Understanding what ‘arbitration institutions’ is and what is the difference to a court of arbitration?

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What to do when facing with disputes but do not want to pursue in a court? Get to know ‘arbitration institutions‘, an Alternative Dispute Resolution where parties can legally settle the dispute ‘out of court’.

What is an arbitration institution? Is it the same as a court of arbitration? First, let us get started with understanding the arbitration proceeding.

What is Arbitration?

Arbitration is one of Alternative Dispute Resolution (ADR) method that, under Arbitration Act B.E. 2545, allow the disputant to settle their problem with ‘an award’ issues by a third party who is knowledgeable and skilled as well as being impartial and independent (called arbitrator), instead of by ‘court or the judge’. Arbitration is a voluntary ADR where the parties must be mutually agreed to arbitration in order to initiate an arbitration proceeding.

How can the parties select and appoint an arbitrator?

Arbitration proceeding allows the parties to select and appoint arbitrators themselves through two methods;

1. Ad Hoc Arbitration. The parties may proceed with an arbitration on their own rules. The parties can specify the appointment of arbitrators along with the procedure and the settlement of their issues. This method may not appropriate for the parties who have no prior experience or skill since the specified procedure may found many loopholes.

2. Institutional Arbitration. The parties can have an arbitration service from an arbitration institute or center. The parties will have the liberty to choose their arbitrator from the list of suggested arbitrators by the center, but such center’s rule will govern the proceeding’s framework and regulation. This method is more prevalent as most centers will have standardized procedures which are primed and comply with the legal requirements. Centers also provide a variety of personnel and experts in arbitration for the selection.

There are many institutes and centers which provide service in arbitration. Examples for such centers in Thailand are the Thailand Arbitration Center or THAC, the Thai Arbitration Institute, and the Thai Commercial Arbitration Office, the Board of Trade of Thailand. Other centers in foreign countries are the International Chamber of Commerce (ICC) and the American Arbitration Association (AAA).

Institutional arbitration VS court of arbitration

Apart from institutional arbitrations, which provide arbitration services for individuals, businesses, organizations, and government, there are courts of arbitration, including The Permanent Court of Arbitration (PCA), The Court of Arbitration for Sport (CAS). The courts of arbitration also provide arbitration services but focusing on the disputes between major organizations or international disputes, such as the territorial disputes in the South China Sea between China and the Philippines.

What is the difference between Arbitration and Mediation?

Mediation is an out-of-court dispute resolution using ‘third party/intermediary’ (called a mediator) to assist the parties, similarly to arbitration. The key difference is that while the arbitrator has the authority to deliver judgment, the mediator does not have the power to order the parties for settlement nor to order outcomes in mediation. The parties may have to continue resolving their issues by other methods such as arbitration or pursuit in the court proceeding (litigation).

What to do when disagreeing with the arbitral award?

An arbitral award is binding on both parties, and since it decides on what is right or wrong, there are inevitably a loser and a winner. Occasionally, when one party disagrees with the award, that party can request the court to annul the arbitral award within 90 days from the date of receipt of the award’s copy. The court may approve or dismiss the request depends on the ground for annulment. There are grounds for request an award annulment by the court, for example;

The proceeding is not transparent or not comply with the agreement
The requesting party was not aware of the proceedings.
The incapacity of the parties.
The contract has no legal binding by the governing law of that agreed country.
The award is out of scope / beyond the scope of the agreement.
The court views that the dispute cannot be settled through arbitration.
The court found that the award was contrary to public order and good morals.

Advantages of dispute resolution by arbitration

• Fast-moving

As the court proceeding has excessive procedures and the parties are entitled to appeal to courts, it consumes time. However, an arbitration proceeding can end quickly without complicated procedures.

• Competent Arbitrators who expertized in disputing matters

Arbitrators, especially those appointed by the parties, are well specialized or expertized in disputing matters. Their skills help to quickly understand facts and evidences on matters and decide on matters swiftly and equitably. On the other hand, the parties cannot select “the arbiter” (the judge) in the court proceeding and may find themselves with the generalized judge who does not truly understand the depth of the matters.

• Maintaining Reputation and Confidentiality

Arbitration is conduct privately, with only disputants and related parties are allowed to enter the proceeding. Outsiders will not be able to find the fact directly, so they are unlikely to know whether there is a dispute between parties. This is precisely why it helps maintain the parties’ reputation and keep the business secret, in contrast with the court proceeding where the proceeding is done in public.

Thailand Arbitration Center or THAC is a center that provides services in arbitration and mediation with an international standard. It has been in operation since 2015 to support and promote international arbitration and provide arbitration services that are independently operated with international standards. With experience and professional expertise, thus, ensuring that users will receive accurate and fast services. Also, THAC is located in the central business district, which makes it easy to travel. It also offers services at a lower rate which helps you to save both time and money.

If you are interested, please contact THAC at email [email protected] or call +66 (0) 2018 1615.

For further information, please contact THAC!

Understanding what ‘arbitration institutions’ is and what is the difference to a court of arbitration?