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Breach of Contract in Thailand

by with No Comment Litigation

Breach of Contract can have serious consequences for your business. Although lawyers will often attempt to settle contract disputes through informal methods such as a demand letter, it is sometimes necessary to take legal action involving Thailand courts.

This article will explore some common types of contractual breach and how it is remedied under Thai law.

Contracts in the Construction Industry

Whether a contractor is working on a project for an agency or for a private client, they are usually required to provide a contract that specifies the terms and conditions of their work. These contracts must be in writing. If the contractor does not follow these contract requirements, they may be in breach of their agreement.

In Thailand, contracts are regulated by the Civil and Commercial Code (CCC). A contract can be oral or implied but must have an offer and acceptance to be legal. Vague or ambiguous contract terms can lead to disputes.

In an effort to improve transparency and combat unfair payment practices, Thai lawmakers have introduced a bill that would prohibit conditional payment clauses in construction contracts. The bill also aims to reduce transaction costs by allowing for statutory adjudication proceedings on payment disputes. This could be a beneficial change for international businesses working on projects in Thailand. However, it is important to understand how these changes could impact a breach of contract dispute.

Non-Disclosure Agreements (NDAs)

NDAs are a common contract tool in Thailand, used to protect sensitive information such as trade secrets, business strategies, intellectual property and customer lists. NDAs are usually mutually-binding and can be enforceable in court, but it’s important to consider the nuances of Thai law when drafting an NDA.

The terms of an NDA must be fair, reasonable and not against public policy or good morals. It’s also advisable to include both Thai and English versions of the NDA and clearly define the choice of jurisdiction and dispute resolution mechanisms, which can improve enforceability.

Breaches of NDAs can have serious legal and reputational consequences, such as termination of contracts and employment, loss of business opportunities and damage to your brand’s image. If a breach of an NDA occurs, it is crucial to act quickly and seek injunctive relief from the court. This may involve sending a cease-and-desist letter, or filing a lawsuit and requesting a temporary restraining order or preliminary injunction.

Damages

The most common way that a breach of contract leads to a legal dispute is for one party to seek damages. This can include compensation for the cost of performing the contract as well as any other loss or injury caused by the breach.

The Thai court system provides methods to retrieve the amount ruled in a court case including seizing assets or liquidating them. However, this can be a lengthy and costly process. Most attorneys will try to settle matters like this out of court.

It is important to understand the legal framework, types of breaches, available remedies and resolution methods before entering into a business relationship in Thailand. A good attorney will have experience in local and international disputes regarding contracts and can provide advice on the best way to proceed with a dispute without resorting to costly and drawn out litigation. A lawyer will also have the skills to negotiate a resolution to a contract dispute in a manner that is best for your business.

Rescinding a Contract

Contracts are the cornerstone of business transactions and legal relationships in Thailand, just as they are worldwide. However, contractual disputes do arise and it is important for both businesses and individuals to understand the legal framework, types of breach, available remedies, and resolution methods.

The most common remedy for breach of contract is damages, which are monetary awards designed to compensate the non-breaching party for losses incurred as a result of the breach. However, a party may also seek specific performance, which is a court order requiring the breaching party to perform its obligations as stipulated in the contract.

Alternatively, parties may opt to resolve their disputes through arbitration. This is a form of alternative dispute resolution in which a neutral arbitrator or panel hears the case and renders a binding decision. However, if all other methods fail, litigation may be necessary. The court’s decision will be final and binding on the parties.

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Personal Injury Claims in Thailand

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Many foreign tourists have experienced accidents or injuries in Thailand. These incidents often happen at hotels and other tourist establishments.

Under Thai law, a person who wilfully and negligently unlawfully injures the life, body, health, liberty, property or any other right of another may be held liable to compensate for the damage.

Statute of Limitations

Any claim for compensation in Thailand must be made within a year of the date of your accident or injury. This is strictly adhered to by Thai courts.

Section 420 of the Thai Civil and Commercial Code stipulates that “a person who wilfully or negligently unlawfully injures the life, body, health, liberty, property or other rights of another shall be bound to make compensation.” The type and amount of this compensation is determined by the court and varies according to the circumstances and the severity of the wrongful act.

A lawyer can assist you with determining what your damages are and file a lawsuit for you if necessary. Often times, however, personal injury cases in Thailand are resolved through negotiation with the tortfeasor’s insurance company. In addition, most personal injury cases require that the injured party appear in person for all hearings. If you cannot come to Thailand in person, you can sign a power of attorney and allow a lawyer in Thailand to represent you.

Damages

As a victim of an accident or injury in Thailand, you’ll be entitled to compensation. This compensation will help to put you back in the position that you were in before the incident occurred, including expenses, loss of earnings and benefits.

However, it’s important to note that unlike many western jurisdictions, Thai courts will only award damages for quantifiable losses. This includes lost earnings that have already been incurred as well as those that are expected to be incurred in the future. Damages for intangible losses are often less substantial, but can still be awarded – albeit at a much lower level than what you’ll see in the West.

A claim for compensation in Thailand must be made within one year of the date on which the injury or wrongful act was committed (this is known as the ‘prescription period’). If it’s also a criminal case, a longer prescription will apply. This is why it’s so vital that you seek legal advice as soon as possible.

Representation

Most law firms in Thailand will have someone on staff who can handle personal injury claims. They will be able to help you determine whether you have a valid claim and assist with filing it. The most common type of personal injury claim in Thailand is for motor vehicle accidents. Other types of injuries can include falls on property, workplace incidents and public place accidents.

Under Thai law, if a person willfully or negligently causes injury to another person’s body, life, health, liberty, property or rights, they are bound to compensate the injured party. Compensation will be awarded for the injury itself and other tangible losses such as expenses for medical treatment, lost income and loss of future earnings. The courts will also take into account other intangible losses such as pain and suffering though these awards may be more restrained than in some countries. It is important for the claimant to physically appear at all hearings in court.

Appeal

If you have suffered an injury in Thailand, whether it occurred at your accommodation or on the streets of the country, it is important to contact a law firm immediately. Many firms have someone on staff dedicated to personal injury, or you can look for a more specialized law firm to handle your case.

Generally, a claim for compensation is a civil case rather than criminal in nature. It is essential that any claims be filed as soon as possible or they will be lost due to the statute of limitations.

The courts in Thailand will seek to award you compensation that will return you to the position you were before the accident. This may include paying your medical bills and compensating you for any time lost at work – both past and future. In some cases, the court will award you for the pain and suffering you have endured as well. This is known as “damages”. In common law jurisdictions, damages for various intangible factors such as disfigurement and emotional distress can reach astronomical levels.

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Medical Malpractice in Thailand

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Medical Malpractice is an act or omission by a medical practitioner that causes injury or death to a patient. Malpractice lawsuits have become an increasing source of litigation for physicians in Thailand.

Compensation in medical negligence claims is based on quantifiable losses. With the right Thailand lawyer, you can maximize your chances of being awarded more than what is normally offered.

Compensation

A patient who believes they are a victim of medical malpractice can file a civil lawsuit. Whether you have been injured by birth injury malpractice, negligence in nursing or dentistry malpractice, you may be entitled to compensation. The law is clear that health care providers must provide the standard of care to their patients at all times and signing a consent form does not waive any right to sue.

Thailand’s court system tends to limit general damages in medical malpractice claims to quantifiable losses, such as loss of earnings currently incurred and those expected to be lost in the future. Compensation for pain and suffering is a little harder to get.

The ViZe Counselor team of Thailand medical negligence lawyers can help you file a medical malpractice claim and ensure that the appropriate amount of compensation is awarded. We will work hard to get you the best possible outcome for your case. We also offer a free consultation service to discuss your claim and help you decide what course of action to take.

Statute of Limitations

While medical malpractice is rare, when it does occur, the victim or their family can file a lawsuit. The result of a malpractice claim can be compensation, cancelation of hospital bills, new treatment opportunities, and punishment of the wrong party.

Malpractice is the act or omission of a healthcare practitioner that falls below the standard of practice in the medical community and causes injury or death to a patient. This can include unskilled, inadequate, or neglectful treatment as well as wrongful diagnosis and failure to warn patients of known health risks.

Society wants medical professionals to be motivated to engage in best practices, occasionally taking calculated and informed risks with their patients’ welfare as the paramount concern. At the same time, societies do not want high malpractice insurance rates and defensive medicine to stifle medical innovation and access to quality care. Fortunately, there are strategies for developing successful malpractice policies. These typically involve establishing a national database for malpractice claims, and a no-fault provision in the country’s health insurance.

Best Practice

Many countries struggle to balance the need to provide quality care and the transactions costs associated with malpractice claims. In order to limit these costs, policy makers seek strategies that will encourage good practice and reduce the number of medical malpractice lawsuits.

One such strategy is to establish a national database for malpractice claims, which would allow better analysis of trends in malpractice claim incidence and compensation. This would help inform current malpractice policy debates and facilitate the development of successful initiatives.

Medical negligence claims are often complicated and require expert testimony. A lawyer with expertise in both medical and legal issues is essential to ensure the success of your case. SIAM CENTER LAW GROUP is a Thailand law firm that can provide you with the ideal lawyer to represent your case in a civil law medical malpractice trial. A professional and perfect Thailand lawyer can increase the chances of a positive outcome significantly. This is especially true if your medical negligence claim involves a foreign physician.

Complaints

With Thailand’s growing reputation as a medical tourism hub, more patients have been coming to the country for surgeries and treatments. While the majority of these patients leave satisfied with their procedures and results, some do not and seek compensation.

The 2008 Consumer Case Procedures Act makes it possible for patients to file claims directly against doctors. This allows claimants to file their complaints verbally or in writing, and it also means that they are exempt from paying court fees for their case.

However, it has been reported that malpractice claims are not random and there is a correlation between certain socio-demographic variables and the probability of receiving malpractice complaints. According to a study involving 1684 doctors, male doctors from surgical specialties who perform a greater number of on-call shifts, those who work in regional or county hospitals and those whose life partner is a doctor are more likely to receive malpractice complaints.

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Dispute Resolution in Thailand

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Dispute Resolution in Thailand includes the use of Arbitration. Arbitration is less formal than court proceedings and hearing dates are set based on the availability of both parties and the arbitrator.

Compulsory mediation is available for family and labour disputes. The chief trial judge can also facilitate a settlement during a case.

Arbitration

Arbitration is an alternative dispute resolution process that allows parties to settle their differences in a private setting. This allows them to keep information, evidences, statements and arguments confidential, which is especially important for renowned public figures or businesses that do not wish to damage their reputation. It also allows them to choose a neutral third party to decide the outcome of their case, as well as choosing a timeframe that suits them. Moreover, an arbitration award is enforceable in countries that have signed the New York Convention, and it can be enforced against both individuals and businesses.

Thailand’s law on arbitration has seen many amendments in recent years, including the introduction of a special “emergency arbitration” and more streamlined processes to allow foreigners to serve as both arbitrators and counsel. However, a complex permit system still disincentives foreigners from taking up appointments in these proceedings. Watson Farley & Williams (Thailand) Ltd. has a team of Harvard, Oxford and Sorbonne-trained lawyers that can assist clients with their international arbitration cases involving Thailand.

Conciliation

The most common form of alternative dispute resolution in Thailand is conciliation. Like mediation, a conciliation process allows for an impartial third party to oversee and facilitate communications that will hopefully lead to an agreement to settle the matter in question. Conciliation is generally less formal than arbitration and is non-binding unless and until the parties agree to a binding settlement agreement.

Litigation is a traditional method of resolving disputes in Thailand, but this can be costly, time-consuming, and risky from the perspective of the parties involved (with the exception of specialised courts such as Bankruptcy Court or Intellectual Property and International Trade Court). A judge in a regular court case will often inquire whether mediation or conciliation could help to resolve the matter. If this is agreed, then the dispute will be referred to that process prior to trial. In addition, the court may impose compulsory mediation for certain types of cases.

Mediation

While there are already existing alternative dispute resolution options in Thailand, these can be quite costly and time-consuming. Moreover, they may not provide a “win-win” solution. Therefore, lawmakers have been working to encourage the use of mediation in resolving disputes.

A recent amendment to the Civil Procedure Code made compulsory mediation a requirement in certain types of cases, including family and employment disputes. Additionally, the Office of the Judiciary has established the Thai Mediation Center to promote mediation as well as develop its practitioners.

However, court-annexed mediation has its limitations and can be inefficient for parties that wish to obtain a commercial settlement. In addition, court-appointed mediators often lack the necessary business knowledge to facilitate a successful negotiation. The emergence of independent mediation centers in the country could potentially solve this problem. In fact, it is a good idea to conduct a mediation before initiating litigation in order to save both time and costs. The process is also more streamlined and less stressful for the disputing parties.

Trial

As a general rule, Thai civil cases are not taken through to trial and as such, legal costs can be lower than in the West. However, criminal matters often do end up at court and therefore it is a good idea to have an experienced local lawyer on your side from the very beginning. A capable and seasoned attorney will be able to prevent surprises throughout the process and work the system to their client’s advantage.

If a case does reach trial, it can be expected to take up to a year or more to complete. Depending on the complexity of the case, witnesses can be called for days at a time.

During the trial, the judges will examine all of the evidence and then decide on a verdict. If the verdict is guilty, then the judge will determine the sentence. If the verdict is not guilty, then a decision on appeal will be made.

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Trade Disputes in Thailand

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In the event of a dispute, conciliation can be sought before or during the trial at the discretion of the judge. In addition, there are several out-of-court mediation services available.

Thailand’s Intellectual Property and International Trade Court is a vital institution that fosters innovation, protects creators, and facilitates international trade partnerships.

Arbitration

Arbitration is a highly efficient process that can provide a quicker resolution than litigating in court. It also provides for a private and confidential settlement of disputes.

When a case is presented to a Thai court with an arbitration clause that appears to be legally enforceable, the court will typically conduct an inquiry hearing to determine its enforceability in accordance with the provisions of Section 11 of the 2002 Arbitration Act. In doing so, the court will confirm that an arbitration clause can be considered separate from and independent of the primary contract.

The court will also confirm that an arbitration proceeding is confidential. Additionally, the courts will streamline its procedures for foreign arbitrators and counsel to obtain work permits to participate in arbitration proceedings. This will help to address a previous issue that discouraged foreign arbitrators from accepting appointments in Thailand due to the complex permit requirements.

Courts

There are ten labor courts in Thailand, including nine regional appeals courts and the central court in Bangkok. Each court has a panel of judges comprising one career judge and another from employer or employee federations. The courts resolve cases within four or six months from the filing of complaints. The courts also hold pretrial conferences with the parties to shorten and hasten proceedings.

If the parties agree to mediation, they can designate their own mediator or make use of the services offered by the Thai Mediation Center. If both parties are satisfied with the settlement reached at the mediation session, the dispute case can be withdrawn from the court’s docket.

Arbitration is a popular alternative to litigation in Thailand. The country has a comprehensive arbitration law based on UNCITRAL’s Model Law with additional Thai specific provisions. A party may opt for arbitration either before or after a dispute arises, and can choose the rules and institute as well as the number of arbitrators to serve.

Alternative Dispute Resolution

On average, out-of-court arbitration proceedings take at least a year to resolve. Mediation can be a quicker and more cost-effective process.

A professional mediator works with disputants to explore their interests in the dispute and helps them hammer out a solution that satisfies both sides. The process is confidential, voluntary, and non-binding.

If parties choose a two-arbitrator tribunal, the arbitrators will be selected from a list of three potential arbitrators. The parties must remove the names of those they do not prefer and appoint their preferred arbitrator within 15 days.

In late 2008, the Philippines submitted a complaint against Thailand for allegedly imposing unfair tariffs on imported cigarettes. The World Trade Organization (WTO) established a panel to review the matter. On 22 February 2011, the panel issued its Panel Report and by 17 June, the Appellate Body issued its Report, which upheld the majority of the panel’s findings.

Intellectual Property and International Trade Court

Thailand recognizes the importance of intellectual property rights and fair international trade practices. It has established a specialized court to protect such rights and promote an environment conducive to business.

Counterfeiting is a widespread problem in Thailand and affects many different industries. It causes significant economic losses for legitimate trademark owners and can pose health risks to consumers.

In 2019, the government launched a National Action Plan on Business and Human Rights based on UNGPs to prevent adverse impacts of business operations on human rights. However, consistent and predictable enforcement of government regulations remains problematic. Gratuitous payments to civil servants responsible for regulatory oversight remain common despite stringent gift bans at some agencies.

Under the new Rules of the IP&IT Court, if parties agree that documents submitted to the Court do not require Thai translation and such translation would be costly or difficult, the Court may exercise discretion to permit submission without translation. This is a welcome change.

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Labor Disputes in Thailand

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Labor disputes can arise for a variety of reasons. The law in Thailand provides a number of mechanisms to resolve these disputes.

These mechanisms include conciliation, arbitration and litigation. Analytics can provide advice and representation in these proceedings. We work closely with local lawyers to represent both foreign and Thai parties.

Disputes between Employers and Employees

Labor disputes can disrupt workplace morale and decrease productivity. They can also lead to loss of revenue and business failure. To prevent them, modern labor policies afford employers and employees several avenues for dispute resolution.

In the Thai labor law a worker can sue an employer for unfair or wrongful dismissal. He can file a complaint to the Labor Court within thirty days after the date of his dismissal. The court may order the employer to pay him severance pay or compensation for his loss of salary and work opportunities due to the unfair or wrongful termination.

Labor disputes between employees and employers are common in Thailand. Many of these issues are related to poorly defined employment contracts. Employees should be able to clearly understand their rights and obligations as stipulated in the Thai labor law, which covers topics such as working hours, holidays, sick leave, maternity leave and overtime. Additionally, workers should be able to easily obtain information about their employment conditions from the Ministry of Labour and Social Welfare.

Disputes between Employers and Suppliers

As Thailand moves from agriculture towards industrial production and service industries, the labour system is evolving into a more formalised structure with improved workplace health and safety standards. This is in part driven by greater openness to foreign influence and civil society participation in policy making.

Disputes between employers and suppliers can arise over terms and conditions of employment as well as supply chain issues. These are particularly complex when involving international companies with elements of foreign employment law and local cultural considerations that must be mastered.

Workers can bring labor disputes to the Central Labor Court under the Act on the Establishment and Procedure of the Labor Court. The court hears all cases and appeals on decisions by the Labor Relations Committee or by the Minister concerning labor matters. Its judgments can be appealed to the Supreme Court. However, the process can be lengthy and may take 18 months or more to reach a decision.

Disputes between Employers and Customers

Disputes between employers and customers can arise in numerous ways and often involve complex issues that are cross-border in nature. Such issues may include disputes on the delivery of products or services, payment terms, pricing, severance pay and termination clauses.

Employers in Thailand must abide by international standards and a range of local labour law provisions when it comes to workplace relations with their employees. The complexities increase when the employees are non-Thai nationals with elements of foreign employment laws in play.

Typically, an employee who feels unfairly treated by the employer will first raise the issue with department of labour protection and welfare officials, who act as mediators and have the power to order the company to rectify the situation. Alternatively, the employee may also bring the matter before the Labor Court (a specialised court with jurisdiction over cases and issues surrounding employment) directly.

Disputes between Employers and Contractors

As with any workplace, there will be times when one or more employees feel unfairly treated. This can often be the result of a wide variety of factors that go beyond what is explicitly stipulated in a company’s policies or labor laws. These disputes may require an outside mediator to help the parties reach a compromise.

If a solution is not found, the matter will then be elevated to a labor court for trial. The law requires employers to offer a written employment contract which lays out working conditions, wage rates, maximum number of work days and hours, vacation and sick leave entitlements and worker securities and privileges. Employees who are unfairly terminated can seek substantial statutory compensation from their employer (a legal maximum is not set).

Understanding Thai labor and employment laws is vital for foreign companies doing business in the country. The laws are complex and a full grasp is necessary to ensure that operations are conducted with compliance.

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Courts Handle Civil and Criminal Cases in Thailand

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Representatives of NGOs and legal entities reported that police and security officers sometimes torture suspects to obtain confessions. Human rights groups also reported that government officials filed frivolous lese majeste and sedition charges against protest leaders and journalists.

Litigation in Thailand is typically a lengthy and time-consuming process. To address this issue, the Law on the Timeframe for Judicial Proceedings was enacted in October 2022 and came into effect on 23 January 2023.

Courts

In Thailand, judges and not juries try cases. Courts have jurisdiction to adjudicate all civil and criminal matters based on law. Judges are independent in adjudicating cases and may use their discretion to determine guilt or innocence, as well as to decide on the punishment for a defendant.

The Courts of First Instance consist of general courts,(2) juvenile and family courts and specialized courts.(3) The Supreme (Dika) Court has the final authority over all appeals against judgments of the Courts of First Instance and specialized courts.

The Supreme Court’s judgments become precedents for the lower courts to follow. Its role is to ensure that all laws are in accordance with the Constitution and public interest. It also acts as the protector of the rights and liberties of the people and the maintainer of a democratic regime of government with the King as Head of State. In interpreting the Constitution, the Court has been creative in mobilising constitutional interpretation techniques such as originalism and legal history.

Jurisdiction

There are three levels of courts in Thailand: the Courts of First Instance, Appeals Court and Supreme Court. Parties who are unhappy with a decision at the lower level can appeal to the higher court.

Court proceedings in Thailand are conducted in the Thai language and pleadings must be submitted in that language. Testimony and documentary evidence must also be translated into Thai before they can be presented in court.

The Appeals Court handles cases decided by the lower courts, such as the District and Provincial Courts. In addition, the Appeals Court has jurisdiction over all cases decided by the First Instance and Regional Appeal Courts located in Bangkok and the Specialized Appeal Court for a Case.

The Constitutional Court has garnered an ambivalent international reputation for its de facto dissolution of opposition political parties and cancelling of general elections in the name of protecting democracy. More recently, it has been tasked with validating organic acts (rules of near-constitutional value placed above legislation in the hierarchy of norms) by the junta.

Filing a Case

The legal process in Thailand begins with a private individual or company submitting a complaint to the police or directly to the court. If the complaint is criminal, the court will conduct a preliminary “investigative” hearing to determine whether or not there is sufficient evidence to proceed with the case for a full trial.

The central and nine regional courts of appeal review the judgments of the First Instance and Specialized Courts, respectively, to reaffirm, dismiss, or reverse those decisions. The Supreme Court, located in Bangkok, hears appeals of cases that are not within the jurisdiction of the other two courts, or those involving a matter of national importance.

As a general rule, criminal defamation cases are filed by companies who allege that a public figure has slandered or libelled them. Defamation is punishable by imprisonment and large fines, as it violates lese majeste laws. Moreover, it can lead to civil damages claims which involve civil litigation procedures.

Trial

The Judge presiding over the trial makes all determinations of guilt or innocence, and also determines punishment. Unlike most countries in the world where criminal trials have a jury, Thai trials are conducted without one.

The court in a district where an offence is committed, alleged, or believed to have been committed, or where an accused resides or is arrested, has jurisdiction over the case. In addition, the Central Bankruptcy Court, the Central Intellectual Property and International Trade Court, the Central Taxation Court, and the Central Labor Court are centralized courts with national jurisdiction.

In 2019 the criminal court dismissed a four-year-old lese majeste case against Patnaree Chankit, mother of political activist Sirawith “Ja New” Seritiwat, after finding her one-word reply to a question in a Facebook chat critical of the monarchy was not an offense. Nonetheless, many rights activists continue to face charges related to their demonstrations. Security forces have been reported visiting or surveilling the homes of protest leaders and harassing them in other ways.