Alternative Dispute Resolution in Thailand

The conventional form of legal dispute resolution, being litigation, usually takes a long time and can in general be quite hostile. Therefore, parties might instead decide to go with a different form of dispute resolution available in Thailand such as arbitration, mediation, or conciliation. In this article, we will give you a brief overview of the advantages and disadvantages of three Alternative Dispute Resolution (“ADR”) options versus litigation.

Although Thailand’s legal system has been influenced by common law, the country uses a predominantly civil law legal system. Under the traditional court-based litigation system, a dispute will be assessed by a judge, someone who generally handles a wide variety of cases and who will most likely not be an expert on the subject of the dispute at hand (with the exception of the specialised courts – Bankruptcy Court, Intellectual Property and International Trade Court, Labour Court, and Tax Court). These court cases are generally held at the relevant local court house and the schedule and pace of proceedings will depend solely on the court’s calendar rather than that of the parties. Therefore, the litigation process can and can therefore take a long time.

As mentioned, litigation can generally be quite intimidating, hostile, and risky for parties. In most cases, only one of the parties gets what it wants. In today’s practice, the judge will already inquire and usually recommend mediation or conciliation before the commencement of litigation. After a trial has commenced, the parties involved can still opt to settle their dispute through mediation, either in- or out-of-court. Under the Thai Civil Procedure Code (“CPC”), a judge may also ask the parties to participate in an in-court conciliation.

Alternative Dispute Resolution gives parties the opportunity to resolve and settle their dispute outside of the court system. Nowadays, ADR plays a significant role in the Thai legal system. Thailand has many in- and out-of-court options available, should parties prefer ADR over litigation. Unsurprisingly, the number of both local and international disputes being settled and resolved in Thailand through ADR has been increasing in recent years. Now, why would parties prefer ADR in general? Find out below!

When a dispute is resolved through arbitration, the matter is judged by an arbitrator (or by a panel of arbitrators). Arbitration is frequently conducted with either a sole arbitrator, or a panel of three arbitrators. The arbitrator (or arbitrators) is a third party carefully selected by the parties themselves, and will generally be an expert in the field of dispute. Furthermore, the parties can select the applicable laws, rules, and framework of the decision to be made by the arbitrator under the arbitration proceedings.

Although arbitration proceedings may appear similar to a traditional court case in some respects, an arbitration proceeding tends to be more flexible, less formal, and less time consuming than traditional litigation. Each party will be able to defend their case, after which both the arbitrator and opposing party are allowed to ask questions. The final decision on the matter is made by the arbitrator (or panel of arbitrators) and is called an arbitral award. Awards will generally be binding upon the parties.

The UNCITRAL Model Law on International Commercial Arbitration (“UNICITRAL Model Law”) provides a template that can be adopted as part of a country’s domestic legislation. In Thailand, the UNCITRAL Model Law is almost entirely implemented in the Thai Arbitration Act B.E. 2545 (2002).

The Thai Arbitration Institute (“TAI”) under the Office of the Judiciary is the primary provider of out-of-court arbitration services in Thailand. The TAI provides arbitration services for domestic and international disputes, and proceedings at the TAI are subject to the Arbitration Rules for the Thai Arbitration Institute (“TAI Rules”). Another out-of-court arbitration service provider is the Thai Arbitration Center (“THAC”) which has its own set of rules for arbitration proceedings. Parties are free to select which procedural rules they wish to apply to their matter.

Advantages:

• More flexibility

• Less time consuming

The parties can agree which law, rules, and framework will apply to their case beforehand and the arbitrator will consult with them on the date, time, and location of the arbitration proceedings and hearing dates.

• Expertise

Not only is the arbitrator usually an expert on the dispute at hand, the arbitrator will also generally have more time to analyse and evaluate the matter.

• Non-public

In contrast to a traditional court case, most arbitration proceedings will not be disclosed to the public and can remain confidential. In other words, no information relating to arbitration proceedings will be made publicly available. This is important for parties wishing to keep their disputes private as disclosure of the details of a dispute may harm a party’s reputation. Further, other third parties such as a party’s competitors or its suppliers could even benefit from the disclosure of a party’s legal dispute.

Disadvantages:

• Can be expensive

Although it is not mandatory to engage a lawyer for arbitration proceedings, most parties still choose to do so. Further, it is often wise for a party to have legal representation during arbitration proceedings as this will help to safeguard a party’s best interests, and help to advance their case to the maximum extent possible. However, the main costs of arbitration will be the arbitrator’s fee which can be significantly higher than court filing fees under litigation.

• No rulings in advance

In Thailand, arbitrators are unable to grant interim measures and relief in the same way that a judge or even arbitrators operating in certain other jurisdictions can. Accordingly, a party seeking interim measures (e.g. an injunction) against the opposing party will still need to file a petition with a Thai court.

• Limited rights to appeal

Although parties cannot lose their right to appeal entirely, arbitration awards are in principle binding on the parties.

A second form of ADR attempts to resolve the dispute by mediation, in which a neutral third party will aim to bring the parties together and settle the dispute. In Thai culture, mediation has always been part of traditional conflict resolution and Thailand’s legal dispute resolution framework does involve the option of mediation. As stated earlier, the mediator is neutral and will only listen to and lead the discussion in order for it to proceed in a good manner. Ultimately, the mediator will attempt to bring the parties to a mutually acceptable agreement which both parties are content with.

Advantages:

• Less time consuming

The mediator will consult with the parties on the date, time, and location of mediation.

• No surprises

Both parties will be present during the entire mediation process. Further, the parties must actively engage with and participate in the mediation. As the mediator is unable to provide a final ruling, the parties will retain a significant degree of control with regards to whether an agreement is made or not.

• Can provide insight and help parties see the bigger picture

A mediator can provide an overview of the dispute, point out certain arguments to the parties, and help to inform a party and make it more aware of its position.

• Allows continuing relationships

As both parties have to participate, listen to each other’s arguments, and stay in control regarding the outcome, the process generally is friendlier and less hostile than litigation (and even arbitration). Accordingly, this option allows for a greater chance of maintaining a continuing relationship between parties. 

• Non-public

The proceedings will not be disclosed to the public and can remain confidential.

Disadvantages:

• Success is not guaranteed

As there is no decision made by a judge or an arbitrator, parties will have to jointly come to a mutually acceptable agreement together. Further, even though mediation can be rather effective, it is possible that the parties are not able to come to an agreement.

• Can be expensive

Coming to an agreement might take longer than expected. In this way, mediation can become relatively expensive if the proceedings take longer than originally anticipated by the parties.

In contrast with a mediator, a conciliator is a more active party when it comes to bringing the parties together. Whereas a mediator will generally try to listen to the parties and understand the nature of the dispute, a conciliator will usually be an expert on the dispute at hand and can actively take part in the discussion between the parties. The conciliator will generally examine the possible and most likely outcome of a trial at court. Taking the most likely outcome into account, the conciliator will focus on what would be best for each party, rather than what they would prefer to be the outcome. Like mediation, conciliation already plays a significant role in Thai dispute resolutions. In Thailand’s traditional court system and civil procedure framework, settlement through conciliation is provided for in the CPC. As mentioned above, conciliation can also be ordered by a judge as one of the pre-trial steps before the commencement of a trial.

Advantages:

• Less time consuming

The conciliator will consult with the parties on the date, time, and location of conciliation.

• No surprises

Both parties will be present during the conciliation process. Further, the parties must actively engage with and participate in the conciliation. As the conciliator is unable to provide a final ruling, the parties will retain a significant degree of control with regards to whether an agreement is made or not.

• Insight in most probable court case outcome

As the conciliator is generally an expert in the subject matter of the dispute, they can actively take part in the discussion and provide guidance on the most likely outcome of the case were it to go to trial.

• Non-public

The conciliation proceedings will not be disclosed to the public and can remain confidential.

• Allows continuing relationships

As both parties have to participate, listen to each other’s arguments, and stay in control regarding the outcome, the process generally is friendlier and less hostile than litigation (and even arbitration). Accordingly, this option allows for a greater chance of maintaining a continuing relationship between parties. 

Disadvantages:

• Success is not guaranteed

As there is no decision made by a judge or an arbitrator, the parties will have to jointly come to a mutually acceptable agreement together. And even though conciliation can be very successful, it is still possible that the parties may not be able to come to an acceptable agreement.

• Can be expensive

Coming to an agreement might take longer than expected. In this way, conciliation can become relatively expensive if the proceedings take longer than originally anticipated by the parties.

Even though ADR makes dispute resolution in general easier and less hostile for parties, it still remains relevant to have legal representation. An attorney can provide legal counsel and ensure that a client’s best interests are properly represented during the dispute resolution process, regardless of it being in or out-of-court.