In Thailand, negotiations and compliance with international trade agreements are critical to maintaining positive trade relations and ensuring fair competition. Timely resolution of trade disputes also promotes economic stability and investor confidence.
The courts have various options for Thailand dispute resolution, including mediation. Alternatives to litigation are governed by the Civil Procedure Code (CPC) and Arbitration Act B.E. 2545 (2002).
Negotiation
As a relationship-oriented society, Thais prefer to find solutions through negotiation rather than going through the courts. Negotiation also provides a more cost-effective solution and may speed up the process of resolving a dispute. However, business negotiations with Thai parties can prove challenging for those who are not accustomed to their negotiating style. The indirect communication style of Thai individuals may create misunderstandings or even lead to mistrust during the negotiation process. This is why it is important to prepare thoroughly before entering into business negotiations with Thai companies.
In the event that a dispute cannot be resolved through negotiation or other out-of-court mechanisms, litigation is available in Thailand. Litigation is a judicial proceeding where a judge makes a final, binding judgment on the basis of the evidence presented. Litigation can establish legal precedents and provide clarity to future disputes, but it is often the most costly method of dispute resolution.
Out-of-court arbitration is a common method of dispute resolution in Thailand, and many international contracts contain arbitration clauses. Arbitration in Thailand is governed by the Arbitration Act B.E. 2545 (2002), which is based on the UNCITRAL Model Law on International Commercial Arbitration with several Thailand specific additions. Parties can choose to have a neutral arbitrator or have their cases heard by a panel of arbitrators. They can also customize their arbitration proceedings by selecting the rules and venue for the proceeding.
Mediation
In mediation, disputing parties meet with a neutral third party to discuss their disputes. The mediator facilitates communication and encourages a settlement agreement. The proceedings are less formal than those of a trial and the mediation sessions are confidential. However, the resulting settlement is not binding unless and until both parties agree to it. In addition to settling commercial disputes, mediation can also resolve employment disputes and family law matters. Institutions such as THAC encourage the inclusion of a mediation clause in expatriate agreements, so that trade disputes can be resolved outside the court system.
The benefits of mediation include speed, cost efficiency and the opportunity to preserve relationships between disputing parties. It is also possible to settle disputes via arbitration, which resembles private court procedure and involves a judge hearing evidence and rendering a judgment that is binding on the parties.
However, it is not uncommon for disputes to remain unresolved by either method. This is partly because of the high volume of cases that exceeds the capacity of courts and court officials. Additionally, the adversarial nature of litigation can damage relationships between disputing parties. Litigation is generally the longest and most expensive avenue to dispute resolution. However, a court decision has the benefit of setting legal precedents and establishing enforceable rights. It can take up to a year on average to reach conflict resolution through court proceedings.
Arbitration
Arbitration is a dispute resolution method that takes place outside of the court system. The disputing parties choose an arbitrator or panel of arbitrators to hear their case, review evidence and make a binding decision known as an arbitral award. Arbitration provides for a faster and more cost-effective route to resolution than litigation. It also allows the parties to select a tribunal with expertise in their specific dispute, which can ensure a level of knowledge not available in a general courtroom. In addition, arbitration awards are generally enforceable in Thailand under international conventions and treaties such as the New York Convention of 1958.
However, it is important to understand that the enforcement of an arbitration award in Thailand may be subject to exceptions or a lack of jurisdiction. The courts have the power to decline to enforce an arbitral award if it does not contain a decision on all differences submitted for arbitration or if the award is contrary to public order or good morals.
Regardless of the industry, disputes with local and foreign partners can arise over a variety of issues such as e-commerce transactions, intellectual property rights and labour laws. Negotiation and mediation can resolve such disputes, but where a dispute is not settled through negotiations or mediation, it is necessary to be prepared for the possibility of litigating a trade dispute in Thailand.
Litigation
Litigation is a costly and time-consuming method of resolving trade disputes. However, it can be an effective tool if the dispute is particularly complex or important for the parties involved in the dispute. It can also be a useful method for resolving conflicts with other countries or businesses.
The process of resolving a trade dispute in court begins with the filing of a complaint by the plaintiff. In some cases, such as labour disputes, courts require parties to participate in mediation prior to the commencement of witness hearings. In general civil cases, however, mediation is not required by law, although the courts are increasingly requiring that parties participate in mediation before witness hearings, even when it is not mandatory.
Once the courts have heard all the evidence and argument on both sides, they will make a decision known as a judgment. The judgment will contain a statement of the facts that the court found proved and the legal conclusion that the court reached based on those facts. The judgment will also include a statement indicating whether the plaintiff or defendant should pay all or part of the costs of the litigation.
There are a number of arbitration institutions in Thailand that can provide dispute resolution services for companies seeking to resolve trade disputes through arbitration. The viability of an arbitration clause in a contract is guaranteed by the Arbitration Act, making it an extremely attractive alternative to going to court.
