You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

August 22, 2014

Customs Settlements: Guidelines for Waiver of Prosecution

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

Every year, numerous companies and individuals face criminal prosecution for violating Thai customs law. The penalties include significant fines and even incarceration. This can have a profound effect on both a company and its employees and agents, and even those who may have unintentionally violated customs laws.

In some circumstances, however, reaching a settlement with Thai customs authorities may be a cost-effective solution that provides closure for companies and targeted individuals and also results in a full waiver of liability for wrongdoing. This article explores the customs settlement process and the internal customs guidelines for waiver of prosecution.

The Customs Department has the power to review and investigate all customs transactions it believes may not be in compliance with Thai customs law. The Department of Special Investigation (DSI) has similar authority to conduct customs investigations that fall within its jurisdictional reach.

In cases where the Customs Department concludes through investigation that the applicable customs law has been violated, it has the authority to levy substantial taxes, duties, and fines against an accused company and individuals. The DSI and law enforcement agencies also have the power to recommend criminal prosecution for alleged wrongdoing.

The Customs Department also has specific authority to settle claims by waiver of prosecution. Section 102 of the Customs Act gives the director-general of the department the authority to waive prosecution where an accused consents to settlement by a fine. Such a waiver also acts as an indemnification of the accused against further prosecution for the alleged wrongdoing.

The same provision gives the director-general the authority to prosecute a claim irrespective of the accused party’s willingness to settle if the director-general believes settlement is not proper in the circumstances.

There is an additional authorization step that must be considered internally for settlements and waivers of prosecution at the Customs Department for claims that are of high value and considered “serious.” This includes, but is not limited to, claims of intentional under-declaration of customs duties and related offenses.

Specifically, Section 102 bis of the Customs Act provides that certain delineated offenses with value in excess of THB 400,000 must be brought before a designated Customs Department settlement committee for authorization before settlement and a waiver of prosecution can proceed. The committee consists of representatives of the Customs Department, the Finance Ministry, and the Office of the National Police, all of which have an interest in the decision on settlement and waiver of prosecution and can provide additional oversight of the settlement process.

In recognition of customs claims settlements being a viable solution for those charged, as well as a cost-effective means for the Customs Department to obtain revenue without prosecution, the department issued order No.10/2554, which provides internal guidelines for settling by fine in return for a waiver of prosecution.

Notably, there are various levels of wrongdoing that may determine whether settlement is viable and involves a waiver of criminal prosecution under the applicable guidelines. For example, misstatements as to quality, which do not affect duty, may be settled under the guidelines with a modest fine in most cases.

More serious criminal charges, such as those for intentional under-declaration of customs duties, are considered on a case-by-case basis, typically requiring substantial settlement in return for waiver of prosecution. However, if the alleged wrongdoing involves violations of non-customs laws, such as a case of forgery, then the Customs Department has no authority to waive prosecution.

The foregoing highlights the settlement options that may be available to parties facing criminal customs inquiries. While opportunities exist that could encourage settlement, end ongoing investigations, and waive prosecution, settlement should not be considered lightly. Once made, settlement is irreversible and could have long-standing financial, legal, and practical implications for those concerned.

For example, a settlement may involve admissions on the part of an accused that could affect future business decisions for the company or individuals accused of wrongdoing. Furthermore, there is the prospect, however slight, that a prior settlement could have some effect on future inquiries and investigations.

It is therefore critically important that a company has in place systems and protocols to respond to customs inquiries. Of equal importance, the company and its counsel should review and assess the legal allegations carefully before making the significant decision on whether to settle claims in return for waivers of prosecution.

In many cases, settlement makes legal and financial sense, but in others settlement may not be in the best interests of the accused.

Download Full Article
Related Professionals

Practices

Dispute Resolution and Litigation

Location

RELATED INSIGHTS​ 

August 20, 2026
Vietnam’s Law on Bankruptcy and Rehabilitation No. 142/2025/QH15, passed by the National Assembly on December 11, 2025, does something many regional counterparts do not yet attempt: it instructs parties and arbitral tribunals on exactly what happens to an arbitration once a debtor becomes insolvent. Together with the Law on Commercial Arbitration No. 54/2010/QH12, the new law improves upon what used to be an uncertain area of practice, now providing an explicit, mandatory sequence of procedures. Suspension and Termination of Arbitration Proceedings Under article 40(2) of the law, once a Vietnamese court accepts a bankruptcy petition, any arbitration that concerns the debtor’s financial obligations must be temporarily suspended as soon as the tribunal receives the court’s notification. If the court subsequently issues a decision commencing bankruptcy proceedings, article 59(2) takes a further step: the suspended arbitration is terminated outright, and the underlying case file is transferred to the court handling the insolvency for resolution. The two provisions work as a sequence: first suspension, then termination and transfer, rather than as independent triggers. Meanwhile, article 60(4) reinforces this effect by vesting the bankruptcy court with exclusive jurisdiction over all claims against the debtor from the date the petition is accepted. Notably, this mechanism operates automatically, without the need for the insolvency court to issue a separate anti-arbitration order. The tribunal simply suspends or terminates the proceeding by operation of law once notified; however, Vietnamese law currently provides no procedure by which a party can apply to the insolvency court for permission to continue the arbitration despite the statutory effect. Practitioners with a Vietnamese counterparty in arbitration should treat notification of a bankruptcy filing as something to flag to the tribunal immediately since continuing to arbitrate a claim that has become subject to article 40(2) or 59(2) risks producing an award vulnerable
Read More
August 20, 2026
Thai law contains no provision that speaks directly to what happens to an arbitration when one of the parties becomes insolvent. The interaction between arbitration and insolvency is derived instead from the general operation of two separately drafted laws: the Bankruptcy Act B.E. 2483 (1940) and the Arbitration Act B.E. 2545 (2002). Because Thai courts have had few opportunities to interpret how these two statutes apply together, the practical answer to many questions, such as who represents an insolvent party in arbitration, whether an award will be enforced, and what happens to a foreign proceeding, depends on inference from general principles of insolvency, arbitration, and procedural law rather than on settled rules. Liquidation and Restructuring The Bankruptcy Act governs both liquidation, which winds up a debtor’s affairs, and restructuring (rehabilitation), which aims to preserve a business. The consequences for arbitration differ accordingly. In liquidation, the debtor’s assets vest in the official receiver, who alone can conduct or continue any arbitration affecting the estate; the debtor loses the authority to act on its own behalf. In restructuring, the plan preparer or administrator takes over that role, but there is more room for the debtor to remain involved, since the objective of rehabilitation is to keep the business operational. Restructuring carries an automatic stay that takes effect once the Bankruptcy Court accepts the restructuring petition. This stay can halt an arbitration regardless of where it is seated. In contrast, liquidation does not work through a stay; instead, the debtor’s loss of authority over its own assets and disputes is what constrains the arbitration. Neither proceeding provides a party a formal route to apply for permission to continue arbitrating—the Bankruptcy Act contains no such mechanism—though in restructuring cases the Bankruptcy Court may allow proceedings to continue where doing so will not prejudice
Read More
August 20, 2026
As part of its membership in Lex Mundi, Tilleke & Gibbins has released the latest edition of its Guide to Doing Business in Thailand, providing an overview of the legal, regulatory, and commercial considerations for companies establishing or expanding operations in Thailand. The 2026 edition offers practical insight into the country’s business environment, investment framework, and operational requirements. The guide covers a wide range of topics relevant to foreign and domestic investors, including: Investment incentives and promotion schemes Financial facilities and banking regulations Exchange controls and money transfers Import and export regulations Business structures and incorporation options Requirements for establishing a business Operational and compliance considerations Business cessation and insolvency procedures Employment and labor laws Taxation Immigration and visa requirements Prepared by Tilleke & Gibbins lawyers across multiple practice areas, the publication outlines key aspects of doing business in Thailand, including foreign investment restrictions, regulatory compliance obligations, corporate structures, employment requirements, and recent legal and economic developments affecting investors. The publication forms part of Lex Mundi’s Country Guides series, a global collection of jurisdiction-specific reference materials prepared by member firms around the world. Together, these guides help companies evaluate opportunities, compare regulatory environments, and plan international business activities across multiple markets. The full Guide to Doing Business in Thailand 2026 is available through the button below.
Read More
August 19, 2026
Arbitration clauses and national court jurisdiction have long existed in a delicate equilibrium, and nowhere is that equilibrium tested more often than in the drafting of multitier dispute resolution clauses. Such clauses—requiring negotiation before arbitration—are ubiquitous in international construction contracts, and they frequently employ permissive vocabulary at the arbitration tier. The formulation “either party may submit the dispute to arbitration” is intended to signal that either side is entitled to initiate proceedings. Yet it is periodically seized upon by claimants who prefer national courts, on the theory that “may” preserves a parallel right to litigate. Each apex-court pronouncement on this question is therefore significant for drafting practice and forum predictability. In 2019, the Thai Supreme Court delivered Thailand’s clearest answer to date (Judgment No. 3427/2562). Reversing an appellate court decision, the Supreme Court held that permissive wording at the point of commencement does not dilute the parties’ antecedent agreement to withdraw their disputes from the courts—doing so in regard to an International Chamber of Commerce (ICC) arbitration clause seated in Singapore, a configuration typical of foreign-invested projects in Thailand. This article examines the court’s reasoning, situates the decision within comparative jurisprudence, and draws out its practical lessons for parties and drafters operating in the Thai market. Background of the Dispute The dispute arose from a subcontract for civil engineering and architectural works concluded on September 25, 2014. Clause 19 of the subcontract governed dispute resolution. Clause 19.1 required the parties, at the request of either, to seek to resolve any dispute “in connection with, arising out of, or relating to” the subcontract through mutual consultation within sixty days of written notice. According to clause 19.2.1, if the dispute could not be resolved within that period, “either party may submit the dispute to arbitration,” to be conducted under the ICC
Read More