Alternative Dispute Resolution vs. Litigation: Weighing the Pros and Cons

• Alternative Dispute Resolution, including mediation, arbitration, and conciliation, offers a flexible, cost-effective, and private alternative to courtroom litigation for resolving business disputes in Thailand.
• Litigation, on the other hand, is a formal and public process, often involving higher costs and more time.

Engaging in business activities in Thailand and other countries will inevitably lead to encountering disputes. These disputes can arise from various sources such as contractual disagreements, regulatory compliance issues, or differences in business and cultural practices.

In this article, experts from WSR International weigh up the process and cons of Alternative Dispute Resolution (ADR) mechanisms and litigation.

Alternative Dispute Resolution

Alternative Dispute Resolution, commonly known as ‘ADR’, is a form of methods that are used to settle disputes between opposing parties outside of a courtroom.

As Thailand looks to ensure that it can continue to be an attractive destination for foreign investment, ADR will continue to serve as a conduit to settling disputes between parties through official channels outside of a courtroom.

The most recognisable forms of ADR are mediation and arbitration, while conciliation is also a growing area in Thailand.

• Mediation: A neutral party, the mediator, will collaborate with both conflicting parties to resolve the dispute and come to a mutual agreement. The settlement between the parties to the dispute will be recorded in an enforceable contract under Thai law.
• Arbitration: Arbitration is a process where a dispute is submitted, by an agreement between the conflicting parties, to a panel of independent arbitrators who will then consider the dispute and make a binding agreement based on the facts of the case.
• Conciliation: In conciliation proceedings, the conflicting parties will appoint an official conciliator who will work alongside both parties to come to some form of agreement. The conciliator has the authority to make recommendations, but also draft settlement agreements between the conflicting parties.

Litigation

Litigation usually entails a claimant filing a claim in the respective court with the intention to gain some form of damages from the defendant.

Litigation proceedings will usually involve a series of steps, including pre-trial formalities, discovery, trial, and appeal, if necessary.

What are the differences between ADR and litigation?

Litigation is a form of dispute resolution, which normally takes place in a courtroom, whereas forms of ADR will take place outside of a courtroom.

From experience, parties tend to have more control and outcome in ADR proceedings, as opposed to litigation. Litigation has strict procedural rules, whereas ADR proceedings are less informal and more flexible.

Due to the nature of ADR proceedings, they can be less expensive than litigation proceedings. Further, ADR procedures are usually private, while litigation is a matter of public record.

Pros and cons of litigation

• Enforceable and legally binding decisions: In almost all cases, the outcome of the trial is legally binding for the concerned parties.
• Formalised structure: Thai court systems have established procedures and rules in place, which will ensure litigation proceedings proceed in a formalised manner.
• Right to appeal: In most cases, parties will have the right to appeal decisions in litigation proceedings.
• Public exposure: If it is a sensitive case, the company may not want details of the case and how it runs is business open to public scrutiny.
• Costly: Due to the nature of litigation proceedings, they can result in hefty legal costs throughout the entire process.
• Time-consuming: Like in other jurisdictions, litigation proceedings in Thailand can be a time-consuming process.

Pros and cons of ADR

• Cost effective: In most cases, ADR processes will result in lower legal costs than opposed to litigation proceedings.
• Time saving: While litigation proceedings can be time consuming, ADR proceedings are more flexible, thus they should be less time consuming.
• Limited legal precedent: Decisions by way of ADR do not create legal precedent, thus this can be a disadvantage in some cases.
• Lack of appeal option: In ADR proceedings, there is usually limited appeal options.

How can WSR international help your business?

Choosing to utilize ADR or litigation proceedings in Thailand ensures that WSR International’s experienced team is well-equipped to support you and your business.

Whether addressing real estate disputes or navigating labor negotiations across Thailand, WSR International stands ready to provide expert guidance and comprehensive assistance, ensuring your commercial interests are effectively represented and protected.