Guide to Arbitration Rules and Procedures in Cambodia
Our Country Chapters set out key aspects of the arbitration framework of each jurisdiction highlighted in our website, covering basics like judicial hierarchy and domestic arbitral institutions to substantive issues such as conflicts of laws and the extent of adoption of the UNCITRAL Model Law.
1. Legal System and Framework
The Kingdom of Cambodia is a constitutional monarchy that was largely influenced by the continental civil law tradition. However, with the rapid regional integration and globalisation of economies, the Cambodian legal system has evolved. Currently, the Cambodian legal system is considered to be a hybrid system as it has absorbed and been inspired by various foreign law concepts (including features from the common law system countries) as a result of foreign aid and assistance with its legal and judicial reforms from different countries.
The framework and process of law making is outlined in the supreme law of the land – the Constitution of Cambodia. According to the Constitution, senators, members of the National Assembly, and the government have the right to initiate legislation. In practice, most draft laws are introduced by the Government.
In Cambodia, the court system is divided into three levels as follows:
- The Provincial/Municipal Court is the court of first instance located in all cities and provinces. The jurisdiction of this court covers a particular geographical area where the court is located. Save for military offences, the Provincial/Municipal Court hears all types of cases including civil and criminal matters.
- The Courts of Appeal are located in Phnom Penh, Battambang, Tbong Khmum, and Preah Sihanouk. These courts hear all cases on appeal from the court of first instance.
- The Supreme Court is the highest court located in Phnom Penh with jurisdiction covering the whole territory of Cambodia. This court adjudicates on questions of law for cases appealed from the Courts of Appeal.
Original jurisdiction over recourse, recognition and enforceability of an arbitral award rests with the Court of Appeal. The Supreme Court shall be the final court to decide on any appeal of the party who is not satisfied with the decision of the Court of Appeal. The actual enforcement of an arbitral award is done in accordance with the Civil Procedural Code which is through the court of first instance.
The Law on Commercial Arbitration (“Arbitration Law“) dated 6 March 2006 and Law on Adoption and Implementation of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards dated 23 July 2001 (“Law on Recognition of Foreign Arbitral Award“) are the main sources of law for international commercial arbitration in Cambodia.
Cambodia’s Arbitration Law, adopted in 2006, was modelled after the UNCITRAL Model Law on International Commercial Arbitration (the original 1985 version) without including features introduced under the 2006 amendments to the UNCITRAL Model Law (e.g., provision on the form of arbitration agreements and extensive revisions of the provision in relation to interim measures).
There is no express legal provision in relation to the distinction between international and domestic arbitrations.
The Arbitration Law adopts the same definition of international arbitration as that of the Model Law. An arbitration is “international” if:
- The parties to an arbitration agreement have their places of business in different States at the time of the conclusion of that agreement; or
- One of the following places is situated outside the State in which the parties have their places of business:
- the place of arbitration, if determined in, or pursuant to, the arbitration agreement;
- any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject matter of the dispute is most closely connected; or
- The parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.
The Arbitration Law does not provide an express definition of domestic arbitration.
Interference from the judiciary in an arbitration is prohibited except where provided for by the Arbitration Law. If a claim which is subject to an arbitration agreement is brought before a court, that court shall refer the parties to arbitration if so requested by a party unless the court finds that the arbitration agreement is null and void or cannot be implemented.
As a matter of practice, a party may use the court to delay or frustrate an agreement to arbitrate if the arbitration agreement is ambiguous.
Parties may request the courts’ assistance during an arbitration, including in relation to:
- Requesting for interim measures (Article 9, Arbitration Law);
- Appointment of arbitrators if there is a lack of consensus (Article 19, Arbitration Law);
- Deciding on the suitability of a challenged arbitrator (Article 21, Arbitration Law);
- Terminating the mandate of an arbitrator for failure to perform his functions without undue delay (Article 22, Arbitration Law);
- Ruling on the tribunal’s jurisdiction, including objections with respect to the existence or validity of the arbitration agreement (Article 24, Arbitration Law); and
- Taking of evidence (Article 35, Arbitration Law).
2. Arbitral Institutions
The National Commercial Arbitration Centre (“NCAC“) is a non-profit institution based in Phnom Penh and was established under the Arbitration Law in 2006. It officially commenced operation on 4 March 2013 to provide businesses with a commercial dispute resolution alternative to the court system. NCAC has administered a total of 25 cases with a total sum in dispute of more than USD$72 million between 2015 to September 2020, with 75% of these cases conducted in English.
At present, there are currently 64 arbitrators of various nationalities on NCAC’s panel list including Cambodian, Canadian, Chinese, Singaporean, French, and American.
The key features of NCAC include:
- Lower costs of conducting arbitration in NCAC in comparison with other international or regional arbitral institutions;
- The capacity to conduct arbitral proceedings in any language under the arbitration rules of NCAC;
- The enforceability of an arbitral award issued by NCAC in more than 160 countries, since Cambodia is also a member of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards.
The Arbitration Law is silent on the parties’ obligation in relation to confidentiality.
However, as NCAC is the only national commercial arbitration centre to date, and NCAC’s arbitration rules (“NCAC Rules“) must be used if NCAC is chosen, the NCAC Rules on confidentiality will generally apply to arbitrations in Cambodia. Notwithstanding this, there is no default rule as to whether ad hoc arbitration is confidential, and this would depend on parties’ agreement and/or the arbitral tribunal’s directions.
Under the NCAC Rules, all meeting and hearings shall be in private, and any recordings, transcripts or documents used shall remain confidential unless otherwise agreed by the parties to the arbitration. The deliberations of the arbitral tribunal shall be confidential, and all persons involved directly or indirectly in the arbitration are bound by secrecy and shall not disclose facts related to, or learned through, the arbitration without the prior written consent of all parties.
4. The Law of the Arbitration and Conflicts of Law
Cambodian law allows the parties to choose the law applicable to arbitral proceedings, failing which it will be determined by the tribunal as it considers appropriate (Article 27 of the Arbitration Law). This is consistent with the UNCITRAL Model Law. The basic approach is similar to most legal systems where the seat of arbitration is an exclusive criterion for determining the law applicable to the arbitral proceedings in the absence of explicit selection by the parties.
The law applicable to the substance of the parties’ dispute will be determined based on the law expressly chosen by the parties in the contract. In the absence of such agreement, the applicable law will be determined based on what the tribunal considers appropriate (Article 36 of the Arbitration Law).
Cambodian law does not restrict the parties from choosing a foreign law to govern the contract. Hence, the arbitral tribunal would be able to recognise the law of another jurisdiction to apply to their substantive obligations with respect to the subject matter of the dispute.
Cambodian law does not set out specific mandatory rules in respect of substantive law where Cambodia is the seat of arbitration.
There is no specific provision in determining the law applicable to claims in tort under Cambodian law. Hence, where required, the rules in determining the law applicable to general claims is likely to be applied to claims in tort.
Under Cambodian law, there is no express distinction between the law applicable to the arbitration and the law governing the arbitration agreement.
The limitation period for claims is determined under general contract law (and not the law governing the arbitral proceedings). Where Cambodia is the seat of an arbitration involving a dispute to be determined by a foreign law, any question in relation to limitation periods will be determined by such foreign law. Where the substantive law governing the dispute is Cambodian law, the claim for compensation for damages under a contract shall be made within five years from the time when the damages occurred (Article 406 of the Cambodian Civil Code). However, the claim for compensation for damages on account of a tortious act shall be made within (a) three years from the time that the injured party or such party’s legal representative became aware that he/she is entitled to seek damages against the tortfeasor, or (b) 10 years from the time that the tort occurred (Article 765 of the Cambodian Civil Code).
5. Arbitration Agreements
The formal requirement is that the arbitration agreement must be in writing. An arbitration agreement is in writing if it is in a document signed by the parties, or in an exchange of letters or other means of electronic telecommunication which provide a record of the agreement, or in an exchange of statements of claims and defence in which the existence of an agreement is alleged by one party and is not denied by another party (Article 7 of the Arbitration Law).
There is no further specific legal requirement for an arbitration agreement to be binding and enforceable apart from the legal validity and enforceability criteria for contracts as stipulated under the Cambodian Civil Code.
Electronic arbitration agreements are recognised if there is sufficient evidence of agreement of the parties to such arbitration agreements (Article 7 of the Arbitration Law).
An arbitration agreement can be incorporated by way of reference into a contract or any other documents recording the agreement, provided that such contract or documents shall be made in writing and the reference is such as to make the arbitration agreement part of such contract or documents.
Under Cambodian law, there are no clear regulations on the specific matters that are capable of being settled by arbitration, except that the dispute needs to be of a commercial nature. The Arbitration Law also sought to ensure that the term “commercial” shall be accorded a broad interpretation (Articles 1 & 2 of the Arbitration Law).
Based on Article 2 of the Arbitration Law, the term “commercial” should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions:
- any trade transactions for the supply or exchange of good or services;
- distribution agreements;
- commercial representation or agency;
- construction works;
- investment, financing, banking, and insurance;
- exploitation agreements or concessions;
- joint ventures and other forms of industrial or business co-operation; and
- carriage of goods or passenger by air, sea, rail or road.
The parties shall agree on the scope of the arbitration agreement. Therefore, a non-contractual claim will usually not be arbitrable unless the relevant arbitration agreement is sufficiently broad to cover non-contractual claims connected to the subject matter of the contract. The arbitral tribunal will decide whether it has jurisdiction over the claim.
The arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not result in the invalidity of the arbitration clause (Article 24 of the Arbitration Law).