Alternative Dispute Resolution, commonly referred to as ADR, refers to measures to help settle disputes outside the classical judicial system, i.e., without going to the courts in Thailand.
Mediation and arbitration are the most common forms of alternative dispute resolution, while conciliation is another dispute resolution procedure that is also practiced in Thailand.
Thailand is one of the countries which enforce alternative dispute resolution as a form of dispute resolution.
Alternative dispute resolution (ADR) includes informal mediation processes, informal tribunals, formal tribunals, and formal mediation proceedings. The traditional tribunal types of alternative dispute resolutions involve arbitration, whether it is binding or non-binding, and private judges, who can either be sitting alone or over summary jury trials.
Alternative Dispute Resolution continues to play an increasingly important role in Thailand. It just might offer a faster and more predictable resolution than the local state courts. There is special legislation regarding alternative dispute resolution in Thailand, e.g., the Arbitration Act B.E.2530 (1987), the Arbitration Rules of Arbitration Institute, Ministry of Justice Conciliation Rules of Arbitration Institute, The Court of Justice Regulations Pertaining to Mediation of Financial Dispute of B.E. 2544 (2001), The Court of Justice Regulations Pertaining to Mediation of B.E. 2544 (2001).
Generally speaking, Alternative Dispute Resolution is very attractive for a couple of reasons:
Mediation, roughly speaking, is a way to resolve disputes between disputing parties by negotiation and coming to a mutual agreement. Mediation can be attempted in almost all cases.
In the Alternative Dispute Resolution Office, the Thai Mediation Center is responsible for conducting and coordinating both court-annexed and out-of-court mediation and offering the public legal advice on conciliation and mediation. The Alternative Dispute Resolution Office further develops the methods, systems, and standards for mediation. According to the Thai Mediation Center, Thailand's mediation system is designed to ensure satisfactory settlements where no parties are ultimately deemed winners or losers. Mediation results in harmony as people proactively participate in the process of dispute settlement. Mediation also saves the court system a lot of time and money by reducing its workload.
In an out-of-court mediation, the disputing parties agree on a neutral mediator that will settle the dispute. The involved parties can either designate an agreed-upon mediator or make use of a mediator from the services of the Thai Mediation Center. When parties agree on an acceptable solution during the mediation, they can decide between entering into an enforceable, binding compromise agreement or withdrawing the dispute case from the court.
Parties can still choose to enter mediation even if a dispute made it to trial. Then, the mediation would occur without the involvement of the court, which would classify the case as an out-of-court mediation without being bound to the rule of the Civil Procedure Code. Mediation cases are always confidential, and both the parties and the mediator are prohibited from divulging any information about the case, nor evidence or facts presented in court unless the parties have an agreement allowing them to do so. Mediation can only be discontinued if one of the parties withdraws, if a mediator fails to meet the deadline, if the mediator concludes that the mediation proceedings won't resolve the dispute, or if the parties request court judgment.
Many local and international disputes can be settled by means of out-of-court mediation, including commercial and civil disputes that involve financial issues, transportation, construction, compoundable criminal disputes, and international trade. Any mediation that proceeds at the Thai Mediation Center adheres to the rules of the Judiciary Out-of-Court Mediation. A standard out-of-court mediation occurs as follows:
Mediation serves as a less formal alternative to traditional litigation. The mediators are adequately trained to conduct negotiations and bring the parties to a common ground where an agreement or settlement can be reached. Mediation is not a binding agreement, but it is rather used in a wide range of cases, such as federal government negotiations with various nationalities. Mediation is also commonly used in resolving disputes between stock brokers and investors.
In arbitration, a dispute will be decided by an arbitrator or arbitral body agreed upon by the parties. The costs for an arbitration agreement consisting of an arbitration clause might be considerable, but arbitration can still be highly advisable, at least for corporate parties.
In Thailand, out-of-court arbitration is regulated by the Arbitration Act. The Arbitration Act has been redrafted to include a more comprehensive scope of issues and is based on the UNCITRAL Model Law on International Commercial Arbitration. The Act consists of key principles in conjunction with Thai-specific additions. The Arbitration Act dictates that an arbitration agreement can be found in a contract or a separately drafted agreement.
The parties decide on the number of arbitrators, but the total number of arbitrators is required to be an odd number. Furthermore, the parties decide on the venue where the arbitration process would occur and the language that will be spoken. A court system that will be competent to handle arbitration may be a court that has jurisdiction over the domiciles of the disputing parties, jurisdiction over the venue of the arbitration, jurisdiction to settle an arbitral dispute, or the International Trade Court and Central Intellectual Property.
The timeframe of settling disputes by means of arbitration is not confined to regulations, and the arbitrator and disputing parties determine the scheduling of when various phases of the arbitration occur. Out-of-court arbitrations generally take one year on average before conflict resolution is achieved. The fee payable by the arbitrator for a dispute settlement involving less than THB 2 million is THB 30 000. Any amount higher than THB 2 million involves percentages and fixed prices based on the disputed amount. Arbitration proceedings and an arbitral award are entirely confidential and may not be declared publicly.
Resolving disputes through arbitration can occur in two forms: ad hoc arbitration and institutional arbitration. The primary difference between these two forms is the manner in which the proceedings are managed. When parties agree to proceed with an ad hoc arbitration, the dispute will be managed entirely by the disputing parties and the arbitrator of their choosing. There will then be no involvement of an arbitral institution. The primary benefit of this form of arbitration is the lowered costs. The disputing parties have the freedom to negotiate with the designated arbitrator regarding the fees involved, and the fees generally associated with distributing documents or scheduled hearings are absent. Moreover, the management flexibility associated with an ad hov arbitration agreement is highly beneficial to both parties.
Conversely, the disputing parties who participate in an institutional arbitration are required to adhere to all the regulations and processes of the arbitral institution, which inevitably increases the costs and extends the period of the overall proceedings.
Ad hoc arbitration being the less formal option, the disputing parties have more control and influence in the organization and proceedings of the arbitration. Proceeding in this manner saves time and offers more opportunities in order to achieve a judicial settlement because the parties may be more willing to participate in negotiation when institutional regulations and rules don't bind them.
However, one flaw of ad hoc arbitration involves the potential that one party may abuse their control and refuse participation in the process, resulting in a failed arbitration. An institutional arbitration does not allow this to happen as all proceedings are supervised.
In Thailand, the primary out-of-court arbitration service is the Thai Arbitration Institute in the Alternative Dispute Resolution Office, which handles both international and local disputes.
Any arbitration proceedings at the Thai Arbitration Institute adhere to the Arbitration Rules, where a standard arbitration would proceed as follows:
Currently, a significant number of disputes have been resolved successfully in Thailand by means of arbitration and will continue to do so. The viability of an arbitration clause in a contract is ensured by the Arbitration Act and therefore makes arbitration an extremely effective manner of alternative dispute resolution in Thailand.
Another method of alternative dispute resolution is conciliation. The process of conciliation is similar to mediation. However, in mediation, the mediator is a neutral third party, while in conciliation, the conciliator is an active party. The main point of conciliation is to make both parties realize what they want to achieve and how they would like to conclude the dispute in a fair and timely manner. Section 22 of the Thai Labor Protection Law outlines and states the procedure of conciliation.
Some lawyers at Juslaws & Consult specialize in Arbitration, and others are skilful mediators. We believe that in the future Alternative Dispute Resolution will become an even more important alternative to state courts in Thailand. We have much expertise in drafting Alternative Dispute Resolution related contract clauses, and we can help you to decide if this is the appropriate dispute resolution mechanism for your case. Please feel free to contact Juslaws & Consult for more information.