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Intro: Welcome to Arbitral Insights, a podcast series brought to you by our international arbitration practice lawyers here at Reed Smith. I'm Peter Rosher, Global Head of Reed Smith's International Arbitration Practice. I hope you enjoy the industry commentary, insights and anecdotes we share with you in the course of this series, wherever in the world you are. If you have any questions about any of the topics discussed, please do contact our speakers. And with that, let's get started. 

Joyce: Welcome to the latest episode of our Arbitral Insights podcast series. I'm delighted to have Guillaume Massin as my guest today to share with us some Arbitral Insights from Cambodia. Guillaume is the head of the European desk of DFDL. He was previously managing director of DFDL's offices in Thailand and Cambodia, and he's currently a partner in the dispute resolution team. Guillaume has been based in Southeast Asia for almost 20 years, and he has extensive experience in facilitating foreign direct investment into the region. Good afternoon, Guillaume. Thank you for joining me on this podcast today. 

Guillaume: Thank you, Joyce, and thanks to Reed Smith for organizing this very interesting session. We're really delighted to be part of this podcast program that covers not only Cambodia, but the entire region where we operate. and I'm happy to be in touch with you, and I'll make this as interesting, as informative as possible. 

Joyce: Well, I'm looking forward to our discussion already. To kick us off, why don't you give us an overview of the arbitration landscape in Cambodia? Are there separate legislations for domestic and foreign arbitrations? 

Guillaume: Sure. Well, everything started in Cambodia in years 2000, 2005. Cambodia has been quite open, tried to be quite open to foreign investment, and as part of that, tried to make arbitration as a way to protect investment in Cambodia. So we have a 2006 law on commercial arbitration, which actually covered the implementation of the New York Convention. We also have the 2007 Code of Civil Procedures, which also provides key, covers the key aspects of the enforcement of arbitral award. So it's basically, for international awards, it would be more the 2006 Law on Commercial Arbitration, and for domestic arbitration, it would be more the 2007 Code of Civil Procedures that would be the key legislation. In terms of the model, Cambodia has been relying on UNCITRAL, so Cambodia is a party to the New York Convention. From 2009, Cambodia has taken steps to create its own arbitration center. And that was modeled, including for the rules of the National Commercial Arbitration Center of Cambodia. It was modeled after the SIAC rules, so directly linked to the UNCITRAL model for that matter. 

Joyce: That's really helpful to know. I hadn't realized that the SIAC assisted with drafting the institutional rules for the National Commercial Arbitration Centre. Since arbitration is relatively new in Cambodia, how is it perceived by the local business community? Do you often see arbitration agreements in contracts? 

Guillaume: So where are foreign parties involved? Yes, most likely there would be an arbitration agreement. There are still some matters where there could be skepticism from local parties about arbitration, or some matters where enforcement would be more difficult with arbitration, including for enforcement of securities, for instance. But generally, arbitration is well accepted in Cambodia. You're right to say that it's fairly recent. In fact, the arbitration center in Cambodia has been up and running. There have been several intakes and developments with new promotions of arbitrators for the past 10, 15 years. So it's been really part of the picture and really open to the business community, let's say, practically speaking, since 2014, 2015. So we have maybe a 10-year track record, and we see that it's more and more used, including for domestic arbitration. 

Joyce: Yeah, what you've just described is consistent with the position in many developing countries, as you know, it takes time and effort to educate not just the lawyers, but and arguably more importantly, the contracting parties and judiciary about arbitration and its benefits. Even what we've just discussed, is it common for parties to nominate Phnom Penh as the state of arbitration? And when might parties do that? And what are the advantages of selecting Phnom Penh over, say, Singapore or Kuala Lumpur? 

Guillaume: So, indeed, the arbitration in Cambodia, as we said earlier, is administered by the National Commercial Arbitration Centre. And it is generally perceived as being, again, when a foreign party is involved, depending on the type of transaction, but as being a process that is more straightforward and cost-effective, including compared to cost-related to court proceedings. As for the choice of seat of arbitration, it would also depend on whether there's a local party involved in the proceedings, depending also on whether assets would be located in Cambodia. But of course, as you can expect, domestic arbitration is usually cheaper than the international arbitration. And for that matter, it's quite clear that there could be a preference also for local parties in Cambodia to choose Phnom Penh as the seat of arbitration. 

Joyce: For foreign parties, at least, one of the factors which determine C's attractiveness is the local court's willingness to uphold and support the arbitration process. Now, would you describe the Cambodian courts as being generally pro-arbitration? 

Guillaume: In practice, courts would tend to be willing to keep the proceedings locally within the courts. But once arbitration proceedings start, or once there's an arbitration agreement that is raised in a dispute, the court would generally favor arbitration. There is still an option if both parties still agree to go to court instead of arbitration, they can still elect to do so even after the dispute has started. But generally, again, the courts would recognize arbitration as a valid process. 

Joyce: That's really positive to hear that the Cambodian courts respect the autonomy of parties to enter into arbitration agreements. On a slightly related note, can Cambodian courts issue orders such as injunctions or asset preservation orders in support of both domestic and local arbitrations? 

Guillaume: Yes, to be clear, both local courts and our arbitration tribunal can issue injunctions. It could be done also through the local arbitration center. And indeed, it's quite frequent that a case would start with preservative relief being sought locally in Cambodia through court proceedings and then referred to arbitration as a main case. The courts would actually recognize that process. There is always a risk that because you start with the courts in Cambodia, then it can continue with the courts. But if one party really makes clear that the entire dispute should be referred to arbitration, then arbitration will kick in at some point. 

Joyce: Okay. Yeah. I think it's really good to understand that the Cambodian courts really respect the party's decision to arbitrate. So if I may, let's now move on to another hot topic, enforcement. How long does it normally take to seek recognition and enforcement of foreign awards in Cambodia, and what might this process look like? 

Guillaume: Well, as we said, Cambodia is a party to the New York Convention, so it would enforce arbitral awards within re-examining the merits of the case. In practice, recognition and enforcement could take from six months to, let's say, two or three years. That would be depending whether all legal avenues to potentially appeal have been exhausted. Because once you get in the recognition phase, so you go straight to the recognition enforcement by the Court of Appeal in Cambodia, but then there could be a further appeal. And in certain instances, it could go to retrial, so back and forth between the Appeal Court and the Supreme Court. And this is where it might take longer. That being said, we see that in many instances, awards are voluntarily executed at some stage, and also may involve a settlement. 

Joyce: So just to be clear, you mentioned earlier that recognition and enforcement proceedings can take from six months to two or three years if all legal avenues to appeal are exhausted. Are you saying that, assuming that a party who doesn't want to pay attempts to appeal, it takes up to three years, and within three years, parties would get closure on whether or not the award would be enforced, or are you saying that two to three years at the first instance, and then you get more time to appeal to the Supreme Court after that? 

Guillaume: No, it would be, in fact, the first instance would be usually about six months as we voted. Then there might be some public order grounds that can be raised, including by a local party. We try to delay the implementation and enforcement of an award. So that's where it might go to the next stage. However, in practice, we've seen that, It is only, in most cases, the local courts will still try to expedite the process for the recognition of the arbitral award because they will not change the outcome of the award. 

Joyce: Understood. Understood. You mentioned earlier you referred to delay tactics and public order objections. Are these the types of grounds that parties rely on to challenge recognition and enforcement in Cambodia? are you able to share some of the common tactics that parties use when they're trying to avoid having to pay up under arbitral awards? 

Guillaume: Yes. So public order is something that, as you might expect, could be interpreted very broadly. So there might be a number of grounds that are raised. Including the fact that there are some, in the event of an arbitral award in relation to a transaction which was not governed by Cambodian law, there could be an argument that at the enforcement state that because the scope of the transaction involves some assets in Cambodia or involved parties in Cambodia, then certain section of the transaction should have been governed by Cambodian law. In which case, what a local party may try to do is to try to get a Cambodian course challenging the fact that the initial award was only rendered based on a foreign law. In practice, it would not work, but they would probably still try, right? In the case of a dispute that is subject to Cambodian law already, there's probably less room for that. But again, you could have a situation where the main transaction is governed by foreign law and you have a section of like the security, for instance, enforcement of security. Would be governed by Cambrian law. In that case, there could be a mix of both, and that will also help the local party to try to raise argument to resist the recognition or enforcement of the award. We've seen that in a few instances. What we usually do when we work for a claimant in the enforcement of an arbitral award, we, of course, keep all these local tactics in mind. And from the start, But we just make sure that the filing, that the local filing with the court for recognition enforcement takes into consideration possible grounds that would be raised by the other side in relation to public order grounds. And we'll try to make sure we'll reject those grounds or make sure that we argue in a way that is in favor of the claimant for the recognition of the arbitral award. 

Joyce: Yeah, what you said is really interesting. I completely agree that it's important to prevent attempts by parties who try to use delay tactics to delay the enforcement of their wards. You mentioned also the certain procedures that you take when filing for recognition and enforcement to avoid, to reduce the ability of local parties to rely on these delay tactics. Is there anything else that parties can do during the arbitration itself maximize the chances of a successful enforcement in Cambodia? 

Guillaume: Yeah well basically everything starts at the time when the transaction is still underway so before it closes before it completes. So ensuring that the arbitration close in the contract is clear ensuring that you don't have as part of the same transaction or project, two different agreements where there could be one agreement subject to local courts and another agreement subject to arbitration, because then there could be a risk that local courts will find themselves having jurisdiction based on the first agreement. So making sure that from the start, the arbitration closing the contract and all the contracts that might be related to the transaction is clear. So that whenever entering into an M&A deal, you start with an NDA, you have a term sheet, you have an SPA, make sure that all the three are aligned. Otherwise, there might be if just one of the three agreements, and usually the term sheet or the NDA are drafted as a very early stage when things are not definitive. So if there is no clear arbitration provision from the start, then it could be potentially challenged later on. So that's really, really important. Another recommendation is, yes, when you start with a dispute, at the beginning of a dispute, there's potentially a recourse to local injunctive relief. We want to make sure that the courts are aware that it's just injunctive relief that's going to be subject to their jurisdiction and not the main case, there could be an assumption locally, and a local respondent or a local party involved in the dispute may try that, that the local party would attempt to have all the issues at hand in a dispute assessed during the injunctive relief proceedings. So it will try to have a main case, arguments for the main case, included in the injunctive relief proceedings, then, the injunctive relief decision might also impact the main case and might be contrary to the principle of having the case resolved through arbitration at a later stage. So that's also quite important. 

Joyce: That's very interesting. Thanks again for these helpful tips. A final question as we wrap up our conversation today. Are there any trends in Cambodia-related arbitrations which our listeners should be looking out for? 

Guillaume: Yes. So for both domestic and international arbitration, I think it's being favored really for a more sophisticated matter where there is a foreign element. So when, depending on the size of the transaction, the amount in dispute, or when things are fairly technical, When we're talking about new commercial practices, implementing transactions that are similar to what is being developed in Singapore and Cambodia would not be really familiar with, then in that case, the trend is to go to arbitration because we estimate that the local practitioners, judges, and lawyers would not be really familiar with the scope of these transactions and very long transaction documents. Also, it's quite natural, but in Cambodia, if you do a court filing, you will have to translate all the documents and supporting documents in Khmer. So when there is a foreign element and you're relying on transaction documents in English, you will tend to favor arbitration because it would be a lot more practical to use documents that are already in English. 

Joyce: And obviously, Khmer might not have the specific words for the specific transaction that you're trying to achieve. 

Guillaume: Indeed. That's usually quite the case, again, for very specific matters. And it is very technical matters. And it is better to start resolving the dispute by arbitration. You can use foreign experts. You can also use local experts, including in a foreign arbitration. So the local element will always be there. But it would be probably better to have a forum that is able to handle the dispute in English than just in command. 

Joyce: And I think, Guillaume, you mentioned to me previously that the mushrooming of specialized courts in Cambodia, which might take away work, so to speak, from arbitration. Are you able to share a bit more on that? 

Guillaume: Yeah, I think there's been an ongoing trend. Everything we've described in terms of the implementation, including of the National Arbitration Centre and the Commercial Arbitration Law, since the early 2000s, there's been a trend where Cambodia has tried to redevelop or update its legal framework. And as part of that, the Ministry of Justice has tried to implement dedicated courts. So for instance, the commercial court, which has been a project that's been ongoing for maybe 20 years. And probably the Cambodian authorities had to wait for more judges to be appointed, the newer generation. And this is all coming as well. So there would be also some local alternatives that are dedicated to resolving disputes, maybe simpler disputes or disputes of a more limited size in terms of the disputed amount and going through local courts, specialized courts. That's also going to be an option. But all in all, I think with the most sophisticated matters going to arbitration, arbitration has also helped raising the standards. So the courts will also know, I think courts would take example on some of the cases that have been resolved through arbitration or some of the matters that up to now have been resolved through arbitration, including through local arbitration, to build up their capacity in terms of dealing with specialized matters in specialized courts as well. 

Joyce: That's interesting. Guillaume, thank you so much for joining me on this podcast. This has been really insightful. Thanks again and have a lovely evening. 

Guillaume: You're welcome. It was a pleasure. 

Outro: Arbitral Insights is a Reed Smith production. Our producers are Ali McCardell and Shannon Ryan. For more information about Reed Smith's global international arbitration practice, email arbitralinsights@reedsmith.com. To learn about the Reed Smith Arbitration Pricing Calculator, a first-of-its-kind mobile app that forecasts the cost of arbitration around the world, search Arbitration Pricing Calculator on reedsmith.com or download for free through the Apple and Google Play app stores. You can find our podcast on podcast streaming platforms, reedsmith.com, and our social media accounts at Read Smith LLP. 

Disclaimer: This podcast is provided for educational purposes. It does not constitute legal advice and is not intended to establish an attorney-client relationship, nor is it intended to suggest or establish standards of care applicable to particular or lawyers in any given situation. Prior results do not guarantee a similar outcome. Any views, opinions, or comments made by any external guest speaker. 

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