Guest Column: Effects of the COVID-19 Outbreak on Creditors and Debtors

Effects of the COVID-19 Outbreak on Creditors’ Exercise of their Rights and Debtors’ Payment of Debts, and Legal Measures for the Prevention and Control of the Spread of the Pandemic

Due to the outbreak of COVID-19, government agencies have set out and implemented necessary measures to prevent and control the spread of the virus. The severity of the situation and these legal measures could affect creditors’ exercise of their rights and debtors’ performance of their obligations. My observations about the status of the rights and obligations of creditors and debtors during the ongoing outbreak of the COVID-19 are as follows:

Although no one knows how long this pandemic will last, it is certain that it will eventually end. It is therefore certain that the relationships between creditors and debtors continue to exist, unless it is agreed otherwise. Debtors are still obliged to pay their debts, while creditors are still entitled to demand payments. In most cases, debtors cannot use a disease outbreak as an excuse to refuse a debt payment. This is because a disease outbreak is temporary and therefore when the situation returns to normal, debtors will have to resume their performance of obligations, obligations which continued to exist throughout and despite the existence of the outbreak.

However, while creditors’ rights and debtors’ obligations remain intact, the public health crisis has resulted in the implementation of legal measures that restrict movement and business activities, prohibiting many people in Bangkok and other large cities from living normal lives. Such legal measures, such as government-mandated closures or a general societal lockdown, affect debtors’ performance of their obligations and exercise of their rights. If an illness or quarantine resulting from the pandemic or a legal measure implemented by the government does not allow a debtor to perform its obligation as scheduled, it is possible that such debtor may not yet be in default. This is because the current situation could be considered a temporary circumstance, of no fault of the debtor, which prevents performance of an obligation, according to Section 205 of the Civil and Commercial Code. Hence, the debtor may not be liable to the creditor for damages incurred from the late performance of the obligation. For example, if a debtor agrees to produce goods for a creditor but said production can only be performed at the debtor’s factory which is located in a lockdown zone, and it is impossible for the debtor to move production from the factory to another location, then if the debtor is late in the delivery of goods, the debtor is not legally liable for the delay and the creditor is obligated to accept the late delivery.

In the case of debts, generally the law considers that a debtor can always pay a debt, even during a disaster or economic crisis, because money is always available in an economic system. In other words, a disaster or economic crisis does not make it impossible to pay a debt. According to Supreme Court Judgments, a debtor’s inability to pay a debt due to not having enough money in itself is not an event that temporarily prevents the performance of an obligation under Section 205. However, if the debtor’s business is closed because of a law or a government order, making the debtor unable to pay the debt as scheduled, this could be considered an event that temporarily prevents the performance of the obligation, which may be raised by a debtor as an excuse for default. (See Supreme Court Judgment No. 16469/2557.) In short, a debtor’s inability to pay a debt caused by a temporary event such as the current COVID-19 outbreak, might exempt the debtor from being in default for payment of either the principal amount or interest. Hence, the debtor may not be liable for default interest or damages. However, for how long a debtor can be exempted under Section 205 depends on the overall outbreak situation and the debtor’s financial status.

Closure of several private places, such as department stores and markets, is a necessary measure to contain the spread of COVID-19. However, the closures cause business operators to lose income and makes them unable to pay rentals. In this case, the lessees will not be legally obligated to pay rentals to the lessors, because the situation had rendered it impossible for the lessors to perform their duty of enabling the lessees to use the leased space pursuant to their lease agreements. Because the lessors are unable to perform their duty, the lessees are, in turn, not obligated to pay rentals in exchange. This is based on the principle of bilateral agreements under Section 369 of the Civil and Commercial Code. This applies even though it is agreed in the lease agreement that the lessee is obligated to pay rentals although the lessee cannot use the leased space, because this contractual clause may become unenforceable or enforceable only to the extent that it is fair, pursuant to Section 4 of the Unfair Contract Terms Act. In cases where it is considered that a lease agreement is made between a business operator and a consumer, or is a standard agreement, which is not governed by the Unfair Contract Terms Act, it is my opinion that this clause should become void because it is contrary to public order and morality, under Section 150 of the Civil and Commercial Code. Once the situation returns to normal and the lessees are able to use the leased space, the lessees will be obligated to make full rental payments according to their lease agreements. (Rental payments are exempted only during the time when the lessees are unable to use the leased space.)

Regarding agreements for services, such as hotel reservation, air transportation, etc., if the service providers are unable to perform their obligations under the agreements because, for example, their places of business are ordered to be closed, making it impossible to provide services normally, the customers should not be obliged to pay charges for the services that cannot be delivered, based on the principle of bilateral agreements. If service charges are paid in advance, the service charges should be returned, or the customers should be allowed to use the services later (e.g. in the case of hotel reservations). If a customer wants to cancel a hotel reservation or is unable to stay at the accommodation because he is infected with COVID-19 or because he is concerned about exposure to COVID-19, although this is the customer’s viewpoint and it is not that the place of business is ordered to be closed or the service provider is not ready to provide the service, the customer should be able to raise the change of circumstances as an excuse for non-performance of his contractual obligation. This is because at the time when the debtor and creditor enter into the agreement, both parties intended to perform their contractual obligations under normal circumstances. This current situation is not under normal circumstances, and is unprecedented and unexpected. Although the principle in this regard under Thai law is not as clear as foreign law, the principle of bona fides broadly prescribed in Section 5 and Section 368 of the Civil and Commercial Code provides sufficient legal grounds for non-performance of obligations by customers in the above situations.

Whether a debtor can successfully argue late or non-payment according to the above legal provisions will be subsequently judged by the court. One certain thing is the economy will impact creditors’ exercise of their rights and debtors’ performance of their obligations to some degree. As such, creditors and debtors may negotiate to loosen certain contractual obligations and defer payments until a future agreed time (e.g. after this crisis ends). For the reasons stated above, strict enforcement of debts at this time may be counterproductive. Debtors may become bankrupt and the creditors would be unable to gain anything from the debtors. Formal legal proceedings also require a lot of money and take years before they become final.

September 15, 2026

Myanmar Clarifies Rules for Investment Approvals

The Myanmar Investment Commission (MIC) has issued a notification that gives investors with projects in Myanmar clearer guidance for securing approval and for changing, expanding, or exiting an approved project. Issued on August 19, 2026, MIC Notification No. 5/2026 replaces MIC Notification No. 26/2021 and sets procedures for state or regional investment committees to review, approve, and supervise investment projects, including project amendments, investment increases, land-use rights applications, compliance inspections, and suspension or termination of approved businesses. Endorsement Application Timeline and Deemed Acceptance In Myanmar, prospective investors seeking approval under the Myanmar Investment Law generally do so through an MIC permit or an MIC endorsement, depending on the nature of the investment. While certain large-scale investment projects require an MIC permit, projects that are not required to obtain an MIC permit may instead apply for an MIC endorsement. Investors seeking MIC endorsement for their planned projects typically submit their applications to the relevant state or regional investment committee. These committees are established under the Myanmar Investment Law and are authorized to approve investments of less than USD 5 million, subject to the project’s nature and location. MIC Notification No. 5/2026 specifies that upon receiving an endorsement application, the relevant investment committee office will check it for completeness and determine whether it can be considered at the state or regional level or must be referred to the MIC; if it must be forwarded to the MIC, this will be done within 10 working days. If an application is within its purview, the committee may reject the endorsement application within 15 working days of receipt; otherwise, the application is deemed accepted. If approved, the endorsement certificate will be issued within 10 working days of the approval decision, subject to applicable procedures. Endorsement Certificate Amendment The notification clarifies which amendments a state

September 9, 2026

Thailand Opens Securities, Derivatives, and Intergroup Financing to Foreign Businesses

Certain securities, derivatives, and treasury activities in Thailand were opened to foreign investors when Thailand’s Ministry of Commerce published two new ministerial regulations in the Government Gazette on August 28, 2026. The regulations significantly broaden the service activities that foreign-owned businesses may conduct without a license or certificate under the Foreign Business Act B.E. 2542, as amended (FBA). Securities and Derivatives Business Exemptions Prior to the issuance of these ministerial regulations, the exemptions covered (1) securities brokerage and derivatives brokerage with their only underlying assets being agricultural commodities, financial instruments, and securities; and (2) dealers, advisers, and fund managers conducting derivatives business under Thailand’s derivatives laws. The ministerial regulations provide broader exemptions. In addition to derivatives under the laws on derivatives as before, the following two major categories are provided: Derivatives whose underlying assets or variables fall outside the scope of Thailand’s laws on derivatives. This addresses a gap in the previous framework, which did not comprehensively exempt derivatives tied to nonregulated underlying assets or variables, such as certain commodities. Foreign brokers, advisors, and fund managers can now facilitate a broader range of hedging and risk management instruments without triggering FBA licensing requirements. Derivatives traded outside a derivatives exchange, or over the counter (OTC), whose payments are calculated by reference to foreign exchange rates or interest rates. This removes an FBA licensing barrier for foreign providers of widely used OTC hedging products, broadening the solutions available to importers and exporters managing currency exposure and to borrowers seeking greater certainty over financing costs. The ministerial regulations also exempt brokers and agents handling transactions involving either of these two derivatives categories. For securities businesses, the ministerial regulations add exemptions for margin loans used to purchase securities and for securities repurchase transactions. These additions clarify whether such activities qualify as exempt brokerage

September 4, 2026

Thailand’s Opening of Telecom, Fintech, and Technology Services to Foreign Business

Foreign business restrictions on telecommunications, treasury center businesses, and intragroup support services were eased when Thailand published the Ministerial Regulation Prescribing Service Businesses Not Requiring Permission for Foreign Business Operations (No. 5) B.E. 2569 (2026) in the Government Gazette on August 28, 2026. The ministerial regulation expands the categories of service businesses that foreign investors may operate without a foreign business license (FBL) under the Foreign Business Act B.E. 2542 (1999) (FBA). Of particular relevance to the telecommunications, fintech, and technology sectors, the ministerial regulation exempts: Type 1 telecommunications licensees, which do not have their own networks; Treasury center businesses operated in accordance with Thailand’s exchange control regulations; and Certain intragroup administrative, human resources, and information technology management services. Telecommunications Services Foreign-owned businesses providing telecommunications services under a type 1 telecommunications license may now operate without obtaining an FBL. This may streamline market entry for qualifying telecommunications and digital infrastructure businesses. The exemption applies only to the FBA licensing requirement. Operators must continue to comply with applicable requirements under the Telecommunications Business Act and the regulations of the National Broadcasting and Telecommunications Commission, and the change does not affect foreign ownership restrictions applicable to type 2 or type 3 telecommunications businesses. Treasury Center Businesses The ministerial regulation also exempts qualifying treasury center businesses from the FBL requirement. This may facilitate centralized treasury functions in Thailand, including liquidity management, foreign exchange management, and intragroup funding arrangements. Treasury center operations remain subject to applicable requirements of the Bank of Thailand and other competent authorities. Intragroup Administrative, HR, and IT Services Certain administrative, human resources, and information technology management services provided between affiliated entities are also exempt, provided the relevant entities satisfy prescribed ownership or management criteria. The exemption is available where the service provider and recipient are related through specified ownership

September 4, 2026

Thailand Moves to Expand Labor Court Jurisdiction over Criminal Labor Offenses

Thailand’s cabinet has approved two draft amendments aimed at improving labor-related judicial proceedings. The proposed amendments to the Act on the Establishment of Labor Courts and Labor Case Procedure B.E. 2522 (1979) and the Act on Procedures for Human Trafficking Cases B.E. 2559 (2016) are intended to make the process more efficient, appropriate, and fair. Key elements of these proposed amendments are outlined below. Expansion of Labor Court Jurisdiction Under the current framework, labor courts generally hear labor disputes, while criminal offenses under labor laws are handled separately. Matters involving both labor and criminal issues may therefore require the parties to pursue proceedings before different courts. To address this, the proposed amendments would expand the jurisdiction of labor courts to cover certain criminal offenses under labor laws. The government states that the change is intended to allow related issues to be heard by judges with expertise in labor law and to reduce the need for parallel proceedings. The proposed amendments also set out the following rules for cases involving multiple offenses. Where a single act gives rise to multiple offenses and at least one of those offenses falls within the jurisdiction of the labor court, the labor court may hear the related offenses as part of the same case. Where multiple connected acts give rise to different offenses, the labor court may hear the matters together or transfer part of the case to the appropriate court, taking into account convenience and the interests of justice. Criminal Offenses Covered The proposed amendments would extend labor court jurisdiction to criminal offenses under 11 labor-related laws, including laws concerning: Home workers protection Labor protection Labor protection in fisheries work Employment and job-seeker protection Management of foreign workers Social security Occupational safety, health, and working environment Compensation Maritime labor State enterprise labor relations

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March 30, 2020