On 30 December 2016, the Thai Arbitration Institute (the "TAI") published updated arbitration rules (the "TAI Rules 2017"). The rules came into force on 31 January 2017 and, unless otherwise agreed by the parties, will apply to all TAI arbitrations commenced after that date. The TAI's arbitration rules are not updated frequently and this is the first update since 2003 (the "TAI Rules 2003").
The changes implemented in the TAI Rules 2017 are designed to promote efficiency, speed, transparency and fairness in proceedings. In particular, they seek to address some of the practical problems that arose under the TAI Rules 2003.
What is new under the TAI Rules 2017?
The TAI Rules 2017 introduce many new concepts and processes that were not included in the TAI Rules 2003. The main changes of significance are as follows.
Removal of right to challenge appointment of arbitrator in court (Article 23)
Under the TAI Rules 2003, any challenge to the appointment of an arbitrator was referred to the arbitral tribunal for a decision. However, if the party making the challenge was unsuccessful, rule 18(2) allowed that party to submit the challenge to the Thai courts. This process was used by some parties as a delaying tactic – they would often challenge the appointment of arbitrators in court in order to delay the arbitration.
Under the TAI Rules 2017, the arbitral tribunal will decide on any challenge to the appointment of an arbitrator unless the TAI decides that it is appropriate to appoint an independent umpire (or three umpires) to decide on the challenge. The umpire (or umpires) must make a decision within 15 days of their appointment. The TAI Rules 2017 state that the decision of the umpires is final. If the party bringing the challenge is unsuccessful, the rules do not include a right to challenge the umpires' decision in court. The intention of the TAI appears to be to avoid delay. However, this conflicts with section 20 of the Thai Arbitration Act 2002 (the "Arbitration Act"), which states that unsuccessful arbitrator challenges may be submitted to the courts.
It remains to be seen whether an agreement by the parties to adopt the TAI Rules 2017 (or a generic reference to "the rules of the Thai Arbitration Institute") would be interpreted as an agreement not to challenge the appointment at court. Ultimately, this is a question that will need to be determined by the Thai courts.
In addition, it would be interesting to see how this new rule concerning umpires would work in practice, including how the umpires will be appointed, the procedure for the appointment of umpires and whether there will be a panel of regular umpires.
Sole arbitrator as default position (Articles 14 and 15)
In the event that the parties do not fix or otherwise agree the number of arbitrators, the TAI Rules 2017 stipulate that the default position will be to have a sole arbitrator. If the parties cannot agree on the identity of the sole arbitrator, the rules set a specific period of time in which the parties must nominate candidates for the role. If any party does not nominate its candidate within that period, or the nominated candidate does not accept the appointment, then the TAI has the power to make the nominations or the appointment (as the case may be).
This is a welcome change that should reduce the ability of a party to delay the appointment of the tribunal.
Power to grant interim measures (Article 39)
Under the TAI Rules 2003, the arbitral tribunal did not have the power to grant interim measures. Therefore, parties' only option was to make an application to court pursuant to section 16 of the Arbitration Act. This was complicated because the courts could only grant the same interim measures that would have been available had the proceedings been conducted in court.
Under the TAI Rules 2017, the arbitral tribunal is now also given the power to grant interim measures. The advantage to the parties is that there is no similar requirement for the tribunal to consider whether the measure is available in domestic litigation.
In practice, interim measures made by TAI arbitral tribunals will not be enforceable in Thailand without a separate court order. However, this is similar to the position in other jurisdictions, where experience indicates that parties often comply with tribunal ordered interim measures voluntarily (so as to avoid annoying the tribunal). Therefore, this rule change may be helpful in some circumstances.
Service and filing by email (Article 4(4))
The TAI Rules 2003 did not allow the parties to serve or file arbitration documents by email. All documents to be filed had to be provided to the TAI in hard copy. Documents to be served on the parties also had to be provided to the TAI in hard copy for onward transmission to the other party. This process caused inevitable delays in the serving of documents on the parties and occasionally led to parties making non-sequential submissions.
In order to address this issue, Article 4(4) of the TAI Rules 2017 allows service of pleadings, notices, documents and other information by electronic means. The result of this rule change should be increased efficiency of proceedings and decreased costs for parties.
Timetable for the arbitration (Article 28)
Under the TAI Rules 2003, there was no requirement for the arbitral tribunal to establish, at the outset, a timetable for the proceedings. This meant that proceedings could often take a long time and were not dealt with as efficiently as possible.
Under the TAI Rules 2017, within 30 days of the arbitral tribunal being constituted, the arbitral tribunal must consult the parties and establish a preliminary timetable for the proceedings which must not be longer than 180 days. The timetable must then be submitted to the TAI for approval. Any modifications to the timetable can only be made by the tribunal and considered by the TAI. The TAI will only allow an extension "in case of necessity or reasonable causes".
If strictly enforced, this new rule would mark a significant change in the speed of TAI arbitrations. The length of arbitrations under the TAI Rules 2003 was often measured in years rather than months. Previously, extensions of time would be routinely granted to any deadline set by the TAI.
One issue that has not been addressed in the TAI Rules 2017 is that an arbitral tribunal is not allowed to make an award on account of costs in an arbitration. If this were to be introduced, it may help incentivise the parties to adhere to the imposed timetable.
Power to consolidate proceedings (Article 13)
The TAI Rules 2017 grant the TAI the power to consolidate proceedings "regardless of whether the relevant arbitration agreements are identical" and if "such consolidation will render the proceeding to be carried out more convenient [sic]".
Here, the TAI Rules 2017 grant a broad discretion to the TAI, and much broader than the powers of other arbitral institutions with respect to consolidation. It remains to be seen how the discretion will be exercised by the TAI. In addition, there is a risk that a decision to consolidate where the arbitration agreements are not identical – and any subsequent award – could be successfully challenged in court (whether in Thailand or upon enforcement elsewhere).
Other notable changes
Other notable changes made in the TAI Rules 2017 include the following.
- Confidentiality of proceedings is now made explicit (Article 36). Previously, whilst not explicit, it tended to be agreed by the parties or otherwise ordered by the arbitral tribunal.
- The form of the award now needs to be approved by the TAI (Article 47). It remains to be seen to what extent the TAI will actively review the form of the award or comment on it.
- If the arbitration agreement does not provide for the language of the arbitral proceedings then, unless otherwise agreed, the pleadings must be in the language of the contract (Article 10). However, the arbitral tribunal still retains the power to determine the language of the proceedings. Where the arbitration agreement provides for more than one language to be used in the arbitral proceedings, the TAI may order the party to submit a translation of their pleadings in another language specified in the arbitration agreement.
- The TAI has the right to dispose of a case if there is no prima facie evidence of an arbitration agreement between the parties (Article 11). However, this right does not affect the power of the arbitral tribunal to rule on the existence or validity of the arbitration agreement and the scope of its own jurisdiction.
Parties must disclose all communications with an arbitrator or prospective nominee for arbitrator except for certain narrow exceptions (Article 27). Communications discussing prospective candidates for appointment as chairman of the tribunal are not an exception and must be disclosed.
The TAI Rules 2017 are a welcome attempt to bring the rules of the TAI into line with international best practice. It is evident from the changes made that the overall goal of the TAI is to improve the speed and efficiency of TAI arbitrations. It will be interesting to see how the changes will be implemented in practice by the TAI and tribunals.
If you have any questions about how the introduction of the TAI Rules 2017 will impact on the drafting of dispute resolution clauses in contracts or on any current or future TAI arbitrations you may have, then please contact Chinnawat Thongpakdee (Managing Partner), Gavin Margetson (Partner), Emi Rowse (Of Counsel), Niruch Winiyakul (Associate) or Pralakorn Siwawej (Associate) in the Herbert Smith Freehills Bangkok office or your usual Herbert Smith Freehills contact.
Chinnawat ThongpakdeeManaging PartnerEmail
+66 2 657 3829