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Legal Update

The Thai Arbitration Institute's Rules 2017 Explained

2 March 2017
Mayer Brown JSM Legal Update

On 31 January 2017, Rules 2017 (the "2017 Rules") of the Thai Arbitration Institute ("TAI") came into force, introducing much needed changes to the way arbitrations will be conducted in Thailand. By replacing the 2003 Rules, the 2017 Rules aim to improve the efficiency and predictability of TAI administered arbitrations. Implementation of the new rules should be welcomed by users of arbitration in Thailand since the 2017 Rules seek to address certain procedural lacunae which were often abused (or taken advantage of) by recalcitrant parties. The 2017 Rules will apply by default, unless otherwise agreed by the parties, to all arbitrations commenced under the TAI's auspices after 31 January 2017.

The key changes are summarised below:

Power to Grant Interim Measures

Article 39 of the 2017 Rules introduces a new power for an arbitral tribunal to grant interim measures. Previously, a party could only make an application to Court under the Arbitration Act 2002. Under Article 39 of the 2017 Rules, parties can now apply directly to the tribunal and it will be open to the tribunal to grant relief which may not be available under other legislation. Despite being a welcome introduction, this power remains somewhat limited as it cannot be enforced in Thailand without a Court Order.

Consolidation

The 2017 Rules include a new procedure for the consolidation of related arbitrations arising from multiple contracts (Article 13). Consolidation of arbitrations into a single proceeding can increase efficiency, reduce time (and therefore costs), as well as avoiding inconsistent findings on facts and law from separate tribunals. Unusually, Article 13 of the 2017 Rules gives an arbitral tribunal very broad discretion to consolidate arbitrations "regardless of whether the arbitration agreements are identical". The primary objective of this provision appears to increase efficiency of proceedings. However, it will remain to be seen how the Courts (in Thailand or in any other New York Convention country) will approach enforcing an award which is rendered from proceedings where the arbitration agreements are not identical.

Challenge to Appointment of Arbitrators

The 2003 Rules only permitted unsuccessful challenges of arbitrators to be submitted to the jurisdiction of the Thai Courts. Under the 2017 Rules, it is now within the remit of the arbitral tribunal to consider the challenge unless the TAI considers it appropriate to appoint an umpire or a panel of three umpires to consider and rule on the challenge. Any decision by an umpire or panel of umpires is stated to be final. Some legal uncertainty has been created by this introduction as there remains some debate as to whether a "final decision" by an umpire can then be submitted to the Thai Courts under the Thai Arbitration Act 2002, which retains the right of an unsuccessful party to refer a challenge to Court.

Procedural Timetable

There is now a requirement introduced by the 2017 Rules for the arbitral tribunal to consult the parties and set out a procedural timetable within 30 days of the appointment of the last arbitrator. The duration of any proceeding is to last no longer than 180 days. Rule 27 of 2003 Rules also requires an award to be made within 180 days from the appointment of the last arbitrator, so this provision may be more aspirational rather than realistic. Provision is made for the timetable to be extended due to necessity or reasonable cause. The 2017 Rules also provide that final awards shall be made within 30 days of the closure of pleadings, unless otherwise stated by the TAI upon request by the arbitral tribunal. A common criticism of arbitration in Thailand in the past was often the length of time (sometimes, over a decade) it took to obtain an enforceable award. As such, these introductions concerning time mark a sea change in Thailand's arbitration practice.

Other Practical Improvements

Service by email: The 2017 Rules now permit the service of pleadings and other documents by email, or any other means of delivery that provides a record of delivery. Previously, service of only hard copies of any document was permitted.

Sole arbitrator by default: Article 14 of the 2017 Rules provides that where there is an absence of agreement on the number of arbitrators, a sole arbitrator is to be appointed. In the past, recalcitrant parties would often delay proceedings by refusing to agree on the number of arbitrators.

Language: Where the arbitration agreement is silent as to language, Article 10 of the 2017 Rules provides that the language must be in the language of the contract, unless otherwise agreed.

Confidentiality: Whilst, previously, parties would usually insist on confidentiality of arbitrations, it was not actually provided for in the 2003 Rules. The 2017 Rules now confirm the confidentiality of proceedings under Article 36.

Communications with a prospective arbitrator: Parties must now disclose all communications with an arbitrator or prospective nominee for an arbitrator. This requirement also encompasses communications with the Chairman of a tribunal or nominees for Chairman. An exception is made where communications are made with the aim of providing a brief description of the dispute, qualifications, and availability to sit as an arbitrator.

Conclusion

With these changes to its Rules, the TAI appears to be making a conscious effort to address some of the historic perceived weaknesses of conducting arbitrations in Thailand, particularly in an increasingly international and competitive marketplace. The introduction of various practical improvements are all welcomed as positive developments. However, it remains to be seen if parties not wishing to cooperate in an arbitration will continue to abuse the rules to their advantage. Success of these introductions will largely be judged on how effectively the TAI interprets, administers and enforces the 2017 Rules. That said, the 2017 Rules are likely to be welcomed by business users desiring more efficient resolution of disputes in Thailand.

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