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April 28, 2023

Overview of Commercial Litigation in Thailand

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Legal Business

Thailand’s legal system is based on European continental civil law systems, with a three-tier court system. Precedents set by the Thai Supreme Court are merely considered as examples of the application of laws and are not binding on Thai courts.

While the country’s judiciary and dispute resolution mechanisms are well developed, some aspects can be unfamiliar or even surprising to counsel unfamiliar with the Thai court system. This article introduces some of the Thai civil court procedures and practices, and covers several key issues it is important to understand regarding civil litigation in Thailand.

Offers of compromise or settlement

In Thailand, there is no such thing as an ‘offer without prejudice’. Anything put in writing can be used against the offering party. Therefore, compromises, settlements, and offers to compromise or settle should not be made before consulting with legal counsel. Similarly, parties at trial or anticipating litigation should be cautious in all communications with the opposing party.

Location of assets

Before initiating litigation, plaintiffs should investigate the nature and extent of the defendant’s assets in Thailand and abroad. A monetary judgment is of limited value if the defendant has little or no recoverable assets. Therefore, any information a claimant has on the opposing party should be assessed at the beginning of the case or as soon as is reasonably possible.

Language of documents

All documents submitted to a Thai court must be in the Thai language. Foreign documents must be the originals or certified copies, and certain documents also need to be notarised and then authenticated by a Thai consular official.

Court costs

A plaintiff must pay a court filing fee when submitting a case. This is usually 2% of the claim amount but will not exceed THB 200,000 per action for claims of up to THB 50 million. There is an additional 0.1% calculated on the amount of a claim exceeding the THB 50 million threshold. If the suit is successful, some of these advanced court costs are usually recoverable.

Additionally, non-resident plaintiffs may be required to deposit security with the court to insure against a potential award of court costs in favour of the defendant.

Appeals

In civil cases, appeals must be filed within one month of the judgment being read. Extensions may be granted at the court’s discretion if requested and reasonably justified.

At each level, the appealing party must deposit additional court costs of 2% of the judgment amount, with a maximum of THB 200,000 for claims of up to THB 50 million and an extra 0.1% calculated on claim amounts exceeding THB 50 million. The appealing party may also be required to post an additional guarantee to ensure its ability to cover judgment should the appeal be unsuccessful.

The Courts of Appeal and Supreme Court are not trial courts, and generally no new evidence may be introduced after the trial in the lower court is completed. Appeals at all levels are resolved through written pleadings and supporting documentation only. There is no live oral advocacy.

In 2015, Thailand changed its appeal system from a right-based system, which allows any party to appeal against the lower courts to the Supreme Court, to a permission-based system, where a judgment or an appellate court order is final unless an appeal is accepted by the Supreme Court. This change gave the Supreme Court the power to grant permission to file an appeal to the Supreme Court if it deems the question a significant matter worthy of a decision. Under this new discretionary system of review, only a minority of Supreme Court appeals are accepted by the Supreme Court.

Length of trials

Unless settled by compromise, civil litigation typically lasts between 12 and 18 months, counting from the initiation of action until a judgment by the court of first instance. Cases in the Courts of Appeal usually take an additional 18-24 months, with a similar period for appeals to the Supreme Court.

Recognition and enforcement of foreign judgments

Foreign judgments cannot be enforced in Thai courts. Thailand is not a party to any treaty or convention on the recognition and enforcement of foreign judgments. As such, a creditor must bring a new lawsuit to the relevant Thai court to obtain satisfaction. This means that a foreign judgment creditor must file a court case against a Thai debtor in Thailand and submit the foreign court’s judgment as evidence. The Supreme Court has ruled that for a foreign judgment to be admitted as evidence, it must be a final, dispositive order.

Arbitration and alternative dispute resolution

Deciding whether to litigate or seek alternative dispute resolution is commonly an anticipatory decision made by the parties to a contract before a dispute exists. Parties either specifically elect mediation or arbitration uniquely tailored to their needs or leave the matter of dispute resolution to the responsible court.

Some key reasons for choosing arbitration over court litigation are flexibility and the ability to tailor how a party’s dispute would be resolved by selecting the arbitration rules and institute, the venue, and the number of arbitrators. Administrative costs and arbitrator fees are pretty reasonable at local institutes and may help decrease the overall cost of dispute resolution in Thailand.

Thailand has three arbitration institutes: the Thai Arbitration Institute of the Office of the Judiciary, the Thai Commercial Arbitration Institute of the Board of Trade, and the Thailand Arbitration Center under the Ministry of Justice.

Enforcement of foreign arbitral awards

In general, foreign arbitral awards are recognised in Thailand if they fall within the recognition of treaties, conventions, and international agreements to which Thailand is a party – and only to the extent that Thailand is committed to be bound by them. Thailand is a party to both the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927. Awards brought under the auspices of the former are easier to enforce than under the latter. Foreign arbitral awards can be executed in Thailand without having to be relitigated, although enforcement does require the filing of an enforcement claim with the Thai court of jurisdiction for execution against a debtor’s assets.

 

This article was originally published in Disputes Yearbook 2023, a publication from The Legal 500’s Legal Business magazine.

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