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4. Rational Dispute Resolution
4.1 Rule of Law
4.2 Enforcement of Contracts
4.3 Commercial Dispute Resolution

4. Rational Dispute Resolution

Goal – An efficient institutional framework that balances the rights of the public, owners, lenders and borrowers in the event of a dispute or loan default

 

4.1 Rule of Law (Very Weak)

Core Question: Do all market participants abide by the rule of law and have confidence in the courts and the ability of police to control crime?

No – Very Weak, the government must do more to strengthen the institutional environment underpinning the rule of law, including improving the judiciary and reinforcing property rights.

Impartiality (Very Weak)

4.1.1   What is the confidence level of the strength and impartiality of the police, courts and contract enforcement?

Very Weak – Percentile Ranking – 16.11 out of 100

Source: Governance Matters 2014, World Bank
http://info.worldbank.org/governance/wgi/sc_chart.asp

Judiciary (Very Weak)

4.1.2   Can members of the judiciary be held accountable for their actions?

No– Score 21 out of 100 – Very Weak, three new judicial “reform” laws approved in 2014 will further entrench the ruling party.

Source:
Global Integrity Report 2010
http://report.globalintegrity.org

Costs of Crime (Weak)

4.1.3   What are the business costs of crime and violence?

Moderate Costs – Ranking 91 out of 144 – Score 4.1 out of 7, Weak

Source:
The Global Competitiveness Report 2015-2016, World Economic Forum
http://www.weforum.org/issues/global-competitiveness

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4.2 Enforcement of Contracts (Weak)

Core Question:  Are systems in place for timely and efficient enforcement of contracts?
 No – Weak

4.2.1 Judicial Enforcement (Very Weak)

Very Weak – Ranking 178 out of 189

4.2.1.1 What is the number of procedures involved in resolving a commercial dispute?

44

4.2.1.2 What is the time between the filing of a lawsuit and resolution in judicial enforcements?

483 days

4.2.1.3 What is the cost of judicial enforcements as a percentage of claim value?

103.4%

Source:
Doing Business 2016 Enforcing Contracts
www.doingbusiness.org

4.2.2 – Summary Proceedings (Strong)

Strong – Judicial sale is the predominate method of foreclosure.

SQ 10  Summary proceedings are alternative dispute resolution processes where creditors can apply for a direct court order in property disputes. What is the time between notice of intent to foreclose and loan collection in summary proceedings if available to lenders?   

 

SQ 11  What is the cost of summary proceeding if available to lenders as a percentage of property value?  

 

4.2.3 – Power-of-Sale (Weak)

Weak – Available in some provinces, but not country-wide.

SQ 12  Power-of-sale agreements give creditors the power to sell properties after notice to the borrower without court intervention. What is the time between notice of intent to sell and loan collection for power-of-sale agreements if available to lenders?

 

SQ 13  What is the cost of power-of-sale agreements if available to lenders as a percentage of property value?

 

Source:
Financing Homes 2008, World Bank and International Housing Finance Corporation
http://www.cipe.org/sites/default/files/publication-docs/Financing%20Homes%202008.pdf

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4.3 Commercial Dispute Resolution (Weak)

Core Question: Can commercial disputes be resolved efficiently and fairly without exorbitant expense and delay?

No – Weak

Survey Questions

4.3.1 Commercial Courts (Very Weak)

SQ 14  Do specialized commercial courts exist for the handling of property disputes and foreclosures?

No – Very Weak, the law to create commercial courts has been drafted, but not fully implemented.

4.3.2 Alternative Dispute Resolution (Strong)

SQ 15  Are alternative dispute resolution mechanisms in place including commercial arbitration, private mediation and community based processes?

Yes – Strong, the law to facilitate ADR is in place and the establishment of a National Arbitration Center is underway.

4.3.3 Commercial Treaties (Weak)

SQ 16  What bilateral, regional and international commercial treaties exist concerning business between countries?

Weak – Malaysia, Japan

Source:
http://www.mfaic.gov.kh/

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