice areas discuss about making deal with foreign partners and managing risks in cross-border disputes. This event provides an opportunity to our business and legal communities to exchange practical and real-life experiences arising out of commercial transactions,”president of the National Commercial Arbitration Centre of Cambodia (NCAC), Bun Youdy told The Post.

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Youdy (left) says there is demand for an effective dispute resolution system in Cambodia.

The workshop was organised by the European Chamber of Commerce in Cambodia (EuroCham) in collaboration with NCAC and the Hong Kong International Arbitration Centre.

It is a timely effort. Cambodia is witnessing an unprecedented growth in business transactions as foreign direct investment (FDI) and international businesses continue to fuel its economic growth and inevitably there could be a spike in the volume of business feuds arising in the competitive corporate sector.

“The amount and complexity of deals and transactions are also growing with all stakeholders consequently demanding an effective dispute resolution system to be able to rely on.

“Over the past seven years since its official launch, the National Commercial Arbitration Centre of Cambodia has strived to build such a system, particularly by ensuring the training of today’s more than 60 arbitrators of Cambodian and foreign nationalities and promoting awareness among the private sector and legal community.

“As a result of these efforts, the number of cases handled by the Commercial Arbitration Centre has now reached 16, with the total sum in dispute exceeding $50 million,” Tassilo Brinzer, EuroCham vice-chairman said in his opening speech at the event.

According to experts, arbitration is seen as an effective, speedy way to settle cases and a transparent mechanism to resolve corporate disputes outside the court rooms. But more need to be done to promote the alternative dispute resolution model in Cambodia.

Ly Tayseng, managing partner of HBS Law, said “arbitration is an important viable alternative. It is faster than court procedures, cost effective, quality, more credible, comprise high skilled arbitrators and independent.

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Tayseng : Arbitration is a better option to resolve commercial disputes.

“Cambodia’s arbitration is behind Singapore and Hong Kong which have very well established [arbitration centres] because the Cambodian arbitration centre was only established a couple of years ago. Now it is a trial [period] to see how it works.

“Where foreign direct investment is concerned, arbitration is important because when a decision is made by arbitration in Cambodia, it can also be enforced in a foreign country where the company or individual have assets, in countries that are members of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral 1958 or called the New York Convention. So if you have a dispute settled by arbitration in Cambodia, that decision can be enforced in nearly 200 signatory countries”.

Youdy added: “To be fair, it would require sometime to assess whether arbitration in Cambodia is really an effective dispute resolution mechanism.

“However, if we take into account what has been achieved so far, it is quite promising. A lot of work remains to be done and it requires a full engagement of all stakeholders in order to establish an ecosystem needed for a well- functioning arbitration system”.


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