THAILAND Trends and Developments Contributed by: Pisut Attakamol, Wasin Lertwalaipong, Pumma Doungrutana and Kosit Prasitveroj, Baker McKenzie
In 2001, the Supreme Administrative Court’s General Assembly expanded this concept by adding two fur - ther examples – ie: • a contract that directly enables a private party to participate in the provision of public services; and • a contract that contains an exorbitant clause grant - ing special powers to a state entity beyond those typically found in a private commercial contract. If a contract is characterised as an administrative con - tract, any dispute arising from that contract falls within the jurisdiction of the Administrative Court rather than the Court of Justice. In addition, the contract becomes subject to a special legal regime, including the ACPA and the general principles of administrative law, which differ in significant respects from the rules governing ordinary private-law contracts. Arbitration of Administrative Contract Disputes Thailand became a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”) through accession in 1959. Subsequently, Thailand enacted the Arbitration Act BE 2545 (2002) (AA), which was modelled substantially on the original version of the UNCITRAL Model Law on International Commercial Arbitration 1985. Importantly, the AA expressly recognises that a con - tract involving a state entity may contain an arbitration clause, regardless of whether that contract is char - acterised as an administrative contract. As a general principle, therefore, disputes arising out of an adminis - trative contract are capable of being resolved through arbitration. In 2015, the Council of Ministers issued a guide - line confirming that a state entity may, as a general rule, include an arbitration clause in its contracts. An exception applies to concession contracts and PPP contracts, for which approval from the Council of Min - isters is required before an arbitration clause may be included. Although compliance with this guideline is not a legal requirement for the validity of an arbitration agree - ment, state entities generally adhere to it in practice. In
addition, state entities commonly prefer the Thai Arbi - tration Institute (TAI) or the Thailand Arbitration Center (THAC), both of which operate under state oversight. From experience over the past decade, the authors have observed a decline in the use of arbitration in PPP contracts. Notably, PPP contracts executed for major rail projects after 2017 generally do not contain arbitration clauses. This trend may be attributable, at least in part, to the Hopewell saga, in which the Thai government was ordered to pay damages amount - ing to several billion Thai baht following an arbitral award. That said, arbitration remains a dispute resolu - tion mechanism that the Thai government continues to consider in other types of public contracts. Practical Challenges in Arbitrating Administrative Contract Disputes When resolving an administrative contract dispute, an arbitral tribunal must apply both the Civil and Commercial Code (CCC) and the general principles of administrative law, such as the principle of public service. A key challenge is that many of these prin - ciples have been developed through the Supreme Administrative Court’s case law rather than through legislation alone. For example, in one case, an arbitral tribunal held that a private party validly terminated an administrative contract under Section 387 of the CCC due to the state party’s failure to pay. The Supreme Administra - tive Court later set aside that arbitral award, holding that the principle of continuity of public service pre - vents a private party from unilaterally terminating an administrative contract even where the state party is in breach. Instead, a private party must obtain a court order terminating an administrative contract. The Administrative Court’s Traditional Approach to Judicial Review Administrative law regards an administrative contract as an instrument for the provision of public services. Accordingly, the formation, performance and termina - tion of an administrative contract may have implica - tions for the public interest. This stands in contrast to arbitration, which is funda - mentally based on party autonomy and private con -
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