Big advantages to arbitration

Arbitration offers a variety of important advantages when compared with conventional local court proceedings in Thailand.

Monday 9 April 2012, 12:33PM

Resolving business disputes quickly and with finality is an advantage to the business community. Conventional court proceedings are not known for providing speed or finality, especially in Thailand.

The fixed time frame to achieve an award outlined by the various arbitration service providers is one of the most important advantages of arbitration.

Also, unlike conventional court rulings, arbitration awards cannot be challenged on the “material part” of the case. In other words, the award cannot be appealed on the basis of its determination on factual or legal issues.

For example, in Thailand, the court that will need to enforce an arbitration award, whether it is an award in an international or domestic arbitration proceeding, is allowed to set aside the ruling only in the following, very limited, circumstances, outlined in Section 40 of the Arbitration Act (2002) – “the Act” for short:

A party to the arbitration agreement was under some legal incapacity.
The arbitration agreement is not binding under the governing law agreed to by the parties, or in the absence of such an agreement, under the laws of Thailand.
The person applying for the award to be set aside was not given proper advance notice of the appointment of the arbitral tribunal, or of the arbitral proceedings, or was otherwise unable to defend the case in the arbitral proceedings.
The award deals with a dispute outside the scope of the arbitration agreement, or contains a decision on a matter that falls outside the scope of the agreement. If the part of the award that lies outside the scope of the agreement can be separated from the balance of the award, then the court will set aside only that part.
The composition of the arbitral tribunal or the arbitral proceedings was not in accordance with the arbitration agreement or, unless otherwise agreed by the parties, was not in accordance with the Arbitration Act.
The award deals with a dispute not legally capable of settlement by arbitration.
The recognition or enforcement of the award would be contrary to public order.

The enforceability of an arbitration award is, itself, another very important advantage of arbitration over normal court proceedings.

Unlike foreign court judgements, all countries that signed the 1958 United Nations New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) will enforce a “foreign” arbitration award if that award was made in a country that is also a signatory to the New York Convention.

Thailand is one of the 144 signatories of the New York Convention. Section 41 of the Act states that “an arbitral award, irrespective of the country in which it is made, shall be recognized as binding on the parties. In [a] case where an arbitral award was made in a foreign country, the award shall be enforced by the competent court.”

As to the proceedings themselves, it is not uncommon that disputes between parties require specialized knowledge to understand the nature of the dispute.

A conventional court judge may not have such knowledge. Arbitration proceedings, however, provide the opportunity for the parties to have the dispute settled by a specialist or practitioner who understands the issues surrounding the claim from a practical point of view.

In Thailand, this enhanced adjudicatory flexibility is reflected in Section 19 of the Act which defines a qualified arbitrator as a person who is “impartial, independent and possesses the qualifications prescribed in the arbitration agreement”.

In addition, the parties in an arbitration case are not only able to select their qualified arbitrator, but they also have the right to choose the place and the language of the arbitration proceedings.

For anyone doing business in a foreign country, selecting a convenient venue for the proceedings, being able to understand the proceedings without needing a translator, and being able to submit documents without having to translate them into a foreign language are all major advantages in settling disputes by arbitration.

Finally, one more procedural advantage of arbitration over conventional court proceedings relates to the “Service of Process”, or how one party or the adjudicator formally notifies the other party of matters in the proceeding, for example, that a case has been filed to start the proceedings.

Service of Process in conventional court proceedings is time-consuming and can be quite expensive. In Thailand, this is particularly true in disputes involving a defendant who is located outside of Thailand, a situation that requires a lengthy notification process involving Thailand’s Ministry of Foreign Affairs.

In arbitration proceedings, however, it is not necessary to involve any government agency. The arbitration service provider is able to service the defendant directly.

This is part three of a four-part series on arbitration. The previous two parts were published in the Phuket News issues of June 17 and July 8. To read these articles, go to thephuketnews.com, click “Archives” and select the appropriate issue of the paper.

DUENSING KIPPEN is a multi-service boutique law firm specializing in real estate and corporate/commercial transactional matters as well as arbitration proceedings arising therefrom. It is the only such firm in Thailand that also compliments its transactional expertise with a core tax law practice. DUENSING KIPPEN can be reached at: phuket@duensingkippen.com or for more information please visit them at: www.duensingkippen.com