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Jul 29, 2014

Cambodia’s Bilateral Investment Treaties Offer Investment Protection Through Arbitration

By Billie Jean Slott

Bilateral Investment Treaties (BITs) are intra-state legal mechanisms which encourage foreign investment. This is particularly so as they provide foreign investors with Investor State Dispute Settlement (ISDS) mechanisms to enforce investment protections through international arbitration against the host state before a neutral tribunal. 
Cambodia has signed over 20 BITs with other states thereby extending investment protection with reciprocity to Cambodian companies and individual investors with the signatory countries.
There is an on-going debate as to whether a country which has a Bilateral Investment Treaties policy will experience an increase in foreign investment.
Sciaroni & Associates, in its own practice, has found that foreign investors find comfort that Cambodia has BITs in place.
Indonesia recently announced that it will terminate its Bilateral Investment Treaty (BIT) with the Netherlands effective when the treaty expires on July 1, 2015.
Indonesia’s decision not to renew this BIT could force investors into the Indonesian court system to resolve business disputes. This has left some foreign investors concerned.
Most BITs contain a dispute resolution clause that allows for disputes to be settled at the International Center for the Settlement of Investment Disputes (ICSID) or alternatively to conduct ad hoc arbitration.
In 2009, a claim was filed for arbitration with ICSID against Cambodia despite the claim not being pursuant to a BIT; but it was, however, in the dispute clause in the contract with the Royal Government of Cambodia. The Royal Government defended against the claim, appointing Sciaroni & Associates as local counsel for this ICSID arbitration. 
The Royal Government prevailed on the facts of the four-year case.  States usually do not prevail at ICSID.  The judgment served to reinforce to foreign investors that Cambodia honors its BITs – reassuring the world that foreign direct investment is protected in Cambodia through the arbitration process and ensuring that Cambodia remains an attractive investment destination for new or expanded business operations.
Sciaroni & Associates is a leading legal and investment advisory firm serving Southeast Asia since 1993 with offices in Cambodia, Laos and Myanmar.  Sciaroni & Associates assists clients in understanding the complex business conditions in those markets while efficiently identifying and resolving issues following strict international ethical standards.  Our firm provides experienced advice and seasoned business insights to many of the world’s leading companies, governments, economic think tanks, global development funds and international NGOs. For more information please visit www.sa-asia.com or contact us at info@sa-asia.com.

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Sciaroni & Associates is a leading professional and investment advisory firm doing business in Southeast Asia since 1993. Based in Cambodia with legal offices in Laos and Myanmar, we provide experienced advice and business insights to many of the world’s leading companies, governments, economic think tanks, global development funds, international NGOs and the Royal Government of Cambodia in accordance with strict international standards.
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