Article: ICC Says Thailand Needs To Think Seriously About Arbitration Legislation

Here’s the piece in Thailand’s,

THE International Chamber of Commerce (ICC) said an arbitration law will be needed to facilitate a settlement between Thai and foreign companies, as it can increase foreign investor confidence while serving as a good preparation for the upcoming Asean Economic Community (AEC) next year.

ICC chairman Kasemsit Pathomsak said the international arbitration law is important for international trade, as it is a mechanism that can promote trade by having a third party settle any dispute between foreign and Thai companies.

“We are pushing for the arbitration law and we have been talking to government agencies such as the Justice Ministry and the department of execution, which hopefully would have to expedite the award, while in the past it was a directive by the government themselves. The government knew exactly what needed to be done but it was not on top of the priority list because of political influence but I think they would be more objective now,” he said.

“We are becoming a part of the international community and this is a prerequisite to do international business. With the launch of the AEC in 2015, it has now become more important than ever before because without an effective dispute resolution mechanism, how can investors invest in Thailand?” he added.

Vanina Sucharitkul, a court member of ICC’s International Court of Arbitration, explained that in international contracts the parties are usually from different countries. What you would like to avoid is go to a court in a foreign country. But with arbitration, companies can have a neutral forum of arbitrators to decide a dispute while the best part is that companies can take this decision and enforce it against assets in any country that is a member of the New York Convention, which now has more than a hundred countries.

Key instrument

The New York Arbitration Convention is a convention on the Recognition and Enforcement of Foreign Arbitral Awards, which is one of the key instruments in international arbitration.

Vanina explained further that another benefit of arbitration is it is more confidential because parties in a dispute would have more control over the process by being able to decide how the procedure should go, how many documents they want to exchange, who would be the arbitrators. For instance, if a case is complex, involving a technical construction dispute, the parties can decide not to have a judge and instead have an engineer decide the case.

She said the current barrier to an international arbitration law tends to be with government contracts. In Thailand, a lot of foreign investors are contracting with the Thai government such as infrastructure projects, which comprises a big part of foreign investments. In 2004, after the government lost in a dispute case, the cabinet passed a resolution forbidding arbitration clauses in certain administrative contracts and in 2009, this was extended to forbid the inclusion of arbitration clauses in all government contracts.

“Foreign investors can be reluctant to invest in Thailand because of what is seen as government policy and although cabinet resolution is not strictly law, they reflect on the government policy, which can be seen as hostile to arbitration,” she concluded.