Arbitration or Court in Cambodia: Resolving a Dispute Under a Sale and Purchase Agreement

Prepared by the NovAsia Editorial Team

Buyers rarely choose an apartment because of the dispute-resolution clause at the end of the sale and purchase agreement. As long as construction is progressing and payments are being accepted, that section can look like routine legal boilerplate.

Its importance becomes obvious only after a serious problem arises: a long delay, refusal to refund money, an unapproved change to the floor plan, or an inability to register ownership.

That is often when the buyer discovers that the dispute must be pursued in Cambodia rather than in the buyer's home country; in Khmer rather than English; before three arbitrators rather than one; or through a procedure whose cost is significant compared with the value of the apartment.

Arbitration can offer confidentiality, flexibility, a chosen language, and decision-makers with relevant commercial expertise. Court proceedings may be more practical for a local title claim, an urgent asset-freezing request, or a lower-value dispute. Neither route is automatically better.

The real objective is proportionality. Enforcing rights connected with a USD 60,000–100,000 apartment should not cost as much as a complex international corporate dispute.

The clause determines the route before a dispute exists

A well-drafted dispute-resolution clause should answer at least the following questions:

• who will decide the dispute;
• in which country and city;
• under which procedural rules;
• in what language;
• before how many arbitrators;
• which law governs the contract;
• which claims are covered;
• where urgent interim relief may be requested;
• how costs may be allocated;
• where and how the decision can be enforced.

A statement such as “all disputes shall be resolved by arbitration in Cambodia” is incomplete. It does not identify the institution, the seat, the rules, the language, or the tribunal's composition.

That uncertainty can create a preliminary dispute before the merits are even considered. The parties may spend time and money arguing about how to start the case before anyone addresses the construction delay or refund claim.

The model clause published by Cambodia's National Commercial Arbitration Centre, commonly referred to as the NCAC, recommends naming the NCAC Rules, the seat of arbitration, an odd number of arbitrators, the language, and the governing law.

Arbitration depends on party agreement

A party cannot impose arbitration after the dispute has arisen merely because arbitration has become more convenient.

Cambodia's Law on Commercial Arbitration requires an arbitration agreement to be in writing. It may appear inside the sale and purchase agreement or in a separate document.

The written requirement may be satisfied by:

• a signed contract;
• an exchange of letters or electronic communications;
• a document incorporated into the contract by reference;
• pleadings in which one party alleges an arbitration agreement and the other does not deny it.

When a court case is filed over a matter covered by a valid arbitration clause, the court will generally refer the parties to arbitration if the clause is invoked in time, unless the agreement is null, inoperative, or incapable of being performed.

A buyer therefore usually cannot ignore an inconvenient clause and select a Cambodian court only after the relationship has broken down.

The tribunal itself may rule on its own jurisdiction. The arbitration clause is also treated separately from the main contract. A claim that the sale and purchase agreement is invalid does not necessarily invalidate the arbitration clause inside it.

Courts remain part of the arbitration system

A common misunderstanding is that arbitration removes state courts from the process. In practice, courts may still be essential.

A Cambodian court may be involved in:

• interim and protective measures;
• preserving assets or evidence;
• referring parties to arbitration;
• appointing an arbitrator in specified circumstances;
• hearing an application to set aside an award;
• recognizing and enforcing an award;
• compulsory recovery against assets;
• claims involving third parties;
• matters outside the scope of the arbitration clause.

Cambodia's arbitration law expressly allows a party to seek interim measures from a court without waiving the arbitration agreement.

The arbitral tribunal may also order interim relief. The NCAC Rules provide for an emergency arbitrator before the main tribunal has been constituted.

The practical choice is therefore not “court forever” or “arbitration forever.” It is a primary dispute forum supported, where necessary, by the powers of state courts.

The seat of arbitration is not the same as the hearing venue

The seat determines the legal home of the arbitration. It affects:

• the arbitration law governing the procedure;
• which state courts have supervisory jurisdiction;
• where an award may be challenged;
• the procedural framework;
• mandatory local rules.

A hearing may still take place remotely or physically in another city or country.

A clause stating that a hearing will be held in Singapore does not necessarily make Singapore the legal seat. Likewise, a Cambodian seat does not prevent witnesses from appearing by video or a hearing from taking place elsewhere.

For an individual apartment buyer, a foreign seat can materially increase costs. The case may require foreign counsel, additional translation, and then a separate enforcement process in Cambodia, where the apartment and the seller's assets may be located.

A foreign seat can be justified in a substantial international transaction. For the purchase of one residential unit, it may add expense without delivering a proportionate benefit.

The institution and rules must be identified precisely

The NCAC is Cambodia's commercial arbitration institution established within the framework of the Law on Commercial Arbitration.

Its rules address:

• commencement of proceedings;
• appointment of arbitrators;
• jurisdictional objections;
• expedited procedure;
• emergency arbitration;
• evidence;
• hearings;
• confidentiality;
• issuance of the award;
• arbitration costs.

For a private buyer, institutional arbitration is often easier to administer than an ad hoc process created entirely by the parties. An institution provides administration, published fees, and a mechanism for appointing an arbitrator when the parties cannot agree.

Ad hoc arbitration may also work, but it requires much more careful drafting. Otherwise, the first disagreement may be about how to appoint the tribunal and which rules should apply.

One arbitrator or three can transform the cost

Three arbitrators may be justified in a high-value, technically complex case involving several companies. For a refund claim of USD 50,000–100,000, that structure may be disproportionate.

Using the published NCAC fee schedule as an illustration, a dispute of up to USD 50,000 before a sole arbitrator may involve:

• a USD 500 registration fee;
• a USD 750 administration fee;
• a USD 1,000 arbitrator fee.

That produces an indicative total of approximately USD 2,250 before VAT, withholding tax, arbitrator expenses, lawyers, translators, and experts.

For a USD 100,000 claim, the institutional and tribunal fees may be approximately USD 6,150 with one arbitrator and approximately USD 13,650 with three arbitrators, before other costs.

These figures are not a quotation for a particular case. The schedule must be checked when a claim is filed. They do, however, show why a three-member tribunal may make enforcement uneconomic for a single apartment buyer.

Expedited procedure does not mean a decision in a few weeks

The NCAC Rules allow an expedited procedure where:

• the amount in dispute is below the applicable threshold;
• the parties agree;
• exceptional urgency exists.

The threshold under the current rules is up to USD 3 million, so most apartment disputes qualify by value.

A sole arbitrator will normally be appointed in an expedited case. The award is generally expected within 270 days after the tribunal is constituted, unless the NCAC Secretary General extends the period.

That clock does not begin with the buyer's first complaint. Before the tribunal is constituted, the claimant must file the case, pay the fee, serve the respondent, complete the appointment process, and sometimes address jurisdictional objections.

Enforcement may then require a separate court application. Expedited procedure is a streamlined route, not a guarantee that money will be recovered within weeks.

Emergency relief is relevant when waiting creates real risk

A buyer may fear that the seller will:

• resell the unit;
• transfer land or other assets;
• move money out of reach;
• alter registration records;
• destroy evidence;
• block access to the project.

The NCAC Rules allow a request to an emergency arbitrator before the main tribunal is formed. Appointment and an initial decision are designed to happen quickly, with the rules contemplating approximately 15 days after the application is transmitted to the emergency arbitrator unless the time is extended.

This is not an automatic freeze of any asset the buyer identifies. The applicant must establish urgency, a connection between the requested measure and the future claim, and a risk of harm. Security for potential loss may be required.

Practical implementation may also depend on the other party's cooperation or support from a Cambodian court.

Cambodia's Code of Civil Procedure provides for provisional attachment, provisional injunctions, and measures to preserve property or evidence. The choice between an emergency arbitrator and a court depends on the asset, the relief required, and the person against whom the order must operate.

Language directly affects cost

Khmer is the official language of Cambodian civil proceedings. A foreign party may need interpreters, and foreign-language documents may require formal translation.

In arbitration, the parties may choose the language. If they do not, the tribunal determines it.

English is often practical for an international buyer and developer. However, title records, permits, cadastral materials, and government documents may still need translation from Khmer.

The contract should also identify which language version prevails. An English-language arbitration does not make the English translation of the SPA controlling if the parties agreed that the Khmer text takes priority.

Particular risk arises when different language versions of the dispute clause name different institutions or different seats.

When court proceedings may be more practical

A court clause may be more rational where:

• the seller and its assets are in Cambodia;
• the amount is relatively modest;
• urgent attachment of property is required;
• the dispute concerns title registration;
• relief is needed against third parties;
• arbitration costs are disproportionate to the unit's value.

Court proceedings also require lawyers, translation, time, and enforcement. They should not be presented as automatically cheaper or faster.

Their main advantage is the court's direct connection to Cambodia's compulsory enforcement system and public powers.

When arbitration may be stronger

Arbitration can be particularly useful where:

• the parties are in different countries;
• a foreign parent company has issued a guarantee;
• the dispute is technically complex;
• a neutral tribunal is important;
• confidentiality matters;
• English should be the working language;
• assets are located in several jurisdictions;
• enforcement may rely on the New York Convention.

Cambodia is a party to the New York Convention, which provides a framework for the recognition and enforcement of foreign arbitral awards. The Convention does not turn an award into automatic payment. Recognition and enforcement procedures are still required in the relevant country.

If the contracting company has no assets, even a well-drafted international award may not produce recovery.

Winning is not the same as collecting

Before beginning expensive proceedings, the buyer should investigate:

• what assets the respondent owns;
• who owns the project land;
• where bank accounts may be located;
• whether a parent company has guaranteed the SPA;
• whether the assets are mortgaged;
• whether insolvency proceedings have begun;
• whether the apartment has been resold;
• whether other creditors have priority.

An arbitral award normally has to be recognized and enforced by a competent court. An application to set aside the award is not a full appeal on the facts. The available grounds are limited and may include an invalid arbitration agreement, lack of proper notice, excess of jurisdiction, an improperly constituted tribunal, procedural irregularity, non-arbitrability, or conflict with public policy.

The losing party cannot ordinarily ask another court to reconsider every piece of evidence from the beginning.

Similar buyers do not automatically become one claimant

In a troubled development, many buyers may have similar claims. Cooperation can help them share legal costs, collect documents, and negotiate collectively.

However, each SPA may contain its own dispute clause. Joinder and consolidation depend on:

• whether the same rules apply;
• whether the clauses are compatible;
• whether the parties overlap;
• whether the transactions are connected;
• how far each case has progressed;
• whether consent is required.

If one SPA refers disputes to the NCAC, another to Cambodian courts, and a third to arbitration in Singapore, combining the claims becomes particularly difficult.

A coordinated strategy should therefore begin with a table comparing every dispute clause, not only a list of buyers and amounts paid.

Settlement may be more valuable than a formal victory

Negotiation or mediation may produce a faster partial refund, a substitute apartment, a revised payment schedule, a completion guarantee, or a fixed title-transfer date.

A court judgment or arbitral award may provide a stronger legal entitlement, but later—and potentially against a company with no liquid assets.

A settlement should answer practical questions:

• who will pay;
• when payment will be made;
• from which source;
• what security is provided;
• what happens if the new arrangement is breached.

Negotiation is less suitable where the seller is concealing assets, denying basic documents, or using discussions only to delay formal action.

What to review before signing

For an individual buyer, a proportionate clause may often provide for the NCAC, a Cambodian seat, one arbitrator, English or another agreed language, Cambodian law, and access to expedited procedure.

There is no universal template. Cambodian courts may be better for a particular title dispute, while international arbitration may be more effective for a claim against a foreign parent company.

Conclusion

Arbitration and court proceedings are different tools, not different grades of justice.

Arbitration can offer a chosen language, a selected tribunal, confidentiality, and a framework for international enforcement. Cambodian courts remain essential for interim measures, title-related relief, recognition, enforcement, and claims involving third parties.

The main risk is a disproportionate clause. A foreign seat, three arbitrators, and a complex procedure may make enforcing rights under a single apartment purchase commercially irrational.

Before buying, the investor should assess not only the chance of winning, but also the cost of the process, the availability of urgent protection, and the existence of assets from which any decision can actually be satisfied.

This article is for general information only and is not legal advice. The forum, jurisdiction, deadlines, interim measures, and enforcement route must be reviewed for the specific SPA and facts with a qualified Cambodian lawyer.

Sources

1. Kingdom of Cambodia — Law on Commercial Arbitration 2006. Provisions considered include written arbitration agreements, referral by courts, interim measures, tribunal jurisdiction, seat and language, setting aside, and enforcement.
2. National Commercial Arbitration Centre — Arbitration Rules 2021. Provisions considered include expedited procedure, emergency arbitration, confidentiality, language, and time limits for awards.
3. National Commercial Arbitration Centre — model clause and official fee calculator. Used for recommended clause elements and illustrative fee calculations.
4. JICA Legal and Judicial Development Project — Code of Civil Procedure of Cambodia. Provisions considered include Khmer as the court language, translation, provisional attachment, provisional injunctions, preservation measures, and enforcement.
5. New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Used for the international enforcement context.

Frequently asked

Can I go to court if the sale and purchase agreement contains an arbitration clause?

A court will generally refer the parties to arbitration if a valid arbitration clause is invoked in time. State courts may still assist with interim measures, setting aside proceedings, recognition, and enforcement.

Is arbitration in Cambodia always faster than court proceedings?

No. The NCAC Rules contain procedural time limits, but the actual duration depends on the complexity of the case, service of documents, expert evidence, the conduct of the parties, and any later enforcement process.

What language is used in the dispute?

Khmer is the official language of Cambodian court proceedings. In arbitration, the parties may choose the language; if they do not, the tribunal decides.

Can several buyers combine their claims?

Not automatically. Joinder or consolidation depends on the applicable rules, the compatibility of the contracts and arbitration clauses, the parties involved, the stage of the proceedings, and sometimes the consent of the parties.

What is the most important part of a dispute-resolution clause to review?

Check the forum, seat of arbitration, number of arbitrators, language, governing law, scope of covered claims, interim-relief provisions, costs, and the practical route to enforcement.