Disputes
Choice of law and resolution methods
In your jurisdiction, are there constraints on the choice of law or the method of dispute resolution provided for in joint venture agreements?
Thailand adopts the principle of party autonomy as grounds for recognising the parties’ choice of law (to the extent that the party relying on the foreign law can provide its existence to the satisfaction of the court, and it is not contrary to Thai public order and good morals) and method of dispute resolution. Nonetheless, in Thai market practice, provided that the joint venture company is located and operated in Thailand, it is advisable to prescribe Thai law as the governing law of the joint venture agreement. As for the method of dispute resolution, if the joint venture parties are of various nationalities, arbitration may be a dispute resolution of choice, wherein the place of arbitration may be a country neutral to the disputing joint venture parties. It is worth noting that foreign judgments would not be enforced by the Thai courts, but would be permissible only as evidence in a new trial.
Mandatorily applicable local law
What mandatory provisions of local law will apply irrespective of the choice of governing law?
Under the Conflict of Law Act 1938, foreign law can apply only to the extent that it is not contrary to Thai public order and good morals. Based on the precedent set by the Supreme Court of Thailand in Supreme Court Decision No. 3402/2548, the provisions of the Thai Civil and Commercial Code (CCC) with regard to, among others, company formation, distribution of dividends, and relationships between the shareholders and the company, are deemed to relate to Thai public order. Thereby, the joint venture parties are prohibited from agreeing on these matters to the contrary of the CCC; otherwise, such an agreement shall be void and the CCC shall apply. In this regard, it is worth noting that the parties are expressly permitted by the CCC to agree on certain matters differently from the provisions of the CCC; for example, the quorum of the shareholders’ meeting and the method of voting.
Remedy restrictions
Are there any restrictions on the remedies a tribunal can grant that would have a bearing on the arbitration of joint venture disputes? Are there any restrictions on the arbitration of shareholder claims?
Under the Thai Arbitration Act 2002, as amended, an arbitral award, irrespective of the country in which it was made, shall be binding upon the parties to the dispute and, upon application to the competent court of Thailand, shall be enforced. If the arbitral award was made in a foreign country, the competent court of Thailand may render judgment for enforcement of the award only when it is governed by an international agreement to which Thailand is a party and this shall have effect only to the extent that Thailand agrees to be bound thereby.
Nonetheless, the competent court of Thailand shall be empowered to issue an order refusing enforcement of an arbitral award, irrespective of the country in which it was made, if the party against whom it is invoked can furnish proof that, among others, the arbitration agreement is not binding under the law of the country to which the contractual parties have agreed. In addition, the court shall also be empowered to refuse to enforce an arbitral award if it is apparent to the court that the award deals with a subject matter that is not capable of settlement by arbitration under the law, or that the enforcement of the award would be contrary to public order or good morals.
Minority investor protection
Are there any statutory protections for minority investors that would apply to joint ventures?
Under the CCC, any shareholder shall be entitled, among others, to file a lawsuit against the director who causes damages to the company if the company refuses to do so, and to inspect the minutes of all proceedings and resolutions of the company’s directors and shareholders. The shareholders, holding altogether at least 20 per cent of the total shares of the company, shall be entitled, among others, to summon a shareholders’ meeting and request that the registrar conduct an inspection of the company. In addition, to protect minority shareholders, the CCC requires certain matters that may significantly affect the management and condition of the company to be approved by a special resolution of the shareholders’ meeting (ie, 75 per cent of the total votes of the shareholders attending the meeting and eligible to cast the votes); for example, amendments to the articles of association and dissolution of the company. This means that, to pass these resolutions, affirmative votes of minority shareholders could be of high importance.
Liabilities
How can joint venture parties have liabilities to each other beyond what is expressly agreed in the joint venture agreement?
Apart from the liabilities under the joint venture agreement, the joint venture parties may be liable to each other under the general provisions of law, such as tort liabilities under the CCC.
Disclosure of evidence
Are there any particular issues that can arise in joint venture disputes in your jurisdiction concerning disclosure of evidence?
In civil cases, the parties are generally required to submit the list of evidence setting out the documents and other evidence that they wish to lodge with the court at least seven days prior to the evidentiary hearing. Copies of the documentary evidence are required to be submitted to the court and the counterparty, except in cases where, for example, the original document is in the counterparty’s possession, which the court may order to be produced upon request of the party.
With respect to attorney–client privilege, registered Thai lawyers are subject to the ethical mandate, which prohibits them from disclosing the client’s confidential information unless prior consent from the client is granted or an order is issued by the court. Violation may result in professional sanction (ie, probation, suspension of practice or deletion from the Register of Lawyers).
