The legal system in Thailand can be a major challenge for expats as they’re not familiar with in a language they don’t understand and going through a process that many have described as “interesting“ – particularly when disputes are involved.
Certainly, the legal system works for the nation, and it provides a relatively inexpensive means to settle disputes. However, the language barrier and unfamiliar procedures mean it is daunting and disproportionately expensive for others. I have had cases where up to 1,500 pages of evidence had to be translated which would have doubled the claimant’s legal costs and effectively killed the case before it even started.
Current Thai court times sit between two to three years due to a COVID-19 backlog in hearings. Add a few years for the appeal process, and you are looking at up to five years before getting an enforceable verdict. For small companies, or those with limited cash flow, this could lead to bankruptcy.
The law isn’t supposed to work this way.
Over sixty years ago, a few notable legal experts put forward what is known as the New York Convention which, together with another initiative called the Model Law, made arbitration a practical alternative.
The primary advantage of arbitration is enforceability, speed, and (sometimes) affordability. An arbitration award is also enforceable in most countries in the world. Other advantages include the ability to select a neutral forum, the fact that awards are final and not typically subject to appeal, and the flexible procedures parties can choose from. Everything is also kept confidential.
Up until a few years ago arbitration was not a popular alternative for dispute resolution in Thailand, with many cases being unenforceable on public policy grounds. Even though Thailand was an early signatory to the New York convention, it was not seen as a particularly arbitration-friendly jurisdiction.
A lot has changed recently and having spent time with the Thai Arbitration Centre (THAC), there is a growing trend for foreign firms in Thailand to arbitrate rather than litigate. The enforceability of arbitration, with the support of Thai courts, now approaches 90% and modern remote testimony and cost-effective processes for small claims makes it a real alternative.
But it’s not as simple as it sounds, and you need to understand the rules the tribunal works under as well as tweak your contracts to best use the practicality of arbitration.
With contracts, I regularly advise clients to arbitrate and, in some cases, move the law of the contract from Thailand to another jurisdiction that better fits the parties’ connections. When writing contracts in Thailand, get some advice on alternative dispute resolution options as it could just save you a lot of frustration.
With due disclosure I am a member of the Chartered Institute of Arbitrators as well as the Inter Pacific Bar Association that champion appropriate alternative dispute resolution practices.
As always, you should seek legal advice if in doubt. We are an experienced law firm that has been advising clients on matters related to litigation, arbitration, and dispute resolution. For any inquiries about litigation, arbitration, and disputes in Thailand or elsewhere, please contact us via [email protected]