A growing number of business disputes are being settled in Thailand by arbitration rather than litigation before Thai courts. However, there are several factors that must be taken into account before deciding to pursue an arbitration case in Thailand.
Trade disputes are an inevitable part of international commerce and understanding the types of trade disputes, available avenues for dispute resolution, and their associated challenges is critical for businesses.
Complaints
Despite efforts by state, NGOs, and private sector actors to strengthen complaint mechanisms at a systems-wide level, many workers do not use these channels because they mistrust them. This is a significant obstacle to the prev- alence of trafficking and forced labor in Thailand. Nevertheless, the government has taken positive steps to increase access to state-based complaint mechanisms for Thai and migrant workers by increasing inter- preter capacity, opening one-stop crisis centers, establishing local Damrongham Centers, centralized government hotlines, and rolling out a national policy and NAP on business and human rights for large private sector companies.
However, it remains common for even relatively uncomplicated cases to take more than a year to be resolved in court. In addition, stateless people and migrant workers whose employment is denied by their origin countries face structural and economic marginalization making it more difficult to report complaints. In this regard, the judicial system is largely ineffective at protecting their rights.
Arbitration
Arbitration is a dispute resolution mechanism where the dispute is settled by an independent third party. It is generally less expensive than litigation. However, there are some disputes where the cost of arbitration can outweigh the benefits.
Unlike court proceedings with their legal protocols, arbitration is usually held in an informal setting and the results are confidential. This can be beneficial to renowned figures or businesses that want to maintain their reputation.
In January 2017, a new set of rules was introduced to improve the efficiency and consistency of arbitration administered by the TAI. The new rules include a revised procedure for consolidating correlated arbitrations, which is intended to reduce time and cost of proceedings and prevent inconsistencies arising from different tribunals handling the same facts. It also allows the tribunal to have general jurisdiction over challenges, which marks a significant step forward for arbitration in Thailand. Additionally, successful parties are able to recover interest and legal costs without significant restrictions.
Conciliation
This is an alternative to litigation and it involves the person who manages conciliation (a conciliator) helping both sides talk about their complaint. The conciliator will not decide who is right or wrong and they may also facilitate a compromise between the two parties. Conciliation sessions can take place face to face and in person or by telephone under certain conditions.
The cost of a conciliation session is significantly less than that of going to trial. This means that the conciliation process is particularly popular for resolving smaller claims. Moreover, companies may wish to include a mediation clause in their contract, especially if they anticipate having disputes with their clients.
Thailand is a major player in global trade and as a result, friction with trading partners can arise – leading to trade disputes. Understanding the nature of these disputes and the avenues for resolution is essential to minimizing their impact on your business operations. However, you should always seek professional legal advice to be sure of your specific circumstances.
Out-of-court Mediation
DFDL assists foreign claimants in settling their trade disputes out of court. This includes conciliation and mediation which is handled by the Thai Mediation Center under the Office of the Judiciary’s Alternative Dispute Resolution Office. The TMC describes its system of mediation as one that enables parties to reach mutually satisfying settlements and create win-win solutions. It also saves time and money for the country by reducing work load of the court system.
Mediation is becoming increasingly popular, especially for smaller claims cases where legal costs can be much higher than any award. It is also commonly used in disputes with domestic and foreign companies.
The courts in Thailand encourage and often divert cases for mediation, and a judge can order a case for conciliation during the trial. Moreover, private mediation firms are growing rapidly in Thailand and are often composed of experienced lawyers, former judges, and entrepreneurs. They are able to offer hybrid dispute resolution mechanisms including Arb-Med-Arb where the parties can choose between arbitration and mediation or even combine both processes.