THAILAND Law and Practice Contributed by: John Frangos, Nuanchun Somboonvinij, Santhapat Periera and Niti Muangkote, Tilleke & Gibbins
3.2.3 Trust/Trustee Concepts Thai law does not principally recognise the common law concepts of liens, trust, charge, hypothecation or a security interest created thereunder, except in the context of the Trust for Transactions in Capital Market Act BE 2550 (2007), which provides for a trust to be created for the benefit of transactions in the capital market. The typical alternative structures that could be used include parallel debt or the appointment of a security agent instead of a security trustee. 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee Subject to complying with the applicable laws, a bor - rower may assign its rights under an aircraft lease (including in relation to insurances) to any person, including the security agent/trustee under Thai law. In relation to mortgages, Thai law does not currently provide for the mortgaging of aircraft. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations Assigning the rights and benefits without assigning the attendant obligations of a lessor is permissible under Thai law. 3.2.6 Choice of Foreign Law A security assignment or a guarantee can be expressed to be principally governed by English or New York law. However, attention should also be paid to Sections 9 and 16 of the Act on Conflict of Laws BE 2481 (1938). • Section 9 states: “Unless otherwise provided by this Act or other laws of [Thailand], the formal validity of a juristic act shall be governed by the law of the country where the act is made. However, the law of the country where a property is situ - ated governs the form required for the validity of a contract, document or other juristic act relating to immovable property.” • Section 16 states: “Movable and immovable prop - erty is governed by the law of the place where the property is situated. However, in the case of expor - tation of movable property, the law of nationality of its owner shall govern from the time of exporta - tion.”
Therefore, in addition to complying with the English or New York law requirements, the security assignment or guarantee and creation/perfection thereof, should be carried out in line with and in the forms prescribed by Thai law as well. In addition, under Thai law and in any proceedings taken in Thailand for the enforcement of the secu - rity assignment or guarantee, the choice of English or New York law, as the case may be, to govern the security assignment or guarantee is a valid choice of law. The Thai courts will observe and give effect to the choice of English or New York law (as the case may be) as the governing law of the security assignment or guarantee, in so far as the English or New York law is established and proven to the satisfaction of the Thai court, and in the discretion of the Thai court, not considered contrary to public order in Thailand or good morals in any way. If the foreign law is not proven to the satisfaction of the Thai courts, Thai law will apply. In any event, the secu - rity assignment or guarantee and any other relevant agreements/documents must be legal, valid, binding and enforceable under, and be in the forms prescribed by, English or New York law, as the case may be, and/ or Thai law if they are to be legally enforced in Thai - land. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments Under Thai law, with respect to an assignment, a claim may be assigned or transferred, unless its nature does not allow this, it is not subject to judicial attachment or the parties have declared a contrary intention. How - ever, the declaration of intention, cannot be set up against a third person acting in good faith. An assign - ment or transfer of the rights or obligations perform - able to a specific creditor is only valid if it is made in writing. The assignment or transfer cannot be set up against the debtor or any third persons unless notice has been given in writing to the debtor or the debtor has consented to the assignment/transfer in writing. If the debtor has only received a notice of assign - ment or transfer, they may submit any defence that they have against the assignor or transferor before the notice was received against the assignee or transfer -
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