In-Court Arbitration in Thailand: A Tool Worth Exploring?

In-court arbitration is an alternative dispute resolution (ADR) tool provided in the Civil Procedure Code (CPC) for cases that have already been submitted to the court. Historically, in-court arbitration has not been a popular method of resolving disputes. Instead, out-of-court arbitration, as prescribed by the Thai Arbitration Act B.E. 2545 (2002), is far more utilized in practice.

The popularity of out-of-court arbitration is demonstrated by the fact that presentations on arbitration in Thailand almost exclusively focus on out-of-court arbitration; in-court arbitration is rarely even a topic of discussion. This situation is partly because in-court arbitration has not been encouraged by the courts in the past. Further, it is also not common for parties to agree on arbitration clauses after a dispute arises and also after it has been submitted to the court. Instead, arbitration clauses are generally discussed and crafted during the negotiation of the contract, which will most likely provide that any dispute arising out of the contract is to be resolved by out-of-court arbitration. Nonetheless, the Thai Courts of Justice have recently started to support this in-court ADR tool as a viable option and to encourage parties to agree in-court arbitration clauses before proceeding with a case through trial.

This article is not meant to assess whether in-court arbitration is preferable to either out-of-court arbitration or to having the case heard by professional judges of the Courts of Justice. Instead, the purpose of this article is to discuss certain key provisions of the CPC that parties should carefully consider before agreeing to an in-court arbitration clause. On this point, the CPC specifically states that out-of-court arbitration is prescribed by arbitration law, the Arbitration Act, which is an entirely separate piece of legislation drafted specifically to apply to out-of-court arbitration. In contrast, in-court arbitration is completely regulated by the CPC, not the Arbitration Act. At most, for in-court arbitration, the Arbitration Act could only be used to assist with the interpretation of the CPC provisions regarding the in-court proceedings. But even this narrow use would most likely be limited.

As discussed, in more detail below, there are two primary issues of which a party considering in-court arbitration should be aware: (1) The award from the in-court arbitration proceedings will be a part of the Thai court’s judgment; and (2) The court will play a greater role with respect to the issues or cases that are handled by in-court arbitration than the court would play in an out-of-court arbitration. One effect of this is that the freedom of the parties to tailor the in-court arbitration process is more limited than it would be with out-of-court arbitration.

1. Section 218 of the CPC provides that an award rendered by an in-court arbitrator is an award to be decided by the court and is considered as part of the court’s judgment. Before rendering judgment, the court will review the award and decide whether to render its judgment in accordance with that award. If the award contains content that is contrary to the law, the court has the discretion to not to render a judgment according to the award. The court also has the discretion to have the arbitrator or the parties to the case revise or edit the award. Furthermore, in-court arbitration could be chosen for the entire case, or only for certain issues of the case and have the remaining issues of the case determined by judges. Regardless of whether in-court arbitration applies to the entire case or only to certain issues, the case remains categorized as a case that is litigated before the court. Regardless of whether the court decides to issue a judgment in accordance with the award or whether it exercises its discretion not to, the parties are generally barred from appealing this decision, except for the limited circumstances provided in section 222 of the CPC, which include allegations that the arbitrators did not act in good faith, that either party committed fraud, that such order or judgment is against public order or that the judgment is not compliance with the award. Finally, when the in-court arbitration award is rendered as a judgment of the court, it is not considered an “award” as provided in the Arbitration Act. Further, it is arguably not enforceable under the New York Convention.
2. With in-court arbitration, the court remains closely involved in the arbitration process although the arbitrator is primarily responsible for the issues assigned to him/her. Under the CPC, the parties are specifically allowed to agree on only four main issues with respect to the proceedings: (1) the arbitration clause; (2) the number of arbitrators and their voting rights in rendering the award; (3) arbitrators’ fees; and (4) the termination or end of the arbitration proceedings due to the failure to appoint arbitrators. Aside from these four issues specifically set out in the CPC, it is unclear whether a court would allow the parties to agree on other aspects of the in-court arbitration proceedings and to what extent. This area has yet to be explored. In contrast, under the Arbitration Act, the parties in out-of-court arbitration proceedings have a great deal of flexibility in tailoring the proceedings to their preferences. The CPC does not mention anything with respect to in-court arbitration proceedings as ad hoc arbitration or through an institution of choice. Neither does it stipulate any qualifications of arbitrators. However, it does allow the court to order the parties to choose a different arbitrator if it does not agree with their choice. If the parties do not nominate a new arbitrator, the court may appoint one as it sees fit. Further, the grounds for objecting to an arbitrator are limited under the CPC, which refers to the list of grounds for challenges to judges under section 11 of the CPC. This list of potential grounds is narrower than those provided under the Arbitration Act for challenging arbitrators in out-of-court proceedings.

In conclusion, in-court arbitration provides parties with the opportunity to have their case litigated in court (as opposed to having the whole proceedings take place outside of the court system) but have a person other than the judge decide on some or all of the issues in the case. Parties to in-court arbitration proceedings can expect to see greater involvement from the court than they would see from an arbitrator in out-of-court proceedings, as the parties lack the independence to agree on matters such as arbitration institution, place of the proceedings, flexibility of the proceedings, or inclusion of additional grounds to object to an arbitrator. The parties should also consider that as the award is rendered as part of the court’s judgment, the award therefore may not be enforced in other countries.

By Tilleke & Gibbins, Thailand, a Transatlantic Law International affiliated firm. 

For further information or for any assistance please contact thailand@transatlanticlaw.com

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