International Construction Law Review
AUSTRALIAN PATHS TOWARD CONSTRUCTION INDUSTRY SECURITY OF PAYMENT: A GUIDE FOR THAILAND?
THANAPAT YAEMKLIN1
LLB, LLM, MConstrlaw
ABSTRACT
This article explores the Australian Security of Payment legislation as a potential model for addressing cash flow issues and payment disputes in the Thai construction industry. Drawing from Australia’s experience, the author provides recommendations for the development of SOP legislation in Thailand. The article suggests a balanced approach to construction statutory adjudication in Thailand with the hope to make it effective and better suited to the Thai local
industry’s conditions.
1. INTRODUCTION
In Thailand, due to the lack of mandatory regulations on construction contracts, the construction industry has often struggled with cash flow issues and payment disputes.2 This may be particularly true when it comes to public sector constructions where Thai administrative law prohibits contractors from suspending construction works even when government agencies delay payments.3 A survey conducted in 2016 also underscored that the most significant financial risk for contractors operating in a southern province of Thailand revolves around non-payment problems.4
To address this problem, on 29 June 2022, the Thai Arbitration Center (THAC) held a conference to gather public input on the potential implementation of a security of payment law in Thailand. While security
1 Legal Advisor and Managing Director of Construct Legal Limited in Thailand. This article is based on a paper prepared for the Melbourne Law Masters subject, “Payment Matters in Construction Projects”, The University of Melbourne. The author would like to sincerely thank John Baartz, David Campbell-Williams and Matthew Bell for their feedback on a previous version of this article.
2 Tantivanichanon, S, “The Right to Receipt Payment and Resolve Disputes by Adjudication in According to the Construction Contract” (LLM Thesis, Thammasat University, 2016), 205–6. See also Yongpanich, P, “Security of Payment Law: A Study of Late Payment and Non-Payment in Construction Contracts” (LLM Study Paper, Assumption University, 2020) 48–9.
3 Netngamsawang, C, “Late Payment and Non-Payment by the Employer in Public Sector Construction Contract in accordance to the Public Procurement and Supplies Administration Act B.E. 2560 (2017)”, (2022) 1 Kalasin University Journal of Humanities Social Sciences and Innovation 46, 53.
4 Rotjanapattranon, A, “Risk Management of Construction Business in Hatyai, Songkhla” (LLM Minor Thesis, Prince of Songkla University, 2016) 55–6.
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