THAILAND Trends and Developments Contributed by: Pisut Attakamol, Wasin Lertwalaipong, Pumma Doungrutana and Kosit Prasitveroj, Baker McKenzie
sent. Against this backdrop, the Administrative Court has traditionally exercised close scrutiny over arbitra - tion involving administrative contracts, including care - ful review of arbitral awards. Historically, it was not uncommon for the Administra - tive Court to engage in substantive review of arbitral awards, extending to issues such as factual findings, contractual interpretation, and the application of law. In doing so, the Administrative Court frequently set aside arbitral awards that did not favour state entities by relying on the public order violation ground under Section 40 paragraph 3 (2)(b) of the AA, which cor - responds to the public policy violation ground under Article V(2)(b) of the New York Convention. As a result, the scope of judicial review exercised by the Adminis - trative Court was exceptionally broad. The Hopewell Turning Point The position began to shift in 2019 with Supreme Administrative Court Decision No Or 221-223/2562 (2019), which enforced the arbitral award in the Hopewell saga. In that decision, the Supreme Admin - istrative Court clarified that allegations concerning erroneous findings of fact, contractual interpretation or the application of law do not involve issues of pub - lic order. Accordingly, the Administrative Court does not have authority to review such matters when con - sidering whether an arbitral award should be set aside or enforced. At the same time, the Supreme Administrative Court examined arguments relating to limitation periods and the termination of an administrative contract, suggest - ing that these issues may still be regarded as matters affecting public order. The Hopewell saga gave rise to divergent views on the appropriate scope of judicial review. On the one hand, the Supreme Administrative Court adopted a more restrictive approach towards reviewing arbitral awards. On the other hand, that approach attracted criticism because it resulted in the Thai government being required to pay several billion Thai baht in dam - ages from public funds. In response, a proposal was made to introduce a new Arbitration Bill that would expressly empower the Administrative Court to review the merits of arbitral awards arising from administra -
tive contract disputes. However, the proposed legisla - tion was ultimately not enacted. Clarification by the Supreme Administrative Court in 2023 This issue became much clearer in 2023 with Supreme Administrative Court Decision No Or 73/2566 (2023). In this case, an arbitral award was rendered against a state entity under a sub-carrier lease contract. The state entity subsequently applied to set aside the arbi - tral award. The Central Administrative Court set aside the arbitral award on the public order violation ground under Section 40 paragraph 3 (2)(b) of the AA, and the private party appealed. On appeal, the Supreme Administrative Court reversed the judgment and enforced the arbitral award. In doing so, the Supreme Administrative Court provided significant clarification regarding the scope and limits of the public order vio - lation ground. The Supreme Administrative Court reiterated that the AA was enacted to recognise arbitration as an alterna - tive dispute resolution mechanism and to enable par - ties to resolve disputes efficiently and expeditiously outside the court system. Consistent with that objec - tive, the Supreme Administrative Court emphasised that its power to review arbitral awards under the AA is limited in scope. This contrasts with the Administrative Court’s broader supervisory powers over other forms of administrative action, where the Administrative Court generally exercises a wider review jurisdiction. The Supreme Administrative Court further held that the concept of public order under Section 40 para - graph 3 (2)(b) of the AA must be interpreted in light of the spirit and objective of the AA. Accordingly, the term should be construed narrowly so as to prevent unsuccessful parties from using court proceedings to re-litigate disputes that have already been determined through arbitration. Otherwise, the finality and effi - ciency of arbitration, which the AA seeks to promote, would be undermined. Most significantly, the Supreme Administrative Court explained that an issue will only fall within the scope of public order under Section 40 paragraph 3 (2)(b) of the AA where it affects the fundamental structure of
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