Dispute Resolution in Thailand
The court and arbitration process in Thailand is time consuming, complex and expensive. Payment issues are a significant cause of disputes which may delay the completion of projects and have a domino effect on other parties at higher tiers.
Alternative dispute resolution is becoming increasingly important in Thailand. The aim is to avoid litigation where possible and instead settle disputes outside of the courts.
Arbitration
There are a number of institutes and centers that provide arbitration services in Thailand. Typically, the process of conducting an Arbitration is much quicker than in court, as hearings can be scheduled more quickly. In addition, the process is usually more cost-effective than litigation.
Under the 2002 Arbitration Act, an arbitration clause can either be included in a main contract or exist as a separate agreement. Furthermore, the law stipulates that the distinctness of an arbitration clause ensures its validity, even in cases where the primary contract is deemed to be invalid.
Under the New York Convention, an award rendered in a member state of the Convention is recognised and enforceable in Thailand. However, a party may still raise a challenge to an arbitral award under the grounds of the law. Furthermore, the courts may require the parties to provide security for costs if they are seeking enforcement of an award against them. These measures serve to protect the integrity of the judiciary system.
Conciliation
Unlike arbitration, conciliation is more informal, during which the mediator oversees and facilitates communications between parties to reach a voluntary agreement. The mediation process can be undertaken outside court proceedings, or as a pre-litigation dispute settlement in conjunction with the courts.
Having a reputable Thailand conciliation law firm represent you is essential, as a claimant will need to be willing to engage in discussions with the opposing party in order to achieve an agreement and avoid litigation. A successful conciliation will reduce the risk of lengthy and costly court cases.
Litigation is a highly adversarial process where the decision maker is the judge and the outcome is generally determined by the facts presented to the judge. Arbitration is an alternative to litigation that provides a faster and cheaper route to resolution of claims. It is also a more friendly process that allows for greater control by the disputing parties, which is not always the case in litigation.
In-court Mediation
In-court mediation is conducted while cases are still pending in court. This type of mediation allows disputing parties to meet a mutually satisfactory settlement. The outcome of the mediation is recorded in a compromise agreement and can be enforced in the court of law.
The courts are active in encouraging disputing parties to mediate and are willing to divert cases from the court docket for mediation. They can also conciliate cases themselves or appoint a person to mediate.
There is a growing demand for neutral and commercially-oriented mediators in Thailand. Many private companies have specialized in providing dispute resolution services and are staffed by experienced lawyers, former judges and entrepreneurs. They are able to provide hybrid dispute resolution mechanisms such as Arb-Med-Arb, whereby the parties can choose between arbitration and mediation. This enables them to achieve greater cost savings and time efficiency. The success rate of mediation varies around the world but is approximately 80% on average.
Out-of-court Mediation
Disputes in the real estate and construction industries often involve issues such as omission and errors in contracts; issues with an engineer or project manager; unexpected site conditions; and disputes between owners and contractors. Such disputes may lead to litigation, but often they can be settled through mediation and a binding settlement agreement.
Similarly, a variety of issues in the banking and finance sector such as financing agreements; derivative transactions; asset management issues; and intellectual property rights require specialist dispute resolution processes. In addition, a range of international employment issues such as work visas; pay and overtime issues; and foreign labour law compliance are involved in the day-to-day operations of multinational businesses.
Under the recently adopted Dispute Mediation Act 2562 (2019), disputing parties can agree to mediate their cases before filing a plaint in court. This is called Court-Annexed Mediation and can result in a mutually satisfactory compromise agreement that is legally enforceable. This form of out-of-court mediation can significantly reduce the time and cost associated with a case being litigated in court.