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February 27, 2018

Thailand Certifies First Class Action

In what is thought to be the first order certifying a class under Thailand’s recently enacted class action legislation, the Act to Amend the Civil Procedure Code (Number 26) B.E. 2558 (the “Act”), the Civil Court in Bangkok has issued an order in case Black No.SorWor.4/2560 against Wax Garbage Recycle Center Co., Ltd. and others, granting the lead plaintiffs’ request for the case to proceed as a class action.

The case was brought against an industrial waste recycling operator in Ratchaburi province, claiming personal injury, property damage, and agricultural business interruption losses arising from alleged environmental breaches. Three lead plaintiffs claimed to represent a class of a village containing over 100 households, represented by Mr. Somchai Armeen, president of the Legal Right and Environmental Protection Association (LEPA).

In its order, the court did not give any detailed consideration to the five tests for certification set down in Section 222/12 of the Amended Code, but in a reference to the language of that section, made a broad finding that it was satisfied that if the proceeding was to be undertaken as an ordinary case it would cause an inconvenience, and that the background and experience of the three lead plaintiffs and their lawyer were sufficient to adequately and fairly protect the rights of the group.

The order certifying the class defines group members briefly as “persons having domicile and occupation in the area […] during the period of 2001 to 2017,” potentially giving rise to a large class of members as well as disputes over interpretation.

The certification order was not appealed by the defendants and has now become final. The court must now make a public announcement of the order, which must be published for three consecutive days in daily newspapers and other media, and which must contain a summary of the complaint, details of the certification order and the definition of the class, information on the rights of class members, and a specified period of not less than 45 days for class members to opt out. The case will then proceed to trial on liability and quantum in accordance with the case management procedures set down in the Act.

Background and Comment

The Act came into effect in December 2015. Modelled primarily on the U.S. class action regime, the Act amended the Thai Civil Procedure Code to implement a fully-fledged opt-out class action procedure for the first time in Thailand.

Significantly, unlike some other jurisdictions which have implemented class action or collective redress regimes in recent years, the Act does not limit the application of the procedure to certain narrow fields of law, or require the involvement of consumer protection agencies or other representative bodies to initiate proceedings. The mechanism is available to any lead plaintiff and their attorney for a wide range of claims for legal redress, which may be based on general tort or breach of contract principles, or other laws including those relating to environmental protection, consumer protection, labor, securities and stock exchange, and trade competition. The Act is therefore of potentially very broad application.

The Act has been somewhat slow to take off, but other actions currently pending certification include a similar claim for environmental damages against the Australian operators of a gold mine in central Thailand, (also the subject of a bilateral investment treaty arbitration with the Thai Government), a claim for false advertising on behalf of potentially 500,000 purchasers of imported frying pans, and a class action suit against Ford Motor Company that was apparently closely modelled on similar proceedings in Australia.

The court’s apparently broad-brush approach to applying the certification test in this case may now well encourage further suits to be filed. However, the real test of whether Thailand’s nascent class actions industry will take off will come when the courts’ approach to costs awards becomes known. The Act empowers the courts to make an award of costs to successful plaintiffs’ attorneys of up to 30 percent of the damages awarded, which are to be paid by defendants in addition to damages, rather than deducted from class members’ compensation. If the courts show a willingness to make costs awards at or near these levels, Thailand may very well follow in the steps of the United States and Australia to become the Asia Pacific’s leading consumer litigation destination. In the meantime the risks are escalating and international operators and their insurers should continue to monitor the situation.

Related Professionals
Aaron Le Marquer
Partner and Deputy Director, Dispute Resolution