In an export-driven economy like Thailand’s, trade disputes can have significant consequences. Effectively managing disputes can preserve business relationships, lower legal costs, and expedite resolution.
Compliance with local labor laws and open communication in the workplace can help minimize legal liability and promote worker morale. When disputes cannot be resolved through mediation or conciliation, parties may file cases in one of Thailand’s labor courts for a more streamlined process.
Legal Framework
The Thai court system offers a range of options for litigating trade disputes. However, going through the courts can be lengthy and costly. Aside from this, bringing a case to court may provide protectionist and enemies of free enterprise a platform on which to attack the plaintiff company.
Prior to resorting to formal legal channels, parties are encouraged to engage in informal negotiation. This can help preserve business relationships, lower legal costs and expedite resolution.
Court-supervised mediation and conciliation are available to parties that wish to resolve their dispute outside of the courtroom. Arbitration is an alternative method of dispute resolution that allows parties to choose their own arbitrator and agree on a binding arbitration award. Arbitration awards are generally enforceable in Thailand if they meet the requirements of the Dispute Resolution Act B.E. 2562 (2019).
Depending on the court’s decision and/or instructions, hearings can be conducted remotely using videoconference technology. Participation at remote hearings must be authorized by the court and is subject to a minimum connection speed requirement. The courts are empowered to impose sanctions for civil contempt, including disobeying orders and directions, upon any party that violates the court’s procedures.
Expert testimony is admissible in most cases, and the court may also appoint an expert for the purposes of evaluating evidence or interpreting laws or international treaties. However, experts are required to have appropriate qualifications and training in the field of their expertise, and must declare any potential conflicts of interest in advance.
Common Causes
Due to Thailand’s heavy reliance on exports and its integration into global supply chains, trade disputes can have serious economic implications. Efficiently managing disputes can help protect business interests, safeguard industries, honor international obligations, and maintain investor confidence in a competitive global economy.
The most common causes of Thai trade disputes include disagreements with Customs over valuation, classification, and duty rates; parallel imports; counterfeit goods; and IP infringements impacting trade flows. Disputes can also arise from breaches of bilateral and multilateral trade agreements, such as the World Trade Organization (WTO) and ASEAN protocols.
A key challenge in resolving trade disputes is finding the right balance between what is legally and politically justifiable, for example, a form of ‘positive discrimination’ to benefit least developed countries. Chanintr Chalisarapong, a representative of the Thai tuna processors, explains that a successful outcome in this case required extensive collaboration between the private sector and government. They held intensive brainstorming sessions and communicated frequently via email to draft a joint submission by the first consultation round.
In addition, effective management of trade disputes is aided by drafting clear contracts that specify governing law and dispute resolution method, maintaining thorough quality and payment records, understanding rules of origin and customs classification under relevant trade agreements, and engaging legal counsel with expertise in complex issues like food safety or intellectual property. Another important challenge is addressing differences in language and legal systems, especially when involving multiple foreign parties.
Alternative Dispute Resolution
The majority of trade disputes in Thailand are settled out of court through informal negotiation, arbitration or mediation. The use of a neutral third party facilitating communication between the disputing parties is popular in Thailand as it allows both sides to maintain a business relationship and avoid the time, cost and hassle of a trial in a Thai court. In fact, many contracts conclude that disputes will be settled through arbitration.
Arbitration in Thailand is regulated by the Arbitration Act B.E. 2545 (2002), which is based on the UNCITRAL model law with local amendments. It is commonly used for international commercial cases in the country, and arbitration agreements may be incorporated into contracts. Arbitration proceedings are usually governed by the laws of Thailand, but can also be conducted under the rules of international arbitration bodies like the ICC or the LCIA.
Unlike arbitration, mediation does not result in a binding decision, but rather helps the disputing parties reach an enforceable compromise agreement. Mediation is a highly effective tool that has been increasingly adopted by courts and private dispute resolution centers in Thailand. Our firm can accompany you through the process to help settle your dispute in a timely manner. For cases that are too complex to settle through mediation, the court can mandate a conciliation hearing before a judge, which will involve closed door sessions with all parties in the case.
Court Litigation
In a country like Thailand that relies on regional and global trade agreements, it’s important to maintain healthy trade relationships. Disputes that escalate into diplomatic tension or long-term disruptions in trade could threaten investor confidence and hamper local businesses’ competitiveness. The good news is that Thailand offers a structured legal and institutional framework to resolve trade disputes. Businesses can mitigate risks by drafting clear contracts, protecting intellectual property and staying updated on regulations.
Aside from formal legal channels, parties in a trade dispute are encouraged to use informal negotiation methods to explore mutually acceptable solutions without resorting to court proceedings. This step can help preserve business relationships, reduce legal costs and expedite resolution. It’s also important to keep proper documentation that can be used as evidence in case of a court ruling.
In some cases, court litigation may be necessary to settle a trade dispute in Thailand. For example, if a party needs immediate protection against infringement or damages, injunctions can be granted by the courts. However, in such instances, courts will only be able to rule on the matter after reviewing all relevant evidence.
Aside from injunctions, arbitration is another option for resolving trade disputes in Thailand. The country is a signatory to the New York Convention, which means that arbitral awards can be enforced in the country. Tilleke & Gibbins has a strong litigation offering that handles a wide variety of cases, from employment to shipping and aviation disputes. The firm also has a strong IP practice that is experienced in handling trademark, copyright and patent disputes.
