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Over the weekend, I met a small-business owner here in Phnom Penh who had some legal trouble setting-up her store. She fell into a common trap, which should serve as a lesson for anyone looking to set up their business.
New businesses need to register with the Ministry of Commerce, which requires a copy of the business’s lease agreement. If you’re sub-leasing the premises, then you’ll also need written authorization from the owner of the property, not just the person leasing it to you. If you can’t get the owner’s approval, you won’t be able to get your business registered.
The business-owner had rented a terrific location for her store, put down a deposit, invested in fixtures and signs, and was starting to grow her clientele. When she filed her lease agreement with the Ministry, they rejected it because it wasn’t between the true landlord and herself.
Unbeknownst to her, she had signed a sub-lease. The person from whom she sub-leased wasn’t willing to help her contact the true owner, who was in fact out of the country. Without the landlord’s agreement, she would never be able to get registered. Without registering, she was operating as a sole-proprietorship – which meant she was paying astronomical import duties and make it impossible get her payment system online. Seeing no other solution, she decided to cut her losses by moving to a new location.
Opening a store is hard enough to do once. But doing it again just because you didn’t know you were sub-leasing is heartbreaking.
The lesson is to know whether you’re renting from the landlord or sub-leasing from the tenant by asking for proof of ownership. If you’ve decided to sub-lease, make sure you get the landlord’s approval in writing at the time you sign the lease.
For more on establishing a business in Cambodia, see our report here.
I’ve posted before on how important it is for NGOs to comply with the Labor Law. The Post has a couple of stories this week (here and here) providing a perfect example of just how crucial it really is.
A local human rights NGO (having plenty of lawyers on staff), has been sued by three former employees, claiming over $20,000 in compensation under the Labor Law. I’m not involved in the case, and know nothing more than what the article states – it could be a frivolous claim for all I know. But even still, the story illustrates how former employees can come back to sue the organization for substantial damages.
Even the most generous and well-intentioned NGOs can find itself in serious difficulty if it’s not fully aware of some very specific and non-obvious provisions. Just for example, if you find out an employee has been stealing from the organization, you have only seven days to terminate him. Wait until the eighth day, and you’ll be stuck employing a known thief.
We’re currently drafting a guide to the labor law specifically for NGOs, which will explain the major provisions and provide practical advice on compliance. Stay tuned to this space for its release date. In the meantime, you can read more about compliance in our prior publication – Labor Law Compliance Review for NGOs.
Even to the experienced, driving in Cambodia can be a harrowing ordeal. Crazy teenagers on motos, horsecarts blocking the road, wandering cows, and bullying Lexus drivers… Drive here long enough, and sooner or later you’re going to have an accident.
Imagine it’s nighttime on the outskirts of Phnom Penh. You negligently clipped a moto-driver, though he was driving like a maniac and probably drunk. He fell and has minor injuries, but the bike is ruined. A crowd has gathered, there’s shouting, everyone’s blaming you. The cops arrive and decide you’re at fault, demanding an exorbitant sum, and won’t let you go. You’re carrying a few bucks, there’s no bank anywhere, and the cop took your keys anyway.
What to do?
To a foreigner used to insurance companies, courtrooms, and due-process, this can seem a bit shocking. Don’t freak out. From a legal perspective, while it may be possible to bring a traffic-accident suit to court, the Traffic Law specifically empowers the police to settle the dispute, on the scene. What’s more, they can legally prevent you from leaving without settling. Don’t think you can just tell them to call your lawyer and drive off. Bad move.
Unless you’re drinking buddies with the chief of police, the best practical advice is to carry liability insurance. Call your insurer’s 24-hour number, hand the phone to the cop (or better yet, dial it on his phone), and they’ll negotiate it all for you. The insurer will reach an agreement, pay the bill, and you can be on your way.
And best of all, you don’t have to talk to a lawyer.
In Cambodia, assuming all the relevant procedures are followed, trademarks go to the first person to register. The “legitimate” owner might be a big foreign brand with registrations all over the world, but if they don’t register the mark in Cambodia, they’re risking trouble.
In recent weeks I’ve seen an uptick in the number of clients facing such trouble. Typically they’re a foreign company selling products around the world, including Cambodia. But for one reason or another, they never registered in Cambodia. Some sneaky company – perhaps a Cambodian distributor wanting business – registers the mark from under my client.
The Trademark Law provides several solutions, but none are straightforward and all involve more time and expense than simply registering the mark in the first place. If you become aware of the situation early enough, you can file an opposition within 90 days of the registration’s publication in the Official Gazette. After the 90 day window, you’d have to request the Ministry to cancel or invalidate the mark, which is available on narrower grounds than opposition.
The take-home message is that if you’re selling a product in Cambodia, or even considering it in the future, be sure to register those marks!
For more on trademark opposition and cancellation in Cambodia, see our full report here.
Important changes to the family laws are in the works, particularly if you’re a foreigner intending to marry a Cambodian. The April 27th Cambodia Daily (offline only) has two articles on the matter– one reporting on a draft Family Dispute Law, and another on new rules on marriages between locals and foreigners.
First, the Family Dispute Law was passed unanimously by the National Assembly on Monday, and now goes to the Senate for approval and the King for signature before becoming law. The law sets forth new procedures for divorces, child-support, alimony, and other family matters. Though I haven’t read the law myself, together with the new Civil Code, it should fill in quite a few gaps in the present law.
In a related development, a Foreign Ministry official announced new regulations for marriages between Cambodians and foreigners. While the regulations are described as “confidential”, the article reports that both husband and bride will need to be physically present through all stages of the marriage process. This new rule seems to be in response to the recent fiasco involving Korean marriage brokers and human trafficking violations.