Hopewell Lesson and the Upgrading of Thai Arbitration
It is believed that over the past month, many of you have heard about Hopewell’s case, about not accepting a request for a new trial by the Administrative Court. The court decided to end a national project that lasted for more than 30 years. In the beginning, it was with good intention, aiming to reduce traffic jams in elevated ways. Unfortunately, over the years, only the pillars left. The budget of thousands of million was wasted paying bills to private companies for a total of 25 billion Baht.
Back at the time when the dispute arose, because the dispute was submitted for settling to an arbitral tribunal, many people heard the word “arbitration” for the first time. In the award, the Ministry of Transport and the Railway of Thailand (SRT) have to pay compensation of approximately 1.1 billion Baht plus interest to Hopewell (Thailand) Co. Ltd.
Arbitration still raises doubts about its effectiveness in solving disputes, in particular, regarding the impartiality of the arbitral tribunal and the request to revoke the award. Today, the THAC has the honor to interview Prof. Dr. Sahathon Ratanaphaijit, a member of the Faculty of Law of the Thammasat University. He will talk about arbitration and answer questions related to the above-mentioned case.
Interview with Prof. Dr. Sahathon Ratanaphaijit
THAC: Many people are wondering why arbitration was chosen as a method to settle this dispute, especially considering that many Thai are not familiar with it. How popular is arbitration in an international context and how is it recognized?
Prof. Dr. Sahathon: First of all, it is important to distinguish between disputes among Thai parties and disputes concerning a Thai party and a foreign party because the choice of arbitration involves much consideration.
In a dispute between a Thai party and a foreign party, the latter wants to avoid litigation in Thai courts since in its view, these courts could not be impartial judging the dispute. Thai, as well, they do not want to litigate in front of a court of another country for the same reason. This is the reason behind the choice of a third party to settle the dispute. This third party takes the name of an arbitrator.
In the case between Thai parties, the reason to choose arbitration is different. If Thai parties are doing business under the Thai law and have the opportunity to litigate in front of Thai courts, why do they need to choose an alternative method to settle their dispute besides arbitration?
This issue has been discussed since the reign of King Rama 5 when the law was reformed. Thailand is not the only country in the world, it is a very small country that needs to deal with other States. For this reason, it is more beneficial to rely on international rules instead of being left alone without interferences from other countries.
THAC: In a lawyer’s point of view, are arbitrators impartial and independent enough to settle disputes? And specifically, talking about arbitration in Thailand?
Prof. Dr Sahathon: Arbitrators are supposed to be impartial and independent. Parties are not forced to choose one arbitrator; they can carefully choose who will decide the dispute. The losing party can claim that the third party judging the dispute is not impartial and independent but this would be a quick and wrong conclusion. It is important to keep in mind that there is a specific process behind the appointment of an arbitrator. This process follows rules that allow parties to select someone impartial and independent. Moreover, the parties can control the arbitrators’ conduct according to the rules. I think the rules that ensure arbitrators’ impartiality and independence are quite universal today.
THAC: What do you think about the acceptance of an arbitral award in Thailand? Is there a big percentage?
Prof. Dr. Sahathon: We have to distinguish two matters if your question is regarding the parties’ acceptance of the award, I am not aware of such percentage. Instead, if your question concerns the award’s acceptance due to its lawfulness and fairness, the matter is different. This is what we should focus on, the conduct of the arbitrators because the victory and the loss in a dispute mainly depend on the lawyers representing each party.
THAC: Thai Government lost in different arbitrations, is it possible that arbitration is a key factor to explain such losses, representing a disadvantage for the government?
Prof. Dr. Sahathon: Let me show you an example, try to imagine a car accident, it would be impossible to say at a first glance if it depends on the driver, the car or the road. Only after checking the facts of the accident, it would be possible to identify its cause.
In the same way, arbitrators and judges cannot decide immediately who is right, they base their decisions on evidence, for instance, the provisions of the contract between parties. The victory or loss will be according to such provisions. Since both, arbitrators and judges, base their decision on the same evidence, they will reach the same decision, so there is no much difference between arbitration and litigation.
THAC: In the Hopewell case and other projects between the Government and private companies, arbitration has been used as a method to settle disputes. Often those arbitration proceedings resulted in the loss of the Government. What mistakes have been done, and how can we prevent this to happen again in the future?
Prof. Dr. Sahathon: This is a good question. Talking about mistakes, the best way to avoid any problem is prevention. When there is a project it is better to conduct a detailed analysis to identify all the obstacles that can be encountered and to check how that project has to be realized. It happened that the Government did not check anything, only signed papers; at this instance, the Government was already in breach of the contract. It has to be noted the importance of contract management, the contract must be strictly followed. In case problems arise, a solution should be found according to the contract. I emphasize this point because the problems of our country are mainly due to this issue. Do not focus on the wrong issue, if you lose the case, do not complain why you have been judged wrong but focus on what made you lose the case.