Alternative Dispute Resolution (ADR) in Thailand – A Guide to Arbitration

Arbitration, as an alternative means to resolve disputes in Thailand, is commonplace, particularly given that court proceedings can often be lengthy and protracted. In addition, arbitration clauses are now common in commercial contracts, especially those concerned with international transactions and construction agreements.

The Legal Basis of Arbitration in Thailand

The Arbitration Act B.E. 2545 (2002) provides the legal basis for arbitration as an alternative to court proceedings in Thailand. The Act contains a comprehensive set of provisions governing both the procedural elements of the process and the enforcement of arbitration awards and is based on the UNCITRAL (United Nations Commission on International Trade Law) model law.

Thailand is a signatory to both the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) and the Geneva Protocol on Arbitration Clauses 1923 (Geneva Protocol). Foreign arbitral awards rendered in member countries are therefore enforceable in Thai courts. It should be noted that, whilst foreign arbitral awards are generally enforceable, foreign judgments are not.

The Pros and Cons of Arbitration in Thailand

A.   Language

An obvious and significant advantage to foreign litigants in Thailand when opting for arbitration over traditional court proceedings is that parties may agree for the proceedings to be conducted in English (or another mutually acceptable language). When contrasted with Thai court proceedings, which require the conduct of the proceedings to be in Thai, all documents to be translated into Thai, and all evidence to be given in Thai (usually through an interpreter), arbitration can present an attractive alternative to foreign litigants who sometimes find the Thai court system to be confusing and opaque.

B.    Costs

Whilst arbitration has traditionally been considered cheaper than litigation, mostly due to its flexibility and potential to limit the more costly stages of litigation (e.g., discovery or disclosure), this is not always the case in the context of arbitration in Thailand. If costs are likely to be an issue, professional advice should be taken before any binding agreement to refer a dispute to arbitration is entered into, taking the following local factors into account:

• Court fees are generally limited in Thai proceedings to 2% of the value of the claim or 200,000 THB (whichever is less). Arbitration fees, depending on the institute, can often be higher.
  
• Pre-trial discovery or disclosure remains limited in Thai courts.
  
  
• Some Thai courts have implemented measures to streamline proceedings, such as replacing direct examination with witness statements and video testimony for overseas witnesses.
  
  
• While it currently appears that arbitrators can, in certain circumstances, make costs orders more commensurate with actual legal costs (Thai courts usually only make nominal costs orders leading to a fraction of actual costs being recovered), this is still a potentially uncertain area and arbitrators often remain reluctant to do so in the context of provisions of the Arbitration Act and Thai civil procedure rules.
  
  
• A final order from a Thai court can be enforced without further recourse to the court, whereas an arbitration award, whilst binding, may require an application to the court for enforcement in the event the losing party fails to comply with its provisions.

C.   Expertise

In contrast to court proceedings, parties may select an arbitrator or a panel of arbitrators based on an appropriate level of expertise in the subject matter of the dispute. This can be particularly relevant in the resolution of complex commercial disputes or construction disputes.

D.   Flexibility

Arbitration provides a high degree of flexibility in the ability of parties to decide how a dispute is to be resolved. Examples of this flexibility include:

• A degree of control over the pace of proceedings
  
  
• The ability to choose the arbitration rules and institute, language, and number and qualifications of arbitrators
  
  
• The ability to choose the venue and governing law

E.    Appeals

Due in large part to a lack of effective adverse costs orders, claims in Thai courts are often appealed to the fullest extent possible, a potentially frustrating process that usually takes many years to be resolved. Arbitration of a dispute can mitigate this practice since arbitration awards can only be appealed in a narrow range of circumstances.

Arbitration Institutes

There are three main domestic arbitration institutes in Thailand, all of whom set reasonable levels of costs, use standard arbitration rules and maintain lists of qualified arbitrators:

1. The Thai Arbitration Institute of the Alternative Dispute Resolution Office, Office of the Judiciary
2. The Thai Commercial Arbitration Institute of the Board of Trade
3. The Thailand Arbitration Centre

Arbitration services are also available through the International Chamber of Commerce (ICC) Thailand, though costs may be significantly higher than domestic institutes and, therefore, more appropriate to the adjudication of complex and high-value disputes. Arbitration can also be conducted on an ad-hoc basis using common rules such as the ICC or UNCITRAL Arbitration rules.

Referring Disputes to Arbitration

A binding agreement in writing between the parties is required to refer any dispute to arbitration. Such agreements are commonly found as clauses in commercial agreements, but parties to a dispute may agree at any point to resolve a dispute by way of arbitration. If a party attempts to file a claim in the court where there exists a binding arbitration agreement between the parties, the court is likely to strike out the claim on an application of an opposing party.

Interim Remedies in Arbitration

Interim relief (e.g., injunctions) is available both before and during arbitration proceedings. However, although the Arbitration Act explicitly provides for the granting of interim remedies by Thai courts, it is silent on the question of whether such relief can be granted by an arbitral tribunal. In practice, this means that any application must be made to the Thai court, where such remedies can be difficult to obtain. Orders for without notice injunctions, temporary seizure or attachment orders, and summary judgment are uncommon in Thai courts, although orders for security for costs are more common and will often be granted where a claimant is not domiciled in Thailand or there is good reason to suspect a claimant will attempt to evade payment of costs in the event of losing a claim.

Enforcement

Domestic arbitration awards are binding on parties, and the losing party is legally required to comply with its provisions. In the event it does not, the party seeking enforcement may apply to the Thai court within 3 years of the issuance of the award for an appropriate order. Following the issuance of an order, the process of enforcement is the same as that of a court judgment: a Writ of Execution is obtained, which will generally order the seizure and sale of the debtor’s property and assets and attachment of the debtor’s rights of claim against third parties.

Foreign awards are enforced in the same way as domestic awards but, as discussed, must satisfy the conditions of the relevant conventions.

LAFS Legal and Arbitration

Our dispute resolution team has significant experience in the conduct of complex and high-value domestic and international arbitration proceedings. In addition, our team contains legal professionals and qualified lawyers from foreign jurisdictions who are not only experts in the conduct of cross-border disputes but have conducted some of the most high-profile international arbitration in recent years and understand the unique challenges in this highly specialized area.

Please contact us at info@lafs-legal.com  if you need any advice or assistance with the arbitration.