Businesses often experience disagreements and conflicts. If unaddressed, these can jeopardize business operations.
Alternative Thailand Dispute Resolution, namely arbitration and mediation, is available to resolve disputes outside the classical judicial system in Thailand. This is often more cost-efficient and quicker than litigation. It can also be less adversarial. It’s especially important for companies with international employees and assets.
Courts
The courts resolve disputes in Thailand through three levels: the Supreme Court, the Court of Appeal and the Courts of First Instance. Civil cases not designated to specialized courts are handled by general courts of first instance, such as district courts and provincial courts; military courts, family courts, labor courts and the newly established International Trade and Intellectual Property Court; and the criminal court.
The law requires judges to operate independently in the trial and adjudication of cases, adhering to the Constitution and laws, and ensuring swift and fair proceedings without bias. Judges are also required to maintain a high level of integrity, and are subject to strict ethical guidelines with disciplinary consequences for violations.
It is a common practice for courts to order the losing party to pay the prevailing party’s court costs. In addition, a judgment obtained by the plaintiff is enforceable against the defendant’s assets both in and out of the country. It is therefore important for claimants to know the extent of the defendant’s recoverable assets before pursuing litigation.
There is no such thing as a ‘without prejudice’ offer in Thailand, so any compromises or settlement offers should be made after careful consideration and consultation with legal counsel. Similarly, parties involved in litigation should not disclose any information about the defendant to the media as any communication may be used against them in court.
Arbitration
Arbitration is a popular alternative dispute resolution method for businesses conducting business in Thailand. It is a quicker process than court litigation and is more cost effective. It can also be tailored to the needs of the parties involved. The arbitration proceedings are confidential and the award is enforceable in countries that recognize such awards. The court system in Thailand is geared towards making the arbitration process as efficient as possible. It is common for parties to stipulate in their agreements that disputes will be settled by arbitration. This is done at the time of drafting the contract, or even after a dispute arises.
The court has a role in case management and makes procedural decisions throughout the trial. It allows both disputing parties to present evidence and question witnesses. Moreover, the court may order the losing party to pay advanced court costs to the prevailing party.
Despite these efforts to make the arbitration process more efficient, there are still some challenges to the effectiveness of the arbitration system in Thailand. For example, guerilla tactics such as challenging the appointment of arbitrators or launching parallel court proceedings continue to be used by some parties. This undermines the credibility of the country’s claim to be an arbitration hub. It would be helpful if the courts could adopt measures to limit frivolous challenges to arbitration.
Mediation
In recent years, Thailand has seen a boom in mediation. This non-adversarial dispute resolution method has become popular for commercial and domestic cases. This is due to several factors: cultural acceptance, a backlog of litigation in the courts, economic growth and its strategic location in Southeast Asia. It is also driven by the government’s policy initiatives to promote alternative dispute resolution methods as a means of alleviating pressure on the judiciary system.
Unlike arbitration, which is often structured as a private court procedure and is binding on the parties, mediation is less formal and can be more flexible in terms of procedural matters. However, this flexibility is not without its challenges as the disputing parties must be willing to negotiate and compromise. The process can also be time-consuming and it may not result in a final settlement.
The disputing parties may agree on a neutral mediator or the Thai Mediation Center will appoint one for them. If they are not able to reach an agreement on a mediator, then a list of three potential arbitrators will be provided for the parties to select from.
Mediation can be conducted as part of a court case or out of court. In the latter instance, it is called ‘court-annexed mediation’ and the outcome of the process is recorded in a compromise agreement which the disputing parties must sign.
Enforcement
The Thai legal system does not include a jury system and it is the sole discretion of the judge presiding over a case to decide whether a defendant is guilty or not and to determine sentencing. The judge must also examine the evidence and decide whether to permit a defendant to plead guilty to a lesser charge or not. The law requires that all court proceedings be conducted in the language of the case, and the presiding judge must ensure that witnesses and defendants are understood.
Unless the losing party cites an issue with the formation of the arbitral tribunal or undue process in the course of the arbitration proceedings, the most common ground for refusing enforcement of an award is that it would be contrary to public policy. A Thai court may refuse to enforce an award if the court finds that the award breaches the principles of “public order or good morals of the people”.
It is important to note that while the concept of public policy is fairly broad, it is typically evaluated on a case-by-case basis. This is because determining what is contrary to the principles of “public order or good morals” depends on sociopolitical factors that change over time.
For example, whereas the violation of intellectual property rights has traditionally been punished criminally in Thailand, this year the government decided to exempt companies with market size above a certain threshold from any possible prosecution. This decision was based on the argument that such actions are ultimately designed to gain profit or market share and therefore not deserving of any criminal sanctions under the Thai law.