Commercial Court Won’t End Corruption, Legal Expert Says

Businesses should not expect a new commercial court to end corruption in the legal system, a World Bank legal expert said Monday.

“I do not see the establishment of a commercial court as resolving the problem of corruption,” Eric Haythorne, a legal and judicial reform adviser at the World Bank, told a seminar conducted by the Economic Institute of Cambodia at the Hotel Cambodiana. “I think it’s wildly naive for any of us to think otherwise,” he added.

It is widely thought that establishing a commercial court, a requirement of Cam­bodia’s ac­ces­sion to the World Trade Org­ani­zation, will improve the legal climate and, thus, spur foreign investment. However, as a new EIC report shows, the court’s composition will largely determine its impact.

The commercial court draft law is expected to be submitted to the Council of Ministers before the end of the year. Parliament is then expected to pass it within a year, and, according to the draft law’s timetable, the court should hear its first case in June 2005.

Businesses often cite the unreliable and corrupt legal system as a major constraint to economic growth. Most foreign businesses in Cambodia know ways to avoid the courts, said Tim Smyth, president of the Australian Business Association of Cambodia. And businesses in other countries view the legal system here as a good reason to stay away.

When the draft law gets to the National Assembly, experts say the debate will likely focus on three issues: Should the new court be separate from the current legal system? Should the court handle criminal cases? And, is the new court independent from the executive branch?

In its current form, the draft calls for a court separate from existing courts. Chea Samnang, an EIC economist, argues that this will help improve investors’ image of the country.

“The courts are corrupted,” he said. “If the commercial court is incorporated into the existing courts, it may be difficult to get out of the box.”

Others, such as Haythorne, disagree. For him, a chamber in the existing courts would suffice. To properly create a whole new court would take years, he said.

“The ambition is laudable, but I have great, great doubts that Cambodia or any country can do what [the government] set out to do in that period of time,” Hay­thorne said.

Several businesses contacted Monday didn’t mind if existing courts incorporated the commercial court. The most important thing, said Smyth, was that commercial specialists judge disputes.

Sok Siphana, secretary of state of the Commerce Ministry who has helped draft the law, could not be contacted on Monday.

The draft law also allows the government to bring criminal cases against businesses. This, experts said, would cause a host of jurisdiction problems with existing courts. Better to restrict the commercial court to civil cases brought against businesses, Hay­thorne and others said.

Finally, some fear the court will become an extension of the executive branch. Under the draft, associate judges of the envisaged court will be recommended by what is called the Inter-Mini­sterial Commission, which consists of five members, four of whom are government officials, and all of whom are appointed by a subdecree from Prime Minister Hun Sen’s office. The recommendations are then approved by the Supreme Council of Magistracy, a body King Norodom Sihanouk recently lambasted.

Furthermore, under the draft law, all commercial court appeals would go to the existing Appeals Court, and, finally, to the Su­preme Council of Magistracy.

“A cynic would point out that the current way of establishing the commercial court has conformed perfectly to the status quo,” a new EIC report said. “In Cambodia, the line separating the executive and the judiciary is as clear as mud.”


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