Winning abroad against a Thai company: why an arbitral award travels and a court judgment does not

A foreign court judgment has no route into Thai execution

Thai law has no procedure for registering a foreign court's judgment or for executing it against assets in Thailand, and Thailand is not party to a treaty that provides one. The 1994 agreement between Thailand and China on judicial assistance in civil and commercial matters and cooperation in arbitration deals with matters such as service of documents and taking evidence, and with arbitration, but not with enforcing each other's court judgments.

The Supreme Court has stated the underlying principle in a different setting. In judgment 964/2520, police had held stolen money so that it could be sent to a foreign government, and the Court held that property in Thailand may be seized lawfully only under Thai law or a judgment or order of a Thai court, and that reciprocity between states has effect only where Thai law recognises it. A judgment creditor from abroad is in the same position. To reach the debtor's land, bank accounts or receivables in Thailand, it needs a Thai judgment.

In practice that means bringing the claim again before a Thai court. The foreign judgment and the record behind it can be filed in evidence, translated into Thai, but the Thai court decides the claim and the debtor can contest it. The plaintiff faces the costs of a second action, a possible application for security for costs, and the Thai limitation period on the underlying claim, which should be checked before anyone relies on proceedings abroad.

An award made abroad has a statute of its own

Arbitration is different because the Arbitration Act B.E. 2545 (2002) provides for it. Section 41 makes an arbitral award binding wherever it was made and enforceable on application to the competent court. For an award made abroad, the court gives judgment enforcing it only where the award falls under a treaty, convention or international agreement to which Thailand is a party, and only to the extent Thailand has bound itself. In practice that is the 1958 New York Convention, as judgment 9476/2558 recognises, which covers awards made in mainland China, Hong Kong, Singapore and most trading nations.

Under section 42 the creditor files a petition within three years from the date the award becomes enforceable, with the original award or a certified copy, the original arbitration agreement or a certified copy, and a certified Thai translation of both. Section 9 lets the petition go to the Central Intellectual Property and International Trade Court, a regional court of that kind, the court where the arbitration took place, the court where either party is domiciled, or the court that would have had jurisdiction over the dispute.

What the Thai court will and will not reopen

The court does not hear the dispute again. Under section 43 it may refuse enforcement only if the party resisting it proves one of six grounds: incapacity of a party, an invalid arbitration agreement, lack of proper notice or an inability to present its case, an award outside the scope of the submission, a tribunal or procedure not in accordance with the agreement, or an award not yet binding or already set aside at the seat. Section 44 adds two grounds the court may raise itself: a dispute that cannot be settled by arbitration, and enforcement contrary to public order or good morals.

Judgment 6292/2561 shows both sides of this. A Korean company held a Hong Kong award against two individuals under a share purchase agreement. The Supreme Court refused to hear their argument that the applicant had not proved its corporate existence, because that challenged the trial court's findings of fact and section 45 bars such an appeal. It also refused the applicant's request for interest on terms different from the award, since the court cannot enforce more than the award gives.

Where Thai law still bites: interest

The same case is the clearest warning for anyone drafting a contract governed by Thai law. The tribunal had awarded interest compounded daily. Section 224 of the Civil and Commercial Code does not allow interest on interest during default, and the Supreme Court held that enforcing that part of the award would be contrary to public order. The award was enforced with simple interest only. An award is only as enforceable in Thailand as its terms are compatible with Thai public order, and interest is where that test is most often met.

The petition itself also needs care. In judgment 6933/2543 the applicant asked for payment in baht converted at the rate on the filing date. A lower court that ordered payment in the foreign currency was held to have gone beyond the request, contrary to section 142 of the Civil Procedure Code.

Three years, and when they start

The three years in section 42 run from the date the award can be enforced, which is a question of fact. In judgment 2611/2562 the first-tier award of an international trade association was still open to an internal appeal, which the respondent pursued. The three years were counted from the appeal award, so a petition filed almost four years after the first award was in time. In judgment 664/2561, by contrast, the trial court counted from the day copies of the award reached the parties by registered post and dismissed a petition filed more than four years later, and the creditor's appeal, which blamed a related company's bankruptcy for the delay, fell outside section 45 and was not heard. Keeping proof of the date the award was delivered is worth doing on the day it arrives.

Annulment belongs to the seat

A Thai respondent sometimes tries to go on the offensive and ask a Thai court to annul a foreign award. The Supreme Court has closed that door. In judgment 9476/2558 it held that the Act gives a Thai court power only to enforce or refuse to enforce an award made abroad, and that setting aside must be sought from the courts of the country where the award was made, in line with Article V(1)(e) of the New York Convention. Judgment 8539/2560 applied this to an award made in Liverpool, which the Central Intellectual Property and International Trade Court had purported to set aside. If annulment proceedings are pending at the seat, section 43 allows the Thai court to adjourn and, on the creditor's request, to order the respondent to give suitable security in the meantime.

Appeals are narrow throughout. Section 45 permits an appeal, directly to the Supreme Court, only on the grounds it lists, such as public order, an order that does not match the award, or a dissenting judge.

What this means for the contract you sign now

For a foreign company dealing with a Thai counterparty that keeps its assets in Thailand, the dispute clause decides what you will be able to collect. A clause giving jurisdiction to the courts at home produces a judgment that has to be relitigated in Thailand. A clause providing for arbitration seated in a New York Convention state produces an award that a Thai court will enforce unless one of the statutory grounds is proved. Two further points follow from the cases: if Thai law governs the contract, keep interest terms within what the Civil and Commercial Code allows, and once an award is made, diarise the three-year deadline from the date it becomes enforceable.

Where the debtor is sued in a Thai court despite an arbitration clause, section 14 lets it apply, no later than the date for filing its defence, for the case to be struck out so that the dispute goes to arbitration. The clause works in both directions, and is worth getting right before anything is signed.