Class Action is a type of civil proceedings whereby one or more plaintiff brings a civil lawsuit in order to protect the right of oneself and a group of persons who have the same rights deriving from the same facts and legal principle. In 1995, Class Action was supplemented as Section 222/1 to Section 222/49 under the Civil Procedure Code of Thailand.
The additional provision of Class Action in the Thai legal system results from the endeavor of the Securities and Exchange Commission, Thailand (“SEC") to resolve the problem that the damaged investors could not get remedies from persons who violated or failed to comply with the Securities and Exchange Act. The SEC proposed the Class Action on Securities Bill to the Council of State for consideration. Thereafter, the Council of State agreed to apply the principle of Class Action to the cases which have numerous victims affected by tort, breach of contract or damage derived from a violation of specific law, to protect the injured persons. Accordingly, the principle of Class Action has been enacted as part of the Civil Procedure Code.
Class Action can reduce the cost of litigation because the law regulates that the plaintiff who commences the case shall pay for the Court fees only for the relief sought in the part of the plaintiff. Moreover, the counsel for the plaintiff shall be awarded when the Court renders judgment in favor of the plaintiff. The Court shall determine the amount of the award by taking into account the difficulties of the case together with the period of time and the work of the counsel for the plaintiff, including the expenses relating to Class Action. (The amount of the award must not exceed thirty per cent of the amount that the plaintiff and the members of the class have the right to receive). The award may induce the counsel to take part in the case and to facilitate the Class Action litigation for the injured person.
In addition, the plaintiff and the counsel for the plaintiff are the representatives of the class members in proceeding with the case in Court. The judgment of the Court shall have the consequence of binding the parties and the members of the class. The plaintiff or the counsel for the plaintiff shall also have the power to proceed with the execution of the case for the plaintiff and the members of the class. Accordingly, Class Action will be able to deliver justice to several injured persons in a litigation and reduce tasks of organizations in the justice system.
However, there are three initial issues that the injured person should realize before participating in Class Action. Firstly, the plaintiff who commences the case shall acquire the right to be a member of the class in good faith and intend to conduct the case to protect the interests of the class members. Secondly, the counsel for the plaintiff shall have knowledge, ability, and experience in Class Action. Lastly, the injured person is automatically a member of the class and legally binding of the Court's judgment by the result of the law. Thus, if a member of the class wants to file a lawsuit separating from other class members or does not want to be bound by the judgment, such person shall notify his or her wish in writing to the Court within the time period prescribed by the Court.
The application of Class Action to the offence or liability under the Securities and Exchange Act
The characteristics, examples and the limitation period of the civil cases which may be requested for a Class Action in order to deal with the offence or liability under the Securities and Exchange Act B.E. 2535 (1992) and amended versions (“the Securities and Exchange Act") are as follows:
Types of Civil Case
Examples of the Offence or Liability under the Securities and Exchange Act
The Limitation Period
The injured person claims compensation from a person who, willfully or negligently, unlawfully acts and causes damage.
Market Manipulation, and Fraud or Failure to perform duties
One year from the day when the wrongful act and person bound to make compensation become known to the injured person, or ten years from the day when the wrongful act was committed.
The injured person claims compensation from a person who does not abide by the contract terms or fails to perform obligations under the contract.
A securities issuing company defaults in payment with respect to debentures.
Ten years from the moment when the claim can be enforced.
Case regarding the Claim of Rights under the Securities and Exchange Act
The injured person claims compensation from a person who is required by law to specifically take responsibility.
- The debenture holder representative or the mutual fund supervisor fails to act in compliance with his or her power and duties;
- Purchasing securities from a person who filed a false registration statement and prospectus or purchasing investment units from an asset management company which offered for sale of investment units by presenting a false prospectus;
- Purchasing securities from a securities issuing company who disclosed information to shareholders or the public which contains a false statement such as financial statements of the company;
- The board of governors of the Stock Exchange ordered a delisting of securities.
The limitation period under the Securities and Exchange Act, for example:
- the rights to claim compensation due to purchasing securities related to information from the person who filed a false registration statement and prospectus shall have a limitation period of one year from the date on which the fact that such document contained false information became known or should have been known, but not exceeding two years from the effective date of such document;
- The rights to claim compensation due to trading securities of an issuer who disclosed information with a false statement to shareholders or the public shall not be brought to the Court upon lapse of two years from the date on which the injured person became aware of the disclosure of the false statement or five years from the date on which such act was committed.
To initiate a Class-Action lawsuit
Investors can arrange to claim compensation via Class-Action lawsuit by taking the following steps:
1. Combining efforts with the other investors who have been damaged under the similar situation or have the same rights deriving from the same facts and legal principle;
2. Collecting evidence related to the claims for compensation or the rights under the Securities and Exchange Act;
3. Contacting a lawyer to make necessary preparations before filing a lawsuit. For example, in case of damage resulting from a breach of contract, compliance with the agreements specified in the contract is required such as sending a notice prior to filing a case.
The SEC has been coordinating with Lawyers Council Under the Royal Patronage, the Stock Exchange of Thailand, and the Thai Investors Association to encourage the injured persons in the capital market to use Class Action in their lawsuit more frequently.
Summary of Class Action under the Civil Procudure Code