The National Assembly, whenever it convenes, will have to ratify Cambodia’s entry into the World Trade Organization, which was approved by WTO trade ministers on Sept 11 in Cancun, Mexico.
Then it must get to work on passing 46 new laws related to WTO membership.
Although reports on the legislative body claim its internal rules and lack of members skilled at technical language hinder its ability to pass legislation quickly, businessmen in Phnom Penh are confident the necessary laws will be passed. The problem, they say, will be enforcing them.
“In Cambodia, there is no legal framework,” Masahiro Matsushi, chairman of the Japanese Business Association, said last week. “Japanese companies are very concerned about the legal system. It is difficult for us to understand the law because it is not clear.”
The problems with the legal system are well-documented. Besides the unclear wording of laws, most judges do not have “proper legal qualifications,” according to a 2001 World Bank report on judicial reform. Since the judiciary was severely depleted during the Khmer Rouge regime, the report notes, the legal system “lacks both credibility and the capacity to assume its new role as arbiter of rights in a rule-based environment.”
“As a WTO member, we need a judicial system with international standards,” said Kao Bun Hong, a government lawyer at the Council of Ministers. “I believe investors will withdraw their businesses or new investors will not want to come if the court system, judgments and the whole legal system is not reliable.”
The Commerce Ministry also realizes that the courts need to improve if the economy is going to expand. In a paper prepared in 2001, Secretary of State Sok Siphana wrote that the court system needs to be “professional, nonpolitical and independent.”
“This is a long-term process which would undoubtedly encounter political resistance from certain sides but is necessary if a consensus develops that economic growth and investment require such an action,” he wrote.
While draft laws have been written and efforts to build capacity have continued in the past couple of years, business owners say the courts remain the same in practice. Some see the WTO as a ray of hope to clean up the legal system. Others say they will believe it when they see it.
“The legal system is a huge, huge, huge problem,” said a local businessman last week. “The laws are there, but they are not implemented evenly across the board. They can pass 40 or 80 laws. The problem is that implementation depends on the mood of the judge or how much he is paid.”
A major legal problem, foreign businessmen say, is the judiciary’s interpretation of the “Breach of Trust” clause in Article 46 of the Untac law. Under this article, they say, a commercial dispute can be turned into a criminal dispute.
Without evidence, a judge can throw the chief executive officer of the defendant company in jail for up to six months while the case is “investigated,” a local businessman claimed. No companies currently in this situation could be contacted, but local experts said such cases were not uncommon.
“During civil trials, the prosecutor always stands on the side of the plaintiff,” said Sok Sam Oeun, executive director of the Cambodian Defenders Project. “They have the power to let the defendant out of jail. The procedure allows opportunities for corruption to exist. Many businessmen complain because you can never predict the outcome.”
Businessmen, lawyers and government officials have repeatedly called for the formation of a specialized commercial court to handle business disputes, instead of dealing with the unpredictable, and often corrupt, criminal court system.
“Establishing a commercial court would enable the government to develop an institution with clear jurisdictions, set procedures, adequate resources and better trained judges with less patience for a corrupt court system,” wrote Sok Siphana in the 2001 report. “The commercial court model could provide momentum for judicial reform.”
On Tuesday, Commerce Minister Cham Prasidh said plans are being made to create a commercial court within two years. The court, he said, would inspire confidence in the private sector.
He was optimistic that the National Assembly would convene on Saturday and begin the process of passing the necessary laws.
“Lawmakers who claim to be nationalists must pass these laws as soon as possible,” Cham Prasidh told reporters outside the Hotel Cambodiana.
The government needs to pass laws concerning business enterprises, commercial contracts, bankruptcy, competition, accounting and corruption, among many others.
“People are taking a wait-and-see approach to whether the government will enforce the laws it needs to pass,” said Tim Smyth, president of Indochina Research. “Right now gaps in the law constrain business development. People would rather avoid the legal system because there is uncertainty about how the complex wording of the law will be interpreted.”
Constitutional Council member Say Bory said Monday that WTO membership would help “clean up” the legal system through increased scrutiny, which will lead to more transparency. But, he said, increased enforcement of laws ultimately rests with the country’s highest leaders.
“There are many capable people, but there is a lack of political will by the government to implement the law,” Say Bory said. “I hope the new government will change its habit.”
