After a four-month standoff, Prime Minister Hun Sen has signed an order that requires all candidates for the National Arbitration Center to pass an examination before being allowed to become a fully fledged arbitrator.
On Sept 4, all 54 candidate arbitrators boycotted two days of examinations intended to assure their competence and understanding of commercial arbitration and bolster the credibility of the center, which is intended to resolve commercial disputes outside the courts.
Experts say an examination would give the private sector more reason to trust the center’s ability to resolve business disputes ethically and with total independence. But arbitrators have said it is unnecessary because the law does not require it.
“The Ministry of Commerce shall prepare an announcement for the examination process,” reads an amended sub-decree on the creation of the arbitration center signed Dec 31 by Mr Hun Sen.
“The individuals who have been selected after having completed the training and having passed the examination can apply for registration as arbitrators with the center,” it said.
Though similar tests are common in arbitration centers around the world, candidate arbitrators have balked at the test requirement, claiming it was not legally required. Many of the would-be arbitrators had quit their jobs in April and only learned about the test in June when Commerce Minister Cham Prasidh announced it.
No date has been set for the opening of the National Arbitration Center.
An official yesterday said the government had no choice but to make the candidates take an examination in order to make sure that the private sector vest their confidence in the center.
“There is a request from the private sector,” said Toek Reth Samrach, a secretary of state at the Council of Ministers who is responsible for organizing the examination with the Ministry of Commerce. “The private sector is the one that will use the arbitration center.”
But arbitrators say the government included legislation to sit an examination retroactively, therefore invalidly, and that many had quit their jobs as civil servants—also required by law—before they found out that an examination was necessary.
They are also highly skeptical of the standard of the test itself and remain fearful of corruption inside the examination room.
“We are not focusing on whether we pass or fail the examination, but we are concerned about legitimacy of the amended law and who can explain it,” said Ros Monin, one of the candidates for the arbitration center.
He added that candidates had still not decided whether or not they would boycott another scheduled examination.
Charles Schneider, head of office at the IFC in Cambodia, which is supporting the government with the establishment of the National Arbitration Center, said an examination was key in ensuring the center is in line with international standards.
“IFC, in partnership with the European Union, has provided training to the arbitrator candidates, and we support the examinations of these candidates,” he said in an e-mail. “Such examinations are commonplace in many reputable arbitration centers all over the world so that candidates can demonstrate their ability to deliver high-quality arbitration services.”
“This will help build the private sector’s trust in the NAC’s services and by extension will help to attract new investments to Cambodia,” he added.
Business leaders said examinations, which are common for arbitrators around the world, are essential to the reputation of Cambodia’s center and its ability to attract foreign investors from elsewhere in the region to use it.
But they also said the arbitration center will have to build a track record of professionalism before it gains trust.
“It’s something that is going to encourage foreign investors, and the fact that the government is demanding some professionalism in this sends all the right signals,” said John Brinsden, vice president of Acleda Bank.
Still, he said it could take years for the center to be fully used by the business community, as businesspeople wait to see how well it functions.
“Some things like this will take time to develop credibility, so I don’t expect a avalanche of cases in the beginning,” he said.
Bretton Sciaroni, chairman of the International Business Council, said that despite the arbitrators’ statements, tests were always part of the plan.
“Naturally, the private sector supports the decision of the prime minister, and is particularly pleased that Senior Minister Cham Prasidh took a principled stand in favor of having qualified people to serve as arbitrators,” he said
Scott Lewis, managing partner at the private equity fund Leopard Capital, said he thought that Cambodian businessmen would be more likely to use it at first and many foreigners will take a wait-and-see attitude.
“Until someone can convince us that this center is as professional as Hong Kong or Singapore, we will continue to do things that way,” he said. “I don’t want to be the first to go to arbitration and try this.”
(Additional reporting by Simon Marks)