Our Practice Areas
Commercial & Business Disputes in Thailand
1. Commercial Disputes From Contracts to Resolution
Commercial and business disputes are conflicts arising from business activities, encompassing everything from breach of contract and shareholder disagreements to intellectual property infringement and unfair competition. In Thailand, the legal framework for managing these disputes rests on three pillars: substantive laws like the Civil and Commercial Code (CCC) , which governs contracts and corporate relationships; procedural laws like the Civil Procedure Code (CPC) , which dictates the court process; and alternative dispute resolution frameworks, principally the Arbitration Act B.E. 2545 (2002) .
Disputes are typically resolved through one of three primary venues: the Court of Justice , the Thai Arbitration Institute (TAI) (an agency under the Office of the Judiciary), and the Thailand Arbitration Center (THAC) (an independent institution focused on international-standard services). Selecting the right venue from the outset is a critical strategic decision.
2. Shareholder & Partnership Disputes
For SMEs and Startups, a dispute between founders or shareholders can be an existential threat. Common issues include:
- Management Deadlock: When shareholders with equal voting power cannot agree on a course of action.
- Minority Shareholder Oppression: Actions by the majority that unfairly prejudice minority interests, such as share dilution or withholding dividends without cause.
- Breach of Director’s Duties: Directors owe fiduciary duties and a duty of care to the company.
- Information Rights: Disputes over a shareholder’s right to inspect company books and records.
The Civil and Commercial Code, Book III, Title XXII on Partnerships and Companies provides the legal foundation for the rights and obligations of partners and shareholders , . Legal remedies range from court injunctions to prevent damaging actions and claims for damages against directors, to negotiated buy-outs or, in severe cases, a court-ordered dissolution of the company.
SME & Startup Angle: The most effective way to mitigate these risks is through a well-drafted Shareholders’ Agreement or Founders’ Agreement. These documents should proactively address governance, roles and responsibilities, share vesting schedules, and the assignment of intellectual property to the company. A clear agreement can transform a potential legal battle into a structured business negotiation.
Many commercial disputes originate from ambiguous or incomplete contracts. Common issues include:
- Sales & Supply Agreements: Breaches related to the quality, quantity, or timeliness of delivery. In international trade, Incoterms are crucial for defining risk transfer and delivery obligations.
- Agency & Distribution Agreements: Disputes often revolve around exclusivity terms, performance targets, termination rights and compensation, and post-termination non-compete clauses.
- Franchise Agreements: Conflicts frequently arise over fees, use of intellectual property (trademarks, trade secrets), the level of franchisor support, and conditions for renewal or termination.
In addition to the CCC, guidelines from the Office of Trade Competition Commission (OTCC) on unfair trade practices may be relevant, particularly where there is a significant imbalance in bargaining power .
3. Sales, Agency & Franchise Issues
4. Trade Secrets & Unfair Competition
For innovative businesses, intangible assets are often their most valuable. Two key laws provide protection:
- Trade Secrets Act B.E. 2545 (2002): This Act protects commercial information that is (1) not generally known, (2) has commercial value because it is secret, and (3) has been subject to “reasonable measures” by its owner to maintain its secrecy . Examples include customer lists, manufacturing processes, and strategic plans. Unauthorized use or disclosure constitutes misappropriation, for which a party can seek an injunction and damages. The Department of Intellectual Property (DIP) is the relevant administrative body .
- Trade Competition Act B.E. 2560 (2017): Section 57 of this Act prohibits unfair trade practices that cause damage to other business operators. This can include actions like trade libel, abuse of superior bargaining power, or coercing a counterparty. The Office of Trade Competition Commission (OTCC) is the independent regulator that enforces this Act .
Protection is not automatic. Businesses must take proactive steps, such as implementing non-disclosure agreements (NDAs), controlling access to sensitive data, and providing employee training.
5. Supply Chain & Logistics Disputes
Modern supply chains are complex and prone to disputes at every stage. Common issues include procurement contract breaches, delivery failures, goods damaged in transit, quality control disputes, and conflicts over freight, warehousing, and demurrage charges.
In these disputes, the documentary trail is paramount. Purchase orders (POs), bills of lading (B/L), quality inspection reports, and all correspondence are critical pieces of evidence. The party with the most organized and complete documentation often holds a significant advantage.
What We Do
JIRAWAT & ASSOCIATES LAW OFFICE provides comprehensive services in civil litigation, focusing on delivering clear information and strategic legal options tailored to your situation. Our services include:
- Pre-action case assessment, issuance of demand letters, and negotiation/mediation strategy.
- Drafting and filing of plaints, statements of defense, and other pleadings, as well as court representation at all stages as permitted by law.
- Filing applications for interim/provisional measures, such as temporary injunctions or the provisional attachment/garnishment of a defendant’s assets before judgment (pursuant to Sections 253 and 254 of the Civil Procedure Code).
- Evidence strategy, preparation of affidavits, and coordination with expert witnesses.
- Negotiating settlements, obtaining consent judgments, and advising on Alternative Dispute Resolution (ADR), both court-annexed and private.
- Handling appeals to the Court of Appeal and petitions to the Supreme Court (Dika) as permitted by law.
- Managing civil enforcement proceedings with the Legal Execution Department (LED), including asset seizure, attachment of claims, public auctions, and collection of proceeds.
6. Strategic Playbook for Business Disputes in Thailand
Managing a dispute effectively is a business challenge, not just a legal one. For an SME or Startup, a “win” in court that leads to bankruptcy is no victory at all. A strategic approach is essential.
- Early Case Assessment: Before taking action, conduct an objective analysis of the case’s strengths and weaknesses, potential costs, and likely timeline.
- Without-Prejudice Negotiations: Attempt to reach a commercial settlement before legal proceedings entrench positions and escalate costs.
- Resource Planning: Litigation and arbitration consume both money and, crucially, management time—both of which are scarce resources for smaller enterprises.
SME/Startup Dispute Checklist:
- Budget & Cash Flow: Can we afford the projected legal fees and associated costs without jeopardizing our operations?
- Business Continuity: How much management time will this dispute divert from our core business? Will it damage key customer or supplier relationships?
- Reputation & Confidentiality: Is it critical to keep this dispute private? What is the potential reputational risk?
- Document Readiness: Are our records and evidence well-organized and readily accessible?
- Defining a “Win”: What is our primary objective? Is it a monetary award, an injunction to stop a harmful activity, or simply a quick, clean settlement that allows us to move forward?
7. Mediation & Arbitration in Commerce
Alternative Dispute Resolution (ADR) offers strategic pathways that are often more flexible and private than court litigation.
- Mediation: A facilitated negotiation where a neutral third-party mediator helps the disputing parties reach a mutually acceptable agreement. The process is non-binding until a formal settlement agreement is signed.
Arbitration: A private adjudicative process where parties agree to have their dispute decided by an arbitral tribunal of their choosing. The resulting “award” is legally binding and enforceable. The main arbitral institutions in Thailand are the TAI and THAC .
8. Litigation in Thai Courts: Formal & Transparent Process
Litigation in the Thai Court of Justice is a formal, public process governed by the Civil Procedure Code . The typical stages are:
- Filing a Complaint: The plaintiff files a complaint with the competent court.
- Service of Process: The court serves a summons and a copy of the complaint on the defendant.
- Case Management Conference (CMC) & Mediation: The court holds a hearing to define the issues in dispute and set a schedule for the proceedings. At this stage, the court strongly encourages the parties to attempt mediation .
- Evidence Submission: Parties submit lists of the evidence they intend to rely on.
- Trial/Hearings: Witnesses are examined and evidence is presented in open court.
- Judgment: The court issues a judgment deciding the case.
- Appeals: The losing party may have the right to appeal to the Court of Appeal and, in some cases, further to the Supreme Court.
Parties can also request interim measures, such as injunctions, from the court to protect their rights during the proceedings.
9. Arbitration: Flexible & Confidential
Arbitration is a creature of contract; it exists because the parties agreed to it, usually via an arbitration clause. Key principles include:
- Party Autonomy: Parties have significant control over the process, including the ability to choose their arbitrators (often experts in the relevant field), the procedural rules (e.g., TAI or THAC rules) , , the language, and the seat of the arbitration.
- Competence-Competence: The arbitral tribunal is empowered to rule on its own jurisdiction.
- Confidentiality: The proceedings, evidence, and the final award are typically kept private.
- Enforceability: An arbitral award is final and binding. It can be enforced through the courts under the Arbitration Act B.E. 2545 and, crucially for international disputes, in over 160 countries under the New York Convention .
10. Mediation: Reaching Common Ground
Mediation is a collaborative process focused on finding a “win-win” solution. Its key advantages, especially for SMEs, are:
- Speed and Cost-Effectiveness: It is generally much faster and less expensive than litigation or arbitration.
- Preservation of Business Relationships: Because it is a cooperative process, it offers a better chance of preserving valuable commercial relationships.
- Party Control: The parties, not a judge or arbitrator, control the outcome.
- Enforceability: If a settlement is reached, the resulting agreement can be registered with the court as a consent judgment, making it as enforceable as a court order.
11. Litigation vs Arbitration: Which Path?
Factor | Litigation (Thai Courts) | Arbitration (TAI/THAC) | SME/Startup Consideration |
|---|---|---|---|
Confidentiality | Public proceedings and records. | Private and confidential. | Public disputes can damage brand reputation and expose sensitive business information. |
Speed | Can be slow due to a three-tiered court system and potential appeals. | Generally faster; awards are final with very limited grounds for appeal. | Speed is critical for cash flow and allows management to refocus on the core business. |
Cost | Predictable court fees, but legal costs can escalate over a long timeline. | Higher upfront costs (institutional fees, arbitrator fees) but often more predictable overall. | High upfront arbitration fees can be a significant cash flow burden. |
Choice of Adjudicator | Parties cannot choose. | Parties can select arbitrators with specific industry or technical expertise. | Expert adjudicators are invaluable in complex technical or industry-specific disputes. |
Finality | Judgments can be appealed to the Court of Appeal and Supreme Court. | The award is final and binding with very limited grounds for challenge. | Finality provides certainty and allows the business to move on more quickly. |
Cross-Border Enforcement | Thai court judgments are difficult to enforce abroad (often requiring re-litigation). | Awards are enforceable in 160+ countries under the New York Convention . | For businesses with international partners, arbitration offers a clear enforcement advantage. |
12. Cross-Border Commercial Disputes
Disputes involving parties or assets in different countries add layers of complexity. Key considerations include:
- Governing Law and Jurisdiction: These contract clauses determine which country’s laws will apply and which country’s courts will have the authority to hear the case.
- Enforcement of Foreign Decisions: This is the most critical distinction.
- Foreign Arbitral Awards: An award made in another member state of the New York Convention is directly enforceable in Thailand through the Thai courts under the Arbitration Act B.E. 2545 . The process is streamlined, and the court will not re-examine the merits of the case.
- Foreign Court Judgments: A judgment from a foreign court is not directly enforceable in Thailand. The winning party must file a new lawsuit in a Thai court and use the foreign judgment as evidence. The Thai court will re-hear the merits of the case.
This enforcement asymmetry means that for cross-border contracts, an arbitration clause provides significantly greater certainty and efficiency than a foreign court jurisdiction clause.
13. Business Dispute Roadmap
Phase | Key Stages |
|---|---|
1. Pre-Dispute | Contract Formation → Performance → Triggering Event (e.g., Breach) |
2. Dispute Arises | Initial Communication → Internal Assessment & Document Gathering → "Without Prejudice" Negotiation Attempt |
3. Formal Resolution Path Selection | Path A: Litigation File Complaint → Service of Process → CMC/Mediation → Trial → JudgmentPath A: Litigation File Complaint → Service of Process → CMC/Mediation → Trial → Judgment Path B: Arbitration File Request for Arbitration → Tribunal Formation → Preliminary Hearing → Evidentiary Hearing → Final Award |
4. Post-Decision | Appeals (Litigation) or limited challenge proceedings (Arbitration). |
5. Enforcement | File for enforcement with the Court → Writ of Execution → Proceedings by the Legal Execution Department (LED) (e.g., attachment, seizure, auction of assets) . |
Frequently Asked Questions (FAQ)
Generally, no. Arbitration requires the consent of all parties. This consent is usually given in an arbitration clause within the original contract. Alternatively, parties can sign a separate "submission agreement" to arbitrate after a dispute has already arisen. Without such an agreement, the default path is litigation in the courts.
The timeline varies greatly. Mediation can be completed in weeks or months. Arbitration typically takes 6-18 months. Court litigation can take several years if the case is appealed through all three tiers of the court system.
The primary costs are (1) court fees or institutional fees for arbitration, (2) legal fees for your counsel, and (3) ancillary expenses such as expert witness fees, translation costs, and travel.
Yes, the law applies equally to all. However, SMEs must conduct a careful strategic assessment of their resources. In some cases involving unfair competition, filing a complaint with a regulator like the Office of Trade Competition Commission (OTCC) may be a more resource-efficient alternative to private litigation.
Interim measures are temporary orders from a court or arbitral tribunal designed to prevent irreparable harm while a case is ongoing. Examples include an order to stop a party from selling a disputed asset or to prevent the disclosure of a trade secret. They are crucial for preserving the status quo and ensuring that a final victory is not rendered meaningless.
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