New Dawn For The Enforcement of Consumer Rights in Thailand
On 22 May 2019, the Establishment of the Council of the Consumer Organization Act B.E. 2562 (2019) (“ECCO Act”) was published in the Royal Government Gazette, with the ECCO Act set to come into force on 21 July 2019. Two types of entities are introduced under the ECCO Act: the Consumer Organization (“Consumer Organization”), and the Council of the Organization (“CO”). Consumer Organizations and COs will each be independent of state agencies, business operators and political parties, therefore providing such entities with autonomy.
Duties and Powers of the CO
Section 14 of the ECCO Act sets out the duties and the powers conferred on the CO as follows:
1) Protect and safeguard consumer rights as well as propose consumer protection policies to the Cabinet or relevant state agencies;
2) Support and perform inspections, and monitor issues concerning goods and services, notify or publish information, or issue warnings relating to goods or services which may adversely affect the rights of, or may cause damage to consumers and may publish the name of the goods or services, business operator should it choose to;
3) Report any acts or failures to act which adversely affect the rights of consumers to the relevant state agency and disseminate such information to the public;
4) Support and assist Consumer Organizations and promote the gathering of Consumer Organizations at the provincial and local level;
5) Promote education and research for the purposes of protecting and safeguarding consumer rights;
6) Support and assist members in mediation or settlement of disputes relating to the infringement of consumer rights, prior to and during court proceedings;
7) Commence legal proceedings on matters relating to the infringement of consumer rights as deemed reasonable or pursuant to a request from a consumer, or pursuant to a request from Consumer Organizations for assistance in legal proceedings, or provide assistance in legal proceedings in the event a consumer or the Consumer Organization is subject to legal action arising from the exercising of consumer rights or the exercising of such rights on behalf of a consumer (as applicable), and in addition, the CO shall have the authority to settle; and
8) Arrange for the gathering and dissemination of information relating to goods or services which will be of benefit for consumers in deciding whether to purchase such goods or services, and ensure that such information is easily accessible.
Power to commence legal proceedings
As set out above, section 14(7) of the ECCO Act grants the CO the power to commence legal proceedings. Such legal proceedings may involve civil, criminal, administrative, or consumer cases. Under the ECCO Act, the CO has the discretion to decide whether or not to commence legal proceedings on matters relating to the infringement or the exercising of consumer rights. However, the ECCO Act does not specify which type of cases the CO
should pursue. For example, whether the CO should pursue cases where a wide range of consumers are affected, or where commencing legal proceedings would be in the public interest. Further, such powers conferred on the CO appear to conflict with the general principle that only the injured party or interested persons may file legal proceedings.
These vast powers granted to the CO also raises a question as to what would happen in the event a consumer does not wish to pursue a claim against a business operator, but the CO does. Given that the ECCO Act does not have a provision preventing the CO from initiating legal proceedings in any circumstances, in such case it would appear that the CO retains the authority to commence proceedings even where the consumer does not wish to pursue the case.
There is also an issue as to what would happen to the legal proceedings commenced by the CO in the event that a consumer commences legal proceedings in parallel but then settles with the business operator. In particular, whether the CO’s proceedings would end immediately on settlement of the consumer’s proceedings or whether it would remain as a separate claim. In the event that the claim remains as a separate claim, an issue arises as to how the CO has the authority to proceed with the legal proceedings when the injured consumer has settled the claim.
Further, given that the CO is not an injured party or an interested party, it is questioned what right the CO will rely on to summon witnesses and obtain evidence from third parties, as the CO itself does not have any connection with any of the parties. Having said this, the autonomy of the CO with regard to consumers could mean that business operators will be discouraged from seeking to end legal proceedings by simply opting to settle claims with a small number of consumers, and instead may focus on rectifying the underlying issue causing loss or damage to consumers.
Payment of Compensation
The ECCO Act provides that in the event the CO successfully brings a claim against the business operator for infringement of consumer rights, the business operator shall be liable for the legal expenses of the CO, in addition to a fee payable to the CO as compensation at a rate not lower than 25% but in any case no more than 50% of the damages and compensation awarded to the consumer by the Court, unless it can be proven by the CO that the actual expenses incurred are higher, in which case, the Court may award such amount to the CO.
An interesting observation is that in certain cases a business operator may be required to pay compensation to multiple parties. For example, section 222/37 of the Thai Civil Procedure Code regarding class action lawsuits provides that the successful party’s lawyer will be awarded a reward not exceeding 30%. This could mean that in a successful case brought by the CO, if the Court awards compensation to the consumer, a business operator would be required to pay compensation to three parties, i.e. the consumer, the consumer’s lawyer, and the CO. This is expounded by the fact that in class action lawsuits a business operator may be liable to pay compensation in substantial amounts to multiple consumers. Therefore, the payment obligation may be too burdensome for some business operators to bear, and may increase the risk of bankruptcy of defendant business operators.
The Formation of a Consumer Organization and a CO
A Consumer Organization can be formed by at least 10 natural persons by registration with the central registrar or the provincial registrar. A Consumer Organization is charged with protecting consumer rights and is
non-profitable in nature. The CO can be formed by at least 150 Consumer Organizations notifying the central registrar or the provincial registrar, and within 90 days of such notification the establisher must procure at least half of the Consumer Organizations contained in the list of Consumer Organizations announced by the central registrar to join the CO. The Consumer Organization and the CO are independent of any government agency and they are charged with protecting consumer rights.
As with the operation of any entity, a CO requires funding to operate. In this regard, section 19 of the ECCO Act provides that a CO will receive at least THB 350 million of government funding to facilitate its operation, which must be provided to the CO within 60 days of its establishment.
It would appear that the ECCO Act intends to provide consumers with the means to form a Consumer Organization and a CO including formulating the internal regulations of the CO within the boundaries provided by the law, therefore dispensing the need to rely on state agencies who may otherwise prolong the process. However, the ECCO Act does not limit the number of COs nor does it establish a hierarchy where a particular CO is above other COs, which may in turn result in the COs having a lack of uniformity or performing duties in a duplicative or conflicting manner, which would adversely affect the effectiveness of such organizations and the underlying purpose of the CO.
Qualification and Term of the Members and the Chairman of a CO
The ECCO Act does not include any provision specifying the length of the term that each member or the chairman of the CO must serve, nor does it include any provision which allows for the removal of the chairman or the members of the CO. Therefore, even where the chairman or the members have committed a serious offence, such as abusing government funding or breaching the law, or where the chairman or the members possess certain undesirable characteristics such as being imprisoned or being bankrupt, such persons cannot be removed.
The ECCO Act does not specify the qualifications of a chairman or its members who are meant to be the spearheads of consumer rights protection. In that regard, if unqualified individuals are allowed to retain their position as member or as chairman of a CO, it will only render the CO less effective. For example, should unqualified individuals who abuse state funds for personal gain be allowed to retain their position, it is possible that such individuals would commit the same offence again. This would in turn reduce the funds available for consumer protection. Therefore, the ECCO Act should be amended to contain a mechanism which allows the removal of unqualified individuals from a CO, so as to ensure the CO can perform its duties effectively and with transparency.
Although it appears clear that the ECCO Act intends for a CO to be at the forefront of consumer protection by equipping COs with the powerful tools set out in section 14, such tools must be used with due regard to other factors, such as the adverse effects it may have on business operators as well as the social and legal implications which may follow as a result of employing such tools. Further, the ECCO Act should be amended to ensure accountability within a CO by, for example, including a mechanism to remove unqualified individuals from a CO as failing to do so could undermine the CO’s purpose. Given that multiple COs can be established under the ECCO Act, it must be ensured that these COs work hand in hand with uniformity.
While the introduction of the Consumer Organization and the CO entities is a step forward for consumer protection in Thailand, the ECCO Act fails to consider the interests of business operators and strike a balance between the rights of consumers and the interests of business operators. Business operators should therefore bear in mind these new legal mechanisms when conducting business and considering their dispute resolution strategy as such mechanisms are bound to revolutionize the way in which consumer rights are enforced against business operators.DOWNLOAD