Why Arbitration?

Why Arbitration?

Arbitration, a form of alternative dispute resolution (ADR), is a means to resolve disputes outside the courts. It is the norm for solving cross-border disputes and has played a significant role for enhancing the rule of law in the Asia-Pacific region. Businesspersons and governments in region have opted for arbitration because of flexibility, finality, cost-efficiency, enforceability, neutrality, transnationality and confidentiality.

  • Flexibility

Arbitration allows parties to tailor-make procedures they wish to apply to their arbitration proceedings. Depending on the needs of a particular dispute, the parties can choose applicable rules of law, the seat and venue of arbitration and set the qualification of arbitrators.

  • Finality

Arbitration awards – decisions made by arbitral tribunals – are final and not subject to review on the merits. As such, parties may avoid the prolonged appeal process under conventional litigation with a national court system.

  • Cost-efficiency

The flexibility and finality of arbitral proceedings often assist parties to solve disputes expeditiously and economically as compared to the usual time-consuming and expensive dispute resolution through court litigation or other means. Costs involved in arbitrations are generally cheaper than that in court proceedings.

  • Enforceability

Enforcement of foreign court judgments is cumbersome and most of the time due to the absence of a reciprocal recognition between Cambodia and most of the countries in the rest of the world. In contrast, arbitral awards are enforceable more widely thanks to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) signed by more than 160 jurisdictions. The Convention mandates each of the contracting states to recognize and enforce foreign arbitral awards without reviewing the merit.

  • Neutrality

Parties have the freedom to choose the seat/venue of arbitration in their arbitration agreement/clause so that they may designate a neutral third country as the seat/venue. The parties may also select independent arbitrators to form a neutral arbitral tribunal once a dispute has arisen.

  • Transnationality

Arbitration is a transnational system of adjudication that is suitable for resolving commercial disputes. The arbitrators come from diverse backgrounds in terms of legal traditions as well as technical expertise perspective.

  • Confidentiality

Unless otherwise agreed by parties, arbitration proceedings is confidential and is therefore not open to the public. Moreover, arbitral awards are not published. Accordingly, disputes are not revealed to the public until enforcement stage, and the parties are able to protect their trade secret and reputation pending the outcome of the resolution of the disputes. This helps the parties maintain their business continuity.