Thailand and Russia: Legal Issues of Foreign Trade for Businesses

 

October 26, 2024

BRACE Law Firm ©

 

The Kingdom of Thailand is the second-largest economy in Southeast Asia after Indonesia. Holding the status of an upper-middle-income country, it serves as an economic anchor for its developing neighboring nations.

The economy of the Kingdom of Thailand is resilient. According to the IMF, growth reached an estimated 2.7% in 2023, slightly higher than the 2.6% recorded the previous year. This occurred as a contraction in investment and goods exports, driven by slowing external demand, partially offset the steady growth in private consumption following the recovery of tourism.

Structure of Thailand's Foreign Trade

In the Kingdom of Thailand, the labor force consists of 40.2 million people out of a total population of 71.6 million. The country's economy relies heavily on agriculture, which accounts for 8.8% of GDP and employs 32% of the active population. Thailand is the world's largest producer of natural rubber and one of the leading producers and exporters of rice; other major crops include sugar, corn, jute, cotton, and tobacco. Fishing is also a vital activity, as Thailand is a major exporter of farmed shrimp. While traditional farming methods remain common, the country increasingly focuses on agricultural modernization through technologies such as precision farming and irrigation systems.[1]

The manufacturing sector accounts for 35% of GDP and is well-diversified, employing 23% of the active population. Thailand has established itself as a manufacturing hub in Southeast Asia, attracting foreign investment due to its strategic location, skilled labor force, and robust infrastructure. Thailand's industrial sector is diverse and dynamic, with manufacturing, electronics, automotive, and petrochemicals among its key sectors. Emerging sectors in the industrial landscape include renewable energy, biotechnology, and aerospace, reflecting Thailand’s efforts to transition toward high-value-added industries and technological innovation. Thailand's industrial output decreased by 5.1% in 2023 due to a significant downturn in the production of computers and peripherals, electronic parts, and furniture.[2]

The tertiary sector accounts for 56.2% of GDP and employs 46% of the active population. Key sectors include tourism, finance, healthcare, education, and telecommunications. Thailand’s tourism industry is a primary driver of the tertiary sector, attracting millions of visitors annually. According to official government data, the country received more than 28 million foreign tourists in 2023, generating impressive revenue of over 1.2 trillion Thai baht. The financial sector, centered in Bangkok, serves as a regional financial hub, offering a wide range of banking, insurance, and investment services. Healthcare and education are also significant sectors; Thailand is a destination for medical tourism and home to reputable universities and international schools. Emerging areas in the tertiary sector include digital services, e-commerce, and financial technologies.[3]

In 2022, total exports from Thailand amounted to $283 billion (up from $266 billion in 2021).

Thailand's main export items are office parts, integrated circuits, cars, delivery trucks, and refined petroleum. In 2022, Thailand was the world's largest exporter of rubber, fruit, meat products, starches, and cassava. The country primarily exports to the United States, China, Japan, Vietnam, Malaysia, Australia, India, Indonesia, Singapore, and Hong Kong.[4]

Total imports into Thailand amounted to $305 billion (up from $268 billion in 2021).

Thailand's main import items are crude oil, integrated circuits, gold, petroleum gas, and broadcasting equipment. It primarily imports from China, Japan, the United Arab Emirates, the United States, and Malaysia.[5]

Foreign Trade Between Russia and Thailand

Statistical data for trade turnover between Russia and Thailand is available for 2021, when turnover reached $2,287,978,913, an increase of 28.91% ($513,152,448) compared to 2020. Russian exports to Thailand in 2021 amounted to $494,185,025, increasing by 39.69% ($140,408,451) compared to 2020. Russian imports from Thailand in 2021 reached $1,793,793,888, an increase of 26.23% ($372,743,997) compared to 2020.

Thailand's share in Russia's foreign trade turnover in 2021 was 0.2915%, compared to 0.3126% in 2020. In terms of its share in Russian trade turnover, Thailand ranked 52nd in 2021 (compared to 51st in 2020). Thailand's share in Russian exports in 2021 was 0.1005%, compared to 0.1052% in 2020. Thailand ranked 70th in its share of Russian exports in 2021 (the same as in 2020). Thailand's share in Russian imports in 2021 was 0.6113%, compared to 0.6140% in 2020. Thailand ranked 31st in its share of Russian imports in 2021 (the same as in 2020).[6]

In the structure of Russian exports to Thailand in 2021 (as well as in 2020), the main share of supplies consisted of the following types of goods:

• metals and metal products (Commodity Nomenclature of Foreign Economic Activity (the "TN VED") codes 72–83);
• chemical products (TN VED codes 28–40);
• mineral products (TN VED codes 25–27);
• wood and pulp and paper products (TN VED codes 44–49);
• food products and agricultural raw materials (TN VED codes 01–24);
• machinery, equipment, and vehicles (TN VED codes 84–90);
• precious metals and stones (TN VED code 71).[7]

In the structure of Russian imports from Thailand in 2021 (as well as in 2020), the main share of supplies consisted of the following types of goods:

• machinery, equipment, and vehicles (TN VED codes 84–90);
• chemical products (TN VED codes 28–40);
• food products and agricultural raw materials (TN VED codes 01–24);
• precious metals and stones (TN VED code 71);
• textiles and footwear (TN VED codes 50–67);
• metals and metal products (TN VED codes 72–83).

International Agreements Between Thailand and Russia

Trade and economic ties between Russia and Thailand rely on bilateral intergovernmental treaties such as:

• The Trade Agreement dated December 25, 1970;
• The Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income dated September 23, 1999.

Additionally, the following agreements are in effect:

• The Agreement on Cooperation between the Chamber of Commerce and Industry of Russia and the Thai Chamber of Commerce dated 1997;
• The Agreement on Cooperation between the Russian Union of Industrialists and Entrepreneurs and the Federation of Thai Industries dated 2003;
• The Agreement on Cooperation between the Russia-Thailand Business Council and the Thailand-Russia Business Council;
• The Memorandum of Understanding and Partnership between the Ministry of Economic Development of Russia and the Board of Investment of the Kingdom of Thailand dated 2015;
• The Memorandum of Understanding between the Ministry of Energy of Russia and the Ministry of Energy of the Kingdom of Thailand on Cooperation in the Energy Sector dated 2015;
• Memoranda of understanding between the Ministries of Agriculture, the Ministries of Natural Resources and Environment, the Ministry of Economic Development of Russia, and the Ministry of Commerce of Thailand dated 2016.

Import and Export Restrictions in Russia and Thailand

Before concluding a contract for the supply of any particular product, one must study the list of goods prohibited for import into the customs territory of the Eurasian Economic Union from specific countries, including Thailand.

Eurasian Economic Commission Board Decision No. 30 dated April 21, 2015, On Measures of Non-Tariff Regulation (the "EEC Decision No. 30") established the list of goods prohibited from import into the customs territory of the Eurasian Economic Union, as well as the lists of goods subject to a permissive import procedure and quantitative import restrictions.

For instance, according to Annex No. 1 to the EEC Decision No. 30, the following items are prohibited from import into the Eurasian Economic Union territory:

• ozone-depleting substances prohibited for import and products containing them;
• hazardous waste prohibited for import (e.g., mercury and its compounds);
• specific plant protection products and other persistent organic pollutants prohibited for import (e.g., heptachlor, including mixtures and preparations containing it) and other goods.

Pursuant to Annex No. 2 to the EEC Decision No. 30, a permissive import procedure into the customs territory of the Eurasian Economic Union applies to the following goods, among others:

• precious stones and metals;
• narcotic drugs, psychotropic substances, and their precursors;
• specific medicinal products;
• special technical equipment for the covert obtaining of information and other goods.

When importing animals or products of animal origin from Thailand, one should refer to the Unified List of Goods Subject to Veterinary Control (Supervision), approved by Customs Union Commission Decision No. 317 dated June 18, 2010. As the name suggests, the relevant state bodies and institutions of the Eurasian Economic Union member states in the field of veterinary medicine monitor goods at the customs border and within the customs territory to prevent the import and movement (transport) of controlled goods hazardous to human and animal health.

For example, in accordance with Rosselkhoznadzor Instruction No. FS-YuSh-7/5002 dated March 13, 2024, based on the results of an inspection of Thailand’s feed sector enterprises conducted from February 14 to February 24, 2024, the import into Russia of feed products from several Thai enterprises has been prohibited since March 18, 2024.[8]

Numerous other similar restrictions, prohibitions, and requirements exist, necessitating a thorough check before launching the import process for goods from Thailand.

Thailand also applies import restrictions to protect human, animal, or plant health and life, intellectual property rights, national security, and public morality.

Absolute prohibitions apply to items such as counterfeit goods, manufacturing equipment for counterfeit products, drugs, pornographic content, and fraudulent banknotes or coins. Additionally, the Convention on International Trade in Endangered Species of Wild Fauna and Flora prohibits the import of certain endangered species of amphibians, corals, fish, and mollusks.

The Ministry of Commerce of Thailand may apply temporary import controls to protect local industries. Generally, a license is required to import goods that directly compete with Thai products.[9]

Information on prohibited and restricted imports is available on the website of the Thai Customs Department.

When registering food products in Thailand, companies must disclose detailed and often confidential information regarding the production process and composition. This applies to both domestic and foreign food products. Importers may also be required to purchase a certain quantity of locally produced goods before receiving import licenses.

Various goods are subject to import control under different laws and regulations. For example, importing drugs requires prior licensing from the Thai Food and Drug Administration, while weapons and explosives require a license from the Ministry of Interior of Thailand.[10]

Thailand imposes minimal restrictions on exports, except in cases involving national security, environmental protection, cultural interests, or compliance with trade agreements. The Ministry of Commerce of Thailand is authorized to exercise export control over certain products. In particular, the export of unhusked rice and rice bran is strictly prohibited. Certain goods, including rice, sugar, seeds, trees, and tobacco leaves, must have export licenses.

Other prohibited items include Buddha images and culturally significant artifacts considered national heritage. Exporters of agricultural goods may face mandatory membership in trade associations, which may implement their own specific membership rules. Export quotas also apply to various goods, such as cassava, coffee, sugar, and tin, under international agreements. Specific restrictions aimed at stimulating industries and avoiding domestic shortages are imposed on fuel, paper, unprocessed wood, tin ore, and tin slag.[11]

Due Diligence on a Thai Company: How to Verify a Legal Entity in Thailand?

Before entering into any business relationship with a Thai company, one must verify its legal status. By doing so, you can accurately assess whether you are dealing with a legitimate, legally compliant, and financially stable entity.

The Department of Business Development (the "DBD") under the Ministry of Commerce is the primary custodian of business registration data.

There are two types of companies in Thailand: private limited companies and public limited companies. A private limited company is formed by registering with the DBD. The structure of a private limited company must include a minimum of three shareholders, who carry limited liability equal to the value of their shares. Directors, on the other hand, generally bear no specific liability for company debts in the event of bankruptcy or liquidation, unless they personally cause losses to the company, act contrary to the company's objectives, or act against the law. A public limited company is established for the purpose of offering shares for public sale. Shareholders' liability is limited to the amount paid for their shares. This purpose must be stated in the company's memorandum of association.[12]

Upon registration, an organization receives a certificate of incorporation. This document certifies that the company is legally registered in Thailand and has the right to engage in the activities specified in its registration documents. Obtaining the certificate is final proof that the company fully complies with all requirements of Thai law and is ready to conduct business. After official business registration in Thailand, the company registers a tax identification number with the local tax authority, as this is mandatory for tax compliance. Additionally, the organization will need to create a corporate seal used to authenticate official documents and conduct business operations.[13]

A company registered in Thailand is considered foreign under the Foreign Business Act (the "FBA") B.E. 2542 (1999) if at least half of its shares belong to non-Thai individuals or legal entities. Such a company may not conduct certain types of activities without a foreign business license or a foreign business certificate. If the relevant activity is not prohibited for foreign companies with controlling or full participation under the FBA, foreign investors may own 100 percent of a domestic Thai company, provided the company's intended business in Thailand is not restricted by said law.[14]

It should be noted that a "service business," which is broadly interpreted as any activity involving the performance of any valuable act, deed, or effort to satisfy a need or fulfill a demand, or the sale of intangible products (e.g., time, energy, or expertise) for the benefit of clients, falls under restricted activities according to the FBA. Consequently, it requires a foreign business license or certificate before business operations begin.[15]

Here are some DBD resources for verifying a Thai partner:

• DBD DataWarehouse: This online platform allows you to search for companies by registration number. You can access basic data such as company status, company type, directors, registered capital, and registered address. While this information was previously available only in Thai, the DBD now offers some of this data in English. Some information will still require translation from Thai.
• DBD Branch Check: For more detailed information, you can visit a DBD branch office. Here, you can request copies of company documents, including information on the director and shareholders (including share percentages), financial statements (if available), the Memorandum of Association and Articles of Association, the history of their amendments (if any), as well as business objectives and activities. Please note that a fee is charged for this service.[16]

The Ministry of Commerce website (https://www.moc.go.th/) also provides information on specific industries or sectors, which can be useful if you are looking for companies in a particular field.

Company House Thailand, while not an official government source, offers a searchable database of Thai companies. This can be a useful starting point for obtaining basic information such as company status, business activity, and directors (https://companieshouse.co.th/).

Several online platforms offer company searches in Thailand, often with additional features:

• EzyBiz: This platform allows searches by company name and provides data such as registration date, contact details, business description, legal representative information, and share capital.
• AsiaVerify (paid service): This service offers comprehensive KYC (Know Your Customer) reports, including real-time information on company status, director verification, credit ratings (if available), litigation history (if available), and potential red flags (e.g., legal or financial risks).[17]

Concluding a Contract with a Thai Company

Thailand primarily follows a civil law system, but it is a hybrid of many influences. In the 19th century, Thailand's legal system was modeled after the French civil system and is thus primarily based on statutes, with main codes resembling those of European civil law jurisdictions. It also features common law traits as well as ancient Hindu traditions.

Thailand's legal system is a statutory law system, meaning it is mainly based on regulations enacted by the legislature. Primary sources of law include the Constitution, which is the supreme law, legislation such as codes and acts, decrees, and customs. Judicial decisions are not sources of law, but in practice, Supreme Court decisions carry some precedential value and are often used as secondary authoritative sources of law.[18]

The Civil and Commercial Code of Thailand B.E. 2468 (the "CCC") governs contract law in Thailand.[19] General provisions of contract law are set out in Sections 354 to 394, while specific types of contracts are regulated in Sections 453 to 1011. Other sources of contract law include the Unfair Contract Terms Act[20] and, in the context of private international law, the Act on Conflict of Laws B.E. 2481 (1938).[21]

Thai law recognizes the principle of freedom of contract, which allows parties to independently determine contract terms. However, this freedom is not absolute. Both a contract and an act performed under it may be declared void if they are expressly prohibited by law, impossible to perform, or contrary to public order or good morals (Section 150 of the CCC). A contract cannot be declared void solely because it differs from a provision of law, provided that law does not affect public order or morality (Section 151 of the CCC).

In Thai contract law, contract certainty is a key element for its legal validity. If the parties fail to agree on all essential terms or if doubts arise regarding their interpretation, the contract is considered not concluded.

When interpreting contracts, primary focus is placed on the mutual intentions of the parties, based on the principle of good faith. Established practice should also be taken into account.

A supply contract with a Thai company should cover several key points and provisions to ensure clarity, compliance, and the smooth functioning of the supply chain:

• the parties;
• the subject of supply, with a detailed description of the quantity of goods supplied and quality terms;
• the price, terms, and procedure of payment. The Bank of Thailand regulates the transfer of money to and from Thailand and manages exchange rates. There are no restrictions on money brought into Thailand; however, certain restrictions apply to the transfer of money out of Thailand. The transfer amount must remain within the limits for each type of transaction as prescribed by the Bank of Thailand. Exchange control approval from the Bank of Thailand or its authorized agent (e.g., a commercial bank licensed to operate in Thailand) must be obtained for and at the time of each funds transfer from Thailand. Transferring money abroad to repay loan principal and accrued interest generally requires evidence of the underlying obligations and records of the loan entering Thailand. Granting approval for offshore funds transfers is discretionary, but approval is typically given for transactions that have reasonable grounds and are supported by documentary evidence;[22]
• delivery terms. On average, air delivery from Thailand takes no more than four days, while sea cargo arrives after 45 days. All Thai manufacturers use international "Incoterms" rules, which determine who pays for delivery and insurance and who bears responsibility for the goods. EXW and FCA are most commonly used. Under EXW, the buyer receives the goods from the seller's warehouse specified in the contract, and the obligation to pay export duties falls on the buyer. Under FCA, the goods are delivered to the customer's main carrier at the departure terminal specified in the contract, and the seller pays the export duties. These formats are generally specified in the contract and should be carefully noted;[23]
• quality control measures and inspection procedures;
• dispute resolution mechanism;
• governing law;
• terms and procedure for contract termination.

Contracts in Thailand do not have to be drafted only in Thai. However, their validity depends on both parties understanding their content and compliance with Thai law. The parties must be fluent in the language of the contract. If the parties later claim they did not understand the contract, problems may arise.

In Thailand’s business environment, English serves as the lingua franca — the language systematically used for communication between people whose native languages are different, especially in international business. Many contracts are drafted only in English. In bilingual contracts, it is important to specify which language prevails. If a contract is drafted in Thai and a foreign language, and the prevailing language is not determined, the Thai version will take precedence according to Section 14 of the CCC.

According to the Act on Conflict of Laws, if the said act or other Thai laws contain no provisions governing cases of conflict of laws, the general principles of private international law apply (Section 3). If the law of a foreign state applies, it applies only to the extent it is not contrary to the public order or good morals of Thailand (Section 5).

It is worth noting that, unlike Russia, Thailand is not a party to the UN Convention on Contracts for the International Sale of Goods 1980 (the "CISG"). Nevertheless, the CISG may apply not only to relations between entities operating in member states (Article 1(1)(a)) but also if the rules of private international law lead to the application of the law of a member state (Article 1(1)(b)).

Pursuant to Article 1211 of the Civil Code of the Russian Federation, in the absence of an agreement between the parties on the applicable law, the law of the country where the party performing the contract has its place of residence or main place of business applies. In a sale and purchase agreement, the seller is recognized as such a party. In a foreign trade sale and purchase contract where the supplier is a Thai company, Thai law will be the governing law; in this case, the CISG cannot be used. For exports where the seller is a Russian organization, the provisions of the CISG may apply.

One should also consider the provisions of Section 13 of the Thai Act on Conflict of Laws, according to which, if such an intention (express or implied) cannot be established, the applicable law is the law common to the parties when they have the same nationality, or, if they do not have the same nationality, the law of the place where the contract was concluded. When a contract is concluded between persons at a distance, the place of conclusion is deemed to be the place where the notice of acceptance reaches the offeror. If such a place cannot be established, the law of the place where the contract is to be performed shall be decisive.[24]

Litigation with Thai Companies and Russian Companies

Faced with a breach of contract in Thailand, the injured party has the right to demand compensation for losses incurred as a result of the breach. These losses may include general, consequential, and stipulated or liquidated damages. According to Section 222 of the Thai CCC, a claim for damages concerns compensation for all losses that usually arise from non-performance. The injured party may even demand compensation for damages arising from special circumstances if the party concerned foresaw or should have foreseen such circumstances.

"Consequential damages" — additional losses beyond general losses — are referred to as "compensation." To obtain compensation, the plaintiff must demonstrate the foreseeability of the parties to the contract and prove the losses incurred. Stipulated or liquidated damages imply an agreed-upon amount established upon concluding the contract, which in Thai law is called a "penalty." While the plaintiff does not need to prove these losses, the court may adjust the amount if it considers it unreasonable. To justify a reduction, the defendant must provide evidence (Sections 379–383 of the Thai CCC). Regarding the conclusion of contracts, if the parties have agreed on consequential damages, this agreement often coincides with what the court calls "stipulated" or liquidated damages.[25]

The remedy for losses includes monetary compensation aimed at restoring the injured party to the position it would have been in had the breach not occurred. This compensation covers actual financial losses incurred, including lost profits or expenses arising from the breach.

When monetary compensation is insufficient or impossible, the innocent party has the right to demand specific performance. This involves compelling the breaching party to fulfill its contractual obligations as originally agreed.[26]

The remedy of specific performance applies when the subject of the contract is unique or when monetary compensation cannot adequately compensate for the harm caused by the breach. For example, in cases involving rare goods or unique services, specific performance may be the preferred remedy.

In the event of a material breach, the innocent party has the right to terminate or cancel the contract due to the other party's failure to perform its obligations. Termination or cancellation of the contract releases both parties from remaining obligations. Additionally, the innocent party may demand restitution, seeking to return to the position it was in before the contract was concluded.

In situations where continuing the contract may cause irreparable harm, the injured party may apply for an injunction to prevent the breaching party from taking certain actions. Injunctions are court orders that prohibit a party from engaging in certain activities or force it to take specific actions. This remedy aims to prevent further harm or preserve the status quo during the resolution of the dispute.

Some contracts include clauses specifying the amount of damages in the event of a breach. If such a clause exists, the innocent party has the right to claim the predetermined amount as damages. Pre-agreed liquidated damages serve as established compensation for the breach, often used to avoid lengthy litigation to determine actually incurred losses.

Currently, Thailand is not a party to any treaty, convention, or international agreement on the recognition and enforcement of foreign judgments. Thus, a final judgment rendered in any foreign court cannot be directly enforced as a court judgment in Thailand by Thai courts but may, at the discretion of Thai courts and in accordance with the rules of evidence in the Civil Procedure Code of Thailand, be admissible as evidence in legal proceedings in Thailand. A Thai court may re-examine the entire case on its merits. If proceedings are initiated in Thailand, Thai courts will apply the procedural laws of Thailand for procedural matters.[27]

A foreign arbitral award will be recognized and enforced in Thailand only if it falls under a treaty, convention, or international agreement to which Thailand is a party, and only to the extent that Thailand accedes to it. Thailand has acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and is also a party to the Geneva Convention on the Execution of Foreign Arbitral Awards 1927. Thus, foreign arbitral awards rendered in countries that have signed the New York Convention or the Geneva Convention are recognized and enforceable in Thailand, except in the cases mentioned above. To enforce a foreign arbitral award, a Thai court judgment must be obtained. Accordingly, an application for enforcement of the award must be filed with a Thai court within three years from the date the award becomes enforceable. Thai courts generally do not review the case on its merits. However, Thai courts may refuse to enforce an award or dismiss an application for enforcement of an arbitral award on certain limited grounds. Based on precedents, excluding arguments regarding public order or good morals, other grounds primarily serve as a defense of "due process". [28]

Dispute resolution must be clearly described and understood. Arbitration and mediation save everyone time, energy, and money. Parties may submit their dispute to arbitration conducted by the Thailand Arbitration Center (the "THAC") in accordance with its arbitration rules. The THAC is an institution that provides alternative dispute resolution services, including arbitration and mediation for cross-border disputes. It was established under the Arbitration Center Act B.E. 2550. The center was first established and began operations in 2015 with the aim of promoting and strengthening the alternative dispute resolution system and services in Thailand.[29]

Thai laws recognize arbitration agreements and arbitration embedded in a main agreement to the extent they comply with the Thai Arbitration Act B.E. 2545 (2002). The Supreme Court of Thailand has also confirmed that if parties have agreed to settle their dispute through arbitration, they cannot ask the court to hear or settle their dispute without completing the arbitration proceedings.[30]

There are also cases where litigation is necessary. The judicial system of Thailand is primarily divided into three levels, consisting of the Supreme Court, courts of appeal, and courts of first instance. The court aims to increase the efficiency of case handling through four measures, in particular: increasing the number of courts to ensure greater access to justice; creating new departments and judicial branches; establishing specialized courts heard by expert judges in accordance with specific procedural laws; and a commitment to promoting alternative dispute resolution. From a human rights protection perspective, the court prioritizes human rights principles in all proceedings. Thais and foreigners are equal before the court. Additionally, innovations in information technology are applied in various aspects of court administration, such as the electronic filing system and the payment of court fees via electronic data collection.[31]

Specialized courts also operate in Thailand: the tax court, the intellectual property and international trade court, the bankruptcy court, and the labor court. The establishment of these specialized courts aims to ensure that specific or technical issues are handled appropriately by knowledgeable judges. Specialized court judges are appointed from among those with competent knowledge in their fields. The panels of judges in the intellectual property and international trade court and in the labor court consist of both professional judges and lay assessors. Lay assessors, recruited separately, work in cooperation with professional judges to render decisions on cases.

It is important to note that currently, there is only one court each for the intellectual property and international trade court, the tax court, and the bankruptcy court, all located in Bangkok. These are the Central Intellectual Property and International Trade Court, the Central Tax Court, and the Central Bankruptcy Court. However, Bangkok has a Central Labor Court, and regional labor courts are located in nine regions across Thailand. Appeals against decisions or orders of the aforementioned specialized courts are filed with the Court of Appeal for Specialized Cases.[32]

Thailand recently introduced rules to simplify litigation, including the Act Prescribing Time Limit for Justice Process B.E. 2565 (2022) and the Judicial Regulation on the Prescription Period of the Court Proceedings B.E. 2566 (2023). These rules aim to eliminate delays in justice. The established time limits for rendering court decisions or orders are as follows:

• Court of First Instance — 12 months from the date the plaintiff's statement of claim is accepted;
• Court of Appeal — 12 months from the date the case is received from the court of first instance; and
• Supreme Court of Thailand — 12 months from the date the case is received from the court of first instance.

In certain exceptional cases, courts may at their discretion establish a longer term.

However, as these provisions came into force very recently, no established trend in judicial practice currently exists. In practice, a complex commercial case is usually heard in the court of first instance much longer than 12 months and can take up to 24 months. The duration of proceedings can vary significantly depending on the complexity of the case and other uncontrollable factors, such as the international service of process. Complex cases may be heard for three to ten years before a final decision is reached in the Supreme Court of Thailand.[33]

The court hears cases based on evidence presented by the parties and the principle of balance of probabilities. If foreign participants can establish facts and evidence that meet all legal requirements, the court tends to enforce their rights. However, in disputes involving foreign participants and the Thai government or a state authority, cases will fall under the jurisdiction of the Administrative Court, which may have more conservative preferences in favor of state benefits rather than the protection of private interests.[34]

Despite the long-standing cooperation between Russia and Thailand, entrepreneurs encounter many problems when attempting to organize collaboration with a Thai counterparty. There are several reasons for this, all of which are quite significant:

• The language barrier, as there are few specialists who know the Thai language. In Thailand, the official language is Thai, and the language of business communication is also Thai, although English is widely spoken. Most government and legal documents are drafted in Thai, so it is recommended to use the services of a professional translator who will help you prepare, translate, and study the documents.
• A unique culture, the ignorance and misunderstanding of which hinder mutual understanding between partners. Businesspeople and officials in Thailand, especially outside Bangkok, usually have limited exposure to other cultures. When conducting business negotiations here, understand that people may expect things to be done as they wish. However, some representatives of the younger generation may have more international experience and can be very open. Additionally, in Thai business culture, the respect an individual enjoys depends primarily on their age and rank. It is very difficult for Thais to conduct a conversation with a person whose status is unclear, as knowing whether someone is superior, inferior, or equal strongly influences behavior. Business leaders may possess a high sense of autonomy and can be very autocratic and authoritarian. Titles are very important.[35]
• Legislation formed with cultural traditions in mind, which also differs significantly from Russian equivalents. It is difficult for persons inexperienced in legal matters to understand all the nuances, and violations lead to serious fines or even the collapse of deals. In particular, this also applies to the preparation of permissive documents.
• Depending on the purpose of the cargo, different shipping schemes apply, which must be carefully calculated, including even small details.

______________________________

References

[1] Economic and political overview of Thailand. Crédit Agricole Group website.

[2] Ibid.

[3] Ibid.

[4] Thailand trade data. TrendEconomy website.

[5] Ibid. [6] Report on foreign trade between Russia and Thailand in 2021: trade turnover, export, import, structure, goods, dynamics. Russian Foreign Trade website.

[7] Ibid.

[8] Thailand. Import restrictions. Rosselkhoznadzor website.

[9] Import & Export in Thailand (2023): Trade Policies & Regulation. OOSGA website.

[10] Ibid.

[11] Ibid.

[12] Market Overview of Thailand. By Kudun & Partners. Legal500 website.

[13] Alexander Evseev. Company Registration in Thailand. August 01, 2024. Business Secrets T-Bank website.

[14] Thailand: Investing In. Legal500 website.

[15] Thailand: Project Finance. Legal500 website.

[16] Where can you go to find out company information in Thailand? July 02, 2024. Logan&Partners website.

[17] Ibid.

[18] Market Overview of Thailand. By Kudun & Partners. Legal500 website.

[19] Information from the Thailand Law Library website.

[20] Ibid.

[21] Ibid.

[22] Thailand: Project Finance. Legal500 website.

[23] Dmitry Fedorov. Made in Thailand: How to Set Up an Export Business with Thailand. Kontur.Journal website.

[24] Information from the Thailand Law Library website.

[25] A Guide to Contractual Breach Under Thai Law. Written by Joy Cunanan, last updated July 15, 2024. Lexagle website.

[26] Ibid.

[27] Thailand: Project Finance. Legal500 website.

[28] Ibid.

[29] Information from the Thailand Arbitration Center website.

[30] Thailand: Project Finance. Legal500 website.

[31] Council of ASEAN Chief Justices website.

[32] Court of Justice Thailand website.

[33] Thailand: Investing In. Legal500 website.

[34] Ibid.

[35] Negotiating International Business – The Negotiator’s Reference Guide to 50 Countries Around the World by Lothar Katz.