11 11月 2024
Insight
Global
The landscape
Class action proceedings were first introduced in Thailand in 2015 through the Civil Procedure Code. Thai courts that are competent to try civil cases have the power to consider class action cases. A decision of the Court of First Instance to certify or decertify the class can be appealed. The decision of the Court of Appeal is final. After the courts determine whether a lawsuit should proceed as a class action or an ordinary civil case, the lawsuit advances to the merit stage.
Thailand’s class action regime is generally plaintiff-friendly, offering a flexible vehicle for injured parties to seek redress as a group. Consumer-related claims are the most common, where large groups may seek compensation or remedies for harms suffered in relation to defective products. There is also a growing trend of securities class actions, environmental claims and shareholder class actions.
Judicial interpretation and discretion are an important feature of the landscape, given the relative infancy of class actions. Judges may handle cases differently based on circumstances, resulting in inconsistent outcomes.
Class actions in Thailand are viewed by courts as a vehicle to handle disputes involving a large number of individuals with small claims. While Thailand lacks a culture of third-party litigation funding, the Ministry of Justice has established a fund to aid low-income people in gaining access to justice. Organisations such as the Lawyers Council of Thailand Under the Royal Patronage, and the Thai Investors Association are working to promote public understanding of class action proceedings.
Current developments
To initiate a class action in Thailand, the plaintiff is required to file a specific motion for class certification. This must provide reasonable grounds for the court to permit the class action to proceed.
Criteria include whether the plaintiff shares common issues of fact and law with other class members, which are sufficiently clear for the class to be acknowledged. The class must be so large that conducting the case in the ordinary way will be complicated and inconvenient. However, the minimum class size is not prescribed.
In Thailand, an opt-out rule is applied, enabling class members to be identified as part of the claim, without them having to give their consent. Each potential class member can express their intention to opt out of the class action without prejudicing their right to bring an individual action.
Various attempts at law reform have been considered that would prescribe clearer regulations and procedures for the Thai courts. One idea is to allow related associations to commence class action lawsuits, since these organisations may have more understanding of legal frameworks than individuals.
Future trends
Thailand is a jurisdiction where a defendant could be exposed to additional damages beyond the disputed amount claimed by the plaintiff. Firstly, with the opt-out regime, the defendant could face a significant amount of damages, depending on the size of the class. Secondly, an unsuccessful defendant must pay a gratuity to the plaintiff’s counsel (capped at no more than 30% of the amount awarded under the judgment). This gratuity will be in addition to the damages, and not to be deducted from damages entitled to the class members.
The practice of charging fees on a contingency basis is not permitted. Despite the absence of an explicit statutory prohibition, a line of Supreme Court judgments has established that such arrangements are contrary to public policy and consequently void under Thai law. In the same way, third-party litigation funders face difficulty in this market. Herbert Smith Freehils does not envisage significant change in this area in the next couple of years.
In terms of type of class actions disputes, we anticipate an increased focus on shareholder and security class actions as public awareness has developed considerably, mostly through high-profile disputes in the media.
Next steps for business
Businesses or foreign investors doing business in Thailand need to be increasingly aware of the risk of class actions. During a dispute, the mere threat of a class action can be used as a strategy to bring a company to the negotiating table. Once the court certifies a class, any individual who shares the same characteristics will be included, irrespective of whether they are aware of the lawsuit. As a result, the potential exposure of companies is massive and the damages payout could be huge.
In Thailand, businesses are taking steps to mitigate class action risk by being more careful about how they operate and disclose information to the market. They are putting in place internal procedures to try and settle consumer-related disputes before they evolve into lawsuits. Once a problem is identified, there is growing recognition that companies need to move fast to communicate with affected stakeholders. Good public relations can also reduce the chances of a class action against the company.
Chapters
- Class Actions radar: Scanning global trends and risks
- Class Actions radar: Australia
- Class Actions radar: United Kingdom – General (England and Wales)
- Class Actions radar: United Kingdom – Competition
- Class Actions radar: France
- Class Actions radar: Germany
- Class Actions radar: Italy
- Class Actions radar: South Africa
- Class Actions radar: Spain
- Class Actions radar: Thailand
Legal Notice
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2024
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