Cambodia Investment Review

Legal Corner: Johnny Tan Cheng Hye on the future of arbitration in Cambodia

Legal Corner: Johnny Tan Cheng Hye on the future of arbitration in Cambodia

By: CIR contributor Anirudh Singh Bhati

Cambodia Investment Review caught up with Mr Johnny Tan Cheng Hye to discuss the future of arbitration in Cambodia. Mr Tan, is one of the founding fathers of the National Commercial Arbitration Centre (NCAC) and is an accredited arbitrator with the institute. He currently serves on the advisory council of the NCAC. 

The NCAC is the only arbitral institution in the country. Established under the aegis of the Ministry of Commerce in 2014, it exists as an independent and autonomous body with an independent source of funding. Since its founding, the institution has administered 27 cases with aggregate claims of over $80 million. NCAC has recently announced the adoption of the 2021 NCAC Arbitration Rules, aiming to make the NCAC a more viable solution for businesses to settle disputes out of court.

In his previous life, Mr Tan, 67, worked as an architect, first with the Singapore Housing & Development Board and later at his firm, LT&T Architects, as the managing partner. Mr Tan tells us that he entered the field of arbitration in 1985, a year coinciding with the introduction of the first iteration of the UNCITRAL Model Law, which has served as the boilerplate for many New York Convention signatory states.

Over the years, Mr Tan has been appointed as a sole arbitrator in over 100 arbitral tribunals in Singapore and across the region. He is impaneled on several arbitration centres, including Singapore International Arbitration Centre (SIAC), Hong Kong International Arbitration Centre (HKIAC), Dubai International Arbitration Centre (DIAC), Asia International Arbitration Centre (AIAC) in Kuala Lumpur and the London Court of International Arbitration (LCIA). Mr Tan also served as the president of the Singapore Institute of Arbitrators between 2007 and 2011.

CIR: Mr Tan, let’s get into the crux of the matter. Many investors in Cambodia are now aware of the National Commercial Arbitration Centre (NCAC), but they want to know more about the enforcement of arbitral awards in the country. As one of the more experienced arbitration professionals in the country, what is your impression of award enforcement here?

 JT: As far as I am aware, there have been no NCAC awards that have been set aside by the Cambodian courts. However, I have heard, anecdotally, that there have been a few cases where the parties are considering challenging the awards, but until the challenges are filed, they remain anecdotal musings. Also, for reasons of confidentiality, I cannot discuss anecdotal musings. NCAC is still young, so this is expected. 

CIR: There is latent demand from investors looking for quick and cost-effective means of dispute resolution. They understand that Cambodian courts (lower courts, more specifically) are unreliable to a great extent. What advice would you give to investors and their counsel who are planning on using arbitration to have a credible recourse as far as enforcement of awards is concerned?

JT: The choice of seat, the choice of substantive law, the choice of the law governing arbitration, the arbitration rules, etc., should be given full consideration when drafting an arbitration agreement. So, what are the factors that you would consider in giving that advice? (1) Where are you likely to enforce the arbitral award?; (2) Where do the parties have their assets?; (3) What are the laws of the jurisdiction selected?; and (4) Will these laws work to your client’s advantage?

CIR: The NCAC recently announced the adoption of the 2021 rules. What makes them different from the 2014 rules? Will these make arbitration administered by NCAC more attractive?

JT: The recent amendments to the NCAC Arbitration Rules are intended to align its rules with other institutional rules like SIAC and HKIAC. The 2021 Rules allow the centre to appoint emergency arbitrators to deal with applications for interim measures before the tribunal is constituted. It also introduces an expedited procedure at the application of a party where the sum in dispute does not exceed the equivalent of USD 3 million, and where the other party so agrees. The other amendments are more for administrative and procedural efficiency. They will undoubtedly make NCAC administered arbitration more attractive.

CIR: As the only arbitral institution in the country, what can NCAC do to create greater recognition for arbitration as a credible dispute resolution process?

JT: For arbitration to develop further in Cambodia, NCAC must not only provide training for aspiring arbitrators but also undertake training for arbitration counsel. 

Unless counsel representing their clients understand the arbitration process, arbitration will not be efficient as counsel will conduct proceedings as if they are appearing in a Cambodian court. That would defeat the purpose of adopting arbitration as a dispute resolution process. One of the attractiveness of arbitration is its flexibility and party autonomy.

So, one of the tasks in front of NCAC is to train as many lawyers as quickly as possible so that arbitration can be conducted in a manner in which it is intended to be with all the flexibility and efficiency of the arbitral process.

To do this, NCAC should conduct different courses for aspiring arbitrators and arbitration counsel. For example, arbitrators need to know how to manage and conduct arbitration efficiently and write an award that is final and binding. On the other hand, counsels need to be able to write concise submissions, conduct cross-examinations and possess good arbitration advocacy skills.

There is also a need to conduct a continuing education program to upgrade the skills of arbitrators continually. For example, the first batch of arbitrators completed their training in 2012. It has already been nine years since then. There are many new concepts and approaches that have been developed since 2012.

Arbitration, like all other professions, is continually evolving and adapting to the times. For example, in 2012, virtual hearings and even telephone conferencing were rare. Today, Covid-19 has made virtual hearings a preferred mode of hearing. How do arbitrators and counsel prepare for virtual hearings? What are the considerations they need to bear in mind when holding a virtual hearing? Does the arbitral institute have a protocol for virtual hearings? Many more similar developments need to be considered.

A third area that NCAC could help with the promotion of arbitration is to educate its users on the advantages of arbitration. Users need to be convinced of the advantages of arbitration. I have always believed that to grow the arbitration pie, we need to preach to the unconverted.

Johnny Tan with the second batch (Promotion 1) of trainee arbitrators at the NCAC.

CIR: As of date, we have not seen NCAC adopt a protocol for virtual hearings. However, a few arbitral institutions worldwide, such as ICC, HKIAC and KCAB, have been cutting edge. They have adopted rules to factor in virtual hearings into their normal processes.

JT: That is exactly right. NCAC leaves these issues at the discretion of the tribunal, and since the arbitrators do not have much experience conducting virtual hearings, they are either reluctant to adopt virtual hearings or do it on a trial-and-error basis. It would be good if NCAC could study the various protocols adopted by international institutions and then educate its panel of arbitrators on what to look out for when holding virtual hearings.

Another area that NCAC could look at is the training of the Secretariat. The Secretariat is tasked with monitoring the arbitration procedures and scrutinizing the awards. To do that effectively, the Secretariat staff themselves need to undergo arbitration training. With a lean secretariat, this is challenging to do. But that said, it is something necessary to improve the service quality offered. 

CIR: What would be the best practice in terms of training the NCAC Secretariat and staff? 

JT: NCAC can consider recruiting people who have undergone arbitration training, whether locally or overseas. It can also consider taking up interns on short-term attachments and look at seconding its staff to other foreign institutions for short-term on-the-job training. But as I said before, this can only be done if there is some excess capacity within the Secretariat to release staff on attachments to other institutions for on-the-job training.

CIR: What other training could NCAC offer to its panel of arbitrators?

 JT: The task before the arbitrator is to produce an award that is final and binding and capable of being enforced. For that, it would be helpful for NCAC to require its panel to undergo an award writing course followed by an award writing exam.

From my experience, the parties who lose are more likely to accept their loss (although they might not be happy about it) if they understand why they have lost. However, if the award does not provide good reasons for the decision, the losing party will never be satisfied with the outcome because they cannot understand why their case failed. In such a scenario, they are more likely to attempt to re-litigate the issues in the courts.

The institution and the legal profession in Cambodia, as a whole, would benefit significantly if all arbitrators were able to draft their awards well and provide proper reasons within. 

CIR: How much impediment does the judicial practice of not publishing decisions pose to the growth of arbitration in Cambodia? Is there a way this could be addressed? Alternatively, will or should NCAC consider publishing redacted awards to spur the development of jurisprudence in the country?

JT: From time to time, the judiciary will have to deal with setting asides and/or enforcement of arbitral awards. It would enhance Cambodia’s reputation as a business centre and as an arbitration centre if the judiciary is seen as pro-arbitration and supportive of arbitration. In this regard, the judiciary may look at judiciaries in arbitration-friendly jurisdictions and how they deal with an application for courts’ assistance for interim measures and enforcement of awards and when arbitration awards are challenged.

On the questions for the publication of awards, many arbitral institutions do not publish arbitral awards. That said, some are considering publishing redacted awards. I think there are merits to publishing decisions, as long as the confidentiality requirements are observed and assured.

CIR: If we talk about training, have you seen any NCAC tribunals appoint secretaries to assist them with proceedings? Could this serve as a valuable tool to train future arbitrators? 

JT: I, myself, do not use tribunal secretaries. There is no guarantee that the secretaries would be more efficient than the tribunal. Unless the tribunal absorbs the costs of tribunal secretaries, tribunal secretaries add on to the costs of the arbitration. Who will bear the cost of the tribunal secretary?

What is the role of the tribunal secretary? Tribunal secretaries only assist the tribunal with administrative matters. Will the secretary be able to draft an order better than an arbitrator? The arbitrator must not derogate from his duties by delegating his decision-making to the secretary. 

I would say that tribunal secretaries are useful when the arbitration community is sufficiently mature, and there are sufficiently well-trained people who are competent to act as tribunal secretaries.

CIR: What are your views on having another arbitration centre in Cambodia? A couple of years ago, the Cambodian Chamber of Commerce proposed establishing an arbitral institution to resolve disputes among its members. 

JT: I am not for another centre in Cambodia. In my view, when arbitration is still very young in Cambodia, competition will not help strengthen the practice of arbitration in the country. I have seen competing arbitration centres in the region where competition has been to the detriment of arbitration.

I will answer that question with a question. Why does Cambodia need another arbitration centre? To begin with, Cambodia does not have many qualified arbitrators, so if you have another arbitration centre, you will get the same people on the panel of both arbitration centres. They will compete for the same small arbitration pie. Presently, the number of cases in Cambodia is not that large to warrant another arbitration centre.

CIR: Several arbitration institutions around the world have amended their rules to include virtual hearings. Is this going to be a permanent feature going forward?

JT: Virtual hearings are here to stay. This is not a new concept. Even before COVID-19, arbitration rules permit the use of telephone and video conferencing. COVID-19 has forced people to accept virtual hearings and accelerated its use. 

CIR: Our final question for today – What is your view of the Law on Commercial Arbitration (LCA) in Cambodia? Does it broadly conform to UNCITRAL Model law? What are its quirks? Do you have any thoughts as to where it could be amended to streamline arbitration in the country?

JT: LCA replicates the Model law. The arbitration laws of most Model law countries consist of a national law that annexed the Model Law as part of its national law. The reason for that is that the Model Law is drafted to establish a comity of law, where member countries can agree with each other. Where there is no consensus, each member state is left to draft their own laws to deal with those parts where there is no agreement. In the case of Cambodia, it had adopted the entire Model law as the Law on Commercial Arbitration. This means that there are some gaps or lacunae that are not plugged in the legislation.

‘Cambodia Investment Review – Legal Corner’ aims to answer commonly asked questions regarding Cambodia’s legal frameworks for both local and international investors. All information is general in nature and should not be considered as advice.

Anirudh Singh Bhati is an India-qualified lawyer and legal researcher based in Phnom Penh.

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