“Public policy” as a ground for challenging arbitral awards has long been a controversial issue among arbitration practitioners in Thailand. Under the Arbitration Act B.E. 2545 (the “AA”), the term public policy is not defined, and therefore there is no clear basis for determining the extent to which the concept should be interpreted. As a result, at the stage of enforcement or challenge of arbitral awards, Thai courts exercise their discretion on a case-by-case basis in determining whether a particular matter falls within the scope of public policy with the aim of protecting the “peace and good morals” of the people of Thailand. This might include instances where enforcing an award could harm national economic security or societal well-being. However, the precise meaning and scope of public policy have not been clearly defined by Thai courts.
In this article, we have summarized recent trends and developments in how Thai courts apply the public policy ground when reviewing arbitral awards. Broadly, Thai courts’ application of public policy in the judicial review of arbitral awards can be categorized into two areas: procedural aspects and substantive aspects of arbitral awards.
1. Public Policy in Judicial Review of Procedural Aspects of Arbitral Awards
Thai case precedents have consistently held that arbitral awards may be challenged on public policy grounds where the arbitral proceedings fail to comply with due process. For example, challenges may arise from concerns regarding the impartiality or independence of arbitrators1, or where the dispute submitted to the arbitral tribunal has already been adjudicated by another forum under the principle of res judicata2. In such circumstances, Thai courts do not review the substantive content of arbitral awards. Instead, they examine whether the arbitration proceedings were conducted in accordance with the applicable procedural laws and principles of due process.
2. Public Policy in Judicial Review of Substantive Aspects of Arbitral Awards
With respect to the substantive content of arbitral awards, the approach of Thai courts in determining whether an award should be challenged on public policy grounds varies. Based on current case precedents, such challenges may generally be categorized into two types: challenges based on the adjudication of law and challenges based on the adjudication of facts.
2.1 Challenges Based on the Adjudication of Law
In many arbitration-friendly jurisdictions, courts generally interpret the public policy exception narrowly and will not set aside or refuse enforcement of an arbitral award merely because the tribunal may have incorrectly applied the law. By contrast, Thai courts have in certain cases adopted a broader approach, holding that an arbitral award which contradicts mandatory provisions of Thai law may be unenforceable on the ground that it violates Thai public policy.
For example, an arbitral award granting compound default interest has been held violate public policy and therefore cannot be enforced3 since Thai law explicitly prohibits compound default interest under Section 224 paragraph two of the Civil and Commercial Code.
Another example involves the misapplication of the statute of limitations. Although the statute of limitations is generally not considered a matter of public policy in ordinary court proceedings, Thai courts have taken the view that an incorrect application of limitation law by an arbitral tribunal may render the award contrary to Thai public policy and therefore subject to being set aside4.
Another illustration arises where the underlying contract is tainted by corruption or unlawful conduct. In Supreme Court Judgment No. 7277/2549, the Court held that an arbitral award based on a contract obtained through corrupt conduct by public officials could not be enforced, as such conduct violated the laws relating to public order and good morals. The Court reasoned that enforcing an award arising from a contract procured through corruption would be contrary to Thai public policy and detrimental to public interests. This decision demonstrates that Thai courts may refuse enforcement of arbitral awards where the underlying legal relationship itself is unlawful or contrary to public order5.
The Supreme Administrative Court (“SAC”) has adopted a similar approach in cases where arbitral tribunals adjudicated disputes in a manner inconsistent with the governing substantive laws. In such circumstances, the SAC has set aside the arbitral award8.
2.2 Challenges Based on the Adjudication of Facts
The approach of Thai courts toward challenges based on factual determinations varies. As a general principle, Thai courts will not accept challenges against the arbitral tribunal’s discretion in determining pure questions of fact, as such matters fall within the exclusive authority of the arbitral tribunal where courts will not intervene. Examples include challenges relating to the tribunal’s determination of the amount of completed work in a construction dispute7, or challenges concerning the tribunal’s assessment of facts and evidence8.
However, the approach becomes more nuanced when the challenge concerns the application of contractual provisions to the facts of the dispute. In this respect, Thai courts of justice and Thai administrative courts appear to adopt slightly different approaches.
For administrative courts, there are instances where the courts review the substantive contents of arbitral awards which clearly contradict the governing contractual provisions . In such cases, the courts may consider setting aside or refusing enforcement of the award on the grounds that it contradicts public policy. This approach partly reflects the nature of disputes under the jurisdiction of administrative courts, which frequently involve public interest considerations. For this reason, the courts may consider it reasonable to exercise judicial review over arbitral awards to ensure that such awards do not adversely affect public interests. However, earlier decisions of the SAC did not provide clear thresholds for determining when a matter constitutes a violation of public policy.
A more recent SAC judgment has clarified this position. In that case, the SAC stated that courts are not in a position to correct the substantive contents of arbitral awards11 12 13, particularly with respect to the arbitral tribunal’s discretion in interpreting contractual provisions, unless the award severely affects the justice system or clearly conflicts with public morals, such as an arbitral award enforcing the purchase of narcotics, or an arbitral award enforcing a contract made by corruption10.
For courts of justice, the majority of case precedents hold that challenges based on the arbitral tribunal’s interpretation or application of contractual provisions are not grounds for setting aside or refusing enforcement of arbitral awards11 12 13. Courts reason that they should not interfere with the tribunal’s factual determinations, as doing so would undermine the parties’ intention to resolve their disputes through arbitration.
Nevertheless, some minority precedents have taken a different approach. In certain cases, Thai courts have considered that where an arbitral tribunal adjudicates a dispute inconsistently with the governing contract, the resulting award may be contrary to public policy. For instance, the court may view such an award as inconsistent with the principle of autonomy of will, thereby conflicting with public policy14.
Emerging Developments in Judicial Review
In recent years, a new trend has emerged in the courts of justice, where courts appear to be more willing to review the substantive content of arbitral awards. While Thai courts have traditionally adopted an arbitration-friendly approach, recent decisions suggest that courts may intervene where serious errors in the application of law are considered to affect the integrity of the judicial system and therefore violate public policy.
In Supreme Court Judgment No. 6020/6021/2567, the Court held that an arbitral tribunal’s failure to take a relevant contractual provision into account when rendering the award constituted a violation of Section 34 of the AA. Consequently, the Court set aside the award on the ground that it violated public policy15.
Similarly, in Supreme Court Judgment No. 145/2568, the Court ruled that where an arbitral tribunal incorrectly applied a contractual provision in a manner inconsistent with the factual circumstances of the dispute, the award may be set aside for violating public policy16.
Conclusion
It remains uncertain whether Thai courts will continue to follow these recent precedents. Overall, however, these developments provide useful guidance on how Thai courts may apply public policy as a ground for challenging arbitral awards.
In administrative cases, the recent precedents appear to impose stricter limits on challenges to arbitral awards, which may help prevent losing parties from using challenges as delay tactics and may facilitate faster enforcement of arbitral awards.
Conversely, in the courts of justice, recent decisions suggest a greater willingness to review certain substantive aspects of arbitral awards. This development signals the need for arbitration practitioners to exercise greater care and thoroughness in arbitral proceedings and award drafting, which may ultimately enhance the overall standard and quality of arbitration in Thailand. Selecting an appropriate dispute resolution mechanism involves numerous considerations and may vary depending on the nature of each business. Given the uncertainty surrounding the future approach of Thai courts, parties should also be mindful of the potential risks at the stage of enforcement or challenge of arbitral awards. We recommend seeking advice from arbitration specialists for strategic decision-making and representation.
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1 Supreme Court Judgment No.3542/2561
2 Supreme Court Judgment No. 11102/2551
3 Supreme Court Judgment No.6292/2561
4 Supreme Court Judgment No.920/2563
5 Supreme Court Judgment No. 7277/2549
6 Supreme Administrative Court Judgment No.Aor.1259-1260/2559
7 Supreme Administrative Court Judgment No.Aor.82/2557
8 Supreme Court Judgment No.1406-1407/2567
9 Supreme Administrative Court Judgment No.Aor.968/2563
10 Supreme Administrative Court Judgment No. Aor.72-73/2566
11 Supreme Court Judgment No.1985/2541
12 Supreme Court Judgment No.2611/2562
13 Supreme Court Judgment No.5560/2562
14 Supreme Court Judgment No.1730-1731/2555
15 Supreme Court Judgment No.6020-6021/2567
16 Supreme Court Judgment No.145/2568