Introduction: Foreigners and Thai citizens may enter into contracts in Thailand. The Thai courts strictly enforce an array of contractual agreements. In fact, Thailand permits more types of agreements than most western countries do. For example, Thai law does not require consideration. Therefore, Thai courts will enforce gratuitous promises. This allows westerners to seek legal enforcement of international business agreements.
Jurisdiction: Foreign citizens and corporations have options when choosing a forum to adjudicate a contract claim. To adjudicate a trade dispute in Thailand, the Thai courts must have jurisdiction over the defendant. This requires that the defendant is a Thai resident or corporation. In contrast, Thai law allows contracting parties to stipulate the country that a dispute will be resolved. Therefore, foreign parties may wish to stipulate that a dispute be resolved in their home country. This does not guarantee that the home court will grant jurisdiction over the matter.In America, for example, there is conflicting case law as to whether a U.S. court would hear a contract case that originated in Thailand. While it might be expeditious for an U.S. litigant to try a case at home, the U.S. courts cannot enforce a judgment in Thailand. Likewise, Thai courts will not enforce judgments entered by overseas courts. However, plaintiffs in Thailand may introduce international judgments as evidence in future trials.
Venues: Two different courts hear initial complaints regarding trade disputes. First, a claimant may file in the Court of First Instance in the jurisdiction of the defendant or the jurisdiction where the cause of action arose. In addition, the claimant may file in the Central Intellectual Property and International Trade Court in Bangkok. This second court is reserved for business entities registered outside of Thailand.
Initially, the filed claim must meet certain criteria. The claim must specify the nature of the injury as well as the damages sought. Additionally, the losing party will typically pay the court fee. This is usually 2% of a settlement up to 50 million baht. The winning party may also seek to recover attorney’s fees. However, Thai courts are hesitant to award attorney fees because they are not seen as part of the initial injury.
Conclusion: Thai trade disputes are best litigated through the Thai courts. The laws are favorable and the judgments are enforceable through government seizure of assets. However, litigants should remember that judgments from Thai courts are generally smaller than those handed down in the West.
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