Snapshot of bringing complex commercial claims in Thailand
Bringing a claim – initial considerations
Key issues to consider
What key issues should a party consider before bringing a claim?
Litigation in Thai courts can be lengthy and costly. For a foreign investor this is largely due to the fact that generally all documents and testimony must be translated into Thai, and even though the hearing dates are scheduled to be successive, they are often not completed within the time scheduled and postponed for weeks or months. Civil trials rarely take less than two years to complete from filing to judgment, often longer. Completing the appellate process often takes five to 10 years. Arbitration is an advisable alternative for foreign investors in Thailand. Thailand is a signatory to the New York Convention and its Arbitration Act is based on the 1985 version of the UNCITRAL Model Law.
Establishing jurisdiction
How is jurisdiction established?
Any general civil action may be filed in Civil Court as long as it is submitted to the court where the cause of action arose or where the plaintiff is domiciled. However, where the case concerns immovable property, the plaintiff must bring the case to the court where such property is situated or where the defendant is domiciled. But if the case concerns certain subject matters (ie, tax, bankruptcy or labour) it must be submitted to the relevant specialised court with exclusive jurisdiction over that subject matter (eg, the Tax Court for a tax matter).
Preclusion
Res judicata: is preclusion applicable, and if so how?
Res judicata is available under Thai law. It prevents a claim from being relitigated when a court of competent jurisdiction has entered a final judgment on the merits on the same claim in a prior action between the same parties. Exceptions to this are when:
proceedings are filed for the execution of a prior judgment or order;
a judgment or order has prescribed provisional measures that are subject to alteration or repeal; or
a complaint or order is dismissed ‘without prejudice’ debarring the plaintiff’s right to refile.
Applicability of foreign laws
In what circumstances will the courts apply foreign laws to determine issues being litigated before them?
Thai courts will apply foreign law if the parties’ choice of law provisions state so.
Where the substantive law has not been established by the parties in cross border situations, the application of foreign law is regulated in the Conflict of Laws Act, which outlines what law applies to a dispute in such cases. Nevertheless, Thai courts only apply foreign law when they consider that doing so would not be contrary to the public order or good morals of Thailand.
Initial steps
What initial steps should a claimant consider to ensure that any eventual judgment is satisfied? Can a defendant take steps to make themselves ‘judgment proof’?
The initial steps the claimant can take are as follows:
file a request to the court to request for protective measures, eg:
to seize all or some of the property in dispute or the defendant’s other property, including any money or property payable to the defendant by a third party;
for a temporary injunction restraining the defendant from damaging, transferring, incumbering any property or right that might inhibit the plaintiff’s recovery;
an order directing any relevant authority to cancel or modify any registration appertaining to the defendant’s property; or
provisional arrest and detention of the defendant.
Inspect the defendant’s assets before filing the case. An inspection of assets of a juristic person can be done by a review of its yearly financial statement which is a public document and easy to obtain, however, an inspection of assets of a natural person is rather difficult as third parties such as banks or government offices often deny such request absent a court order or judgment.
It is a criminal offence if a defendant unfaithfully takes steps to make themselves ‘judgment proof’ (eg, by removing, concealing or transferring his or her assets to other parties by knowing that the claimant has filed a case to the court or is going to file a case to the court).
Freezing assets
When is it appropriate for a claimant to consider obtaining an order freezing a defendant’s assets? What are the preconditions and other considerations?
An order freezing a defendant’s assets can be obtained by filing an ex parte application to the court together with the complaint or at any time before judgment. For the court to grant such order, the claimant must satisfy the court that:
there are sufficient reasons to believe that the defendant has intention to transfer, sell, or remove the assets in order to delay or obstruct future execution; and
the case has a reasonable chance of success.
Pre-action conduct requirements
Are there requirements for pre-action conduct and what are the consequences of non-compliance?
For most cases, there are no pre-action requirements. However, there are some cases that require a person to take certain actions, which generally involve various notification formalities, before commencing civil proceedings (eg, a rescission of contract; suretyship enforcement; mortgage enforcement; and pledge enforcement) failing which will result in different consequences. In practice, a notice is usually sent to the opposing party to demand a performance under the contract or to request alternative dispute resolution mechanisms before bringing the case to the court.
Other interim relief
What other forms of interim relief can be sought?
Apart from the protective measures over the defendant’s assets explained above, the parties can also seek an interim of relief by applying to the court for an order prescribing measures to protect the applicant’s interest during the trial or to secure the execution of judgment, such as depositing property or money in dispute with the court or the third party or appointing an administrator of the business in dispute. The defendant can also seek an interim relief in a form of security for costs.
Alternative dispute resolution
Does the court require or expect parties to engage in ADR at the pre-action stage or later in the case? What are the consequences of failing to engage in ADR at these stages?
Thai courts generally encourage ADR at the preliminary stages of an action (and often throughout the case before the judgment as well), but the parties are not obliged to participate. And, there are no consequences for failing or refusing to engage in such ADR. That said, recent changes to the Civil Procedure Code outline a more formal ADR option for the parties to consider which involves their entering into a formal mediation at the beginning of a civil proceeding. In such case, upon request of one party and acceptance of the other party, the court will appoint a mediator for the matter. Upon settlement, if any, the parties can request the court to issue a corresponding settlement judgment, which can only be appealed for limited reasons. If the parties cannot settle during the mediation process, the prescription period that was halted during the mediation process will be extended by 60 days from the completion of the mediation process.
Claims against natural persons versus corporations
Are there different considerations for claims against natural persons as opposed to corporations?
The difficulties between assessing natural persons’ assets and corporations’ assets are significantly different and should be considered before bringing a claim. Assessing a corporation’s assets is easier since these are subject to public records whereas assessing a natural person’s assets can be more complicated.
Class actions
Are any of the considerations different for class actions, multiparty or group litigations?
Multiparty litigation is common in Thailand and can be established by initial joinder of parties or, subsequently, brought by or against any natural or juristic person who is not already a party to the proceedings. Class actions are relatively new to Thailand and came into effect on 4 December 2015. As with the class actions in other jurisdictions, particularly in the United States on which Thailand’s version is modelled, a plaintiff party may seek certification of a class by the court. If the court finds, among other things, that there is indeed an identifiable and definable plaintiff class, that the plaintiff seeking certification is an adequate representative of such class, and that the potential class representative’s legal counsel can effectively and fairly represent the class, it will certify the class. An important distinction between multiparty or group litigation and class actions in Thailand is with regard to case funding, specifically with regard to payment of legal fees and expenses. Actual, legal fees and expenses are not awarded in normal, including multiparty or group, civil actions. However, in the event that a class is successful, the court will determine the amount of the class’ actual legal fees and expenses, which may be up to an amount equal to 30 per cent of the monetary judgment awarded to the class, to be paid by the defendant.
Third-party funding
What restrictions are there on third parties funding the costs of the litigation or agreeing to pay adverse costs?
Third-party funding or agreeing to pay adverse costs is not disallowed by law. However, it is unclear whether or not Thai courts would find a third-party funding arrangement from a disinterested third party associated with litigation of another person in exchange for certain benefits from the litigation, as contrary to public policy or not.
Contingency fee arrangements
Can lawyers act on a contingency fee basis? What options are available? What issues should be considered before entering into an arrangement of this nature?
In the past, the Lawyer Act explicitly prohibited lawyers from acting on a contingency fee basis. Although the current Lawyer Act no longer prohibits such, to prevent lawyers from having direct interest with the result of the case many court judgments have voided the contingency fee based on the reason that it was unethical and contrary to public order and good morals.
Law stated date
Correct on
Give the date on which the information above is accurate.
7 August 2020.
Source: https://www.lexology.com/library/
