Arbitration in Thailand

Arbitration in Thailand

In this age of disruptive technologies where artificial intelligence is displacing many conventional human behaviors, including the manner in which international trade and other business transactions are conducted, the method of resolving commercial disputes must adapt to these changes.  The traditional way of litigating commercial disputes in court may still remain the primary way of resolving them, but sooner or later the court will become forum non conveniens to try these disputes. With their flexibility to quickly adapt to changes, mediation and arbitration are gaining popularity in filling this void left by the court. It is more compelling to resolve disputes via mediation in which the parties reach mutual agreement even though they come away with less than what they expected.  If mediation does not succeed, arbitration is the other alternative.  A distinct advantage of arbitration over litigation is that the parties can appoint neutrals to settle their dispute.  What is more, they have the flexibility of choosing the rules to govern their arbitration proceedings instead of submitting themselves to the rigid rules of court procedure.    

Overview of Arbitration Law

The current law on arbitration is the Arbitration Act B.E. 2545 [A.D. 2002] (“AA”), which mostly follows the UNCITRAL Model Law on International Commercial Arbitration. Pursuant to the AA, the Thai courts will enforce foreign arbitral awards to the extent of Thailand’s commitment under international agreements. 

Thailand became a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”) without any reservation.  The New York Convention enables (through AA) foreign arbitral awards to be enforced in Thailand and for arbitral awards issued in Thailand to be enforced in 164 member states (as of June 2020), subjected to the reservations made by those states.

The ability to enforce arbitral awards issued in Thailand among the member states of the New York Convention provides a marked advantage of arbitration over litigation in Thailand. For the reason that a Thai court judgment is not enforceable as a matter of right outside Thailand, as there is no treaty or international agreement to enable it to be done.  Therefore, it is up to the courts in the countries where the Thai court judgments are sought to be enforced, and whether to enforce them on the basis of reciprocity, comity or otherwise.  For the same reason, it is not possible to enforce a foreign court judgment in Thailand. In practice, a foreign court judgment can be submitted as evidence of the claim which must be litigated de novo.

Unlike the old Arbitration Act of 1987, the AA does not make any distinction between domestic and international arbitration.  Arbitrability under the old act was limited to civil disputes whereas the AA does not contain such limitation, but covers all disputes whether or not arising from contractual relations.  Of significance, the AA also covers all disputes arising from contracts between the state and private parties.  Unfortunately, the administrative branch of the government discourages the insertion of arbitration clauses in state contracts, requiring government agencies and state enterprises to request permission from the council of ministers before doing so.  The reason behind this is because government agencies and state enterprises have lost many arbitration cases against private parties resulting in substantial awards against them. 

Thailand has concluded investment treaties with many countries both on a bilateral and multilateral basis.  Many of the treaties contain arbitration clauses whereby the private investors or host states can institute arbitration proceedings to resolve their disputes under the respective treaties. 

Facilitating Regulations

In order to promote Thailand as the venue for international arbitration, visa and work permit laws have been relaxed to facilitate foreign arbitrators and those acting as party representatives in arbitration proceedings in Thailand.   ‘Smart visas’ and special work permits are generally granted to foreign arbitrators to enable them to carry out their duties until the closure of the proceedings.  Foreign lawyers who are normally prohibited from practicing in Thailand are permitted to receive special dispensation from the law to act as party representatives in the arbitration proceedings.

Local Arbitration Institutions

There are three main arbitration institutions in Thailand:

  • The Office of the Arbitration Tribunal of The Board of Trade of Thailand;
  • The Thai Arbitration Institute of the Office of the Judiciary (TAI), and;
  • The Thai Arbitration Centre (THAC) under the auspices of the Ministry of Justice.

The Office of the Arbitration Tribunal of The Board of Trade of Thailand

By far the oldest institution, is the arbitration centre operated by The Board of Trade of Thailand (a federation of Thai and foreign chambers of commerce in Thailand), also where the office of the ICC Thailand is situated.  The Board of Trade of Thailand has been administering the Thai Commercial Arbitration Rules since the ’60s.  The centre is supported by the Board of Trade of Thailand and, detached from governmental agencies.

Thai Arbitration Institute (TAI)

Established in 1990, TAI is a successful attempt by the judiciary to promote alternative dispute resolution.  It has the highest number of ongoing cases.  Although the institute is a part of the Office of the Judiciary, which is administrative arm of the courts and is overseen by it. Neither the Office nor the courts interfere with the deliberations or decisions of the arbitrators.  TAI is the main forum where disputes arising from contracts between state and private parties are arbitrated.

The Thai Arbitration Centre (THAC)

Not to be confused with TAI, The Thai Arbitration Centre or THAC was established by an act of parliament in 2007, but started operation in 2015. THAC has been in the forefront of promoting arbitration in general and in presenting itself as an international arbitration centre.  It has modernised facilities and conveniently situated in a buzzling part of Bangkok, within minutes of famous hotels and shopping centres.  Although THAC is partly funded by the Ministry of Justice, the latter does not interfere with the arbitration proceedings under the centre’s rules. THAC’s connection with the Ministry of Justice provides it with the unique opportunity to initiate changes in the laws and regulations to make Thailand a more friendly place for arbitration.

Other Arbitration Centres

Apart from the three main arbitration centres there are four more centres which administered their own arbitration rules relating to specific areas.  These include the following.

(I). The Arbitration Centre of the Office of the Insurance Commissioner

The Centre administers its arbitration rules to resolve disputes between the insureds or beneficiaries and the insurance companies.

(II). The Arbitration Centre of the Office of the Securities Commission

The Centre administers its arbitration rules to resolve disputes between investors in the capital market and securities companies.

(III). Office for the Prevention and Resolution of Disputes regarding Intellectual Property, Department of Intellectual Property

As its name suggests, this centre is attached to the Department of Intellectual Property and administers its arbitration rules to resolve disputes regarding intellectual property matters (e.g. trademark, patent and copyright, etc.), as well as disputes arising from licensing and other agreements relating to intellectual property.

(IV). The Arbitration Centre of the Thai General Insurance Association

The Centre administers its arbitration rules to resolve disputes arising from among its members.

Final Thoughts

For a long time, arbitration has been promoted as an alternative mean of dispute resolution, its increasing popularity is mainly attributable to its flexible nature which enables it to keep pace with the rapidly changing business landscape.  Thailand is a long -standing member of the New York Convention, thereby allowing foreign arbitral awards to be recognized and enforced within its territory.  Conversely, awards made in Thailand can be enforced in 164 member states across the world, subject to the reservations made by those states.  The Thai arbitration law follows the UNCITRAL Model Law in the most part, further strengthening Thailand as an international arbitration forum.

Further efforts have also been made to relax certain laws and regulations to facilitate the participation of foreign arbitrators and counsel to in Thai arbitration proceedings.

Presently, there are a number of arbitration institutions in Thailand which can cater to the needs of the parties seeking to resolve their disputes.  Thailand has been a long-recognized venue for ICC and ad hoc arbitration under the UNCITRAL Rules.  It is now asserting itself to become the hub of international arbitration.

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Article written by: Prof. Jayavadh Bunnag, Managing Partner

The Law to End Laws

The most recent development in Thai law which would benefit business and society at large is the Act on the Rules governing the Preparation of Draft Bills and Assessment of their Effectiveness when passed into Law, B.E. 2562 [2019] (the “Act”) which, among other things,  empowers the courts to refer certain laws and regulations which are no longer necessary, or which are not in keeping with the times, or which impede the livelihood or occupation of the people (for the purpose of this article, “obsolete law(s)”), to (in the case of the courts of justice) the President of the Supreme Court for submission to the Supreme Court’s general meeting (sitting as a full court), to determine and declare whether such laws or regulations are obsolete.

The effect of the Supreme Court declaring a particular law or regulation obsolete would enable the court of justice concerned to exercise its discretion not to enforce the sanction under that law and prescribe other sanctions which it considers appropriate in the case before it.

This Act applies to Administrative Courts and Military Courts mutatis mutandis.  

The Act, as its long name suggests, requires state agencies (as defined) to issue laws and regulations only to the extent that is necessary, and to repeal or amend existing laws and regulations which have outlast their usefulness or are not keeping with the times.  It sets out procedures for holding public hearings of the proposed legislation and assessment of its possible impact which, together with the public opinion, must be taken into consideration when drafting the legislation.

However, this article will not deal with the procedures that state agencies must follow when proposing legislation, but will focus on the more significant aspect of the Act which empowers the courts of justice to refuse to enforce the sanctions under the obsolete laws.

I. Scope

The Act covers:

Laws:  defined as Organic Laws (implementing constitutional provisions), Acts of Parliament and Codes.

Regulations [or Rules]: defined as the regulations pursuant to the law governing administrative procedure, which creates a burden on the people, or the failure to comply with them incurs punishment, or results in the deprivation of rights, or affects personal status.  

These are the subordinate legislation or regulations which implement the acts of parliament.

II. Enabling provision

Section 6 of the Act provides that when a court of justice is going to enforce a legal provision which incurs criminal punishment, administrative sanction, or other sanctions which would adversely affect the violator, if, by its own cognition, or as a result of a reasoned objection from a party in the case, it appears, in the court’s opinion, that such legal provision is not in accord with section 5, first paragraph, of the Act[1], and: i) is not a case within the jurisdiction of the Constitutional Court;  and  ii)  there is no prior ruling by the general meeting of the Supreme Court on that question (i.e. that it is an obsolete law), shall send its opinion to the President of the Supreme Court for submission to the general meeting of the Supreme Court (sitting as a full court) for determination.

Pending such determination, the court proceedings may continue, but no judgment may be issued until the general meeting of the Supreme Court has determined the question.  In the event that the general meeting of the Supreme Court determines that such legal provision is obsolete law, the trial court or the Court of Appeal, depending where the case lies, may elect not to sentence, or to issue a lighter sentence than that prescribed by law, or may prescribe sanctions different from what that law stipulates, as the case may be.  Such determination by the general meeting of the Supreme Court shall serve as precedent for all cases under the jurisdiction of the courts of justice.  In such event, the administrative authority responsible for implementing such legislation shall proceed to amend it to be consistent with section 5, first paragraph, promptly.

III. Analysis

This is indeed a new development in Thai law whereby the legislative branch vests the judiciary with the authority to elect not to apply sanctions under laws which have outlived their usefulness, or which are not in line with present day conditions and which impose unnecessary burden on the livelihood or occupation of the people.  It must be noted that the courts have no power to repeal the obsolete law, but can prescribe sanctions different from what that law stipulates.  The duty to repeal or amend the obsolete law rests with the agencies under the executive branch responsible for implementing such law. 

In the past, Thailand has undergone various attempts to reform its regulatory regime to make the country more competitive with other countries and to do away with laws which are no longer suitable with the times, but its effort has gained little success.  The Act enables a party in a court case involving an obsolete law to raise his objection with the Court of First Instance (the trial court) or the Court of Appeal to have the court apprise the President of the Supreme Court to have the general meeting of the Supreme Court declare such law or regulation to be inconsistent with section 5, first paragraph of the Act, enabling the respective court to exercise its discretion not to impose criminal punishment, or to impose a lighter sentence than what is prescribed by such law or regulations, or to prescribe other sanctions different from what is prescribed by such laws or regulations in the case before it.

The laws and regulations mentioned above include announcements and orders having the force of law, i.e. the subordinate legislation and official directives which affect people in their daily lives.

The unique procedure of the Act which enables the courts to ‘weed out’ obsolete laws is an innovative and a more practical way of deregulating the legal system and keeping it attuned to the current requirements of society. The Act is certainly a quicker way of implementing law reforms as compared to the time it would take the other machinery of government to come to grips with the problem.


Prof. Jayavadh Bunnag