Legal and Tax Updates

Issue: No. 007P/23 – 03 April 2023

The protection of consumer has been strengthened since 2019 following the promulgation of law on consumer protection, the establishment of National Committee for Consumer Protection, and the issuance a Prakas by the Ministry of Commerce (“MOC”) in early 2022 on the Unfair Contract Clause which are to protect consumers from excessive profit exploitation by any creation and using of unfair and exploitive standard form of contract.

It should be noted that under article 351 of Civil Code, if a party enters into a contract while taking advantage of the other party’s economic difficulties, ignorance or inexperience, and made excessive benefits form that contract, the other party may rescind the contract on the ground of the defect of the declaration of intention.  In addition to this, any business owner violating the requirement under the on Prakas Unfair Contact Clause may also be punished pursuant to the Law on Consumer Protection.

On March 24^th, 2023, the MOC and the National Bank of Cambodia has issued a Joint Press Release on the implementation of the above Law and Prakas, calling all banking and financial institutions to conduct their business in accordance with the above Law on Consumer Protection and the Prakas on Unfair Contact Clause; and encouraging, any general public, especially consumers, to directly report to MOC or to the National Bank of Cambodia on any unfair standard forms of contract.

Please be noted that the Law on Consumer Protection and the Prakas on Unfair Contact Clause does not only cover banking and financial institutions, but also other business institution. The consumer, as defined under the Law on Consumer Protection, refers to the one who acquires goods and/or services for personal, domestic or household use, and not for re-sell for commercial purpose. Therefore, all business conducting such transaction should pay attention on the implementation of the above law and regulation.

Unfair contract clauses include, but not limited to, the following:

• clause that provide exemption or limitation of liability of business owner form the guarantee of its products and/or services;
• clause providing the business owner to make substantial changes to the kind, amount, price, and quality of its goods and/or services, or any other modification of important elements of the contracts without the prior notice to and/or prior consent from consumer; and
• clause that grant business owner the discretion to interpret the contract or to unilaterally terminate the contact.

We hope that the above legal compliance alert is helpful for your investment and help you to invest more confidently.

Disclaimer

The article is merely for general information purposes. It does not constitute a legal advice on the subject matter. If you have any question or need any assistance, please feel free to contact us:

	SON Sokeng, Partner, Managing Director sokeng.son@sithisak-lawoffice.com +855 12 885 870	He has more than 10 years of professional experiences in corporate, commercial, investment and capital market sector in Cambodia. He has leaded a legal counsel team to advise and assist Royal Railway Plc., Golden Tree Plc., one of the biggest commercial bank in Cambodia and one of the biggest telecommunication service provider in Cambodia in conducting legal due diligence and restructuring for their proposed bond issuance: plain, guaranteed and green bond issuance and listing; He also advised and assisted Phnom Penh Autonomous Port, Acleda Bank Plc., DBD Engineering Plc, one holding company in real estate sector and two other companies in their proposed listing at Cambodia Securities Exchange (CSX) through IPO.
	NOEUM Sokvichhai, Partner, Head of Corporate, Commercial and Investment Practice Group sokvichhai.noeum@sithisak-lawoffice.com +855 12 826 785	Sokvichhai has more than 6 years of experiences in labour, corporate, commercial and investment advisory in Cambodia. He actively advices and assists various businesses in commercial, tax, and labour registration, business licensing, products registration & distribution, business recapitalization & restructuring, and mergers & acquisitions transaction. He also has particular experiences in advising collective investment fund and trust business, investment incentives & qualified investment project, and labour & employment related issues.

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