Herbert Smith Freehills (Thailand) Ltd


The Fifth Amendment of the Thai Arbitration Rules: Can small changes make a big difference?

 

On 19 September 2023, the Thai Arbitration Institute, Office of the Judiciary (“TAI”) published the fifth amendment to its Arbitration Rules (originally launched in 2017) in the Royal Gazette (the “Fifth Amendment”). The Fifth Amendment came into effect on 1 September 2023 and, unless otherwise agreed by the parties, is applicable to any arbitration proceedings commenced under the TAI Arbitration Rules on or after 1 September 2023.

The Fifth Amendment is part of the TAI’s attempts in the past few years to respond to international arbitration users and modernise its Arbitration Rules to be in line with widely recognised international arbitration practice. Previously in 2021, the TAI amended its Arbitration Rules to include appendix one on expedited procedures in the cases of (i) parties’ agreement to conduct expedited proceedings; or (ii) claims with amount lower than 5 million Thai Baht (approximately US$ 135,000).

In the Fifth Amendment, various small changes have been introduced to further streamline arbitration proceedings under the TAI Arbitration Rules. We discuss the key changes introduced by the Fifth Amendment below.

Language of Arbitration

In circumstances where the arbitration agreement does not specify the language of arbitration to be Thai or English, or where the statement of claim is not made in Thai or English, the claimant is required to provide a Thai translation when submitting the statement of claim to the TAI. In practice, this allows the commencement and the conduct of arbitration proceedings under the TAI Arbitration Rules in languages other than Thai or English, such as Chinese Mandarin, Japanese, French, etc.

Indirectly, the Fifth Amendment confirms that the TAI can operate bilingually (i.e., both in Thai and in English) and Thai translation of documents (at least the statement of claim and statement of defense and counterclaim) is not required if the language of arbitration is English. From a costs perspective, the Fifth Amendment is considered a positive change as the parties will not bear the burden and costs of translating English documents into Thai for the arbitral tribunal or the TAI.

Expert Evidence

Another important change is the tribunal’s authority to order experts from the same discipline to give evidence concurrently (i.e., hot tubbing) at any stage of the arbitration proceedings (e.g., after experts testify sequentially). Although it is commonly observed that the TAI Arbitration Rules are modelled after the Thai court’s civil procedural rules, according to which hot tubbing of experts are unheard of, the Fifth Amendment distinguishes the arbitration proceedings under the TAI Arbitration Rules from the Thai court proceedings by incorporating common-law-style hot tubbing of experts into the TAI Arbitration Rules. As a result, this places the tribunal in a better position to explore and identify the areas where the experts are able to agree and understand the areas of disagreement (including the reasons behind them).

Costs Award

The Fifth Amendment repeatedly empowers the tribunal to issue a costs award determining the apportionment of costs between parties. Such costs under the TAI Arbitration Rules include fees of the parties’ assistants or representatives in the proceedings. In line with international practice, the Fifth Amendment sets out relevant factors for the tribunal to take account of when apportioning costs between the parties – i.e., the parties’ efforts in conducting arbitration proceedings in an efficient manner, relevant circumstances and good faith in conducting arbitration proceedings, the complexity of issues decided, time spent on the proceedings and expert evidence required. If the tribunal does not apportion costs in the award, each party will bear half of the costs incurred (i.e., American Rule).

According to the Fifth Amendment, the tribunal may also determine interest on the deposits (for the arbitrator(s) fees and expenses in the arbitration proceedings) placed with the TAI.

Conclusion

The Fifth Amendment contains small changes to the TAI Arbitration Rules to improve arbitration proceedings in terms of accessibility (by non-Thai or non-English speakers) and quality of expert evidence. It also provides a greater degree of clarity on the tribunal’s power to issue a costs award and relevant factors that the tribunal must consider when issuing a costs award. Most importantly, the clarification on costs awards in the Fifth Amendment goes hand in hand with the decisions of the Thai Supreme Court (in the past five years) which enforced costs awards under major institutional rules. The Fifth Amendment is therefore considered a positive change to the Arbitration Rules of the TAI, which is an arbitration institution that has been operating in Thailand for almost 35 years.

For further information, please contact Warathorn Wongsawangsiri, Managing Partner, Bangkok and Jedsarit Sahussarungsi, Senior Associate, or your usual Herbert Smith Freehills contact.

 

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