THAILAND Law and Practice Contributed by: Jessada Sawatdipong, Sarunporn Chaianant, Supawich Nimmansomboon and Supawin Pongthananikorn, Chandler Mori Hamada
ble energy auction awarded approximately 2,145 MW of new generation capacity under long-term feed-in tariff power purchase agreements lasting 20–25 years. The combination of stable tariff structures and project scale underpins the sector’s bankability. Beyond renewable energy, data centres have become a growing focus of project finance. Supported by gov- ernment incentives and increased demand for digital infrastructure, financing structures now include syndi- cated loans and project-based facilities. There is also a clear shift towards aligning data centre financings with green and sustainability-linked principles, par- ticularly where energy-efficiency and renewable power are integrated. 8.2 Public-Private Partnership Transactions The Public-Private Partnership Act B.E. 2562 (2019) came into force in March 2019. The Act streamlines the process of investment partnerships between the public and private sectors. It is applicable to various types of projects, ranging from infrastructure transpor- tation to public services, energy, telecommunications, hospitals, schools and exhibition centres. In 2018, the Eastern Special Development Zone Act, B.E. 2561 (2018) was enacted. This Act creates an expedited process for the approval of public-private partnership projects within the so-called Eastern Sea- board. Apart from the Eastern Seaboard initiative, under the Public-Private Partnership Project Preparation Plans for 2020–27 (the “PPP Plans”), there are 135 PPP pro- jects in the pipeline, with investment costs of over THB1.18 trillion, to be executed within an announced timeframe. 8.3 Governing Law There is no legal requirement for any of the project documents to be governed by Thai law. The parties can agree to project documents being governed by a foreign law, including English and New York law, and disputes may be resolved in any foreign court – or by international arbitration. In all circumstances, if a governmental authority is a party to the project documents, it is generally neces-
sary for the project documents to adhere to standard terms/templates, with Thai law being the governing law and disputes resolved by the Thai courts. For example, where an offtaker of power projects is a state-owned Thai electricity utility enterprise, or where an owner of project land is a governmental authority, the power pur- chase agreement and land lease agreement would typi- cally need to be drawn up in accordance with standard terms, allowing only limited room for negotiation, with Thai law stipulated as the governing law and disputes resolved solely by the Thai courts. 8.4 Foreign Ownership Under Thai law, foreigners are generally prohibited from owning real property, both surface and subsur- face, including any water resource that is represented by a title deed. Consequently, foreign lenders may not be able to foreclose on real property secured in their favour following an enforcement event. Exceptions may apply, such as where land has been acquired under Board of Investment incentives or in respect of condominium units. Given this drawback, in the case of syndicated financ- ings, foreign lenders normally rely on separate secu- rity sharing arrangements, whereby proceeds from the enforcement of real property will be shared among all lenders on a pro rata basis based on each lender’s outstanding commitment. With respect to water rights, there are no restrictions on foreigners applying for the use of water resourc- es, unless the water resource is located on private land where ownership is subject to foreign ownership restrictions. There is no private ownership of public water resources, and the use of such water is subject to the relevant official’s permission. It is important to note that where security is created over shares, if the foreign pledgee opts to foreclose on the pledged shares, such foreclosure will result in the borrower becoming a foreign entity (majority-owned by a foreigner). Consequently, such entity may not be able to carry on its business if its business operation is considered a restricted business for a foreigner, unless a foreign business licence is obtained. See 5.5 Other Restrictions . Similarly, where a security is cre- ated over a ship and the foreign mortgagor forecloses
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