Trade Disputes in Thailand

Trade is central to Thailand’s economy, which relies heavily on exports, regional integration, and foreign investment. As the country has developed into a regional hub for manufacturing, agriculture, and services, commercial relationships between domestic and international businesses have grown increasingly complex. Inevitably, this expansion gives rise to trade disputes—conflicts between parties involved in the sale of goods, provision of services, cross-border contracts, or enforcement of trade rights.

Thailand has established a legal and institutional framework for resolving trade disputes, aiming to maintain investor confidence, support economic stability, and comply with its international obligations. This article explores the nature of trade disputes in Thailand, the legal framework, resolution mechanisms, common challenges, and best practices for businesses.

Legal Framework for Trade Disputes

The resolution of trade disputes in Thailand is grounded in several key laws and regulations:

1. Civil and Commercial Code (CCC) – Governs contracts, commercial transactions, and obligations. It forms the backbone of domestic trade law.

2. Arbitration Act B.E. 2545 (2002), as amended – Provides for domestic and international arbitration in line with UNCITRAL principles.

3. Intellectual Property Laws – Including the Trademark Act, Patent Act, and Copyright Act, which often intersect with trade disputes involving IP.

4. Competition Act B.E. 2560 (2017) – Regulates anti-competitive behavior and unfair trade practices.

5. Customs Act B.E. 2560 (2017) – Governs import/export procedures, duties, and related disputes with customs authorities.

6. International Treaties and Agreements – Thailand is a member of the World Trade Organization (WTO), ASEAN, and numerous free trade agreements (FTAs), which also provide frameworks for dispute settlement at the intergovernmental level.

Mechanisms for Resolving Trade Disputes

Thailand provides multiple avenues for resolving trade disputes, ranging from informal negotiation to international arbitration.

1. Negotiation and Mediation

Most disputes begin with direct negotiation between the parties. Mediation, either through private mediators or government bodies such as the Department of Intellectual Property (for IP cases) or the Department of Trade Negotiations (for WTO/FTA-related matters), is encouraged. Mediation is quick, cost-effective, and preserves business relationships.

2. Civil Courts

Domestic trade disputes, such as breach of contract or payment claims, are typically filed in the Thai courts under the Civil and Commercial Code. The Central Intellectual Property and International Trade Court (IP&IT Court), established in 1997, plays a major role in trade-related litigation. It has jurisdiction over:

• International trade disputes

• Intellectual property cases

• International carriage of goods disputes

• Disputes involving enforcement of arbitral awards

The court uses specialized judges, expedited procedures, and allows foreign witnesses via video conference, making it business-friendly compared to general courts.

3. Arbitration

Arbitration is a preferred method for international trade disputes in Thailand. The Thai Arbitration Institute (TAI) and the Thailand Arbitration Center (THAC) are the main institutions administering cases. Arbitration is favored because:

• It offers neutrality in disputes involving foreign parties.

• Awards are enforceable under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which Thailand is a party.

• Proceedings are confidential, preserving commercial reputations.

4. Administrative Remedies

Disputes with customs or trade regulatory authorities may be resolved through administrative procedures, appeals to higher government bodies, or, in some cases, judicial review before the Administrative Court.

5. International Forums

At the intergovernmental level, trade disputes involving Thailand may be addressed through WTO dispute settlement mechanisms or arbitration panels under ASEAN or bilateral FTAs. These typically involve governments rather than private businesses but can impact corporate trade interests.

Common Types of Trade Disputes in Thailand

1. Breach of International Sales Contracts – Failure to deliver goods, late shipments, or payment defaults.

2. Letter of Credit Disputes – Misunderstandings between exporters, importers, and banks regarding trade financing instruments.

3. Intellectual Property Infringement – Counterfeit goods and piracy remain a challenge, leading to disputes between rights holders and importers/exporters.

4. Customs Valuation and Classification – Disagreements over tariff rates, HS codes, or under-invoicing issues.

5. Franchise and Distribution Agreements – Conflicts between Thai distributors and foreign franchisors over exclusivity, termination, or royalties.

6. Investment and Treaty Disputes – Cases brought under bilateral investment treaties (BITs) or the US-Thai Treaty of Amity, where investors challenge government measures.

Role of the Central IP & International Trade Court

The Central IP&IT Court is a cornerstone of Thailand’s trade dispute resolution system. Its jurisdiction is broad, covering not just intellectual property but also disputes involving international commercial transactions. Key features include:

• Specialized judges with trade expertise.

• Expedited procedures, with cases often resolved more quickly than in general courts.

• Allowance for foreign-language evidence, reducing barriers for international litigants.

• Enforcement of foreign arbitral awards, providing credibility for cross-border contracts.

This court helps enhance investor confidence by ensuring that trade disputes can be resolved efficiently and predictably.

Challenges in Trade Dispute Resolution

Despite strong institutions, trade disputes in Thailand face some challenges:

1. Length of Proceedings – While specialized courts expedite matters, some disputes, especially appeals, can still drag on.

2. Costs of Litigation/Arbitration – International arbitration can be expensive, making it less accessible to small businesses.

3. Enforcement Issues – While arbitral awards are generally enforceable, practical enforcement against unwilling parties may be slow.

4. Complexity of International Law – Disputes involving WTO rules or FTAs require specialized legal expertise, which not all businesses can easily access.

5. Counterfeit and Piracy Prevalence – Despite legal protections, IP infringement remains widespread, leading to frequent disputes.

Best Practices for Businesses

To minimize the risk of trade disputes, businesses in Thailand should adopt proactive measures:

• Use Clear Contracts: Draft agreements with detailed terms on delivery, payment, governing law, and dispute resolution forums.

• Include Arbitration Clauses: For cross-border deals, arbitration offers neutrality and enforceability.

• Due Diligence on Partners: Vet foreign and domestic trade partners to avoid unreliable or fraudulent actors.

• Protect Intellectual Property: Register trademarks, patents, and copyrights in Thailand to strengthen enforcement rights.

• Stay Compliant with Trade Regulations: Understand customs rules, competition laws, and FTA provisions.

• Consider Mediation First: Explore negotiation and mediation to preserve commercial relationships before escalating to court or arbitration.

Conclusion

Trade disputes are a natural byproduct of Thailand’s vibrant commercial activity and integration into the global economy. From simple contract breaches to complex international arbitration, Thailand has built a multi-layered dispute resolution framework supported by domestic courts, arbitration institutions, and international mechanisms.

The Central IP&IT Court, along with institutions like TAI and THAC, ensures that businesses have access to specialized forums. Meanwhile, government agencies play a vital role in resolving administrative disputes and upholding trade rules.

For businesses, preventing disputes through clear contracts, compliance with regulations, and open communication is the most cost-effective strategy. However, when conflicts arise, Thailand’s legal system—aligned with global standards—provides a structured pathway for resolution. Ultimately, the effective handling of trade disputes strengthens investor confidence, supports fair competition, and sustains Thailand’s role as a key player in regional and international trade.