Disagreements and conflicts are an inevitable part of business, but they can jeopardise progress toward commercial objectives. Fortunately, Thailand offers a wide range of in-court and out-of-court mechanisms for resolving disputes.
Litigation involves a court trial where a judge renders a binding judgment based on evidence presented. It can be costly and time consuming, but its decisions are enforceable by law.
Litigation
Litigation is a formal legal process of disputing claims between parties through the court system. It involves a structured series of steps where both the plaintiff and defendant present their cases to a judge or jury who will render a decision based on Thai law and the evidence provided.
The majority of civil litigation in Thailand is conducted in the courts, with specialised cases being referred to more specific tribunals. The general rule is that a claimant must bring the case in the forum where the cause of action arose, or where the defendant is domiciled.
Courts in Thailand generally adopt an adversarial approach. However, certain courts such as the Administrative Court, Labour Court, Constitutional Court and Criminal Court for matters involving corruption and misconduct operate under an inquisitorial system. Class action lawsuits are permissible in Thailand. The courts will consider whether the class of plaintiffs has suffered damages that are similar and if conducting the case as a class action is more efficient than hearing each individual case individually.
The principle of judicial impartiality and independence is enshrined in the constitution. There are also rules and codes of ethics that govern judges, including provisions to prevent conflict of interest or a serious relationship with a party in a case. Moreover, judges are subject to disciplinary proceedings where they fail to conduct their adjudications objectively and independently.
Mediation
As the name suggests, mediation is a Thailand dispute resolution process that involves a neutral third party (usually a trained mediator) helping disputing parties to come to their own mutually acceptable settlement of the matter. This can be conducted either in-house or outside of court. The advantage of mediation is that it can be cheaper, faster and more satisfactory than litigation. However, it should be noted that there are limitations on which types of disputes can be mediated.
A key element of mediation is that the participants should prepare their cases, including their bottom lines for settlement. While it is important to have a clear view of one’s position, the participants should try not to identify absolute boundaries in advance as this may close off potential opportunities for settlement. In addition, it is advisable to remain open to new ideas for resolution from the other side as well as being realistic in assessing how far the mediation will get before reaching a conclusion.
A range of disputes may arise in the banking, finance and IT sectors. These can include issues relating to debt collection, intellectual property (e.g. trademarks, copyrights or patents), shareholder disagreements or disputes over the supply of goods and services. In general, such disputes are more suited to arbitration than litigation due to the need for specialist expertise and cost efficiency.
Arbitration
Arbitration is a dispute resolution process suited to a wide range of civil disputes and is often included in commercial contracts. It is a form of alternative dispute resolution (ADR) which is less expensive than litigation. It is also generally faster and more confidential. It is important to include an arbitration clause in all agreements to ensure that the arbitration process can be commenced promptly.
When a dispute is resolved by arbitration the parties will need to appoint an arbitrator or a panel of arbitrators. It is important to have a good understanding of the law of both countries involved in the case. If the dispute involves a party from Thailand and another from a different jurisdiction it is also advisable to appoint a neutral expert in the law of both countries to assist with the proceedings.
It is a common practice for a dispute to go through arbitration before proceeding to court. It is generally more cost-effective and faster than a court proceeding, although claims in court can take many years to reach final resolution. It is important to note that there are limitations on appeals from arbitral awards and the enforcement of an award in court can be subject to setting aside proceedings. In general, courts are reluctant to make costs orders commensurate with actual legal fees, resulting in minimal recovery of costs for the losing party.
Conciliation
Although Thailand is not a litigious society, it has been increasingly popular to settle disputes through mediation and arbitration. These mechanisms are often cost-effective and time-efficient, particularly for small claims. In addition, they are more likely to result in a win-win solution for all parties, as opposed to a one-sided judgment.
Mediation is a process where a third-party neutral helps disputing parties reach a mutually-agreable settlement. It is usually conducted in a face-to-face setting with the conciliator helping both sides communicate and exchange information. However, it can also be held by telephone in certain circumstances. Mediation is an effective tool in resolving commercial and labor disputes in Thailand and can be conducted prior to the commencement of litigation, during the litigation process or even after a judgment has been handed down.
In some instances, a court may require the parties to participate in court-annexed mediation during the trial procedure. The courts have a list of mediators including lawyers, former judges and entrepreneurs. In addition, private mediators are available in Thailand as well. In a court-annexed mediation, facts arising from the mediation proceedings cannot be used as evidence in a trial or an arbitration, nor can they be admitted to as evidence in any other proceedings. In addition, the outcome of a conciliation must be recorded in a compromise agreement and enforceable under the law.