CODIFIED LIMITATIONS ON CORPORATE LIABILITY IN THAI CIVIL COURTS
Until meaningful reforms are adopted, practitioners should consider prioritizing claims involving blatant or overt incidents of corporate misconduct with all requisite documentary evidence in hand
In Thailand's civil courts, corporate defendants enjoy a variety of limitations on liabilities for wrongful acts, including effective limitations on monetary and reputational damages. Collectively, these liability limitations frequently protect corporate defendants and their senior executives from public and financial accountability for corporate misconduct.
Civil claims in Thailand are governed primarily by the Civil and Commercial Code ("CCC") and Civil Procedure Code ("CPC"). This article focuses on specific provisions of the CCC and CPC which limit monetary and reputational damages for corporate misconduct.
Limitations on Monetary Damages
Limitations on monetary damages arising from "wrongful acts" are codified under the CCC with respect to the scope of recoverable damages, default interest, and recovery of legal costs.
• Under CCC Section 222, civil damages are awarded as "compensation for all such damage as usually arises from nonperformance". Damages are most often limited to direct compensatory damages, though "special circumstances" may give rise to reasonably foreseeable consequential damages (particularly if the defendant knew or should have known of the special circumstances giving rise to the consequential damages).
Generally, the CCC does not recognize punitive damages, exemplary damages, liquidated damages, speculative damages, indirect damages or (remote) consequential damages.
• Default interest is currently limited to 5% per annum for breach of contract claims, and 3% per annum for other claims (recently reduced from 7.5%) under CCC Section 7.
• The court is authorized under CPC Schedule 6 to award legal fees to the prevailing party at the court's discretion. However, the award of legal fees is subject to a maximum of 5% of the trial court's award, and a maximum of 3% of the appellate court's award. In practise, legal costs are commonly awarded in the range of Thai Baht 50,000 – 100,000 (approximately USD 1,500 – USD 3,000) regardless of actual legal costs or prevailing market rates.
Limitations on Reputational Damages
The identities of civil litigants are closely guarded by Thailand's civil courts.
Case files are confidential and unavailable to the public or the press (CPC Section 54). Case files may be examined or copied only by the parties and their legal representatives (and any third party having a "legitimate interest"). Otherwise, case files may only be disclosed pursuant to a court order.
The identities of civil litigants are redacted from all published court decisions. Only a select few judgments of Thailand's Supreme Court are published each year (in abstract form). Lower court decisions are not published at all.
Though a litigating party may disclose the contents of a complaint, judgment or other court document directly to the press or other third party, the disclosing party (not to mention the publisher) must always be conscious of Thailand's tough criminal defamation laws. Thailand's Criminal Code embraces a private right of criminal action, whereby any person may file a criminal complaint independently without participation of police or prosecutors (Criminal Code Section 162).
Not surprisingly, criminal defamation actions are common in Thailand's criminal courts, particularly among business and political enemies. Plaintiffs in civil courts often find themselves as defendants in criminal court after retaliatory (criminal) claims are filed by civil defendants or their emissaries.
Limitations on Pre-Trial Discovery
In addition to the liability limitations noted above, pre-trial discovery procedures are strictly limited under the CPC. Plaintiffs go to court with the evidence they have. Civil litigants are not entitled to any pre-trial "discovery" procedures.
Limited document production may be approved by the court at its discretion on a case-by-case (document-by-document) basis (CPC Section 123). In practise, the courts occasionally compel a party to produce a specific document of notable importance which would otherwise be unavailable to the counterparty. However, no party is entitled to document production.
Protection of Adverse Witnesses
A primary tool in the litigator's toolbox is the cross examination of the counterparty's senior executives, who are often directly responsible for the wrongful acts of the corporate defendant. In Thailand's civil courts, however, plaintiffs are often denied the opportunity to cross examination directors and other senior executives directly responsible for corporate misconduct.
A witness may ignore a summons to testify in court based upon a "simple excuse" such as illness or other reasonable excuse (CPC Section 108). In practise, senior corporate executives commonly avoid court appearances due to prior commitments, travel plans, business and personal emergencies and the like. A lower level employee with scant knowledge of the dispute is often appointed as "proxy" to appear in court in place of the witness (CPC Section 64) or to testify with power-of-attorney on the witness's behalf.
When a witness under summons fails to appear in court for scheduled testimony, the court has the discretion to proceed with the trial without the missing witness's testimony (CPC Section 110) or reschedule the witness's testimony (CPC Section 111) or issue an arrest warrant to compel the witness to testify (CPC Section 111). In practise, the court commonly proceeds with the trial, while gently encouraging the plaintiff's lawyer to waive objections.
Even when a witness appears in court testify in a civil trial, whether voluntarily or pursuant to a summons, the witness may nevertheless refuse to answer a question which might incriminate (1) the witness; (2) the counterpart; or (3) a third party. If, however, the question at issue is "central" to the matter in dispute, the witness may be compelled to answer the question (CPC Section 108). In practise, however, the courts seldom compel witnesses to answer tough questions (whether central or peripheral to the matter in dispute).
The court is simply unlikely to order a senior corporate executive to answer a difficult question under oath, or to hold a senior corporate executive in contempt, or to issue an arrest warrant to compel a senior executive to testify in person. Such raw assertions of judicial power are too extreme under Thailand's judicial version of Marquess of Queensberry Rules (i.e., denoting a sense of sportsmanship and fair play among members of the privileged class).
In practise, absent extenuating circumstances, senior corporate executives commonly avoid court appearances, and claimants are often denied the opportunity to cross examine the senior executives who were directly responsible for (alleged) wrongful acts. Such prevailing customs and practices, well grounded in the CCC and CPC cited above, frequently have the practical effect of insulting corporate defendants and their senior executives from accountability for corporate misconduct.
Reforms to Deter Corporate Misconduct
Various reforms could be adopted to more effectively deter corporate (civil) misconduct:
• Provide public access to case files.
• Broaden scope of document discovery.
• Increase rate of default interest.
• Increase legal cost recovery.
• Publish full text of Supreme Court judgments (and identify litigating parties).
• Improve right to call/question adverse witnesses.
• Repeal criminal defamation law.
Until meaningful reforms are adopted, practitioners should consider prioritizing claims involving blatant or overt incidents of corporate misconduct with all requisite documentary evidence in hand.
Author's Note: The topic of civil justice reform in Thailand is seldom discussed – and more seldom discussed in writing. The very topic of judicial reform is a legal minefield potentially triggering harsh criminal penalties (imprisonment for 1 – 7 years) for any person found guilty of criticizing a judge or court judgment (Penal Code Section 198). Not surprisingly, such harsh criminal penalties (while subject to a "good faith" exception for academic purposes) tend to have a chilling effect upon free and open discourse regarding much-needed judicial reforms. Accordingly, the author has relied upon direct citations to civil laws and procedures codified under Thailand's Civil and Commercial Code and Civil Procedure Code without reference to any relevant or illustrative court judgments.
Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.