Arbitration or civil litigation?

Because generally speaking parties must have to agree in advance to hear a dispute about their legal relationships at arbitration under this most basic rule of the Thai Arbitration Act, the most commonly submitted cases to arbitration are disputes relating to a contract between parties, often relating to a specific breach by one party to the damage of the other party. The reason for this is because parties to a contract often lawfully define how they wish their disputes to be resolved, and may at the time of contracting elect, in lieu of resolving a case in a civil court, to submit it to final binding arbitration in front of the selected arbitral panel, which is usually comprised of one or three arbitrators at the agreement of the parties.

Now this is not to say that every civil dispute submitted to arbitration will be related to a contract dispute, and indeed, Section 11 of the Thai Arbitration Act specifically states that other types of civil disputes based on a legal relationship of parties may be submitted to arbitration – so long as there is an agreement to arbitration.

Naturally, a dispute relating to a contract might have the agreement to arbitration located within the very terms of the disputed contract, which is most often the case. However, in other types of legal relationships, the parties must actually agree to submit their dispute to arbitration; this is often agreed in such cases when the dispute has already arisen and the parties agree to resolve it joinly at arbitration in lieu of in a civil court of law. Accordingly, the agreement to arbitrate might come to fruition following the actions involving the disputes between the parties, rather than prior – which is often the case where the agreement to arbitrate is already located within the terms of a disputed contract. Legal advisors often refer to this type of arbitration as ‘ad hoc’ arbitration.

It is important to note that without an agreement to arbitrate, a party runs the risk of having an arbitration case dismissed for lack of jurisdiction. It is therefore important for parties seeking to resolve their differences to determine whether arbitration is actually a legal option available to them.

Arbitration counsel can advise on this key issue and other matters such as costs of the arbitration, appointments and costs of arbitrators, the rules and procedure under which the arbitration will progress and enforcement issues once an award is issued by an arbitration tribunal. An experienced arbitration counsel will be able to make sufficient contrasts between proceeding with an arbitration or with a civil case in the courts for damages to a client considering their options in a disputed matter. One important difference from filing in the civil courts is that, generally speaking, an arbitration case cannot be appealed by the parties, is final and binding and there are limited avenues to challenge an award issued by the arbitral tribunal.

Suing in the civil courts
Although often lacking knowledge of the availability of arbitration as an option, most parties involved in business and contract disputes are well aware that one party can sue the other for damages in a case submitted to a civil court of law. A very key difference between resolving a civil dispute at arbitration and suing for damages in a civil case in court is that filing complaint in civil court for recovery of damages does not require a specific agreement as in the case of arbitration, as discussed above. Indeed, nearly anyone can proceed with a lawsuit in civil court, so long as jurisdiction and venue are correct, subject of course to the rules of civil procedure.

In a civil case, the same laws will be applicable to the dispute except a court case will be conducted under the rules of civil procedure rather than the rules of the arbitration venue in the case of arbitration. Civil cases do not require appointment of a judge and there are no fees to be paid to judges who hear the cases, whereas in arbitration there is a process for appointing the arbitral tribunal by the parties and fees for the arbitrators are necessary and usually fixed by the rules of the arbitration venue. Furthermore, civil cases can almost always be appealed by a losing or winning party on the ground of an error in law or procedure by the judge that heard the case in the court of first instance. To file a civil case in the courts, an aggrieved party must only usually pay a court fee and prepare a complaint alleging the facts and applicable laws that have been violated to the damage of the party with basic reference to relevant evidence.

An experienced trial attorney should be able to guide a client through the requirements and procedures for filing a civil case in the courts, much the same way as an experienced arbitrator can guide their client through the procedures of commencing a case in arbitration.

It is always recommended to seek out advice on the issue of whether a dispute can be filed at arbitration or in the civil courts, and the pros and cons of each. Of course if someone finds themselves as the party against which the case has been filed, they might not have much of a choice where the case will actually be heard and decided!

By Robert Krupica, Senior Partner of Hughes Krupica.
Hughes Krupica is a law firm which specialises in Real Estate; Construction; Hospitality; Corporate; Commercial; Tech; Dispute Resolution; and Litigation, operating from Phuket, servicing clients in relation to their business activities in Thailand and in other regions of Asia.