By welcoming foreign citizens to serve as arbitrators and advocates, Thailand's arbitration laws have taken a giant leap forward...
Arbitration standards in Thailand have long been derided in the international legal community for falling short of internationally accepted practices. However, the 2019 amendments to Thailand's Arbitration Act confirm that arbitration standards in Thailand are steadily and incrementally improving.
In April 2019, Thailand's Arbitration Act was amended to welcome the participation of foreign citizens as arbitrators and advocates in arbitration proceedings conducted by the Thai Arbitration Institute ("TAI") and Thailand Arbitration Center ("THAC"). Prior to the adoption of the 2019 amendments, the Arbitration Act was silent on such issues, and the appointment of a foreign citizen as an advocate in arbitration was often controversial and occasionally problematic.
The 2019 amendments to the Arbitration Act resolve any lingering ambiguity with respect to the participation of foreign citizens as arbitrators and advocates in arbitration proceedings in Thailand. Upon the request of a party, the administering authority (TAI or THAC) now issues a "certificate" authorizing a foreign citizen to work as an arbitrator or advocate by obtaining a visa and work permit (or by amending an existing visa or work permit) for the duration of the arbitral proceedings. The certificate is then presented together with supporting documentation to the Ministry of Labor and Immigration Bureau, respectively, in support of the applicant's (new or amended) work permit and visa.
While the above procedures may be somewhat costly and time-consuming, the process has thus far been implemented in a timely and efficient manner.
In addition to the recent amendments to the Arbitration Act, the TAI also revised its Arbitration Rules in 2017 to more closely track international standards. Notably, the TAI's revised rules impose limitations on a party's ability to delay arbitration proceedings. Generally, the tribunal is now required to consult with the parties to establish a "preliminary procedural timetable" within 30 days from the date of appointment of the last arbitrator. Moreover, the "preliminary procedural timetable" adopted by the tribunal "should last no longer than 180 days" subject to the TAI's approval.
Previously, the appointment of the arbitral tribunal itself was often subject to significant delays. Any party seeking delay could simply file a series of EOT (extension of time) motions for additional time to nominate an arbitrator, and such EOT motions were routinely granted. Under the TAI's revised Arbitration Rules, the claimant is now required to nominate an arbitrator upon filing a claim (assuming a tribunal promised of more than one arbitrator), and the respondent is required to nominate an arbitrator upon submission of a defense (and counterclaim, if any). This relatively simple rule change accelerates arbitration proceedings by up to 90 days or more.
Moreover, the TAI is currently less generous with time extensions granted to the parties. EOT (extension of time) motions are still routinely granted (a maximum of three (3) EOT motions are commonly approved for each procedural milestone). However, the duration of each time extension is now limited to approximately 15 days (rather than 30 days). As a result, a party seeking to frustrate the arbitration process through delay tactics finds itself with fewer tools in its toolbox.
The TAI's adoption of both statutory and procedural time limits significantly improves the efficiency of arbitration proceedings, and addresses a common criticism of arbitration proceedings in Thailand. Previously, a party seeking to delay arbitration proceedings could readily secure a delay of 90 days or more at each stage of the process -- to file a pleading, to nominate an arbitrator, to file a witness list, to submit documentary evidence, etc… As a result, arbitration hearings could be delayed by a year or more by any party seeking to benefit from delay. Such cynical delay tactics are now substantially curtailed.
That said, Article 6 of the TAI's revised rules clarify that the specified timeframes may still be extended: "The Institute may, but its own initiative or upon a request by the Arbitral Tribunal or any party, abridge or extend any period of time prescribed under these Rules." In addition, under Article 29 of the TAI's revised rules, the tribunal may modify the procedural timetable, and the TAI may "allow" an extension of time in case of "necessity or reasonable causes."
Additional revisions to the TAI's Arbitration Rules include the following:
1. Interim Relief: Previously, only a court of appropriate jurisdiction could grant a party's motion for interim relief pending the tribunal's award. The tribunal itself is now empowered to grant interim relief.
2. Consolidation of Claims: Previously, the TAI was reticent to consolidate substantially similar claims against the same respondent(s) due to slight variations the arbitration clauses or contract terms. Absent consolidation, arbitration hearings were redundant, unduly
inefficient, and arbitral awards were not necessarily consistent. Under Article 13 of the revised rules, the TAI may consolidate proceedings for the sake of efficiency and convenience (regardless of whether the relevant arbitration agreements are identical) at the TAI's discretion.
3. Confidentiality: Article 37 of the TAI's revised Arbitration Rules clarifies that all arbitral proceedings, claims, defenses, documents, evidence, hearings, orders and awards are confidential, and may not be disclosed by a party, the tribunal or the TAI (except as otherwise required by law, or to enforce or challenge the award, or to protect or exercise legal rights, or upon the consent of the parties).
While the THAC's arbitration rules are modeled after the rules of the Singapore International Arbitration Centre, few claims have yet been filed with the organization and the TAI continues to dominate the field with several hundred cases filed annually.
In summary, arbitration procedures in Thailand continue to evolve. Reforms are adopted incrementally to coincide with international standards. Certainly, more remains to be done.
Neither the TAI nor the THAC are fully independent. Both organizations are authorized by statute, and receive public funding. In fact, the TAI operates directly under the Office of the Judiciary with its offices located (and hearings conducted) on the 5th floor of the Criminal Court Building at the Ratchadapisek court complex. Fully autonomous organizations would certainly be preferable in the long run.
Arbitrator compensation in Thailand remains well below international standards. As a result, the TAI's roster of arbitrators currently includes only one foreign citizen who actually works and resides in Thailand. Of course, a
party may appoint any foreign citizen (or domestic citizen) to serve as an arbitrator, regardless of whether such person appears on the TAI's roster. Additional reforms (and higher compensation) may be required to expand the TAI's roster to include a reasonable number of qualified foreign citizens.
Arbitration remains the preferred method of dispute resolution in Thailand, particularly for foreign parties. By welcoming foreign citizens to serve as arbitrators and advocates, Thailand's arbitration laws have taken a giant leap forward.
We see a bright future for commercial arbitration in Thailand. The staffs of the TAI and THAC are courteous and highly professional, while arbitration laws and procedures are moving ever closer towards international standards.
Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.
Managing Partner, SIAM ADR
SIAM ADR is managed by Daniel Chernov, an American attorney (Georgetown University Law Center ’86) with a diverse range of legal experience gained in the Asia-Pacific region. Daniel is a member of the District of Columbia Bar Association in Washington, D.C. He has practiced law for more than 30 years in Washington, D.C., Tokyo, Ho Chi Minh City, and Bangkok. While generally focusing his legal practice on foreign direct investment in Asia, Mr. Chernov developed expertise in resolving international business conflicts through civil litigation and alternative dispute resolution (arbitration, mediation, and negotiation). In 2011, following a quarter-century of international legal representation, Mr. Chernov established Siam ADR. He soon developed the firm’s reputation as market leader in civil litigation and alternative dispute resolution services in Thailand. Daniel specializes in alternative dispute resolution, civil litigation, international commercial transactions, foreign investment, and international mergers and acquisitions.