2015 04 June

Thailand Legal Update: Incoming Class Action Law – Section 222/8 of the Civil Procedure Code

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On 4 December 2015 Thailand’s Civil Procedure Code will (*the civil procedure had already amended and it announced on the official gazette on 7 April 2015) include provisions for class-actions , which were not previously permitted under Thailand’s legal regime. A class action is a type of lawsuit in which one or a group of individuals sues a defendant on behalf of a larger group. Because section 222/8 of the Civil Procedure Code will be Thailand’s introduction to class actions it is worth understanding how class actions work, the benefits they hold and the impact this new law will have on business operators in Thailand.

Common Elements in All Class Action Lawsuits:

Class action law suits generally involve a certain degree of “public interest” whereby a “class” can be created. While their subject matter can vary, there are two common elements present in every class action lawsuit across all jurisdictions where such laws exist. The two issues are:

  1. The dispute issues are common to all members of the class; and
  2. Those affected are so large in number, that it would be impractical (and a waste of the Court’s time) for each person to bring a separate lawsuit forward.

What are some good examples of class action subject matters?

  • Consumers harmed by defective products (e.g. a car model with an inherent manufacturing defect);
  • Homeowners affected by environmental development projects such as dams and factories;
  • A  group of employees being subjected to racial, age, or gender discrimination by their employers.

The Advantages:

The introduction of class action legislation is likely to result in a number of positive developments in the Thai judicial system, such as:

  1. Increasing the efficiency of courts through dealing with actions as a group rather than on an individual basis;
  2. Enabling “good” lawsuits to be filed where the individual cost of litigation would otherwise be too high;
  3. Lowering individual costs (similar to No.2, the cost of litigation is shared amongst the “class”);
  4. Providing a degree of certainty to plaintiffs and defendants. Once the court has decided on the class action, the issue would not be heard again. It also provides greater certainty for defendants in  that individual actions often result in varying rewards;
  5. Establishing alternative methods of regulation outside the standard governmental regulatory regimes.

The Disadvantages:

While class action litigation is generally understood to be advantageous to the court process, it is subject to   criticism because of the limited monetary rewards resulting from a judgment.

  1. If a judgment is made in favor of the class action, class members receive minimal awards, as the payout is distributed among the class. Thus individuals may be likely to receive higher awards if they were to bring action as an individual rather than part of a class;
  2. As Thailand does not have a jury system, it is expected that class action awards will be highly predictable and limited in monetary value; and
  3. High legal fees.

Commercial Effects:

Thailand’s introduction of class action laws is a welcome inclusion into Thai jurisprudence, but what effect will such laws have on individual businesses?

While at this early stage the precise impact of the amended law is unclear. Though the scope of a class action law’s impact can only be determined after testing in the courts, some businesses may be at a higher risk after the passage of this law than others.

This higher risk is likely to also mean higher insurance premiums. Smaller businesses are at greater risk for increases in insurance premiums.  Unlike bigger corporations, small businesses may not have the luxury of in-house counsel to handle class-actions. As such, higher costs will be involved in engaging outside counsel who would be better suited in terms of experience and expertise. However, businesses currently operating in sales will not be subject to higher risks.

Commentators have argued, that the introduction of  class action law in Thailand will decrease Thailand’s attractiveness as a business destination and impact future foreign investments. As class action laws exist all over the world, many companies have acclimated to the concept as well as the risks behind establishing operations in a country with class action law.

How to Bring a Class Action Lawsuit in Thailand (a step by step guide):

Thailand’s class action legislation includes elements mentioned above though it will vary from other U.S. and Common Law class action legislation.  Numerous international statutes permit class actions to brought in regard to any subject matter, Thailand has decided to limit its focus on tortious claims (negligence etc.), breach of contracts and  regard to “claims of legal rights” (which are laws generally passed to protect the public (i.e./such as environmental law, consumer protection, labor, securities and exchange and trade competition laws). The first step is to find a “class” of individuals and then, determine whether the courts will permit a class action in relation to such an action.

Which Court do I bring my potential class action to?

If you have decided that a class action law suit is appropriate for you and your group’s claims,(and you have established that the courts will be willing to hear on the issue)  the next stage is to approach the courts. But which Court?

The jurisdiction for class actions is subject to the Court which is empowered to hear an individual on the same matter *except municipal court (kwaeng court).The class actions involve with specific matters such as the administrative decisions, the labor dispute and trade protection dispute shall be brought to the specific courts (i.e. the Administrative Court, Labour court and the Intellectual Property and International Trade Court).

The Pre-Class Action Phase:

Before proceeding with legal action, the class of plaintiffs, who have now determined which Court to proceed under, must demonstrate to the Court that there exists a “group of people” who carry common rights, facts and base their legal claims on common ground (despite their “injury” varying from person to person). The second point demonstrated to a Court under Section 222/8 of the Civil Procedure Code is that bringing individual actions (as opposed to actions brought as a class) would be “troublesome and inconvenient” and that bringing the action as a class of individuals will result in “better justice and efficiency”. Subject to these conditions, the Court  consider whether the class action should be heard.

While there may be instances where the court prevents the class action from  moving forward, the Civil Procedure Code states that an interlocutory appeal can be filed to ensure that the class’ facts are heard thoroughly.

Obtained Certification, Now What?

Once the “pre-class action phase” is  successfully completed and the class action has been certified by the court, the next stage is to submit to the court the plaintiffs desired remedy. The Court, prior to the trial, will appoint a “class action office” (sometimes referred to as an “executing officer”) whose job involves assisting the Court by attempting mediation, collecting and verifying  evidence, meeting with witnesses and taking  statements before and during the trial.

During this phase, if “class members” decide that the class action remedy does not best suit their needs, they have a period of forty-five days to withdraw from the “class”. It is not uncommon for individuals to withdraw from  a “class” following a few rounds of mediation between the parties.

Before the trial, it is required  that notification be provided to the public that a class action lawsuit is taking place and any  individuals (with the same facts and grievances) may apply to be a part of the lawsuit. Notification is expected to be provided in a public newspaper for a period of  three days. The court may, in its discretion, permit such notice to be distributed via mass media or in any other form deemed appropriate by the court.

Obtaining a Judgment:

Congratulations, you and your class have made it this far. From a procedural standpoint, the trial portion of class actions is not very different from ordinary civil actions. You can expect the same process of mediation, submission of evidence, hearing of witnesses and finally a delivery of judgment.

If the court decides in the favor of the class of plaintiffs, then a judgment will include the class’ lawyer fees  along with the payment of damages to all class members individually (based on the formula submitted to the Courts). Section 222/37 authorizes the court can consider and prescribe percentage of total monetary awards up to 30% as the attorney fees.

DFDL Contacts:

Angus Mitchell
Partner; Managing Director, Thailand

Kunal Sachdev
Legal Adviser

Chartchai Piriyapanyaporn
Senior Legal Adviser

* The information contained in this legal update is provided for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.