THAILAND Law and Practice Contributed by: John Frangos, Nuanchun Somboonvinij, Santhapat Periera and Niti Muangkote, Tilleke & Gibbins
3.1.10 Transfer/Assignment of Debts Under Foreign Laws Subject to complying with the applicable laws, the transfer or assignment of all or part of an outstanding debt under a valid English or New York law-governed loan is recognised and permissible under Thai law. 3.1.11 Usury/Interest Limitation Laws There are usury or interest limitation laws in Thailand. Principally, with respect to a loan transaction, inter - est will not exceed 15% per annum. However, the maximum interest rate chargeable by the international financial institutions which Thailand is a member of, or banks or financial institutions registered and located in foreign countries will not exceed 20% per annum. If the applicable interest rate under the relevant agree - ment/document exceeds the maximum interest rate permissible under Thai law, the whole interest charged is void and unenforceable and only the principal amount will be recoverable. If the interest has been paid, it was in violation of the law. As a result, the borrower cannot claim restitu - tion. The lender must also apply the amount paid as interest in violation of the law towards repaying the principal and in this event, all interest accrued but unpaid may not be recoverable by the lender and/or the persons purportedly entitled to it under the terms of the agreement/document. The laws governing the maximum interest rate extends the scope of interest to benefits in lieu of interest. 3.2 Security 3.2.1 Typical Forms of Security and Recourse The typical forms of security traditionally recognised under Thai law include: • mortgage of immovable property (such as land, buildings and structures on the land and condo - minium units) or certain types of movable property (such as machinery and vessels); • pledge of movable property (including shares); and • business security under the Business Security Act BE 2558. The Business Security Act BE 2558 makes provision for the recognition of a security interest created by
a business security agreement. A business security agreement is an agreement whereby a contracting party (the security provider) has placed a property with the other contracting party (the security receiver) as security against debt repayment with no need for the property to be delivered to the security receiver. The creation of a business security is recognised as security interest under Thai law, which then will pro - vide the security receiver with preferential rights over that asset in the case of bankruptcy. The Business Security Act BE 2558 requires security receivers to be eligible persons which are defined in the Business Security Act BE 2558 and its ministe - rial regulations, which currently include, inter alia, Thai commercial banks and foreign banks providing a loan with Thai commercial banks. Otherwise, at pre - sent, foreign banks and foreign entities are not eligi - ble security receivers as provided under the Business Security Act BE 2558 and its ministerial regulations. A security provider may place its own property as security against debt repayment payable by a third person. A business security agreement must be made in writing and registered with the business security registration officer. However, Thai law does not pres - ently facilitate the mortgaging of aircraft and registra - tion or perfection of a mortgage over an aircraft under Thai law may therefore not currently be achievable or practicable. In specific circumstances, assignment of income/proceeds or insurance may be used. In addition, guarantee and assignment are available forms of contract that could be used to create a con - tractual security arrangement under Thai law (in other words, “quasi security”). These contractual security arrangements will be enforceable between the parties but they will not create any priority over other creditors under Thai law. Debts that are secured by contractual security arrangements will be treated as unsecured debts. Claims against the guarantor under guaran - tee and the assignor under an assignment will rank at least pari passu with the claims of all other unsecured creditors of the guarantor or assignor. 3.2.2 Types of Security Not Available At present a mortgage over an aircraft is not permis - sible in Thailand under Thai law.
571 CHAMBERS.COM
Powered by FlippingBook