Trade Disputes in Thailand

Disputes that cannot be resolved through mediation, conciliation and/or other informal processes can be brought to court. Litigation is a lengthy process in which a judge renders a binding decision based on evidence presented.

The Philippines alleged that Thailand breached various due process obligations under the CVA and GATT in connection with its customs and fiscal measures on imported cigarettes.

Alternative Dispute Resolution

The use of alternative dispute resolution (ADR) is a significant option for businesses in Thailand. It offers a cost-effective and faster route to resolution than litigation. In addition, it can also be more amicable to both parties. However, ADR must be carefully considered given the complexities of the Thai legal system.

In a mediation, disputing parties are required to share confidential information with the neutral mediator who is responsible for determining a settlement. The mediator may be designated by the parties or appointed by the Thai Mediation Center. It is important for disputing parties to be candid with the mediator, but they should be aware that the information shared can be used against them in arbitration.

An arbitrator will review evidence and arguments from both parties before making a binding decision known as an arbitral award. The advantage of arbitration is that it allows parties to choose an arbitrator or panel who has expertise in the dispute. The awards made by an arbitrator are enforceable in the courts of Thailand and internationally.

Foreign arbitral awards are recognised in the court of Thailand only to the extent that they are authorised by treaties, conventions or international agreements to which Thailand is a party. It is therefore important to ensure that any trade dispute agreement contains a clear and unambiguous arbitration clause.

Arbitration

Arbitration is a trial-like process outside the court system, where parties choose an arbitrator or panel to review evidence, hear arguments and make a binding decision called an “arbitral award.” Parties typically find arbitration less expensive than litigation and more efficient in reaching a resolution. Additionally, arbitration awards are generally enforceable both domestically and internationally.

While arbitration is widely used in several sectors of the economy, its use is particularly prevalent in the energy and mining industries. The easing of immigration restrictions in 2019 also has helped to fuel this trend, as foreign investors and lawyers are now more likely to come to Thailand to participate in arbitration cases.

In terms of the actual trial itself, an arbitral tribunal is free to evaluate and examine evidence as it sees fit, with both parties being allowed to question witnesses at hearings. It is not uncommon for proceedings to last over a year before Thailand dispute resolution is achieved.

As a part of the trial process, both parties are usually required to submit their defenses and claims on the first day of the hearing, which gives them an opportunity to present any facts that support their positions. Additionally, the tribunal is at liberty to evaluate expert witness testimony and to conduct hearings in privacy. However, one hindrance to arbitration is the inability for tribunals to order costs that are commensurate with their jurisdiction, unlike final orders from courts which can be enforced without further recourse.

Conciliation

As part of the Alternative Dispute Resolution (ADR) process, conciliation is often a faster and less expensive way to settle a trade dispute in Thailand. The process is generally less adversarial than traditional litigation and gives control of the case back to the participants.

Conciliation is a court-based process that is available for most civil cases in the Thai courts. It is widely used in the civil courts, the labour court, the family and juvenile court and the Central Intellectual Property and International Trade Court.

The participants in a conciliation session will usually try to reach an agreement through discussion with the help of the conciliation officer. The conciliation officer will be impartial and assist in the negotiation process. The conciliation officer will also act as a “messenger” by talking to the parties separately and communicating ideas or proposals between them. Conciliation sessions are usually held face to face, but can be conducted by telephone in some circumstances.

Conciliation can be used to settle a wide range of disputes, including debt collection, intellectual property, shareholders’ disputes and consumer disputes. A party can request a conciliation session at any stage of proceedings. A judge in a court case can also refer a dispute for conciliation if they believe it would be more appropriate than traditional litigation. Information received during a conciliation session is confidential, but hearings are public.

Litigation

Litigation is a means of resolving trade disputes through the court system. Civil litigation cases are generally commenced by filing a lawsuit, a written document that contains the details of a dispute. The parties must submit evidence to support their case. The court then reviews the case and issues a final judgment.

Litigating a trade dispute can take years, and the resulting cost can be prohibitive for many businesses. However, in certain instances, litigation may be the most suitable option for a business or industry.

Chandler Mori Hamada's team of attorneys has substantial experience in handling a wide variety of trade litigation matters. We regularly represent clients in litigation before Thai courts of justice and specialized courts, including the Administrative Court, Bankruptcy Court, Commercial Court, Employment Court, Intellectual Property and International Trade Court, and Taxation Court.

The arbitration institute in Thailand schedules a meeting with the disputing parties to establish a schedule of proceedings, decide on evidence and procedure matters, and officially designate the tribunal. If the parties cannot agree on a single arbitrator, the institute will provide each party with a list of potential candidates. The parties can then remove the names of any candidate they do not prefer. If both parties accept the nominations, the arbitration institute will assign a tribunal of one or three arbitrators.

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