Trade Disputes in Thailand

As a major player in international trade, Thailand is susceptible to a variety of commercial disputes. Understanding the causes, mechanisms for resolution, and impacts on business operations is critical.

Foreign judgments can have varying evidentiary value in Thai courts, depending on the court’s discretion and the underlying merits of the case. Arbitration is often a more effective way to resolve such matters.

Arbitration

Considering the recent influx of joint public and private investments, new businesses and private property acquisitions in Thailand, it is understandable that the judiciary has experienced an unavoidable increase in court dockets. Hence, Thailand has encouraged the use of alternative dispute resolution mechanisms such as arbitration.

Arbitration proceedings are done in a more informal setting and all the information, evidences, statements and arguments can be kept confidential. This can be beneficial to renowned public figures and companies who do not wish to risk losing their good reputation.

Moreover, a decision from an arbitral tribunal is final and enforceable and does not require review by a local court. However, the 2002 Arbitration Act grants courts power to set aside an award if certain circumstances arise. These include where the award deals with a dispute that does not fall within the scope of the arbitration agreement, the enforcement would be contrary to public policy or where the composition or conduct of the arbitral tribunal raises justifiable doubts as to its impartiality and independence.

Conciliation

As a major regional player, Thailand’s engagement in international trade often leads to friction with trading partners, which can lead to trade disputes. Understanding these disputes and how to resolve them can help companies ensure their interests are protected.

Disputes may arise from market access, such as restrictions on the import of goods; unfair trade practices, including dumping and subsidies; or intellectual property rights. In such cases, a business should consider working with a law firm that can provide counsel on how to proceed.

In Thailand, conciliation is an important part of the dispute resolution process. During a case management hearing, a judge will often ask the parties to mediate their dispute. This is highly recommended and often faster than pursuing litigation.

In addition, a mediated settlement is legally binding and can be enforced by the courts. This is because Thailand is a party to the New York Convention on the Recognition and Enforcement of Arbitral Awards of 1958.

Court Litigation

The Thai legal system has a mixture of Western and local procedures. Trials are based on evidence and there is no jury. Judges will decide the outcome of a case and can award damages. The courts can also order specific performance in respect of contracts.

Court-annexed and out of court mediation is available. Arrangements for mediation and conciliation are made through the Alternative Dispute Resolution Office, a division of the Office of the Judiciary.

Prospective litigants are not obligated to undertake alternative dispute resolution before filing a statement of claim, but recent amendments to the CPC encourage mediation by offering exemptions from court fees to promote the use of this method. Whether a party chooses to engage in mediation or to proceed with litigation, they should carefully assess the extent of a defendant’s assets in Thailand and abroad to ensure that a judgment will be enforceable. Also, plaintiffs should be cautious about making compromises or settlement offers without a legal expert.

Online Dispute Resolution

Alternative Dispute Resolution (ADR) refers to methods that help settle disputes outside the conventional judicial system, with mediation and arbitration being two of the most prominent. It is one of the most important ways to resolve trade disputes because it allows for a win-win solution and prevents parties from going through the stress and expense of litigation.

Arbitration in Thailand is regulated by the Arbitration Act B.E. 2545 (2002), which is based on the UNCITRAL Model Law on International Commercial Arbitration. Domestic arbitration awards are binding and enforceable under Thai law, just like court judgments.

During an arbitration proceeding, the disputing parties may have either a single or three-arbitrator tribunal. They will be given a list of potential arbitrators and asked to select their preferred candidate for each position. After the parties have chosen their arbitrators, the Thai arbitration institute will be responsible for appointing the final tribunal. The process is less formal than a court proceeding and can take place in any location that both parties agree upon.