Trade Disputes in Thailand

For businesses entangled in commercial disputes where compromising is not an option, litigation can be the most viable solution. However, this can be a long and costly process.

Chanintr explains that it requires the right level of commitment and momentum to gather enough information, personnel and determination to see the case through.

Alternative Dispute Resolution

ADR is a means of dealing with disputes that aims to avoid litigation. Generally speaking, it involves the involvement of a neutral party in order to bring the parties to an agreement through negotiations or arbitration. It can be a voluntary process or a mandatory one in accordance with a contract. ADR can involve mediation, conciliation, negotiated rulemaking and neutral factfinding.

Thailand has a system of judicial review with three levels: the Court of First Instance; the Court of Appeal; and the Supreme Court. There are also specialized courts. The Supreme Court has discretion as to whether to accept an appeal from a specialized court decision.

The prevailing legal system in Thailand has a strong common law influence and has generally been effective at enforcing property and contractual rights. Monetary compensation in a civil claim is generally based on actual damage that resulted directly from the wrongful act. However, decisions of foreign courts are generally not binding in a Thai court.

Litigation

Litigation is a last resort option when a trade dispute cannot be resolved through mediation or arbitration. In a court action, the dispute will be decided in accordance with the governing law of the country chosen by the parties.

The Central Intellectual Property and International Trade Court is a specialized court that adjudicates IP disputes including infringement and invalidity issues. The decisions of CIPIT Court may be appealed to the Court of Appeals for Specialized Cases.

The United States continues to urge Thailand to impose effective and deterrent enforcement measures in order to meet its obligations under the GATT/WTO/TRIPs Agreements. In January 2000, Act Up, Doctors Without Borders and Public Citizen wrote to the International Subcommittee of the Patent Committee of USTR to ask that the US government not apply Section 301 pressure to Thailand until the latter carries out changes in its intellectual property laws.

Mediation & Conciliation

Outside the courts, mediation is increasingly popular in Thailand. Many dispute resolution centres, including the office of alternative dispute resolution centre in the Office of the Judiciary and THAC’s mediation institute, provide services.

The process of mediation is normally confidential. It offers the parties greater control and flexibility than the long-winded litigation that inevitably accompanies a case and can help to preserve business or personal relationships that might otherwise go sour during years of court proceedings.

The conciliation process is similar to the mediation procedure but the conciliator acts as an active party rather than a neutral third-party. It also tends to be more cost effective and quicker than a lengthy legal case. The Thai legal system recognises the benefits of conciliation and imposes on parties to arbitration agreements provisions requiring them to attempt to settle disputes through conciliation before proceeding to trial. It also encourages the use of mediation as a means of dealing with trade disputes in order to avoid expensive and time-consuming legal proceedings.

Settlement

The settlement process involves negotiation and mediation and can offer a more amiable outcome for parties than litigation. It also avoids the impact of a long court proceeding on the relationship between partners.

Negotiation is a common mode of dispute resolution and is included in standard arbitration clauses in Thailand. The Labour Department generally encourages insertion of mediation clauses in expatriate agreements to settle disputes before resorting to litigation.

Although the legal system in Thailand is based on English law, a large proportion of international business transactions involve Thai lawyers. Therefore, it is often advisable to have the agreement in both languages to avoid misunderstandings or misinterpretation of the terms and conditions.

The Philippines and Thailand have a longstanding history of bilateral discussions in the WTO dispute settlement process. The 13-year long ongoing DS371 dispute is a testament to the region’s confidence in formal trade dispute settlement.