THAILAND Law and Practice Contributed by: John Frangos, Nuanchun Somboonvinij, Santhapat Periera and Niti Muangkote, Tilleke & Gibbins
2.10.3 Application of Article XIII of the Protocol on Matters Specific to Aircraft Equipment The Protocol does not apply in Thailand. 2.10.4 Enforcement of Conventions The Convention and Protocol are not enforceable in Thai courts. 2.10.5 Other Conventions Thailand ratified the 1948 Geneva Convention on the International Recognition of Rights in Aircraft in 1967. However, Thailand is not a party to the 1933 Rome Convention. 3. Aircraft Debt Finance 3.1 Structuring 3.1.1 Restrictions on Lending and Borrowing Subject to complying with the applicable laws, there are no restrictions on foreign lenders financing an air - craft locally or borrowers using the loan proceeds. 3.1.2 Effect of Exchange Controls or Government Consents Thailand has a comprehensive exchange control regime that regulates foreign exchange transactions, including outward remittances of Thai or foreign cur - rency. Authorised juristic persons such as commercial banks in Thailand are allowed to approve specific for - eign exchange transactions. Other foreign exchange transactions meanwhile can only be carried out with the approval of the Bank of Thailand. With respect to necessary foreign currency remittanc - es to repay a foreign loan or make payments under a guarantee or security document (net of applicable Thai withholding tax), the party seeking to remit the funds must, each and every time they make an appli - cation for outward remittance, submit documentary evidence with respect to the remittance (such as the relevant invoice, a copy of the relevant loan or other relevant agreement and any other relevant documents or instruments).
3.1.3 Granting of Security to Foreign Lenders Subject to complying with the applicable laws, bor - rowers are permitted to grant security to foreign lend - ers to secure a valid primary obligation. 3.1.4 Downstream, Upstream and Cross-Stream Guarantees Subject to complying with the applicable laws, down - stream, upstream and cross-stream guarantees by Thai companies or individuals as security for a valid primary obligation of a third-party debtor in favour of lenders are permitted. There are no consideration, corporate benefit or registration requirements for these guarantees to be valid under Thai law. 3.1.5 Lenders’ Share in Security Over Domestic SPVs A pledge of shares of a domestic/Thai special purpose vehicle that owns the financed aircraft under Thai law is recognised and advisable. 3.1.6 Negative Pledges The provisions relating to a negative pledge are rec - ognised and acceptable under Thai law, if, and to the extent, they are not against Thai laws or public order in Thailand or good morals. 3.1.7 Intercreditor Arrangements Subject to complying with the applicable laws, there are no material restrictions or requirements imposed on intercreditor arrangements. 3.1.8 Syndicated Loans The concept of agency and therefore the role of an agent (such as the facility agent) under a syndicated loan are recognised under Thai law. 3.1.9 Debt Subordination Provisions or arrangements setting out subordination of any rights of a person to any rights of another per - son under an agreement are only binding and enforce - able on those parties under Thai law. They are only binding and enforceable to the extent, and, upon the conditions as may be agreed upon by the parties concerned. However, they may not create preferen - tial rights nor bind or try to enforce them against a third party.
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