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Vol. X No.12 - June 8 - June 15, 2011


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BUSINESS
 


Arbitration in Thailand: Part 2: The agreement to arbitrate

In our last article we explained that arbitration can only take place if both of the contract parties agree to the use of such a mechanism to resolve any dispute arising from their contract. In fact, in Thailand, Section 11 of the Arbitration Act (2002) (the "Act") specifically requires that the parties, must enter into a written "Arbitration Agreement" that is signed by both parties. Furthermore, the Arbitration Agreement must state that the parties want arbitration proceedings govern all disputes arising out of a specified legal relationship, like a contract.

The Arbitration Agreement may be in the form of a separate agreement or it may be in the form of a clause within the contract in question itself. It should be noted that if it takes the form of a clause within a contact, the Arbitration Agreement “survives” the termination of the contract it is embedded in. In other words, the "arbitration clause" has its own standing as a separate agreement independent from the main contract that the arbitration covers.

Thus, an Arbitration Agreement, ideally a well drafted Arbitration Agreement, is a pre-requisite for any enforceable alternative dispute resolution. The various arbitration service providers propose sample clauses to be used in contracts between parties who wish to choose arbitration as a method to settle any future dispute under the contract. Locally, the two most well-known arbitration service providers are the International Chamber of Commerce (“ICC”) and the Thai Arbitration Institute (“TAI”).

The ICC recommends the following clause to be included in any contract that the parties wish to have any disputes arising there from resolved by arbitration under auspices of the ICC:

"All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules."

Alternatively, where the TAI is the chosen service provider, the following is recommended:
“Any dispute, controversy or claim arising out of or relating to this contract or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the Arbitration Rules of the Thai Arbitration Institute, Office of the Judiciary applicable at the time of submission of the dispute to arbitration and the conduct of the arbitration thereof shall be under the auspices of the Thai Arbitration Institute.”

Both of these model clauses have two essential elements of any Arbitration Agreement: (1) referral of any dispute under the contract to arbitration; and (2) the incorporation of the governing rules of arbitration. However, before actually inserting any such model clause into your contract, it is advisable to further tailor the clause to the parties' preferences and in order to avoid future disputes regarding the arbitration proceedings. The place of the arbitration hearing, if any, is one essential element that the parties may very well wish to decide on beforehand such that it is mutually convenient and that they will very likely dispute if not agreed prior to any dispute. The language that should govern the proceedings is another element.

Especially in cases with a local contract partner, a firm decision as the governing language when entering into a contract with an arbitration clause is generally essential. It is also usually prudent to predetermine the number and qualifications of the arbitrators used for the proceedings. However, note that the more arbitrators the higher the fee payable for the arbitration. Highly skilled arbitrators will generally only work for the institutes that pay them accordingly. On the other hand, the more arbitrators and the more highly skilled they are, generally the better, and therefore, the more certain the enforceability of the final award.

In case of ICC proceedings, the "Seat" of the arbitration is also one of these elements that the parties should agree upon prior to signing the Arbitration Agreement. The choice of Seat will determine what jurisdiction's procedural arbitration law governs arbitration proceedings itself, e.g. in the case of Thailand being the Seat, the Act will govern the proceedings.

Finally, it should be noted that it is not possible to obtain an enforceable arbitration award for all disputed matters. If the jurisdiction where you are seeking enforcement of an arbitration award has a substantive law that does not allow final resolution of the said matter by way or arbitration or if that jurisdiction considers that enforcement of arbitration award of said matter would be contrary to "public policy", that jurisdiction will not enforce any such arbitration award.

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 and 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: [email protected] or for more information please visit them at: www.dktaxandlaw.com.


Arbitration, enforcing contracts outside of Thai courts

If you are doing business in Thailand you might have already had some experience with the local court system. An all too common complaint of the local business community is that court proceedings in Thailand are agonizingly slow. Furthermore, a non-Thai businessman usually does not understand the proceedings, since the official language in Thai courts is Thai. Finally, a domestic court ruling is generally not enforceable in another country and if one or both of the parties does not live in Thailand and/or has their assets in another country, a domestic court "win" might be a "hallow victory".

But what's the alternative? You may have heard of "alternative dispute resolution". The "alternative" means "other than going to court." One such longstanding alternative gaining evermore international recognition, is arbitration. Arbitration is the most commonly used formal alternative to domestic court proceedings, especially for disputes between parties in different countries. From a legal perspective Thailand was a relative "late comer" to the arbitration scene, enacting its first law governing arbitration in 1987. Then in 2002 Thailand enacted the current Arbitration Act which replaced the 1987 law. The Arbitration Act governs not only domestic, but also any international arbitrations conducted in Thailand.

In order to submit a dispute to arbitration, it is required that both parties agree to it. Section 11 of the Arbitration Act defines such an arbitration agreement as “an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement might be in the form of an arbitration clause in a contract or in the form or a separate agreement.” The arbitration agreement needs to be in writing and signed by both parties. Thus, it is not possible for one party to unilaterally and without the approval of the other party to submit a dispute to arbitration. If the parties failed to include an arbitration clause to an agreement and a dispute arises, the dispute must be settled by the local courts as long as both parties do not agree to arbitration proceedings. Therefore, it is advisable to include a well drafted arbitration clause in an agreement, preferably in the initial contract document, before any dispute that requires a third party adjudicator arises. In our experience, once such a dispute arises, getting the parties to agree on anything, including how to resolve the dispute can be very difficult, if not impossible.

But if you are going to use the arbitration alternative then its is highly advisable to select and include in your arbitration clause a professional arbitration institute that can provide the procedural and administrative support requisite for the conduct of proper arbitration proceeding. Internationally, perhaps the most commonly known such institute is the International Chamber of Commerce's International Court of Arbitration (the “ICC”) which is headquartered Paris, France but which conducts arbitrations worldwide. Founded in 1923, the ICC established its own rules of arbitration that govern the proceedings between the parties themselves and between the parties and the ICC. These rules of arbitration are “universal” and govern all ICC proceedings worldwide. Locally, Thailand established its own "Thai Arbitration Institute of the Alternative Dispute Resolution Office, Office of the Judiciary" (the “TAI”) to provide arbitration services within Thailand. The TAI also has its own rules that govern its arbitration proceedings. Finally, the Board of Trade of Thailand also offers arbitration services which are provided by its "Thai Commercial Arbitration Institute" and which are conducted under its own rules.

The parties to an arbitration agreement are free to choose what rules should govern the arbitration proceedings by choosing one of the aforementioned service providers. It should be noted that the choice of the service provider not only has an impact on the fees charged for the arbitration service, but could also have an impact on the recourse a winning party has to claim for compensation for legal fees incurred during the arbitration proceedings.

Arbitration proceeding are generally quick, in fact the ICC rules generally require a decision and an award within 8 months of the arbitrator's appointment. In the case of the TAI it is within 6 months of such appointment. Arbitration proceedings can be conducted in any language the parties choose. In general, the parties get to choose the arbitrator, thus they control their competence and may even select someone with particular expertise and experience relevant to the dispute at hand. And an award issued by any of the above mentioned arbitration institutes is enforceable in any country that is the signatory to the 1958 U.N. Convention on the recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). Thailand is a signatory to the New York Convention and an arbitration award made here will be enforceable outside of Thailand in any other signatory country (currently 145 countries worldwide). And pursuant to the Arbitration Act any such award will also be enforceable inside of Thailand. Accordingly, formal arbitration can be an outstanding alternative to Thai court proceedings and highly advisable to include provision for such dispute resolution in your commercial contracts here in Thailand.

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 and 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: [email protected] or for more information please visit them at: www.dktaxandlaw.com.


MBMG Group wins accolades at the ACQ Global Awards 2011

MBMG Group has won the Financial Advisory Firm of the Year, Investment Management firm of the year and 10 other accolades at the ACQ Global Awards 2011.

MBMG Group won the 12 awards at the annual ACQ Global Awards, which have been presented to the world’s best and brightest firms for seven years. MBMG Group and its subsidiaries were recognised on both global and international levels, picking up nine global awards and three Asia-specific awards.

Readers of the London-based ACQ magazine nominated their favourite firms, from which the winners were selected by the expert awards committee.

MBMG Group Managing Partner Paul Gambles said, “MBMG Group is delighted to have won 12 ACQ Global Awards. This success is testament to the hard work, strong ethical standards and commitment to providing the highest levels of service to our clients by the entire team of MBMG group. I would like to take this opportunity to give a heart-felt thanks to our team, and of course to our clients who nominated us for the awards.

“There are always strong investment opportunities regardless of global economic conditions and MBMG Group is motivated by the commitment to protect and grow our clients’ wealth according to their investment and risk appetite,” said Gambles. “All advice that we offer is guided by the same mantra - always put clients and their needs first. Winning 12 awards across the whole spectrum of our services, including financial, legal and tax advisory, has set a new benchmark for us to measure ourselves against and to ensure that we continue to achieve the highest standards of service for our clients.”

MBMG Group and subsidiaries won the following awards: MBMG Asset Management Limited, Investment Management Firm Of The Year; MBMG Group, Financial Advisory Firm Of The Year; MBMG Group, Tax Advisory Firm Of The Year; MBMG Law Office, Competition Law Firm Of The Year; MBMG Law Office, Corporate Service Provider Of The Year; MBMG Law Office, Management Due Diligence Advisor Of The Year; MBMG Law Office, Tax Law Firm Of The Year; MBMG Law Office, Niche Advisor Of The Year; MBMG International, Commercial Due Diligence Adviser Of The Year Asia; MBMG International, Debt Advisory Firm Of The Year Asia; MBMG Law Office, Business Advisory Firm Of The Year Asia.

ACQ’s senior journalist Karen Moss, who headed the judging panel, said of the 2011 awards, “My fellow judges and I had a hard time choosing between so many excellent candidates, but we believe the winners represent the best law firms, advisory firms, private equity firms, banks and asset based lenders from around the world.

“This year ACQ was particularly pleased with the huge increase in votes and winners from within Asia. In 2010, only six firms on the continent walked away with Global Awards, this year that number almost quadrupled as we saw 30 Asian companies take top prizes. I have to say, I was blown away by the quality of the candidates and delighted to see the wonderful things their customers had to say about them. After all, isn’t customer satisfaction the ultimate accolade that all companies are striving towards?”


HEADLINES [click on headline to view story]

Arbitration in Thailand: Part 2: The agreement to arbitrate

Arbitration, enforcing contracts outside of Thai courts

MBMG Group wins accolades at the ACQ Global Awards 2011
 

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