1. T HE USE OF ARBITRATION IN THE ADMINISTRATIVE CONTRACT : THE RECOMMENDATION FOR T HAILAND Natthinee Sereechettapong

2. O BJECTIVES To examine arbitration laws and practices on the administrative contract in Thailand and some European countries To analyze the reason behind such practices from Law and Economics perspective To initiate some recommendations for Thailand

3. T ERMS Administrative contract entered into by public entities with private parties in connection with public interest matters. e.g. concession contract, public services contract A classic form of investment contracts Arbitration clause A clause in which the parties undertake to settle disputes that may arise by means of arbitration. A significant contractual device for foreign investment protection

4. S TATEMENT OF PROBLEM Thailand Its economic improvements depend on FDI An arbitration friendly state at the beginning The Cabinet resolution of 2004 and 2009 imposed to prohibit public entities from including the arbitration clause in the administrative contracts, unless prior Cabinet approval was obtained. has restrained international investment. has been criticized by foreign investors.

5. I NTERNATIONAL U NIFORM L AWS The Arbitration law in Thailand and most of European countries is based on the UNCITRAL model law on International Commercial Arbitration does not detail the requirements for arbitrable matters other thanmatters arising from all relationship of commercial nature, whether contractual or not. Whether public entities have legal ability to conclude the arbitration clause in administrative contracts or not, was left open to be determined by law-makers of the countries.

6. I NTERNATIONAL U NIFORM L AWS European convention on international commercial arbitration of 1961 Article II, paragraph 1 provides that legal persons of public law have the right to conclude valid arbitration agreement. Only Belgium has made a reservation to this provision. Other signatories, especially countries in continental Europe, do not conform with this provision firmly.

7. D OMESTIC L AWS England and Wales are representative of common law countries. have no administrative court. have no restriction on the use of arbitration in administrative contracts. Other Continental European Countries are representative of civil law countries. Administrative court is very well developed and has jurisdiction over disputes in relation to administrative contracts. have Ex Ante and Ex Post restriction on the use of arbitration in administrative contracts.

8. D OMESTIC L AWS Ex Ante restriction conducted by the legislature and the government. Two different ways of enactment: explicitly prohibits 1. explicitly prohibits a public entitys recourse to arbitration. does not explicitly prohibit 2. does not explicitly prohibit a public entitys recourse to arbitration. creating different environment for the parties when bargaining over the arbitration clause. Ex Post restriction conducted by the national court. making a final decision whether to enforce an arbitration clause or set aside the award, according to domestic laws.

9. D OMESTIC L AWS Thailand At first, Thailand has no restriction at all. Moreover; the new Arbitration act of 2002 expressly allows public entities to include the arbitration clause in administrative contracts, despite the establishment of administrative court in 1999. Recently, the cabinet issued a resolution in 2004 and 2009 to prohibit public entities from including arbitration clause in such contracts, merely due to Thai governments losses in several arbitration cases.

10. R ECOMMENDATIONS FOR T HAILAND The cabinet resolution : may be imposed by misconception of the Thai government. should be revised.

11. Q&A