8 June 2021

Commercial Arbitration in Cambodia: The New NCAC Rules 2021 Are Out Now

On 28 March 2021, the National Commercial Arbitration Centre (“NCAC”) adopted a new set of procedural rules (“NCAC Rules 2021”). The NCAC Rules 2021 introduces modern procedural concepts, such as expedited procedure and emergency arbitration, and made amendments to its previous rules to align with the best international practices.

In this article, we aim to provide a summary of the major changes that the NCAC Rules 2021 has brought to our clients who may wish to seek justice before the NCAC. The new rules will be applicable from 28 June 2021.

The NCAC is the first permanent commercial arbitration institution in Cambodia and has been operational since 2014. The first set of procedural rules which governs the arbitration proceedings conducted under the auspices of the NCAC was adopted in 2014 (“NCAC Rules 2014”). Since then, the arbitration centre has received 25 cases and the Cambodian and foreign arbitrators on the NCAC roster have since experienced the pros and cons of working under the NCAC Rules 2014. The time has arrived to take the lessons learnt from the past arbitration proceedings and examine how arbitration institutions all over the world meet their clients’ new expectations and cope with challenges such as the COVID-19 pandemic.  Most importantly, can some of the findings be implemented in a new, revised set of procedural rules for the NCAC?

What are the major changes introduced in the NCAC Rules 2021?

Remote hearings

Since the COVID-19 outbreak, it has become nearly impossible to set the definite date of physical hearings. The travel restrictions, lockdowns, and social distancing measures have been changing continuously, from one day to the other. The service of justice in general had to adapt to the new circumstances. The continuous postponements of the pre-scheduled physical hearings have simply been untenable. Though online hearings have never been prohibited, and precedent exists for virtual hearings held under the NCAC Rules 2014, the rules for these hearings have not expressly addressed. As a result, legal counsels have been wondering whether the online hearing process would cause any difficulty in a prospective recognition and enforcement proceeding. The new NCAC Rules 2021, however, expressly authorises the tribunal to decide between conducting a hearing with people in physical attendance or remotely by videoconference, telephone or using other communications technology means with participants in one or more geographical places or in a combined form. Importantly, such a decision of the tribunal must be made taking into account the relevant facts and circumstances of the case and after consulting the parties.

Expedited procedure

The length of the proceeding is a general concern in dispute resolution. Since arbitral awards are not appealable, arbitration is considered a faster way of dispute resolution than litigation. As of 2021, this is even more pronounced. The NCAC has introduced rules regarding the expedited procedure whereunder the disputing parties may receive their final and binding award within 270 days. This timeframe is counted from the day when the Tribunal is constituted and can only be extended under exceptional circumstances. The expedited procedure is not available for all disputes; however, the threshold has been worded in a way that allows the use of the expedited procedure for a broad spectrum of disputes. Pursuant to the new NCAC Rules 2021, a party may file an application with the General Secretariat of the NCAC for arbitration proceedings to be conducted in accordance with the Expedited Procedure, provided that any of the following criteria is satisfied: (i) the sum in dispute does not exceed the equivalent amount of USD 3 million, representing the aggregate value of the claim, counterclaim and any set-off defense; (ii) the parties so agree; or (iii) in cases of exceptional urgency.

Emergency Arbitrator

The emergency arbitrator is another new concept introduced by the NCAC Rules 2021. The emergency arbitrator may issue interim orders and awards before the constitution of the tribunal. In an arbitration proceeding conducted under the NCAC Rules 2014, the parties could seek interim measures either from the Tribunal or the Cambodian courts. Both possibilities will remain available under the NCAC Rules 2021. The novel element is that under the new procedural rules, the parties may seek an interim order or award even before the constitution of the tribunal. There are circumstances whereby such urgent measures cannot wait until the process of the constitution of the tribunal is completed. The NCAC Rules 2021 imposes very strict deadlines on both the NCAC and the emergency arbitrator which aligns with the best international practices. The emergency arbitrator shall make his interim order or award within 15 calendar days from the date of his appointment unless, in exceptional circumstances, the General Secretariat of the NCAC extends the time. The Emergency Arbitrator shall have no power to act after the tribunal is constituted, unless the parties wish to do so. The tribunal may review to modify, suspend or terminate any interim order or Award issued by the emergency arbitrator. The tribunal is not bound by the reasons given by the emergency arbitrator. Any interim order or award issued by the emergency arbitrator shall, in any event, cease to be binding if the tribunal is not constituted within 90 calendar days of the order or award or when the tribunal makes a final award or if the claim is withdrawn.

If you have any questions or require any assistance in relation to the resolution of a commercial dispute in the Kingdom of Cambodia, please feel free to contact Khieu Mealy, Eszter Papp or Seangly Linna of SokSiphana&associates (a member of ZICO Law).

This alert is for general information only and is not a substitute for legal advice.