Thailand is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. As a result, Thailand is obligated to recognize foreign arbitration agreements and will enforce foreign arbitration awards pursuant to the Convention. Thailand’s current (2002) Arbitration Act closely mirrors the 1985 version of the United Nations’ model law (commonly known as “UNCITRAL”). The Act implements Thailand’s obligations under the Convention, and governs both international and domestic arbitrations conducted in Thailand.
Accordingly, contractual parties in Thailand may choose to resolve any dispute arising from or connected to their contract through arbitration rather than the Thai courts. There are several reasons why parties may be well advised to do so:
- If one or more of the parties are not Thai, arbitration provides a neutral forum for resolving the dispute.
- The parties can decide how the dispute will be resolved — by what rules and procedures, by whom, where, how soon, and in what language documents will be submitted and proceedings conducted — giving them comfort, efficiency, and control over costs.
- Perhaps most importantly, once an award is obtained, the prevailing party may seek enforcement against the assets of the non-prevailing party in any of the (currently 149) countries that have signed the New York Convention.
The ever-growing significance of arbitration in international commerce is undeniable. While many of Thailand’s neighbors have clearly recognized this — Singapore, Hong Kong, and Malaysia have all taken steps to promote arbitration and benefited from doing so, and one of the first actions of the newly “open” Myanmar’s Parliament was to ratify the New York Convention, almost certainly to encourage foreign investment — the same cannot quite be said of Thailand yet.
Several issues still need to be addressed before Thailand can be considered a truly “pro-arbitration” jurisdiction. These include immigration and labor restrictions on arbitrators and parties’ counsel; sections of the Arbitration Act not present in the UNCITRAL model law, which allow for appeals of recognition and enforcement rulings and impose enhanced liabilities on arbitrators; and a general lack of understanding within Thailand’s legal community of what arbitration is and why it matters. These issues genuinely need addressing — but we’re confident they can and will be, as Thailand continues its progression from a developing to a fully developed jurisdiction.