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The TAI takes the 5th: minor amendments with mighty impact?

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The TAI takes the 5th: minor amendments with mighty impact?

The stated aim of the 5th Amendment to the Thai Arbitration Institute’s (“TAI”) Rules, which came into effect on 1 September is to “promote and develop arbitration to be prevalent and widely recognized at the international level”.  The 4th Amendment to the TAI Rules introduced provisions relating to an expedited procedure where the parties agree or the claim is lower than THB 5 million.  Do the latest amendments have any impact on the conduct of arbitration under the TAI Rules going forward?

Overview of the Amendments

[1] Language of Arbitration

Under Article 10, Rules, which relates to the language of arbitration, the 5th Amendment provides that, where the arbitration agreement does not specify the language to be used in the arbitration proceedings or if the Statement of Claim in the arbitration agreement is not in Thai or English, the Claimant is required to submit the translation of the Statement of Claim in Thai. The same provision shall also apply to the Statement of Defence and Counterclaim, as well as the Answer to the Counterclaim.

The new provision  provides welcome clarity that the arbitration proceedings under TAI Rules can also be conducted in languages other than Thai or English. It also reiterates that if the arbitration proceedings are conducted in English, there is no need for the parties to provide a Thai translation for the proceedings.

[2] Hearings of Expert Witnesses

A new method for conducting hearings of expert witnesses is introduced in the 5th Amendment by the addition of Article 33/1 of the TAI  Rules, which allows the Arbitral Tribunal to order the parties to bring in expert witnesses to testify concurrently.  This will allow the Arbitral Tribunal to consider adopting a common-law style concurrent expert evidence (‘CCE’) process, sometimes known as ‘conferencing’ or 'hot tubbing'.  This method is used to adduce and compare evidence, where the expert witnesses testifies in the presence of one other, and are able to comment on each other's opinion in real time.

The advantages of CCE include saving time at any substantive hearing, for example, by narrowing the issues and avoiding repetition (particularly where there are multiple parties with different experts). This will also help reduce costs at any hearing, which is usually the most costly component of the arbitration process.  As well a serving to help the tribunal’s understanding of the issues, CCE, whilst less adversarial, may also serve to encourage experts to be more careful in their evidence, as they may be more conscious of the presence of their counterpart(s) who will be ready to rebut or counter any erroneous evidence or overstatements.

Whilst an effective method to adduce expert evidence, CEE has also been criticised as a practice as it removes the need for cross examination and in order to be properly useful the tribunal will need to well prepared and properly understand the technical expert issues before the hearing.  There has also been criticism of CCE where experts may be tempted to concede points based on academic seniority, or due to the fact CCE is less formal than the usual cross examination process. The introduction of CCE under the 5th Amendment are a positive development and will provide more options for the Arbitral Tribunal to conduct arbitral proceedings in a manner it deems most appropriate, particularly allowing the experts to identify areas of agreement. It is hoped CCE will make arbitration proceedings conducted under the TAI Rules more efficient and therefore less costly in terms of time and money, as well as providing flexibility from traditional court proceedings.

[3] Costs of Arbitration 

Article 56, paragraph 2 of the TAI Rules is an addition under the 5th Amendment which seeks to clarify  “Costs of Arbitration”, by providing that the amount of the Arbitrator’s fees and expenses incurred during the arbitral proceedings (i.e. fees of assistants or representatives) shall be determined or certified by the TAI in an attachment to the arbitral award.

The introduction of this paragraph will ensure that the determination or certified Costs of Arbitration by the TAI becomes a part of future arbitral awards rendered under TAI Arbitration Rules, thus providing further clarity and certainty for parties to pursue reimbursement of such costs in later court proceedings.

[4] Apportionment of the Costs of Arbitration

A new Article 57 is introduced in the 5th Amendment, which provides detailed criteria that the Arbitral Tribunal will take into consideration when determining the issue of apportionment of the costs of arbitration. This includes attempts to carry out the proceedings with speed and efficiency, the circumstances and good faith in the proceedings, how complicated the case is, the duration of the proceedings and expertise. Furthermore, if the responsibility of fees and expenses is not specified in the arbitral award, this newly introduced provision provides an express default apportionment that each party shall equally bear such costs.

Interestingly, Article 57, paragraph 2 empowers the Arbitral Tribunal to specify the interest for payment of compensation in the case where a party has deposited the security for expenses, fees and arbitrator’s fees in lieu of another party; a provision that should encourage the parties to make their contribution financially in the arbitration proceedings, because failure to do so may result in more compensation being paid due to the levying of interest.

In summary, the 5th Amendment, whilst relatively minor, gives the TAI’s Arbitration Rules some way to achieving its aim of internationalizing and modernizing the conduct of arbitration under its Rules, particularly in relation to efficiency of conducting the arbitral process and the management of costs.  The main impact of these changes will hopefully allow parties to save costs by not having to provide translations and by facilitating areas of agreement in matters of expert evidence.  Furthermore, the apportionment of costs in awards should be welcomed and comes in the wake of several recent court judgments where the courts have enforced costs orders issued by various non-Thai arbitral institutions in the region.