C.  PAST INITIATIVES

a.  Strengthening Capacity:

There is widespread recognition to the need not only to involve nationals in the legislative drafting process, but also to develop local expertise in this specialized area of legal activity. A step in this direction was taken in the case of commercial draft legislation currently under preparation in the Ministry of Commerce: under this Bank funded activity, the role of expatriate consultants has been significantly curtailed and the activity has been left to be managed by a Cambodian lawyer with the support and assistance of short term consultants, both local and expatriate. Similar steps have been taken under other legislative reform activities funded by other donors in view of increasing the participation of local counterparts in the legislative reform process.

In terms of strengthening the capacity of the National Assembly and the Senate to review legislation in an efficient way and to accelerate the lawmaking process, the World Bank has also taken the lead to provide them with some technical assistance support.

In the area of improving legislative drafting skills, the UNHCR and the Asia Foundation has successfully sponsored in a recent past a series of training courses to key government drafters and parliamentarians.    

b.  Improving Coordination:

While key donors continue to support the preparation of a significant number of new legislation covering such areas as the criminal code, civil code, criminal and civil procedures, land tenure law, forestry law, and the commercial code, there is a growing emergence of the need to improve coordination not only within the government and also among donors. Progress in this area is encouraging. A coordination system was developed between the Ministry of Commerce (MoC) and the Ministry of Justice (MoJ) to agree on a strategy to guide the process of preparation of the commercial code and the civil code, both activities are funded by the World Bank and Japan, respectively. The commercial contract is a good illustration of the strategy. While the Ministry of Justice is preparing a comprehensive all encompassing civil code which may take several years to be completed, the MoC is moving forward with its preparation of the commercial contract in response to the fast growing needs of the free market operators. However, irrespective of the time line, both institutions have agreed on adhering to the same fundamental principles underlying the formation, execution, and enforcement of the contract. In due time when the civil code will be adopted there will be a seamless merging of the key provisions of the commercial contract in the civil code.

The same strategy was used in the case of the preparation of the land tenure legislation which activity was supported by the Asian Development Bank. The International Monetary Fund which has recently provided technical support to the Ministry of Commerce in the area of bankruptcy and secured transactions legislation is following the same footstep of consultation and cooperation. Another step in this direction was taken in the case of the development and establishment of the commercial court currently under the joint preparation in the Ministry of Commerce and the Ministry of Justice. The drafting process for the land law is another illustration where an unprecedented amount of constructive input and useful feedback from the "NGO/IO Land Law Working Group" nongovernmental voices was incorporated, a process which no doubt improves the effectiveness of the law and increases the chances of the Government for a successful implementation of this complex and crucial law.  

D.  VISION FOR THE FUTURE:

a.  Need for a Coherent Legislative Reform Program:

Legal and judicial reforms have moved to center stage as an important priority on the development agenda of Cambodia. These are being undertaken to foster development of a vigorous private sector, to respond to the requirements of the regionalization and globalization of world trade, and to make the Government more accountable to its own citizens. By the day the economy became increasingly complex: urbanization rates increased, the labor force shifted from agriculture into light manufacturing and services, markets expanded, and the enterprise sector grew. Cambodia’s recent membership in ASEAN and its impending accession to WTO required economic strategies that were more adaptable to the changing environment. Against this backdrop Cambodia is hard pressed not to learn the lessons from Asia’s unprecedented historical evolution from the perspectives of industrialization, urbanization, and the increasing division of labor altered society, the economy, and politics. All these changes also demanded a legal framework that would provide flexibility for market agents and stable institutions to enforce contracts and property rights and enhance the predictability, transparency, and accountability of state actions.

With all these competing force at play there is a clear need now, and to a far greater extent than has been the case at any previous time since 1993, to develop a coherent legislative program which sets out the purposes and objectives of the legislative reform program as a whole, as well as the purposes and objectives of each of the individual piece of legislation. Such a program not only serves to set the context for the reform program but it also ensures that the different parts of the program serve to reinforce, not undermine, each other. The Government has recruited a consultant to prepare a draft of a legislative programme which was widely circulated and fully discussed.

The legislative programme was articulated along two mutually-reinforcing thrusts of activities. Each of these activities represents a cluster of interlinked objectives which the Government is utilizing all means at its disposal to achieve.                                    

(i)   Reform of the "Rule of Law": 

The object is to establish the Kingdom of Cambodia as a "State of Law" in which the rule of law prevails. The work will entail the enactment and amendment of laws and regulations to reflect the realities and needs of a liberal market economy, as well as to create an environment conducive to the progress of a democratic society, and particularly one which guarantees human rights and social justice, including private ownership, the sanctity of contracts, fairness and equity. Of particular importance are laws that provide the basic structure for the functioning of the courts; laws that improve judiciary and law making; laws that improve legal capacity; and laws that protect basic economic rights, assets and interests of the private sector. The issue of legal validity of Cambodian laws in force prior to the 1993 Constitution as well as access to the general body of laws will be addressed.

The reform of the Rule of Law will also advance the fundamental aspects of good governance where public institutions and officials are held accountable to the people for decisions made or actions that damage the nation or individual rights, where a rule-based decision-making system operates in a predictable manner, where information on public sector decision making, policies, actions, and performance is available to people in a transparent manner, and where public officials facilitate and promote an environment in which people can participate meaningfully in the development process.

(ii) Sectoral legal reform: 

The object is to develop a body of laws and regulations necessary for the good and efficient functioning of a free market economy. The work will entail the enactment of laws, regulations and procedures that encourage lending by financial institutions; laws that provide rules for functioning of commercial sector; laws that govern specialized commercial transactions; laws that govern key economic sectors like energy, transportation, communications, agriculture, industry, tourism, commerce and private investment. Many of these laws and regulations were enacted or adopted over the seven years period since the formation of the Government in 1993. An overview of the legal development covering the period 1993-2000 is provided in Annex 1.

Moreover, as Cambodia is now pursuing market-oriented policies, opening up their industries to international competition, attracting foreign direct investment, liberalizing their trade in goods and services through the removal of barriers and developing rules in new trade-related subject areas, it is therefore vital that the ASEAN legal commitments and the uniform rules embodied in the WTO legal instruments are applied or set as a norms in all legislative initiatives of the Government.

PRIORITIZATION OF THE NATIONAL LEGISLATIVE PROGRAMME

The National Legislative Programme is set out below, in order of priority:

(a)      YEAR 2001:

• Law Establishing the Commercial Court

• Independent Budget for the SCM and the Judiciary (Financial Management Law)

• Amendment of the Law on the Organization and Functioning of the Supreme
  Council of Magistracy 

• Trademark Law 

• Law on Business Enterprises

• Amendment of the Law on Investment

• Law on Export Processing Zones (EPZs)

• Land Law

• Postal Services Law

• Ratification of the New York Convention (Enforcement of Foreign Arbitral Awards)

•  Ratification of the ICSID Convention                                                           

(b)  YEAR 2002:

• Law on the Organization of the Judiciary (Labor Court, Administrative Court, and Military Court)

• Law on Magistrates and Law Officers

• Commercial Contracts Law

• Commercial Arbitration Law 

• Bankruptcy Law

• Secured Transactions Law

• Customs Code

• Accounting Law

• Forestry Law

• Fisheries Law

• Copyright and Related Rights Law 

• Merchant Shipping Law 

• Telecommunications Law

• Law on Industrial Standards

• Law on Protection of Patent, Utility Models, and Industrial Designs

• Sub-Decree on Plant Quarantine 

• Amendment of the Internal Rules of National Assembly                                  

(c)   YEAR 2003:

• Criminal Code

• Law on Criminal Procedures

• Civil Code 

• Civil Procedure Code 

• Tourism and Entertainment Law

• Commercial Leasing Law

• Commercial Agency Law 

• Law on Rules of Origin

• Civil Aviation Law 

• Water Resources Management Law

• Water Supply Law

• Law on Plant Variety Protection

• Law on Layout Designs of Integrated Circuit 

• Law on Protection of Undisclosed Information

• Law on Geographical Indication Including Appellation of Origin 

• Sub-Decree on Animal Quarantine 

• Laws on Anti-dumping, Countervailing duty, and Safeguard

(d)      YEAR 2004: 

• Negotiable Instrument Law

• Securities and Exchange Laws

• Law on Cooperatives

• Competition Law

• Land Traffic Law                                                                                    

2.  LAW MAKING PROCESS: 

a.  Developing Coordination Mechanism. 

Various institutions at several levels of the Cambodian administration are involved in one way or the other in the policy formulation, drafting, adoption, implementation of, giving advice on, and teaching about the various laws of Cambodia. These include the Parliament (Senate and National Assembly); the Council of Ministers; the ministries (including the many relevant departments); the courts; the universities; the Bar association; the private sector; and the various development associations.

As such it is vital that the Government develop a consultative mechanism to ensure close coordination not only amongst the various ministries involved in any draft legislation and the Council of Jurists, but also involving the National Assembly and the Senate as well. Moreover promoting stakeholders' participation and building broad-based partnerships, in particular with the private sector and civil society, should also be pursued. While these new approaches are time consuming and not without controversy, the benefits are worth the efforts. It broadens the ownership of reform and adds great strength to reform efforts of the Government. They also ensure that political support not weaken once implementation begins and unpopular consequences become more visible.

(i)  Coordination within Government and the Legislative Branch:

Inter and intra-ministerial consultations not only serve to allow a regular exchange of views and information amongst the branches and agencies, and thus minimize conflicts between agencies as well as inconsistencies between draft pieces of legislation, but they also enable the branches and agencies concerned, and the National Assembly and Senate in particular, to program their activities, determine their priorities and equip themselves in advance to address the technical issues involved in each of the pieces of legislation that they are called upon to examine. For example, the Senate in defending its role in the legislative process rejected the draft law on financial institutions complaining that the five days allotted for review of "urgent" legislation were not enough to meaningfully consider such complex and important legislation. Instead, the Senate recommended amending the Constitution to ensure adequate time for its review. Generally, the Assembly's role in the legislative process is reactive and comes late. For example, the annual budget law typically arrives at the Assembly for consideration in mid-December, two weeks before the start of the new fiscal year. This leaves little time to review the lengthy legislation, even for members with sufficient capacity to understand the budget. It is no surprise that the Assembly has never changed a single budget line from the draft received from the Government.

(ii)  Coordination with the Private Sector

While increasing transparency in existing laws and regulations provides a level playing field for all businesses and facilitate private sector development, formal and informal consultations with the private sector on draft legislation will increase the effectiveness of these laws to support private sector growth. Conversely, the absence of consultations between the Government and private sector may result in less effective laws or laws that actually inhibit rather than support private sector growth in Cambodia. The Cambodian private sector on its own has been still outside the loop in terms of engagement in the policy making process, both by institutional default and historical neglect. It is relative small and was historically weak to command the respect as would their counterparts in more advanced economies. This reason alone validates the argument that more concerted efforts should be expanded to empower them to take a more active role in this historical moment in which the country is in the eve of acceding to the WTO.

(iii)  Coordination with Civil Society

Consultations with civil society on draft legislation is a key component of good governance and promotes public sector accountability to the people who delegate authority to exercise power for public interests. It gives those who are affected by legislation opportunities to voice opinions and thus enhances a sense of ownership among all stakeholders. 

Up to now productive interactions between the government and non-government sectors are limited, although Cambodia's political and economic transitions have made positive, and perhaps irreversible, changes in the way public sector and civil society (including the private sector) interact. Compared to 3 years ago, the current situation looks much brighter and more hopeful. There are many examples of positive changes. Public officials and institutions seek more dialogue and consultations with civil society. Civil society organizations actively engage in advocacy on specific topics and influence decision-making by the public sector. A recent good example is the participation of an NGO/IO Land Law Working Group in the drafting of a new Land Law. The Government offered the Working Group a chance to voice their concerns and to take part in the decision making process. Such interactions are being replicated in other areas of draft legislation like taxation, investment, forestry, and fisheries laws.  

Building on these successes, the Government recently institutionalized the dialogue through the establishment of 7 public sector/private sector thematic working groups. A variety of forums-large meetings, smaller, sector-specific dialogues are engaged with the private sector - the Phnom Penh Chamber of Commerce, the Cambodian Bar Association, and national and international business groups in Phnom Penh. Such public-private sector interactions would ensure that legal reforms affecting the private sector are pursued in a more transparent and informed manner.

Recently at the Third Royal Government – Private Sector Forum held on February 7, 2001 under the high patronage Prime Minister Samdech Hun Sen, the Government reiterated its commitment to ensure transparency and predictability in the adoption of laws and regulations affecting the private sector and welcomed the views of the private sector in the law making process. Ministries/ institutions that have completed their draft laws and regulations affecting the private sector are required to submit them to the Working Group in charge of Legislation, Taxation, and Governance in order to provide the opportunities for the business community and investors to comment and propose recommendations within a specific period prior to submission of these drafts to the inter-ministerial meetings and thereafter to the Council of Ministers for approval. Previously, the MoC has made as a practice the publication of their draft laws and regulations and either formally and informally hold participatory workshops to discuss them. The Ministry's expatriate legal advisors engaged on a regular basis consultation with other legal advisors and the private sector to ensure adequate exchange of ideas and information.

b.  Lawmaking Process as a Continuous Process

The proposal to develop and adopt a legislative reform program is a first step in the development of such a consultative mechanism. But it is only a first step. Consultations amongst the various branches and agencies need to be a continuous process. Lack of clear policy-dictated direction in developing legislation appears to be the main cause of legislative failure. The experiences of drafting the forestry law is a good illustration of how the absence of clear policy have contributed to its failure in getting it adopted, despite 5 long years of expansive technical assistance, and has resulted in chaotic harvest and failure of the Government to maximize revenue capture from the forestry sector.

The drafting of legislation and regulations should be made only after the issuance of clear policies that are well understood or accepted by the institutions concerned. Recommendations for changes will be ineffective in reform efforts in the absence of well-defined policy. The objectives of the legislation should be clearly identified and the drafting guidelines should be Cambodia specific. For the sake of illustration new legislation should be clearly written and easily understood; new legislation should strictly limit its reliance on subsequently issued implementing regulations. In the past, passage of regulations is often delayed or pursued in a piecemeal, chaotic manner by various Government authorities. Lack of implementing regulations would allow undesirable discretion in the implementation of any new legislation, impairing its beneficial effects. Whenever possible the guidelines for the legislation could address this problem by restricting the degree to which the legislation contemplates implementing regulations; clearly specifying those subjects to be addressed by implementing regulation; clearly specifying the authority responsible for development of implementing regulations; making ample provision for implementation of the new law prior to the passing of any implementing regulations by specifying interim rules and procedures; and setting out a timetable for development of comprehensive implementing regulations.

The Government institutions that have completed their draft legislation can organize forums or public hearings with the private sector and civil society - large meetings, sector specific dialogues - where the policy, objectives and guidelines of the legislation and other support materials like explanatory notes are presented. Senior government officials, members of the technical commission of the National Assembly and the Senate, and representatives of civil society should be invited. General draft legislation should be made available for public comments during a defined period of time before it is finalized and approved.

For private sector related legislation the Working Group in charge of Legislation, Taxation, and Governance should be utilized to the fullest in order to provide the opportunities for the business community and investors to comment and propose recommendations within a specific period. The Government could require, by law, an official notice-and-comment period (45 to 60 days) prior to approval of draft laws or regulations by the Council of Ministers. Members of the Council of Jurists and representatives of the relevant technical parliamentary and senate commissions should be invited to participate in the process, or at the least they be kept informed of the status of the drafts and the suggested substantive changes. At the start of the notice-and-comment period, the Government or an individual ministry would announce the completion of a draft law or regulation, make copies available to the public, and invite comments before a final draft is approved. Requiring a notice-and-comment period prior to approval by the National Assembly (for draft laws), the Council of Ministers (for draft sub-decrees), or an individual ministry (for draft prakas or other regulations) would ensure that interested parties or the public have an opportunity to provide input into proposed legislation before it is approved. Notice-and-comment periods are common in many countries. They ensure transparency, predictability, and greater public participation. The private sector has specifically endorsed this idea for Cambodia. Adding 60 days, for instance, to the legislative process creates no undue delay. In fact, it would significantly enhance the effectiveness of legislation by promoting both transparency and greater participation in policy making.

c.  Capacity Building in Lawmaking Process

The government and the business community in free market economies need both a comprehensive legal infrastructure and legal competence in the public sector. Capacity building at each of the institutions involved in the policy formulation, drafting, adoption of Cambodian legislation lies at the heart of any sustained effort to ensure the full success of the legal reform, the appreciation of the policies, institutional responsibilities, and the respect of the rights and the legal obligations arising from the adoption of new legislation. 

Despite the significant role played by each of these institutions in the lawmaking process, few has resources to respond to the challenges. The shortage of highly skilled Cambodian lawyers means that much of this legal drafting is being done by international experts. The level of understanding, policy planning, political support, and capacity for implementation of any of these laws is unclear. As such, capacity building, while focusing on long-term needs, must also take into account the urgent priorities. When examining the training and retraining needs of government lawyers and legislative officers, one must consider the long or medium term objective of the administration, which is to have competent personnel equipped to deal with the legal issues confronting the country.

In free market economies, the economic actors have more responsibilities and more freedom of choice even though their initiatives remain governed by the legislation. In fact the role of the government as a regulator and as a participant of the economy are clearly separate. The economic actors, whether private entities or enterprises still run by the government, have infinitely more options in their transactions. However, these options will always be within a framework defined by the government and in particular by its lawyers. It is thus the responsibility of the retraining to help define this new role and explain these new tasks.

Any such training must redefine the role of government lawyers, legislative officers, and lawmakers in fostering the Rule of Law. A new role for them warrants new functions which require new skills and techniques. Drafting legislation in a planned economy meant, essentially providing a broad legal framework within which the almighty plan would operate. In market economies like Cambodia, legislative drafting is of utmost importance and the legislative drafters must provide more comprehensive legislation including implementation regulations ranging for example from the registration of companies, to copyright and intellectual property.

With respect to the substantive law content of the retraining programs, government lawyers, legislative officers, and lawmakers will need to be familiar with the legal issues associated with restructuring State-owned enterprises, privatization or the multitude of BOT (Build Own Transfer) project concepts because, with few exceptions, none of them has ever been exposed to these issues. Similarly, the topics on intellectual property rights protection, economic exchanges/dealings in international trade contracting and the intricacies of the capital markets and international financing in a globalized economy are accordingly important.                                           

As much as the relevant substantive law is important, it is similarly imperative to assess carefully the level of education of one’s audience. Moreover, the legal background of the target population should be a primary consideration for anyone designing capacity building programs for government lawyers. Their prior exposures to legal education, legal concepts which bear relevance or contradict the concepts of a market-based economy, e.g. individual ownership of property, are a determining factor and may prove to be one of the greatest difficulties in providing retraining.

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