The typical first step of a commercial dispute is to submit a case to the court for its resolution. Since the court proceeding shall be conducted in an open court, It makes difficult to keep confidentiality when submitting a case to the Court. Another aspect to consider is that due to the multiple steps ina court proceeding in Thailand, the timeframe to obtain the compensation will not be ruled fastly.
Taking in consideration the two aspects highlighted above, H&P lawyers would like to point out that arbitration is nowadays a solid alternative in Thailand to dispute resolution because the entire arbitration proceeding, the statement of claims, the statement of defense, documents, evidence, hearings, orders, and awards are totally confidential.
The parties and the arbitrator can not disclose all or certain matters relating to the arbitration proceeding. The parties can choose the person who will be the arbitrator based on the knowledge or experience of the sector or business, therefore the arbitrator can judge the dispute with a deeper understanding. In addition they can keep the business relationship. The parties who agree to go to arbitration to solve disputes are not only private companies but can be a government agency and organization.
In Herrera & Partners law practice in Thailand, we see gradually a larger number of commercial agreements including dispute resolution mechanisms such as arbitration, specially in contracts binding subcontractors with main contractors due to the confidentiality that provides the arbitration versus a public court proceeding.
The system of appointing an Arbitral Tribunal in Thailand
The parties can authorize to solve the dispute appointing the arbitrator by ad hoc arbitration or institution via an arbitration agreement or clause in a commercial contract. The parties can submit to arbitration all disputes or certain disputes which have arisen or which may arise between them in respect of a specific legal relationship, whether contractual or not. An arbitration agreement may be by the form of an arbitration clause in a commercial contract or by the form of a separate agreement.
When the parties submit the dispute to arbitration it will be binding upon the parties. If it has any dispute the parties have to submit the case to the Arbitration before submitting the case to the Court.
In the case where a party commences any legal proceedings in Court against the other party in respect of a dispute which is the subject of the arbitration agreement, then the party against whom the legal proceedings are commenced may file with the competent court, a motion requesting the court to issue an order to stop the case, enabling that the parties may proceed with the arbitral proceedings.
But if none of the parties file with the competent court to issue this order, the result will waive the force of the the arbitration clause/agreement implicitly. Therefore the Court can continue with the case and the party can not use the arbitration agreement come into force again.
The arbitral tribunal will be composed of an uneven number of arbitrators and the tribunal can be one or more than one member. If the parties have agreed on an even number, the arbitrators will jointly appoint an additional arbitrator who shall act as the chairman of the arbitral tribunal.
If the parties fail to reach an agreement on the number of arbitrators, then a sole arbitrator shall be appointed. When the arbitral tribunal has a sole arbitrator, if the parties are unable to agree on who whill be the sole arbitrator, either party may file a motion with the competent court requesting an appointment of the arbitrator. If the arbitral tribunal is consisting of more than one arbitrator, each party will appoint an equal number of arbitrators and the appointed arbitrators will appoint an additional arbitrator. The party may reject an arbitrator if some circumstances exist that bring justifiable doubts on his/her impartiality or independence, or based on his lack of qualifications agreed by the parties.
The jurisdiction of the Arbitral Tribunal
The arbitral tribunal can be competent to rule on its jurisdiction, including the existence or validity of the arbitration agreement, the validity of the appointment of the arbitral tribunal, and issues of the dispute falling within the scope of its authority.
The arbitration clause, which forms part of a contract, shall be treated as an independent agreement of the main contract. If the arbitral tribunal rules that the contract is null and void, this shall not affect the validity of the arbitration clause. If the party wants to express its doubts on the competence of the tribunal, then this will be raised no later than the date of submission of the statement of defense.
Arbitration Proceeding in Thailand
The parties will be treated with equality and they will be given a full opportunity of presenting the case following the circumstances of the dispute. H&P lawyers find that a typical question from our clients involved in arbitration proceedings in Thailand is on the prescription timeframe. Regarding the settlement of the dispute by arbitration, it will be deemed that a dispute is submitted to arbitration so the prescription is interrupted by law.
When can we understand that the arbitration proceeding is going to start? The arbitral proceeding have commenced when a party receives a letter from the other party requesting that the dispute shall be settled by arbitration, or when a party notifies the other party in written to appoint an arbitrator or to approve the appointment of an arbitrator, or when a party sends a written notice of the disputed issues to the arbitral tribunal designated in the arbitration agreement, or when either party submit the dispute to an agreed arbitration institution established for settlement of disputes by arbitration as has been agreed upon.
Who can the arbitrators be and which language can be used? The arbitrator can be a foreigner, so the parties are free to agree on the language or languages to be used in the arbitral proceedings. If the parties fail such agreement, the arbitral tribunal will determine the language or languages to be used in the proceedings. The agreement or determination will apply to any statement of claim, statement of defense, any written statement by a party, any hearing, and any award, decision, or other communications by or to the arbitral tribunal.
Key legal comments on the termination of Arbitration proceedings in Thailand
The arbitral tribunal shall rule the dispute based on the governing law chosen by the parties. Any designation of the governing law shall be construed, unless otherwise expressed, as directly referring to the substantive law of the country. If the parties fail on this designation, the arbitral tribunal will decide the dispute following Thai laws.
The arbitral tribunal must decide in accordance with the terms of the contract and shall take into account the trade usage applicable to the transaction.
Any awards, orders, and rulings of the Arbitral Tribunal shall be made by a majority of the votes. If a majority of votes cannot be obtained, then the chairman of the arbitral tribunal shall solely issue an award, an order or a ruling.
The arbitral proceeding is terminated by the final award or by an order of the Arbitral Tribunal. If the parties can settle the dispute, the arbitral tribunal has to terminate the proceeding. If the settlement is not against the law, the arbitral tribunal shall render an award accordingly and enjoy the same status and effect as the award.
Challenge and opposition of the Award and ruling
The parties can challenge an arbitral award by making a motion for setting aside to the competent court by the following reason: one of the parties that sign the arbitration agreement was under some incapacity under the law, or the arbitration agreement is not binding under the law of the country agreed by the parties, or failing any indication thereon, under the law of Thailand, or the party making the application was not given proper advance notice of the appointment of the arbitral tribunal or the arbitral proceedings or was otherwise unable to defend the case in the arbitral proceedings, or the award deals with a dispute, not within the scope of the arbitration agreement or contains a decision on the matter beyond the scope of the arbitration agreement or the composition of the arbitral tribunal or the arbitral proceedings was not following the agreement of the parties, or the court finds that the award deals with a dispute not capable of settlement by arbitration under the law, or the recognition or enforcement of the award would be contrary to public policy.
Recognition and enforcement of Awards and rulings in Thailand
The arbitral award, with independence of the country in which it was made, will be recognized as binding on the parties, and upon petition to the competent court, will be enforced. The party who is seeking enforcement of the arbitral award has to apply with the competent court within three years from the day that the award is enforceable. In the case where an arbitral award was made in a foreign country (not Thailand), the award shall be enforced by the competent court only if it is subject to an international convention, treaty, or agreement to which Thailand is a party. Thailand is a party of the New York Convention, so the award can enforced which another jurisdiction that is a party ot member in this convention.
On the appeals of the order or judgment
When the Court order or judgment is delivered according to the arbitral award, the parties can not appeal against the order or judgment of the court unless the recognition or enforcement of the award is contrary to public policy, or the order or judgment is contrary to the provisions of law concerning public policy, or the order or judgment is not in accordance with the arbitral award, or the judge who handled in the case gave a dissenting opinion. The appeal against the court’s order or judgment will be filed with the Supreme Court or the Supreme Administrative Court.
Recently it has been estipulated that the arbitration proceeding, hearing, or any award, decision, or other communications can be done using video conference or electronic meeting according to Regulation of the Thai Arbitration Institute on Criteria for the Use of the Electronic Arbitration (E-Arbitration) System B.E. 2563.
If you need to consult with a lawyer in Thailand on arbitration and alternative dispute resolution mechanisms, please contact H&P at [email protected]