Legal Updates

The private sector in Cambodia has been steadily growing in strength ever since the end of the country’s civil war. First came the expansion of the garment industry and, soon after other sectors, such as tourism and construction, followed.


However, despite the growing investor confidence in the local market, one problem remained: the domestic courts oftentimes lacked the expertise to rule on complex commercial issues, forcing businesses to resolve their disputes overseas or discouraging them from investing in the Kingdom altogether, according to specialists.

But today the same experts seem to agree that it is all about to change thanks to the National Commercial Arbitration Centre (NCAC) – a third-party, independent arbitration body specialising in the resolution of commercial and business disputes arising between investors.

The centre was officially launched on 4 March 2014, and as confirmed by Bun Youdy, an NCAC executive board member and partner of law firm Bun & Associates, is now ready to hear its first cases.

He then stressed that although investors may wait to see how the tribunal handles its first cases before using its services, with time, they will choose the NCAC over lengthy court proceedings or the much more expensive option of foreign arbitration.

Additionally, as pointed out by Kunthea Kun, the spokesperson for the International Finance Corporation, parties to disputes before the tribunal will each be able to select an arbitrator from a pool of candidates with expertise in a whole range of fields – meaning they will have the right credentials to arbitrate any given case. Among them are lawyers, accountants and academics. Then there is the promise of neutrality and independence. As pointed out by Alastair Henderson, partner at Herbert Smith Freehills LLP in Singapore and an expert in commercial dispute resolution in the region, the body could be the answer to those business people who may have “less confidence in the courts and judges.”

“Where there are concerns, justified or not, about judicial neutrality and independence, arbitration represents an alternative way to resolve disputes in a neutral forum that is less susceptible to influence or ‘home team’ bias,” Henderson says.

As for the costs, according to Youdy, each claim is subjected to a one-off administrative fee of $250 and a separate tribunal payment, which depends on the size of the dispute. It is also the money, and more specifically long-term funding, together with general awareness among the business community, that he is concerned about at the moment. This being said, Udy is adamant the tribunal will overcome these challenges with time.

And indeed only time will show whether the NCAC will deliver on all its promises, further strengthen the confidence of domestic and international entrepreneurs and give Cambodia the edge it needs when competing for investment dollars with its resource-richer neighbours like Myanmar and Vietnam.



Text by Marta Kasztelan | Illustration by Cedrick Ragel