Cambodia
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. Orders for relief to preserve assets (within the jurisdiction) or the status quo are available in Cambodia on a temporary basis, pending the ultimate outcome of legal proceedings. This can vary from placing a freeze on the transfer of bank assets to a freeze on the transfer of immovable property in cooperation with the relevant land ministries.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
Yes. Generally, the Court will make such interim orders as necessary, dependent on the demands in the petition. The Court will not usually make an order relating to the management of assets, but can make orders for disclosure where appropriate.
3. Briefly what is the relevant legal test?
The Court must be satisfied that such an order is necessary to safeguard the future execution of a claim, to avoid the risk of significant damage or imminent risk to the rights in dispute.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The procedures and requirements for obtaining preservative or injunctive relief are governed by Articles 530-549 of the Code of Civil Procedures (referred to below as the “CCP”). Article 541 of the CCP requires that the applicant file a written motion containing the following information, supported by evidence:
(i) names and addresses of the parties, and the name and address of their agents;
(ii) the details of the order for preservative disposition that is being sought;
(iii) the details of the rights or legal relationship(s) that are to be preserved;
(iv) the reason(s) why the preservative relief is necessary.
Upon receipt of the application, the Court will review and determine the application based on the applicant’s submissions, without notice to the respondent. This is to avoid the risk of the respondent disposing of the assets which the application is seeking to preserve. Once the order is made, the enforcement of the order shall be applied. An objection can be asserted by the respondent under Articles 550-556 of the CCP when the respondent learns about the order eventually. If the objection is denied by the Court, the respondent can file an appeal to the Court of Appeal within a prescribed timeframe (two weeks). The decision of the Court of Appeal is final.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
The Court has discretion about whether to require a security deposit; for instance, Article 542 of the CCP is applied for an order for preservative deposition, while Article 547 of the CCP is applied for an order for provisional attachment. If required, there is no specific formula for calculating the security amount under the CCP and it will be determined by the Court taking into account the value of the relevant assets and the amount of debt claimed. The applicant may apply for a refund of the security deposit if it subsequently wins the substantive case. Conversely, if the applicant loses the substantive case, the respondent is able to apply for the security deposit.
6. Can it be sought against third parties?
No. Pursuant to the relevant provisions of the CPP, a preservative order cannot be sought directly against a third party. However, dependent on the facts, a third party may be indirectly affected. For example, an order placed on immovable assets is announced via the local cadastral (register) to try and prevent any transfer of the property (including by a third party). Likewise, it is possible to place a freezing order on intangible assets, such as bank accounts, which would have to be complied with by the bank. Enforcement of the order against that third party would however require a separate Court process.
7. What assets are covered by a freezing (or equivalent) order?
Any moveable (including intangible assets) or immovable assets located within the jurisdiction.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
A preservative order can only be made in Cambodia in support of substantive proceedings abroad where the relevant assets or rights are located within Cambodia.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
A preservative order can be sought at any stage of civil proceedings up until the final judgment has been issued (that is a decision on the merits of the substantive case). It also can be sought before the merit case is lodged.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Currently, Cambodia does not have any exceptions to the general prohibition on the use of assets subject to a freezing order.
12. What happens after a freezing (or equivalent) order is granted?
After the preservative order is granted, the enforcement of the order shall be applied. Once it’s done, the respondent (also known as the “debtor” under the CCP) is restricted from dealing with the preserved property until there is a final judgment in the substantive case or the preservative order is lifted by the Court.
13. Who pays the costs of the application for a freezing (or equivalent) order?
Based on Article 537 of the CCP, the applicant must pay the Court fee for the filing of the motion for the preservative order and the enforcement stage. The applicant is generally liable to pay the fees even where it is successful on the application.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
As third parties cannot be direct parties to a preservative order, the CCP does not include any specific provisions setting out a third party’s obligations or any protections available to them. As noted previously, they can be subject to separate enforcement action if they fail to follow an order that indirectly affects them.
15. What are the consequences of breach of a freezing (or equivalent) order?
The CCP does not contain any specific provisions regarding the consequences of breaching a preservative order. However the applicant has to make further applications to enforce the preservative order. There are some protections in place because pursuant to Article 565 of the CCP, the execution of a provisional order over movable assets is carried out through the relevant Court bailiff who has jurisdiction over the location of the asset and seizes the relevant asset. Also, pursuant to Article 567 of the CCP, execution of the preservative order over immovable assets is carried out by registering the provisional attachment. Therefore, any third party attempting to purchase immovable assets covered by the order cannot receive the right transfer. Furthermore, it could be incriminated by the criminal Court where a “failure to enforce a judicial decision” is found, pursuant to Article 523 criminal code, which attracts “imprisonment from one month to six months and a fine from one hundred thousand to one million Riels”.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
No. Under the CCP, a third party cannot be held liable to the applicant for non-compliance with a preservative order. Separate enforcement action may however be taken against a third party who breaches an order.
17. Can a freezing (or equivalent) order be enforced abroad?
The CCP does not contain any provisions that allow a preservative order to be enforced abroad. As the purpose of such an order is to ensure the preservation of assets or rights available in Cambodia, enforcement will be limited to Cambodia.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
No. The CCP does not contain any specific provisions that allow such an order from overseas jurisdictions to be enforced in Cambodia. However, a foreign judgment can be directly enforceable in a Cambodia if there is an applicable treaty between the two countries, and the applicant could then apply for a freezing order to preserve assets in Cambodia to satisfy that foreign judgment.
Contact
Guillaume Massin Partner DFDL cambodia@dfdl.com www.dfdl.com/locations/cambodia
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