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April 2, 2024

Applicability of Foreign Law in Thailand Aircraft Lease Agreements

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The Legal Industry Reviews

Aircraft lease agreements are commonly governed by the law of England and Wales, New York, or another common-law jurisdiction. This article examines the challenges of applying these and other foreign laws to an aircraft lease dispute in Thailand.

The applicability of foreign law in Thailand is subject to the Conflict of Laws Act B.E. 2481 (1938). Section 8 of the Conflict of Laws Act states, “Whenever the law of a foreign country which is to govern is not proved to the satisfaction of the court, the internal law of Thailand shall apply.” According to this section, the burden of proof is on the party that claims the foreign law. The claiming party must prove to the court the existence of the foreign law and how the law applies.

However, in aircraft lease disputes, especially those that involve seizing or repossessing aircraft, generally only Thai law will apply. Seizing or repossessing an aircraft involves Thai government authorities such as the Civil Aviation Authority of Thailand (CAAT) and the Airports of Thailand (AOT), among others, and these authorities will only comply with Thai law.

Moreover, foreign court judgments are not enforceable in Thailand. This means that any action to seize or repossess an aircraft in Thailand must be initiated in Thailand and using Thai law. Foreign court judgments, however, can be used as evidence and may be helpful in convincing the CAAT or court that the lessor is entitled to repossess an aircraft, and in proving damages.

The Thai laws relevant in a hostile repossession or seizure action include the Air Navigation Act, the Civil and Commercial Code (CCC), and the Civil Proceedings Code (CPC). The CCC provides guidelines on contract termination and the rights of parties in lease agreements. Specifically, it outlines the conditions under which a lessor can terminate a lease agreement due to lessee default, including nonpayment or breach of lease terms. Parties can agree differently from the CCC on the grounds for termination or expiration of a lease agreement, which would lead to the seizure and repossession of the aircraft, if the agreement does not contradict Thai “public order or good morals.”

The CPC sets out the mechanism to apply for injunctions necessary for aircraft seizure. The Air Navigation Act and implementing regulations state the requirements for aircraft deregistration necessary for repossession.

While foreign law is usually inapplicable to seizing or repossessing an aircraft, it can potentially be beneficial in terms of compensation for damages. Thai courts generally do not award the full compensation claimed for, particularly when it comes to punitive damages. Instead, they typically award actual damages, which may not cover the full extent of losses, unless the claimant can clearly prove the actual damage suffered.

In sum, navigating the legal complexities of aircraft repossession and seizure in Thailand requires a deep understanding of both international and local laws. Understanding the application of Thai law is crucial for parties involved in aviation disputes. By seeking legal expertise and leveraging foreign court judgments as evidence, parties can navigate this intricate legal terrain more clearly and effectively.

 

This article was first published in the April 2024 Thailand edition of The Legal Industry Reviews, an international platform that publishes news and applied law updates from industry-leading law firms in about 30 jurisdictions worldwide. To read the full aviation contribution, or to browse the complete issue, please visit The Legal Industry Reviews website.

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