The Permissibility of Third-Party Funding for Litigation in the Thai Legal Landscape

• (1)Bank Loans. While loan providers charge interest regardless of the outcome of the case, funders in TPF transactions secure a percentage of the proceeds of the award or settlement if the claim is successful. 
• (2)Insurance Products. While insurers receive a premium regardless of the outcome of the case, funders in TPF only make a profit if the claims are successful. Furthermore, whilst insurers have a coverage cap, funders in TPF do not merely cover a party’s costs up to a certain amount (i.e. coverage cap). Rather, they try to get a return from the investment.
• (3)Lawyer Contingency Fees. While lawyers are already involved in the proceedings as lawyers, a funder in TPF is a third party/non-party who is unrelated to and has no prior interest in the legal proceedings. In addition, a lawyer s a service in return for a fee and is governed by ethics and rules. However, funders invest in an asset subject to little direction or administration⁵.

(1)Section 853 of the Civil and Commercial Code (the “CCC”) regarding “Gambling (พนัน) and Betting (ขันต่อ)”
A TPF contract, at face value, appears to be some kind of Gambling (พนัน) and Betting (ขันต่อ) (“GB”) transaction, because the funder will receive returns only if the party that it financed wins the case; otherwise, it loses all of its investment. If a TPF contract were indeed considered a GB transaction under Section 853 of the CCC, the consequence is that no obligation is created, which means that the funder is unable to enforce the TPF contract if the party it financed wins the case but fails to honour his/her promise to share a portion of the proceeds with the. 
According to the Royal Institute Dictionary, an official dictionary used to interpret Thai words and often cited by law practitioners as a supplemental source to confirm the meaning of words in case of ambiguity in the language of laws, “Gambling (พนัน)” means: “A Game, using money or other things, which relies on intelligence, versatility, craftiness, acuteness and skill as well as luck ”⁸; while “Betting (ขันต่อ)” means: “Negotiation of which success relies on a future and uncertain event”⁹. Therefore, under said definition, TPF is not considered as  GB because: a) a funder is not personally involved in the lawsuit by using his/her own “intelligence, versatility, craftiness, acuteness and skill as well as luck ”; and b) there is no negotiation during the legal proceedings, which relies upon the burden of proof of each party and the consideration of the case by judges. It is not an action of leaving something to chance. Therefore, a TPF contract is not a GB transaction¹⁰. 
However, in order to ascertain whether or not the formation of a TPF contract would create an obligation, there are other factors to take into consideration in addition to Section 853 of the CCC. 

(2)Section 150 of CCC regarding “Voidness of Juristic Acts”
Under Thai law, Section 150 of the CCC is a fundamental provision determining whether or not a juristic act, including a TPF contract, should be regarded as being void, and there are three boundaries that a juristic act must not cross otherwise it will become void pursuant to this Section 150, as follows:

• Express prohibition by law, despite the fact that there was previously a provision in the Lawyers Act B.E. 2477 (1934) and B.E. 2508 (1965) prohibiting lawyers from charging legal fees by taking proceeds from the winning party, such prohibition was abolished in the subsequent Lawyers Act B.E. 2528 (1985) and Thai Lawyer Council’s Regulation on Lawyers' Professional Etiquette B.E. 2529 (1986), Consequently, there is currently no express legal provision prohibiting such practice under Thai law¹¹.  
• Impossibility of performance of obligation. Due to the fact that the obligation of a TPF contract is for one party (the funder) to provide financial support to a legal case and the other party to keep his/her promise to share a portion of the proceeds from the case to the funder if a favourable outcome is obtained, such obligation is therefore not impossible to perform. Consequently, a TPF contract does not cross this boundary. 
• The nature of being contrary to public order or good morals is a broad concept, both complex and abstract, which allows judges to exercise discretion to determine in accordance with the current trend and development of society, and can be complicated. Pursuant to the study of relevant precedents laid down by the Supreme Court of Thailand, it is found that Supreme Court is rather conservative towards the concept of an unrelated party providing financial support to a party in a lawsuit, and has regularly regarded this practice as contrary to the public order or good morals. For example, Professor Jitti Tingsapat, one of the most influential legal scholars and a former Supreme Court Judge in Thailand, commented in the obiter dictum (a judge's incidental expression of opinion, not essential to the decision and not establishing precedent) of a Supreme Court judgment that: “…the practice of taking a portion of proceeds belonging to the client from a case is a forbidden practice for lawyers according to the law of the Kingdom of Thailand. Such prohibition expands its scope to non-lawyers and this derives from English law, under which it is regarded as a criminal offence on the grounds of ‘Maintenance and Champerty’ in common law…”¹². 
  Furthermore, two recent Thai Supreme Court judgements also resolved that the practice of an unrelated party providing financial support in order to share proceeds in a case is considered against the public order and good morals of Thailand. For instance, contracts where lawyers advance litigation expenses for the client in exchange for legal fees only in the case of victory¹³, or where an unrelated and non-lawyer funder advance litigation expenses in exchange for half of the proceeds as returns¹⁴, are considered against public order and good morals. This is because such practices involve an unrelated party attempting to profit from a dispute involving two unrelated parties, and thus promotes the disputes of others, which could lead to more discord and disarray in society, and therefore should not be encouraged. 
  TPF practices have regularly overstepped the mark regarding this third boundary provided under Section 150 and as a result cannot be legally enforced under the current position of Thai courts.