THAILAND Law and Practice Contributed by: John Frangos, Nuanchun Somboonvinij, Santhapat Periera and Niti Muangkote, Tilleke & Gibbins
2.2.3 Parts Installed or Replaced After a Lease’s Execution A lease may cover installed or replaced parts on an aircraft or engine after its execution, provided that terms to this effect are included in the lease agree - ment. 2.2.4 Risk of Title Annexation There could be a risk of title annexation in respect of aircraft engines installed on an airframe. Under Thai law, if several movable properties belonging to differ - ent persons are joined to become component parts or are indivisible, those different persons become co-owners of the composite property and each co- owner’s share will be in proportion to the value of their respective component part. Notwithstanding this, if one of the component parts is regarded as a principal part, the owner of the principal part will become the sole owner of the entire compos - ite property and they will be liable to pay the value of other parts respectively held by each of them to the other owners. In addition, an express provision in the lease agree - ment that aircraft engines not be annexed as part of the airframe upon installation and having a nameplate fixed on each engine with a statement that the engine belongs to the owner/lessor and leased to the lessee will help mitigate the risk of title annexation. 2.2.5 Recognition of the Concepts of Trust/Trustee Thai law does not recognise the common law con - cepts of liens, trust, charge, hypothecation or a secu - rity interest created under it, except in the context of the Trust for Transactions in Capital Market Act BE 2550 (2007). This Act provides for a trust to be cre - ated for the benefit of transactions carried out in the capital market. A trust and the role of an owner trustee under a lease are generally not recognised under Thai law therefore. 2.3 Lease Registration 2.3.1 Notation of Owner’s/Lessor’s Interests on Aircraft Register Thai law does not specifically require the registra - tion of an aircraft lease or provide provision for this. To operate a leased aircraft lawfully in Thailand, the
every THB1,000 or fraction thereof) of the total value, regardless of whether the agreement is in electronic or physical form. Each executed physical copy, duplicate or counter - part of an instrument (if any) will be subject to stamp duty of THB1 if the duty with which the original is chargeable does not exceed THB5. Alternatively, it will be THB5 if the duty with which the original is charge - able exceeds THB5, except where the party liable to Under Thai law, the lessor does not have to be licensed or otherwise qualified in Thailand to lease an aircraft from abroad to a lessee in Thailand. However, a lease of property is considered a service business, which is a restricted business to foreigners, under List 3 (21) of the Foreign Business Act BE 2542 (1999) (FBA). Therefore if any part of the lease activity carried out by a foreign lessor occurs in Thailand, the foreign les - sor will be subject to the FBA and will have to obtain a foreign business licence from the FBA before they can carry out the business activity with a domestic lessee in Thailand. 2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law A lease of property under Thai law, is a contract whereby the lessor agrees to let the lessee have the use or benefit of the property for a limited period and the lessee agrees to pay rent in return. Apart from that, there is currently no law that specifically requires particular terms to be included in a lease agreement for movable property. pay the duty is a co-operative society. 2.1.6 Licensing/Qualification of Lessors 2.2.2 Tax and Withholding Gross-Up Provisions Freedom of contract is an underlying principle of Thai law. It enables the intention of the parties to the contract to be recognised. The parties may therefore agree to tax and other withholding gross-up provisions and the provisions will be permissible and enforceable to the extent they are not contrary to public order in Thailand or good morals.
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