Navigating commercial disputes in Thailand requires an understanding of Thai culture and the country’s specific legal framework. Engaging experienced legal counsel familiar with international trade laws and regulations can help companies avoid conflicts and protect their business interests.
From contract disagreements to IP infringement to regulatory compliance, the causes of trade disputes are diverse. This guide explores the various trade dispute resolution mechanisms available in Thailand, including negotiation, mediation, arbitration, and litigation.
Trade Agreements
Businesses in Thailand are governed by a wide variety of trade agreements, including international treaties and domestic laws. Issues related to these agreements can lead to disputes.
Disputes related to trade agreements can stem from a number of areas, including intellectual property, debt collection, and consumer complaints. Trademarks, copyrights, patents, and trade secrets can all be subject to claims of infringement. Debt collections and the enforcement of payment obligations can also result in a number of trade disputes. Shareholder disputes can arise over company management or profit distribution, while consumer complaints involving product quality, unfair trade practices, or misleading advertising may lead to legal action.
Litigation is a process in which a court hears evidence and renders a decision that is binding on both parties. The advantage of litigation is that the courts set legal precedents and can provide clarity to future disputes. However, it can be expensive and time-consuming. Moreover, courts generally only allow for one or two appeals, making it difficult to reverse a decision.
In the Philippines’ DSB request, the country alleged that Thailand’s actions were inconsistent with the country’s obligations under Article X of the GATT 1994 in connection with customs and fiscal measures. Specifically, the Philippines alleged that Thailand’s practice of having certain government officials simultaneously serve on the board of TTM, the state-owned domestic cigarette manufacturer, violated Article III:2, first and second sentence, and Article X:1 of the GATT.
Intellectual Property (IP) Infringement
The Covid-19 pandemic has seen a spike in IP infringement as people are relying more on the internet for work and leisure. This has led to a rocketing increase in counterfeit goods being offered for sale online, including face masks, hand sanitisers, antiviral medications, vitamins and medicines, cosmetics, foods, household products, DIY tools and entertainment technology.
In Thailand, the holder of an intellectual property right has the right to take criminal action against the infringer and seek remedies for infringement. To do so, they must file a complaint with the police force through their legal representative.
If the infringement is found to have caused damage, the court can order the infringer to cease production and distribution of the disputed product and pay compensation for any loss or damage. The rights holder can also request the court to issue a preliminary injunction against the infringer to stop them from committing an act of infringement before the case is heard.
The CIPITC is able to decide on the amount of compensation that should be awarded for IP infringement and can require the infringer to destroy any of the disputed products it has produced or stored. Moreover, it can issue an order requiring the infringer to pay the legal fees of the rights holder as part of any damages awarded to them.
Regulatory Conflicts
Despite efforts to address the root causes of Thailand’s intractable conflicts, many observers believe that these remain unresolved. Proponents of this narrative point to varied forms of ‘isms,’ particularly classism as the basis for conflict and argue that societal conditions need to be created that provide opportunities for people from all backgrounds to support democratic governance.
Among these are income redistribution, economic development and education reform. Others call for transparency and watchdog agencies that can reveal the hidden agendas of power brokers.
Legal controversies arising from the sale of products that are controlled by law also pose challenges. For example, under the Price of Goods and Services Act, raising prices for certain products requires approval by the Committee on Controlled Products. The government uses its ownership stakes in major suppliers to exercise influence over the prices that are charged to consumers.
Thailand’s judicial system has several levels of courts, including the Court of First Instance (at the district level), Court of Appeals and Supreme Court. Disputes with foreign parties may be arbitrated under the provisions of the country’s national arbitration law, which is modeled on the UNCITRAL Model Law. Decisions of international arbitration tribunals are generally binding in Thailand.
Foreigners seeking to conduct business in Thailand are encouraged to consult with lawyers who specialize in the region. Enforcement of property or contractual rights is relatively effective in Thailand, although some litigants and third parties seek to affect judgments by extra-legal means. The government is working to change a provision in the law that prohibits foreign arbitrators in cases with domestic parties, and it is considering allowing foreigners to participate in arbitration proceedings under very limited circumstances.
Dispute Resolution
Alternative dispute resolution (ADR) methods like mediation and arbitration offer faster, cost-effective, and less adversarial solutions compared to conventional litigation. However, the complexity of navigating Thai business customs and culture can make these processes challenging. In addition, ongoing reforms in Thailand’s trade laws and regulatory practices will impact business operations and raise new types of disputes.
Arbitration is similar to a trial, but it takes place outside of the court system and parties select one or three arbitrators who hear evidence, listen to arguments, and make a binding decision called an “arbitral award.” As a result, arbitration provides greater flexibility, confidentiality, and speed compared to conventional litigation. Furthermore, arbitration awards are enforceable locally in Thailand and internationally.
Disputes involving tariffs, taxes, and trade barriers can arise because of disagreements over pricing, market access, and the application of non-tariff trade barriers, such as licensing requirements or quotas. Other common causes of trade disputes include issues related to investment and joint venture agreements, differences in expectations or failures to meet contractual obligations, and disagreements over control.
Managing these trade disputes requires experienced legal counsel familiar with both Thai law and international trade regulations. Thorough documentation and compliance with local and international standards can help support claims or defenses, and facilitate a favorable outcome. Incorporating clear Thailand dispute resolution clauses in contracts can also provide a predetermined method for resolving conflicts.