THAILAND Law and Practice Contributed by: John Frangos, Nuanchun Somboonvinij, Santhapat Periera and Niti Muangkote, Tilleke & Gibbins
are entitled to the mandatorily and generally appli - cable statutory preferential rights, general or special and therefore have preference over other unsecured creditors under the laws of Thailand (particularly under Sections 251 to 289 of the CCC and Section 130 of the Thai Bankruptcy Act). 2.5 Insurance and Reinsurance 2.5.1 Requirement to Engage Domestic Insurance Companies It is not mandatory for insurance to be placed with a domestic insurance company. 2.5.2 Mandatory Insurance Coverage Requirements Under the Thai aviation law and the relevant regu - lations, an aviation business operator must provide insurance that covers damages to the life, body and property of passengers and third parties. The mini - mum coverage is as follows: • for passengers, 128,821 SDRs per person, per flight; • for baggage, 1,288 SDRs per person, per flight; • for goods, 22 SDRs per kilogram; and • for third parties, from 0.75 million SDRs to 700 million SDRs, depending on the Maximum Takeoff Mass (MTOM) in kilograms. For the combined single limit insurance, the minimum coverage for each aircraft will be calculated from: • for passengers, 128,821 SDRs multiplied by the maximum number of passengers carried on the aircraft; • for baggage, 1,288 SDRs multiplied by the maxi - mum number of passengers carried on the aircraft; • for goods, 22 SDRs multiplied by the weight of goods, in kilograms, carried on the aircraft; and • for third parties, from 0.75 million SDRs to 700 mil - lion SDRs, depending on the MTOM in kilograms. 2.5.3 Placement of Insurance Outside of Jurisdiction Reinsurance of up to 100% coverage can be placed outside Thailand. However, it is also reported that the Office of the Insurance Commission (OIC) (the regula - tory body for the insurance industry in Thailand) has
issued a circular letter to all licensed insurance com - panies in the country seeking co-operation to maintain a particular portion of domestic coverage. Although this does not have the force of law, insurance compa - nies will generally follow the OIC’s request. 2.5.4 Enforceability of “Cut-Through” Clauses Thai law does not specifically prohibit the inclusion of “cut-through” clauses in insurance or reinsurance documents. However, in order to be valid and enforce - able, ”cut-through” clauses that are included need to comply with the requirements regarding third-party contract rights, as specified in the CCC. According to the CCC, the parties to a contract can agree to perform debt to a third party. However, the third party must notify its intention to the debtor (ie, the reinsurer) that it will take the benefits relating to the contract. 2.5.5 Assignment of Insurance/Reinsurance Thai law does not specifically impose any prohibi - tions on the assignment of insurance or reinsurance. The assignment of insurance or reinsurance can be made by complying with the conditions specified in the CCC, which state that: • an assignment must be made in writing; and • a written notification regarding the assignment must be sent to the debtor or written consent from the debtor must be obtained. 2.6 Lease Enforcement 2.6.1 Restrictions on Lessors’ Abilities There are no restrictions on a lessor’s ability to ter - minate a lease, re-export the aircraft and/or sell the aircraft following termination. The lessor can terminate the lease in line with the lease agreement. Alternatively the lessor can re-export the aircraft but will have to comply with the regulations of the CAAT. In addition, the lessor can sell the aircraft after termi - nation if there are not any restrictions provided in the lease agreement. The aircraft does not need to be physically located in Thailand at the time of termination and sale.
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