With the increasing use of Arbitration-Mediation-Arbitration (“Arb-Med-Arb”) methods to resolve both domestic and cross-border commercial disputes, the National Commercial Arbitration Centre (“NCAC”) issued Instruction No. 288/NCAC/24 on May 24, 2024, regarding the Use of Disputes Resolution Mechanisms through Arbitration-Mediation-Arbitration of National Commercial Arbitration Centre (the “Instruction”). This Instruction aims to enhance the efficiency and effectiveness of resolving commercial disputes by providing guidance on the use of the Arb-Med-Arb mechanism.

UNDERSTANDING ARB-MED-ARB

a. The Purpose of Arb-Med-Arb

Arb-Med-Arb is a dispute resolution process in which a dispute is first referred to arbitration before mediation is attempted. In the mediation stage, if parties are able to settle their dispute, their mediated settlement may be recorded as a consent award. The initial step still involves commencing the arbitration proceedings. However, nce these proceedings are initiated, both parties will endeavour to engage in a mediation process, allowing the mediator to facilitate the resolution of the dispute. If the mediator successfully assists the parties in reaching a resolution, they may settle the dispute. Subsequently, both parties may return to the arbitrator within the arbitration proceedings to issue a consent award based on the settlement. However, if the parties are unable to settle their dispute through mediation, they may continue with the arbitration proceedings.

b. Benefits of​ Arb-Med-Arb

Arb-Med-Arb is particularly efficient because it offers the parties more flexibility than a standard arbitration process. Even if mediation is unsuccessful, the parties can continue arbitration without losing time or resources. Simultaneously, the mediation provides the parties with the opportunity to find a mutually agreeable solution, thereby reducing the time and costs.

In cross-border commercial disputes, if the mediation is successful, the parties may provide their settlement record to the arbitrators, allowing them to issue a consent award that is generally accepted as an arbitral award (see Article 45 of the NCAC Arbitration Rules). This award is recognized and enforceable in over 170 countries under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, adopted on 10 June 1958 in New York City.

c. Using NCAC’s Arb-Med-Arb Model Clause

To ensure effective dispute resolution through the Arb-Med-Arb under NCAC’s administration, NCAC has provided the Arbitration-Mediation-Arbitration Model Clause (the “Arb-Med-Arb Clause”) that the parties may consider incorporating into their contracts as follows:

Arb-Med-Arb Model Clause:

Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity, performance or termination, shall be referred to and finally resolved by arbitration administered by the National Commercial Arbitration Centre of the Kingdom of Cambodia in accordance with the Arbitration Rules of the National Commercial Arbitration Centre (NCAC Arbitration Rules) being in force at the time of commencement of arbitration, and by reference in this clause, the NCAC Arbitration Rules are deemed to be incorporated as part of this contract.

The parties further agree that following the commencement of arbitration, they will attempt in good faith to resolve the dispute through mediation that administered by the National Commercial Arbitration Centre of the Kingdom of Cambodia, in accordance with the Mediation Rules of the National Commercial Arbitration Centre of the Kingdom of Cambodia (NCAC Mediation Rules) being in force at the time of commencement of the mediation and by reference in this clause, the NCAC Mediation Rules are deemed to be incorporated as part of this contract.

The seat of the arbitration shall be [Phnom Penh, Kingdom of Cambodia].

The Tribunal shall consist of  ______________ arbitrator(s).

The language of the arbitration shall be ______________.

In addition to the above, the party may consider incorporating the following:

1. Language(s) of mediation

The language(s) of the mediation shall be [choose the language(s)].

2. Place of mediation

The place of the mediation shall be [Phnom Penh, Kingdom of Cambodia].

Governing Law Clause

This contract is governed by the laws of ______________.

Keynotes:

The Arb-Med-Arb mechanism is designed to encourage the parties to resolve their dispute through mediation, which is a mandated obligation during the arbitration proceedings. This mechanism offers a structured yet flexible framework for resolving disputes through both arbitration and mediation. By strategically incorporating the Arb-Med-Arb clause into contracts, parties can enhance their ability to resolve disputes amicably while preserving the right of formal arbitration.

If a model clause does not fit your needs and you are considering amendments, it is advisable to seek legal advice beforehand.

No need to abbreviate it if we do not further mention the NYC.