As a dynamic participant in international trade, Thailand encounters its share of trade-related conflicts. Disagreements over tariffs, quotas, and market access can spark tensions between trading partners.
Timely resolution of these disputes benefits both parties. Preserving trade relationships, economic stability, and fair competition are among the benefits of resolving disputes quickly.
Commercial Disputes
In a business context, disagreements and disputes are unavoidable. However, the way in which those Thailand disputes resolution are resolved can significantly impact a company’s progress toward success. The resolution of commercial disputes in Thailand is facilitated through litigation or alternative dispute resolution mechanisms such as mediation and arbitration.
Litigation is the most commonly used method for resolving commercial disputes in Thailand. It involves filing a lawsuit and conducting a court case to determine the facts of the case and issue a ruling on the dispute. Litigation is generally a slow and costly process. In contrast, alternative dispute resolution methods are often quicker and more cost-effective than litigation.
While litigation is the most common means of resolving commercial disputes in Thailand, alternative dispute resolution methods are becoming more popular. In fact, many companies and individuals choose to settle their disputes through mediation or arbitration instead of going through a lengthy litigation process.
Mediation is a dispute resolution process where a neutral third party facilitates the discussion between the parties in order to bring about reconciliation. In Thailand, mediation is governed by the Civil Procedure Code and can be initiated before filing a case or at any stage of a trial. A conciliation session can also be ordered by a judge. The court will appoint a reconciler to hold closed door sessions with the parties.
Arbitration
Arbitration is one of the most popular options for settling trade disputes in Thailand. Often, parties will agree to arbitration clauses in their contracts, which will provide that any dispute arising from the contract will be settled through out-of-court arbitration. When a dispute does arise, the law provides that domestic laws as well as international trade customs and principles will be applied to the case. This includes such principles as freedom of contract, public order and morals, bona fide business practices, and sanctity of the contract.
The courts will often rely on decisions of other higher courts in the country and abroad, which have been rendered in relation to the same factual and legal issues. It is very rare for judges to decline to follow the judgments of a superior court or the Supreme Court.
However, it is still common to see guerrilla tactics such as challenging the appointment of arbitrators or parallel proceedings being used in attempts to delay and disrupt the arbitration process. In addition, the efficiency of the arbitration process and enforcement of awards should be improved.
With a strong understanding of the local Thai legal system, and an in-depth knowledge of international arbitration practices, PDLegal is able to deliver optimal results for clients involved in trade dispute cases in Thailand. Our experienced team of lawyers can guide businesses through the complex process of arbitration and achieve equitable resolutions that are in line with their commercial objectives.
Mediation
The influx of joint public and private investments in Thailand has led to an increase in disputes that must be settled through legal channels. While resorting to court action may be a viable option, it can cause delays as the judiciary’s trial docket is heavily clogged.
For this reason, we recommend using alternative dispute resolution methods such as mediation to settle disputes quickly and cost effectively. These procedures also preserve relationships that might otherwise sour over prolonged litigation that ultimately determines who wins or loses.
In a judicially-supervised mediation, the chief trial judge has the power to order mediation at any stage of the lawsuit. The court’s Thai Mediation Center is responsible for diverting cases to mediation and developing regulations for the procedure. The center has also trained mediators to work within the judiciary.
An arbitrator’s decision is binding, unless the disputing parties agree to change it, and there are limited appeal rights. However, arbitration proceedings can take more than a year on average to resolve the conflict.
The Dispute Mediation Act 2562, which was passed in 2019, sets out a framework for mediation as an out-of-court process. Under the new law, disputes with a value of up to five million baht (roughly US$165,000) are eligible for mediation. In addition, the law prohibits disputing parties from admitting certain facts to a mediation hearing.
Litigation
Legal litigation is a traditional and time-consuming path to resolve disputes. It can be costly and stressful for all parties. However, it is often a necessary step in obtaining justice. Dispute resolutions through the courts can range from the issuance of injunctions to rulings on intellectual property rights, enforcement of debt collection, and a variety of trade-related disputes.
Civil cases in Thailand are heard in the Court of First Instance within the territorial jurisdiction of the defendant’s residence or the location where the cause of action arose. If the case is based on international trade, the proper court may be the Central Intellectual Property and International Trade Court. Foreign nationals, non-domiciled persons and foreign companies can sue a Thai defendant provided that the claim is based on a contract that is subject to both domestic law and international trade customs and laws such as the CISG and INCOTERMS.
Unlike some other countries, there is no automatic right to a jury trial in Thailand. Generally, cases are heard by a judge and/or an arbitrator or a panel of judges. A judgment is issued at the end of a case and will contain a statement of the reasons for the decision. The judgment can be appealed to the Supreme Court (Dika). Enforcement of arbitral awards in Thailand is possible under the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards, and is enforceable both locally and internationally.