THAI COURT SANCTIONED ARBITRATION UNDER THE CIVIL PROCEDURE CODE


ARBITRATION REFERENCE BY ARBITRATION AGREEMENT

The parties to a pending lawsuit may agree to refer any or all issues of a dispute to one or more arbitrators by stating the terms of such in an arbitration agreement[1] in the form of a joint-application. (Section 210, CPC).  If the court finds that the agreement is in conformance with the law, it shall allow such application and refer the dispute to arbitration.

APPOINTMENT OF ARBITRATORS, FRAMING THE ISSUES, AND PROCEDURE

Section 211 details the procedure to be followed for appointment of arbitrators, if the parties have not provided for the same in their agreement.

It may be observed that Section 211 envisages that either party is entitled to appoint one arbitrator, which would suggest 2 (two) arbitrators. This may run counter to ordinary prudence that advises against having an even number of arbitrators, reinforcing the importance of having an arbitration agreement that prescribes the procedure to be followed for appointment of an odd number of arbitrators.

A court may not appoint an arbitrator without his consent.  (Section 212, CPC).

A party is barred from rescinding the appointment of an arbitrator after having agreed to such appointment without the consent of the opposing party. (Section 213, CPC).  Either party, however, may challenge the appointment of an arbitrator appointed by the court or even by a third person. Understandably, an opposing party may challenge such appointment in case the arbitrator’s appointment was made only by one party. The grounds for such challenge are the same as for challenging a judge as provided by Section 11 of the CPC.[2] In addition to these grounds, a party may also challenge the appointment of an arbitrator on the grounds of incapacitation or inability to act.  In the event that such challenge is conceded, a new arbitrator shall be appointed.

In the absence of fee payment stipulations for arbitrators in the arbitration agreement, arbitrators are entitled to refer the matter through a motion, and the court shall exercise its discretion with regard to issuing an order for the payment of such fees.  (Section 214, CPC).

Should the issues of the dispute not be described in the arbitration agreement or the court order, issues shall be framed by the arbitrator(s), and a detailed memorandum shall be drafted specifying the points of the dispute and filed as part of the arbitration case. (Section 215, CPC).

Section 216 incorporates a fundamental principle of equity by ensuring that the arbitrator(s) shall give all the parties a fair hearing and make such inquiries as deemed fit and relevant to the dispute, prior to delivering the arbitration award. An arbitrator is empowered to examine documents, witnesses, and experts, and shall receive the assistance of the court in communication of all pleadings to them. Issuance of summons, administration of oaths, and compelling production of documents shall be processed through the auspices of the court. This entails an application subject to the Court decision with respect to admissibility and competence, and the payment of applicable court fees by the arbitrators. In essence, the courts retain a supervisory role, which is unlike in an independent arbitral proceeding where arbitrators have much more independence.

In the absence of the arbitration agreement specifying the procedure to be followed in the arbitration proceedings, Section 215 prescribes that the arbitrator(s) shall have the power to determine such procedure as they see appropriate.

Again, should the agreement not contain any provisions to the contrary, Section 217 mandates that:

  1. In a case presided over by several arbitrators, the award shall be given in accordance with the majority;
  2. In the event of deadlock, assuming an even number of arbitrators, the arbitrators may appoint an umpire for the purpose of rendering a casting vote. Should the arbitrators fail to agree on the appointment of an umpire, they shall file a motion requesting such appointment.

THE ARBITRATION AWARD, TERMINATION, AND APPEAL

Sections 140, 141, and 142 specifically relating to the standards, minimum contents, and effect of judgments and orders of civil courts apply to arbitration awards as well according to section 218. Upon conclusion of the arbitration proceedings, arbitrators must file their award with the Court, which shall then pronounce judgment in accordance therewith. However, if the Court arrives at the finding that such award is in contravention of the law in any respect whatsoever, it may refuse judgment on such basis. Should the deficiency be determined as curable, the Court may require the arbitrator(s) or the parties to make good such error within a reasonable time as it sees proper.

Section 219 contemplates termination of the arbitration agreement and a reversion to litigation if no provision is found within the agreement to remedy the following situations:

  1. the failure to appoint the arbitrator(s);
  2. if the appointed arbitrator(s) decline such appointment(s);
  3. die(s);
  4. arbitrator(s) is/are incapacitated, or refuse, neglect to or are otherwise unable to carry out his/their duties within a reasonable time-frame toward passing an award; and
  5. if no new agreement is arrived at.

Section 220 prescribes that any question relating to the performance of an arbitration agreement or whether such agreement has been terminated for the reasons enumerated in Section 219, shall be remanded to the Court that granted the reference to arbitration under Section 210.

Section 221 lays down the principle that out-of-court arbitration proceedings wherein the parties have an arbitration agreement prior to commencement of litigation shall be governed by the Arbitration Act.  (Please see our separate paper on this topic).

Section 222 precludes an appeal to a court-sanctioned arbitral award unless any one of the following can be shown:

  1. There is an allegation of dishonesty against the arbitrators or the umpire, or an allegation of fraud against any of the parties;
  2. The order or judgment is in contravention to Thai public policy;
  3. Where the judgment is contrary to the arbitration award.

DURATION

It must be observed that there is no minimum or maximum timeframe for commencement or conclusion of arbitration proceedings contemplated by the Civil Procedure Code. Impliedly, the choice of arbitrators and the difficulty of the dispute before them will determine the speed in which a matter gets resolved.    From our experience, cases appearing before the court of first instance typically take anywhere from 9 (nine) to 18 (eighteen) months to resolve so arguably a court-sanctioned arbitration should not take more than this period of time.

OBSERVATIONS IN CONCLUSION FOR THAI COURT SANCTIONED ARBITRATION UNDER THE CIVIL PROCEDURE CODE

At first blush, the provisions relating to arbitration under the Civil Procedure Code may appear antiquated in comparison to the dedicated law on the subject being the Arbitration Act, B.E. 2545 (2002). Entering into an arbitration agreement at the late hour of having already commenced litigation does not present an ideal scenario especially in context of appointment of an even number of arbitrators and the overly constrictive supervision exercised by the Court of First Instance in almost all aspects of the arbitration proceedings. It is also quite unlikely that parties would be successful in arriving at consensus with respect to crucial framework and working elements of the arbitration proceedings having already assumed an adversarial stance. An arbitration agreement is best memorialized as an avenue of alternative dispute resolution when parties first enter into a contractual relationship for that is when the probability of achieving consensus is in fact the highest.

It must be noted that such an arbitration agreement has been entered into under the auspices of the Court, as distinguished from an arbitration agreement entered into by the parties prior to commencement of litigation without any form of judicial supervision.

Section 11. Where a case is in a court, any judge of such court may be challenged on any of the following grounds:

  1. That he has an interest in such case;
  2. That he is related to any of the parties, either as an ascendant or descendant to any degree, or as a collateral within the third degree, or by affinity within the second degree;
  3. That he has been cited as a witness on account of his knowledge of the facts or as an expert on account of his having expert knowledge in connection with such case;
  4. That he has that he has been or is the legal representative or representative, or that he has been the lawyer, of any of the parties;
  5. That in the same case he has sat as judge of another Court or has acted as an arbitrator;
  6. That there is another case pending between him, his wife or his relatives in direct or descending line on the one part, and any of the parties, the wife or any relative in direct ascending or descending line of such party on the other part;
  7. that he is the creditor or debtor or employer of any of the parties.

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