Disagreements within businesses can jeopardise the progress of operations. It is therefore essential to have a good understanding of the different types and possible solutions of commercial disputes in Thailand.
Chandler MHM has a dedicated Thailand dispute resolution team which handles a broad range of disputes for clients from a diverse array of sectors. The team is knowledgeable in judicial proceedings, arbitration and conciliation.
Commercial disputes are a common part of doing business in Thailand. They can arise from a variety of issues that affect trade and business operations, including breaches of contract terms, misunderstandings about the interpretation of contract clauses, and differences of opinion between parties.
The first step in resolving a commercial dispute is usually negotiation. This involves direct communication between the disputing parties, with the assistance of a neutral third party, such as a professional mediator. This is a cost-effective and fast option that can preserve business relationships. In addition, mediation is a legally binding process that can provide a sense of finality.
When commercial disputes cannot be settled through negotiation or mediation, the next step is often arbitration. Arbitration is a process similar to trial, but conducted outside of the court system. It allows parties to select an arbitrator or panel of arbitrators who have expertise relevant to the dispute, which can guarantee a higher level of knowledge than would be available in a courtroom. Arbitral awards are also generally enforceable both in Thailand and internationally.
While litigation is a last resort, it can be necessary when other methods fail to yield results. For businesses in Thailand, it is important to have an understanding of the country’s commercial dispute resolution mechanisms and how they work. With the right legal counsel, international companies can ensure their best interests are safeguarded and that their legal rights are upheld throughout any dispute proceedings in Thailand.
In Thailand, disputes between companies and administrative authorities can arise from the exercise of an administrative power or from the carrying out of an administrative act. These cases are handled by the administrative court.
A dispute with an administrative authority can often involve complex issues of law, such as the application of foreign laws in a case concerning the exercise of a discretionary authority by a public agency. In such cases, it is necessary to seek advice from a specialist in the relevant field of law.
Litigation in administrative disputes is common in Thailand. The Thai legal system provides a fair, accessible and balanced vehicle for the resolution of these disputes. The courts also maintain a strong system of checks and balances to ensure that decisions made by the judiciary are based on facts and the law. In addition, the courts have the power to investigate judges who may be suspected of dishonest conduct.
In resolving these kinds of disputes, the courts generally require the prevailing party to pay costs. However, the court can decide that neither party should be required to bear such costs or that both parties will share the burden equally. Alternatively, a court may award damages to the party that has succeeded in its claim. In addition, the court can order a defendant to remove a name from a house register, revoke their citizenship or return a passport.
In Thailand, the court system is one of the most important sources for dispute resolution. Court procedures typically begin with the filing of a lawsuit, followed by witness hearings, and finally a trial date. This process can take anywhere from 8-12 months, depending on the complexity of the case. After a judgment is rendered, appeals and enforcement can last up to several years.
During court proceedings, parties are encouraged to participate in mediation or settlement discussions and can use experts for expert determination. Alternative Dispute Resolution methods, such as conciliation and arbitration, are also common in Thailand and are governed by the CPC and the Arbitration Act B.E. 2545 (2002).
The success rate for dispute resolution via mediation varies throughout the world, but is about 70 – 85% on average. Thailand has taken steps to promote the efficiency of its courts by allowing witnesses who are outside the courtroom or abroad to testify through video conferences (e-Hearings).
The judicial system in Thailand is highly regulated and provides checks and balances, both internally and externally. Judges are required to follow a code of ethics that includes guidelines on maintaining impartiality and independence in their adjudication, as well as disciplinary provisions for violations. In addition, a party can challenge a decision or judgment by filing an appeal with the Court of Appeal or Supreme Court.
Arbitration is an alternative dispute resolution method that is increasingly recognised by businesses for its speed, cost-effectiveness and flexibility. It is typically incorporated into commercial contracts and the disputes are decided by an arbitration tribunal made up of one or more arbitrators. Disputes that are more complex and have higher values are often heard by three arbitrators. The tribunal must decide on the rules of procedure, evidence and the way that the proceedings should be conducted.
Arbitral proceedings are governed by the Arbitration Act of 2002, and in most cases parties will stipulate that any disputes will be resolved by out-of-court arbitration rather than in-court litigation. Nevertheless, the courts have historically been reluctant to encourage arbitration, and there is a lack of awareness regarding the benefits of including arbitration clauses in contracts.
A significant development in the law of arbitration was the introduction, in January 2017, of a new set of rules administered by TAI, known as the Office of Judiciary Regulation on Arbitration Rules of TAI 2017 ("TAI Rules"), which amended many procedural omissions from previous law. These changes include the power to grant interim remedies and an expansion of tribunal discretion, which was previously limited by law.
A recent judgment of the Supreme Court highlighted that it is a general rule that disputes may be decided by an arbitration tribunal, even where there is a contractual provision for resolving disputes through court proceedings (Supreme Court Judgment No 3427/2562 (2022)). This is a positive step towards encouraging more use of arbitration in Thailand, and highlights the importance of ensuring that the parties’ agreed method of costs allocation is applied.