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​ 

April 29, 2026
Is arbitration only as good as the arbitrator? Undoubtedly. Choosing an arbitrator is therefore one of the most pivotal decisions a party makes in the arbitration proceedings. In practice in Vietnam, many arbitration proceedings have been significantly prolonged because of multiple unsuccessful appointments arising from conflicts of interest, challenges by the opposing party, or subsequent unavailability. In other cases, additional expenses were incurred where appointed arbitrators were located far from the hearing venue or were unfamiliar with the arbitration language or applicable law. To preempt these issues and secure a more efficient and cost-effective appointment, this article proposes a practical, step-by-step approach to arbitrator selection. Step 1: Know Your Own Case At the outset, it is essential to develop a clear understanding of the dispute by addressing the following key considerations: Nature of the dispute: From which sector does it arise (e.g., construction, international trade, investment, banking and finance, technology, intellectual property)? Value and complexity: Is the dispute high or low in value? Does it involve multiple parties, multiple legal systems, or foreign elements? Is its crux related to multiple legal matters? Existing arbitration agreement: Does the agreement specify the seat, language, and governing law? If not, what would be appropriate considering the parties’ conduct and the applicable arbitration rules? Having clear answers to these questions in mind will help identify, from the outset, the core criteria for selecting an appropriate arbitrator. Step 2: Form Your Candidate Pool Based on the understanding developed in Step 1, a candidate pool should be formed through a structured and careful process: Researching Arbitrator Profiles At the initial stage, comprehensive research should be conducted via reliable sources to ensure both accuracy and diversity of candidates. Official sources, such as lists of arbitrators published by arbitral institutions, most notably the Vietnam International Arbitration Centre
Read More
March 13, 2026
For decades, intellectual property rights holders seeking to eliminate counterfeit goods from the Thai market have relied primarily on criminal raid actions to seize infringing products and hold infringers accountable. The deterrent value of this approach is typically threefold: imposing criminal liability on infringers, removing counterfeit goods from circulation, and subjecting violators to imprisonment and fines. However, these outcomes often fall short of fulfilling brand owners’ broader objectives. In many cases, those prosecuted are merely staff or intermediaries rather than the principals orchestrating the infringing operations. Moreover, any fines imposed are remitted to the Thai government—not to the rights holders who have suffered commercial harm and invested substantial resources in investigation and coordination with law enforcement authorities. As in other jurisdictions worldwide, rights holders seeking monetary compensation for IP infringement in Thailand have traditionally pursued separate civil litigation. Before initiating such proceedings, a brand owner must gather sufficient evidence to establish both the infringement and the resulting damages. Notably, Thai law does not recognize punitive damages; courts award only actual damages proven by the claimant. In the absence of seized infringing goods, the damages awarded in such cases are typically minimal. This all leaves rights holders with limited recourse despite possibly having suffered significant commercial injury. In 2005, Thailand amended its Criminal Procedure Code to introduce Section 44/1, which enables rights holders to claim damages within criminal proceedings at the Intellectual Property and International Trade Court prior to the evidentiary hearing. In practice, this mechanism allows an injured party to submit a petition for civil damages directly within the criminal case initiated by the public prosecutor. Historically, rights holders in Thailand have been reluctant to use Section 44/1 because the compensation awarded by courts was often insufficient to justify the effort. However, recent years have seen a notable shift
Read More
March 9, 2026
Over the past several years, numerous automobile manufacturers have brought electric vehicles (EVs) to the market and received positive feedback from consumers in Thailand and around the world. EVs have gained popularity due to their lower maintenance costs, reduced energy expenses, and environmental benefits. However, reports have emerged of EVs causing problems such as battery fires, autopilot malfunctions leading to accidents, and safety systems such as brakes engaging automatically under inappropriate conditions. Even when these situations do not cause injury to drivers or passengers, they raise significant concerns for EV manufacturers, importers, and sellers operating in Thailand. These problems may seriously impact businesses if the products are identified as unsafe under Thailand’s Product Liability Act (PLA), officially known as the Liability for Damages Arising from Unsafe Products Act. Under this law, authorities or courts can order business operators to recall products from the market or prohibit their export, import, or sale. To manage and mitigate the risk of being found liable for damages due to an unsafe product under the PLA, EV business operators should be aware of the scope of the law. Potentially Liable Parties The PLA identifies several types of entrepreneurs and business operators—both individuals and entities—as “potentially liable parties” (PLPs) who may be held liable under the law. In the EV context, this could include vehicle manufacturers, battery suppliers, software developers whose systems are integrated into the vehicle, and local importers or distributors. Specifically, the PLA covers: Manufacturers or hirers Importers Sellers of goods for which the manufacturer, hirer, or importer cannot be identified Any other party who uses the name, trade name, trademark, or statements associated with the alleged unsafe products, or acts in a manner that causes them to be perceived as a manufacturer, hirer, or importer Definition of “Product” and “Unsafe Product” The
Read More
March 5, 2026
Amid increasing financial globalization, Vietnam’s establishment of an International Financial Center (IFC) represents a strategic initiative to attract high-quality foreign investment and enhance the country’s position in the global financial system. In support of this objective, a Specialized Court was introduced under Resolution No. 222/2025/QH15 as a dedicated dispute resolution mechanism within the IFC framework. The Specialized Court at the IFC was subsequently operationalized by Law on the Specialized Court No. 150/2025/QH15, effective from January 1, 2026. Organizational Structure of the Specialized Court The Specialized Court at the IFC is a court within the system of the People’s Courts, organized and operating in accordance with the Law on the Specialized Court, and vested with jurisdiction to adjudicate and resolve cases at the IFC. The Specialized Court is located in Ho Chi Minh City and comprises (i) a Court of First Instance; (ii) a Court of Appeal, and (iii) a supporting apparatus. Jurisdiction of the Specialized Court The jurisdiction of the Specialized Court at the IFC is strictly defined based on both (i) the subject matter of the cases and (ii) the membership status of the parties involved. Specifically, the Specialized Court has jurisdiction over (except for cases involving public interests or the interests of the state) the following: Disputes arising from investment and business activities. Requests for recognition and enforcement in Vietnam of judgments and decisions of foreign courts and foreign arbitral awards. Requests related to dispute resolution by arbitration. Other disputes directly related to investment and business activities (to be specified by the Supreme People’s Court). Additionally, at least one party in the case must be a member of the IFC. The IFC’s membership status is established through registration, recognition as a member, or the grant of a license for establishment and operation within the IFC. In the
Read More