Trade disputes can have significant economic and diplomatic implications. Negotiation is a good option for most trade disputes, but other dispute resolution proceedings also exist.
Thailand has established trade remedy laws that can be used to resolve trade disputes with trading partners. However, these proceedings can be lengthy and costly.
Arbitration
As a member of the global economy, Thailand engages in international trade. This engagement sometimes results in friction with trading partners, which leads to trade disputes.
Arbitration is an option for resolving such disputes. The arbitration process is governed by the Arbitration Act. However, this does not necessarily oblige parties to exclusively resort to arbitration – litigation is also permissible.
A court will review the arbitral award to ensure its compliance with Thai law. It will then decide whether or not to enforce the award. If the award is to be enforced, the court may require the party against whom enforcement is sought to provide security as it deems appropriate.
The 2002 Arbitration Act requires arbitrators to disclose any circumstances that could lead to justifiable doubts about their impartiality or independence. This duty applies from the time of appointment and continues throughout the proceedings. This includes disclosure of any previous disputes in which they have been involved.
Conciliation
The growth of international trade inevitably brings friction between trading partners, and the resolution of such disputes is essential for the success of business operations. Understanding the nature of such disputes and the available avenues for resolution can help companies proactively manage these risks.
One of the main dispute resolution options in trade cases is conciliation. Typically, a judge in a trial court will oversee the conciliation process. If the judge deems it appropriate, the court may appoint outside conciliators. The conciliation proceedings are generally conducted in closed door sessions and held for the benefit of the parties.
In conciliation cases, disputing parties can choose between one or three arbitrators. If the parties do not agree on the number of arbitrators, they will be presented with a list of potential candidates. The candidates will be ranked by each party and the highest rated candidate will be appointed to the tribunal. While a mediated settlement agreement can be enforced in Thailand, the process is not internationally recognized (and direct enforcement from abroad is difficult). It is therefore prudent to seek legal advice regarding the use of this mechanism.
Court Litigation
Court litigation is an alternative to arbitration. Generally, the court will decide a case by examining evidence based on a preponderance of the evidence. However, the burden of proof in criminal cases like murder and rape requires proof beyond reasonable doubt. Civil cases like breach of contract or rescission only require a lower standard of proof, known as the ‘balance of probabilities’.
Unlike common law jurisdictions, Thai courts do not utilise juries and judgments are rendered solely by judges. The Supreme Court is the highest court of appeal in Thailand.
As a party to the 1958 New York Convention, Thailand guarantees the enforcement of arbitral awards in respect of trade disputes. However, a court cannot enforce an arbitration award against a foreign defendant without the agreement of that jurisdiction.
In cases involving multiple claims, the court may at its discretion or at an interested party’s request order a disjoinder for all or certain of such claims to be tried separately. This is comparable to a split trial in some jurisdictions.
Alternative Dispute Resolution
Alternative dispute resolution is a way for parties in a trade dispute to resolve their differences outside of court. It involves neutral party intervention to assist in lowering tensions, improving communication and interpreting issues and exploring options for settlement. Types of alternative dispute resolution include conciliation, case evaluation and neutral factfinding.
Thailand can use its domestic legal system to settle trade disputes involving violations of domestic law, or through free trade agreements that contain their own dispute settlement procedures. However, this option is time-consuming and costly.
Additionally, a number of private online dispute resolution mechanisms exist that offer quicker and more cost-effective solutions. It is important for companies operating in Thailand to understand these alternatives, as they can be an effective strategy in preventing and resolving trade disputes. Moreover, such alternatives are often more consistent with international trade customs than the formal court process.