Arbitration in Thailand: Arbitration clauses in real estate agreements
Arbitration, including arbitration in Thailand, is an alternative dispute resolution option that many businesses and individuals depend on to settle conflicts without resorting to the costs and complexities of court proceedings. Particularly in certain sectors, arbitration is often written into an agreement or contract through an arbitration clause. This is particularly true of real estate transactions, where alternative dispute resolution, such as arbitration, can settle disputes more smoothly than resorting to complex litigation.
Real estate transactions can be rife with potential disputes. As buyers and sellers try to obtain the best outcome for themselves, they may suspect their counterparty is withholding information or not acting in good faith. In many cases, adding a well-drafted arbitration clause into an agreement provides not just a more advantageous dispute resolution method than litigation but it might still provide some peace of mind to involved parties as they enter into a real estate agreement.
What is arbitration and its benefits?
Arbitration in Thailand, like mediation, is a method of alternative dispute resolution (ADR) that conflicting parties can pursue rather than filing a suit in court. Arbitration is similar to a court proceeding in that involved parties present evidence and arguments to a neutral third party, or arbitrator, who then decides on the outcome. However, arbitration differs significantly from there. The involved parties can select the arbitrator(s), procedures and rules, scheduling, and other aspects of the arbitration.
This greater control is one of the benefits that arbitration offers. With this control, parties have more flexibility and convenience when it comes to scheduling and location. Furthermore, arbitration in Thailand can be much more affordable than litigation as there is no need for court and filing fees or for paying for legal representation to assist in navigating the complexities of court proceedings. Another benefit is the confidentiality of arbitration hearings. As they are private, disputing parties may be more forthcoming with the understanding that the process is as public as a court hearing; therefore, they can protect their reputation and proprietary information. Finally, unlike a judge in court who is only expected to be an expert in the law, arbitrators can also be subject-matter experts who have extensive knowledge of the underlying matter.
What is an arbitration clause or agreement?
Parties to a contract or agreement can include an arbitration clause or agreement to confirm they agree to arbitration as the first means of settling disputes between them. It can include details such as what types of disputes would trigger an arbitration, the governing arbitration rules, and who or how to select the arbitrator(s). While these clauses or agreements are typically agreed to simultaneously as the overarching contract, parties can add an arbitration clause after the fact if they all sign an agreement to do so.
Within most agreements, there are causes for terminating such included within, whereby certain circumstances may render the agreement null and void. However, any attached arbitration agreement is covered by the doctrine of separability. This means that the arbitration clause is preserved as intact and enforceable, even if the contract in question is subject to termination.
A major element of arbitration agreements is whether it is binding or non-binding. In both cases, the disputing parties agree to pursue arbitration. A binding arbitration clause means that the parties agree to arbitration and agree to accept the arbitrator’s decision, thereby excluding the possibility of litigation or even an appeal in court. Non-binding arbitration allows the parties to reject the arbitral award and seek remedies in court.
How does an arbitration clause benefit real estate disputes?
As mentioned earlier, an arbitration clause provides parties with an affordable, expedient way to resolve conflicts without resorting to lawsuits in court. As a result, real estate transactions may smooth the process between buyer and seller as they know what remedies are available to them if things go wrong. Furthermore, because they have discussed potential disputes, there is the possibility that the arbitration agreement fostered goodwill and understanding between them as well.
As many real estate deals are time-sensitive, an arbitration agreement can help compress the timeline for any dispute to resolve faster than if the parties sued each other in court. Additionally, for more complex property projects, selecting a third-party adjudicator who is a real estate expert could prove advantageous. Outside experts who may be needed to explain issues to the court may no longer be required, saving time and money.
Rely on THAC for real estate arbitration
Parties contemplating a real estate transaction who want to include a well-drafted arbitration clause or agreement to include in their contract can depend on the Thailand Arbitration Center (THAC). THAC provides arbitration service in Thailand with a full range of ADR resources, including model language for arbitration clauses and access to highly skilled arbitrators with real estate expertise. Furthermore, THAC is a leading ADR center that is conveniently located by the Phrom Phong BTS Skytrain station as well as major thoroughfares in central Bangkok, accessible to major international airports. This ideal location, along with the state-of-the-art facilities, can accommodate arbitration in Thailandand cross-border dispute resolution hearings, both in-person and remotely. Additional assistance is also available in complete administrative service. For more information on how THAC can help you mitigate or arbitrate your business or personal disputes, please contact THAC at [email protected] or +66 (0)2018 1615.