A same-sex couple is embroiled in a legal battle in Thailand after the surrogate mother who gave birth to their child has refused to allow them to leave the country claiming she was unaware they were gay.

The surrogate – who is biologically unrelated to the baby – handed over baby Carmen to Gordon Lake, an American, and his Spanish husband, Manuel, in January but later refused to sign documents to allow the infant to get a passport.

“I was flabbergasted, in a complete state of shock. It’s your worst nightmare in a process like this. I didn’t believe it,” Lake, 41, told the Guardian.

“We sent messages back. Hoping there was some sort of miscommunication. We were terrified.”

Six months later, the family of four, including his 23-month-old son Álvaro, also a surrogate baby born in India, are living in a secret location in Bangkok, afraid that Carmen will be taken away.

They chose Thailand for its top rate medical facilities and established surrogacy industry for gay couples.

But while Carmen – biologically his and an anonymous egg donor’s – was in the womb, the military overthrew the government. The coup was shortly followed by a series of high-profile surrogacy scandals that led to a ban on the industry.

The first involved a 24-year-old Japanese businessman who had fathered 16 children, mostly through Thai surrogates, shocking the nation.

The other was the case of baby Gammy, who has Down’s syndrome and was left with the Thai surrogate mother even as his parents took his twin sister back to Australia. Adding to the hysteria, it later emerged that the father was a convicted sex offender, court documents revealed.

So Lake was relieved when the surrogate happily signed the release documents to allow them to take Carmen from the hospital. “I took her flowers,” Lake said of the surrogate. “We have a really cute picture of her and my son.”

Ten days later, a day before Lake was due to meet the surrogate to fill out the forms, she messaged him through a translator. She wanted Carmen back.

“She said she thought she was doing this for an ‘ordinary family’ and when she found out that it wasn’t an ordinary family she was worried for Carmen’s wellbeing,” he said.

He spoke to the Guardian via Skype as his lawyer has advised him not to disclose his location. He says the surrogate has asked several times for him to bring the baby to her.

In March the surrogate appeared on Thai TV. Hiding her face with a beige hat and aviator sunglasses, she said she could not understand the surrogacy contract because it was in English.

She said she felt a moral urge to help a “legitimate married couple” and even paid her own medical bills – a claim Lake denies, saying he has paid about US$35,000 $47,000) for the entire process.

Speaking to the Guardian, the surrogate’s lawyer, Verutai Maneenuchanert, said the surrogate found out the men were gay only when she saw documents Lake left in the hospital room on the day of the birth.

But she denied that was the reason the surrogate wants to keep the baby. “It is because ... she will never ever sell her baby for money,” she said.

Maneenuchanert, who has equated commercial surrogacy with human trafficking, also speculated that the fertilised egg might have belonged to the surrogate, giving her a biological link to the baby. Lake says he has documents proving the egg came from a donor.

The big question for Lake and his family is why the surrogate did not know he is gay, a point he says he was clear about with the agency they used: New Life, which has branches in eight countries.

When military rulers in Thailand cracked down on the commercial surrogacy industry last summer, New Life’s office in Thailand closed. After that, Lake said he did not receive much information. At one point, he stopped receiving medical scans of Carmen.

New Life’s website deals directly with the changes in Thai laws last summer which banned commercial surrogacy and affected many parents.

“Co-founder of New Life Global Network, Mariam Kukunashvili, emerged as a ray of hope for thousands of destitute parents,” it says. “The parents having apprehensions regarding our ability and integrity were offered complete refunds.”

Lake said the only refund he received was 1000 Thai baht ($40) to cover one taxi fare. “Mariam was definitely not a ‘ray of hope’ for us whatsoever,” he said. “As far as we know they have done nothing.”

Kukunashvili told the Guardian in an emailed statement that New Life is trying to help Lake “in any possible way”.

She said the surrogate knew they were gay parents from the beginning of the process – a charge the surrogate’s lawyer denies – and that the contract was bilingual. She added that Lake and his husband did not follow New Life’s instructions and the situation has since become “unmanageable”.

Lake and his family have a new lawyer and will launch a court case for full parental rights of Carmen later this month.

Thai law does not recognise same-sex marriages but they hope for a sympathetic judge.

Lake has crowdfunded $23,000 for a trial that could last months. He works online remotely and is trying to bring up both children in Bangkok.

He says Carmen has two teeth already and his son calls her little sister.