Newsletter No. 09    (EN)

 

 

 

Liquidation of a Thai Company

 

 

 

 

October 2014

 

  

  • Reasons for the Liquidation of a Company

 

According to Sec. 1236 of the Thai Civil and Commercial Code (CCC) a company is dissolved:

 

  • in the case, if any, provided by its regulations;
  • if formed for a period of time, by the expiration of such period;

 

  • if formed for a single undertaking, by [reaching] the termination of that undertaking;
  • by a special resolution to dissolve;

 

  • by the company becoming bankrupt.

 

According to Sec. 1237 CCC a limited company may also be dissolved by the court on the following grounds:

 

  • If default is made in filing the statutory report or holding the statutory meeting, unless the court directs that the statutory report be filed or the statutory meeting is held, as it may deem fit.

 

  • If the company does not commence its business within a year from the date of registration or suspends its business for a whole year.
  • If the business of the company can only be carried on at a loss and there is no prospect of its fortunes being retrieved.

 

  • If the number of the shareholders is reduced to less than three.

 

  • Process of Liquidation

 

In case that the company shall be dissolved by a special resolution, this resolution has to be passed by one successive general meeting and by a majority of not less than three-fourths of the votes of the present shareholders who are eligible to vote (Sec. 1194 CCC). The process will be as follows:

 

The directors or the shareholders of the company are required to ask for a special shareholders resolution to start the liquidation process. Therefore, invitations for such kind of meeting have to be sent out to all shareholders. Notice of the summoning of every general meeting shall be published at least once in a local newspaper not later than seven days before the meeting date, and sent by post with acknowledgement of the receipt to every shareholder whose name appears in the register of the shareholders not later than seven days or, in case the notice is for a special resolution to be made by the general meeting, fourteen days before the date fixed for such meeting (Sec. 1175 CCC).

 

 

The meeting shall appoint the liquidator(s) and auditor(s). If no liquidator is appointed, the directors become liquidators unless otherwise provided by the regulations of the company. The dissolution of the company and the name of the liquidator must be registered within 14 days after the date of dissolution by the liquidator (Sec. 1254 CCC). The liquidator has the following duties:

 

  • To notify the public by advertisement at least in once a local newspaper that the company or the partnership is dissolved and that its creditors must apply for payment to the liquidators, and send a similar notice by registered letter to each creditor whose name appears in the books or documents of the company within fourteen days after the date of dissolution or after the date of appointment (Sec. 1253 CCC).

 

  • To settle the affairs of the company, settle debts and sell out all assets of the company (Sec. 1250 CCC).
  • To deposit the amount due to a creditor as described by the provisions of the CCC concerning deposit in lieu of performance, if he does not apply for payment (Sec. 1264 CCC).

 

  • To apply to the Court to have the company declared bankrupt, if he finds that after all of the contributions or shares have been paid, the assets are still insufficient to meet the liabilities (Sec. 1266 CCC).

 

  • To make a balance sheet and have it examined and certified by the auditors, and he must summon a general meeting at the earliest possible (Sec. 1255).
  • To summon the general meeting in order to approve the balance sheet and/or to approve the report of the liquidation (Sec. 1256 CCC).
  • To file a report every 3 months on the progress of the liquidation and deposit that report at the Registration Office, showing the situation of the accounts of the liquidation. Such report shall be open gratuitously for inspection to the shareholders or creditors (Sec. 1267 CCC).
  • To summon a shareholders’ meeting at the end of every year from the beginning of the liquidation and lay before this meeting a report of his activities and detailed account of the situation, if the liquidation takes more than 1 year (Sec. 1268 CCC).

 

  • To provide an account of the liquidation showing how the liquidation has been conducted and the property of the company has been disposed of, as soon as the company liquidation process is finished. The liquidator shall summon a general meeting for the purpose of laying before it the account and give an explanation.

 

All costs, charges and expenses properly incurred in the liquidation must be paid by the liquidator in preference to other debts (Sec. 1263 CCC). Only so much of the property of the company that is not required for the settlement of the obligations of the company may be divided among the shareholders (Sec. 1269 CCC).

 

 

After the account is approved, the proceedings of the meeting must be registered within 14 days by the liquidator. Such registration is considered as the end of the liquidation process. At this point, the status of the company as a juristic person comes to an end.

 

  • Liquidation and Taxes

 

  • During the announcement of dissolution, the Revenue Department as the creditor for tax liability can object the dissolution of the company if it believes that the company has any outstanding tax liability.

 

  • The company must return the company’s taxpayer card to the Revenue Department within 60 days from the date at which the Ministry of Commerce (hereinafter: MoC) accepts the registration of the dissolution (the “Dissolution Date”). In addition, if the company is registered for VAT, it must also give notice of the cessation of its business in accordance with the form prescribed by the General Director at the place of registration for VAT and return the VAT registration certificate to the Revenue Department within 15 days from the Dissolution Date (sec. 85/15 Revenue Code).

 

  • The corporate income tax return for the period ended on the Dissolution Date must be filed with the Revenue Department together with the audited financial statements for the period, within 150 days.

 

  • Under the Revenue Code, the Revenue Office has the power to investigate tax returns for a period of 2 years. It can extend the investigation to a period of up to 5 years in case there is any evidence or suspicion of tax evasion. The scope of examination will depend on the fact how well the company has complied with the tax regulations in the past.

In case the company had problems with the tax authorities in the last years, it should be considered to leave the company dormant for at least 2 years before entering into the dissolution process, so that the tax prescription period of 2 years expires. Even though the company is dormant, it still has the duty to file corporate income tax return, to have the books of account audited by an auditor annually and to submit the audited financial statements to the MoC.

 

  • The company must register the dissolution with the Revenue Department within 15 days for VAT purpose. In case the entire business and assets are not transferred, the VAT on outstanding assets is due on the Dissolution Date, regardless whether the assets have yet been sold or transferred to anybody.
  • In case there is any outstanding input tax not due on the Dissolution Day, the company cannot claim such input tax invoice before receiving the related tax invoices from its supplier. In addition, the company cannot claim the input tax received after the dissolution, because it is no longer a VAT operator. Therefore, the company should arrange to receive all outstanding input tax before the Dissolution Date.

 

  • Severance Pay

 

The dissolution will be considered a termination of employment, for which the employees must be compensated according to Sec. 118 of the Labour Protection Act. The amount of severance pay depends on the time the employee has been working for the company. The rates are as follows:

 

 

Years of service in the company:

 

More than 120 days but less than 1 year: 1 year or more but less than 3 years:

 

3 years or more but less than 6 years:

6 years or more but less than 10 years:

 

10 years or more:

 

Severance pay:

 

at least 30 day wages at least 90 day wages at least 180 day wages at least 240 day wages at least 300 day wages

 

 

In the event an employer terminates an employee’s employment, the employee will be entitled to remuneration for any accrued and unused annual leave calculated up until the last day of work. The rate for such renumeration is calculated at not less than the wage rate in effect during the last 30 days prior to termination.

 

The company must withhold personal income tax for its employees. The severance pay and remuneration for unused annual leave must be included in the computation of the personal income withholding tax.

 

  1. Timetable of Liquidation

 

 

Timing

Place

Requirement

1.

Prior to desired date of

Company’s Office

Special Resolution, passed by one successive

 

dissolution.

 

shareholders’ meeting to dissolve the company and

 

 

 

appoint liquidator(s).

2.

Within 14 days from the

Company’s

Liquidator to register:

 

date of dissolution,

Registrar, Ministry

the fact of dissolution of the company,

approved by the company.

of Commerce

the name of the liquidator and

 

 

registrar will issue confirmatory affidavit.

 

 

3.

As soon as possible after

Company’s Office

 

obtaining Commercial

 

 

Registrar’s affidavit (see

 

 

item 2 above).

 

4.

Within 14 days from date

In a local newspaper

 

of dissolution, approved by

 

 

the company.

 

 

Liquidator to prepare a balance sheet to be audited.

 

Convene general shareholders’ meeting to approve balance sheet, confirm appointment of liquidator(s).

 

Notify the public by one successive advertisement that its creditors must apply to the liquidator for payment of any outstanding obligations.

 

 

  1. Within 14 days from date of dissolution, approved by the company.

 

Registered letter of each creditor whose names appear in the books or documents of the company

 

Same notice as in 4 above.

 

 

6.

Within 15 days from date

Revenue

 

of dissolution, approved by

Department

 

the company.

 

7.

Within 60 days from date

Revenue

 

of issuance of affidavit by

Department

 

Commercial Registration

 

 

Department approving

 

 

dissolution.

 

 

Notify the Director General of the dissolution.

 

Submit VAT registration certificate or specific business tax certificate, as the case may be, for cancellation.

 

File an application.

 

Submit original tax payer I.D. card for cancellation.

 

 

Timing

Place

Requirement

8.

Within 15 days from date

Revenue

Inform Revenue Department of the company’s

 

of issuance of affidavit by

Department

dissolution.

 

Commercial Registration

 

 

 

Department approving the

 

 

 

dissolution.

 

 

9.

3 months after date of

Company Registrar,

Liquidator to file reports as to progress.

 

dissolution, approved by

Ministry of

 

 

the company, and

Commerce

 

 

thereafter at successive 3

 

 

 

months intervals.

 

 

10. Within 150 days from the

Revenue

File a final corporate income tax return.

 

date of issue of affidavit by

Department

 

 

Commercial Registration

 

 

 

Department approving the

 

 

 

dissolution.

 

 

11. As soon as possible after

Company’s Office

Liquidator prepares full report of conduct of

 

the completion of

 

liquidation and disposal of the company’s property.

 

liquidation.

 

Convene shareholders’ meeting, present report.

 

 

 

12. Within 14 days of

Registrar of

Register minutes of shareholder meeting referred to

 

shareholders’ meeting

Companies

in item 11 above.

 

referred to in item 11

 

 

 

above.

 

 

13. Within 14 days of

Registrar of

Deposit all corporate books, accounts and

 

shareholders’ meeting

Companies

documents.

 

referred to in item 11

 

 

 

above.

 

 

 

Although Lorenz & Partners Co., Ltd. always pays greatest attention on updating the information provided in this newsletter we cannot take responsibility for the topicality, completeness or quality of the information provided. None of the information contained in this newsletter is meant to replace a personal consultation. Liability claims regarding damage caused by the use or disuse of any information provided, including any kind of information which is incomplete or incorrect, will therefore be rejected, if not generated deliberately or grossly negligent.

 

 

 

Newsletter No. 10 (DE)

 

 

 

 

 

Zur Steuerpflicht eines GmbH-Geschäftsführers mit Wohnsitz im Ausland

 

 

 

Juni 2015

 

 

A l l  r i g h t s r e s e r v e d ©  L o r e n z  & P a r t n e r s  2 0 1 5

 

 

 

Obwohl Lorenz & Partners Co., Ltd. größtmögliche Sorgfalt darauf verwenden, die in diesem Newsletter bereitge-stellten Informationen stets auf aktuellem Stand für Sie zur Verfügung zu stellen, möchten wir Sie darauf hinweisen, dass dieser eine individuelle Beratung nicht ersetzen kann. Lorenz & Partners Co., Ltd. übernimmt keinerlei Ge-währ für die Aktualität, Korrektheit, Vollständigkeit oder Qualität der bereitgestellten Informationen. Haftungsan-sprüche gegen Lorenz & Partners Co., Ltd., welche sich auf Schäden materieller oder ideeller Art beziehen, die durch die Nutzung oder Nichtnutzung der dargebotenen Informationen bzw. durch die Nutzung fehlerhafter und un-vollständiger Informationen verursacht wurden, sind grundsätzlich ausgeschlossen, sofern seitens Lorenz & Partners Co., Ltd. kein vorsätzliches oder grob fahrlässiges Verschulden vorliegt.

 

 

 

  1. Einführung

 

Den Ausführungen liegt folgender Sachverhalt zugrunde:

 

Herr Meyer ist Geschäftsführer der deutschen Müller-GmbH mit Sitz in Rosenheim. Herr Meyer lebt dau-erhaft in Bangkok (Thailand) und verbringt im Laufe des Jahres weniger als sechs Monate in Deutschland.

 

Diese Situation ist mit einigen steuerrechtli-chen Besonderheiten verbunden, die im Fol-genden näher erläutert werden sollen.

 

Der Ausgangspunkt ist die Vorschrift des § 1 Abs. 4 Einkommensteuergesetz (nachfolgend „EStG“), nach der Folgendes gilt:

 

Natürliche Personen, die im Inland weder Wohnsitz noch ihren gewöhnlichen Aufenthalt haben [sondern z.B. in Thailand] sind (…) beschränkt einkommens-steuerpflichtig [in Deutschland], wenn sie inländische [deutsche] Einkünfte im Sinne des § 49 haben.“

 

  • 49 EStG bestimmt, welche Einkünfte ihrer Art nach unter die beschränkte Steuerpflicht i. S. v. § 1 Abs. 4 EStG fallen. Anknüpfungs-punkt der Besteuerung ist weniger die Person des Einkommensbeziehers als die Quelle, aus der die Einkünfte fließen. Insofern müssen in Deutschland lediglich inländische [deutsche] Einkünfte versteuert werden.

 

  1. Grundsätze

 

Bei beschränkt Steuerpflichtigen wird nicht das Welteinkommen, sondern nur die in § 49 EStG genannten Einkünfte vom deutschen Fiskus besteuert.

 

 

 

Steuerpflichtig gem. § 49 EStG sind:

 

  • Einkünfte aus einer im Inland betriebenen Land-und Forstwirtschaft (…) [z.B. Weinbau, Gar-tenbau, Pferdezucht];

 

  • Einkünfte aus Gewerbebetrieb (…) [z.B. ge-werbliche Unternehmen];

 

  • Einkünfte aus selbständiger Arbeit (…), die im Inland ausgeübt oder verwertet wird oder worden ist

 

[z.B. freiberufliche Tätigkeit von Anwälten oder Ärzten];

 

  • Einkünfte aus nichtselbständiger Arbeit (…), die

 

  • im Inland ausgeübt oder verwertet wird oder worden ist (…) [z. B. Gehäl-ter, Gratifikationen],

 

  • aus inländischen öffentlichen Kassen (…) gewährt werden (…),
  • als Vergütung für eine Tätigkeit als Ge-schäftsführer, Prokurist oder Vor-standsmitglied einer Gesellschaft mit Geschäftsleitung im Inland bezo-gen werden,

 

  • als Entschädigung im Sinne des § 24 Nr. 1 für die Auflösung eines Dienstver-hältnisses gezahlt werden (…),

 

  • an Bord eines im internationalen Luftver-kehr eingesetzten Luftfahrzeugs ausgeübt wird (…);

 

  • Einkünfte aus Kapitalvermögen (…) [z.B. Ge-winnanteile, Dividenden, Zinsen];

 

  • Einkünfte aus Vermietung und Verpachtung (…) [z.B. von unbeweglichem Vermögen (Wohnung) in Deutschland];
  • sonstige Einkünfte i.S.d. § 22 Nr. 1, soweit sie dem Steuerabzug unterworfen sind [z. B. wieder-kehrende Bezüge (Renten)];

 

8.

sonstige   Einkünfte   i.S.d.   §   22

Nr.2

(…)

 

[z.B. private Veräußerungsgeschäfte];

 

9.

sonstige   Einkünfte   i.S.d.   §   22

Nr.3

(…)

 

[z.B. Einkünfte aus gelegentlicher Vermitt-

 

lung].

 

 

 

III.  Doppelbesteuerungsabkommen

 

Wenn der Steuerpflichtige, wie im oben ge-nannten Beispiel, in Bangkok wohnt und eine Vergütung für seine Tätigkeit als Geschäftsfüh-rer einer deutschen GmbH bezieht, besteht die Gefahr der Doppelbesteuerung. Bezüglich der Vergütung ist er im Wohnsitzstaat [Thailand] unbeschränkt steuerpflichtig und in Deutsch-land gem. § 49 Abs. 1 Nr. 4 lit. c) EStG be-schränkt steuerpflichtig. Besteht jedoch ein Doppelbesteuerungsabkommen (nachfolgend „DBA“), so gehen, soweit aufgrund des natio-nales Steuerrechts eine Doppelbesteuerung des gleichen Einkommens eintritt, die dortigen Re-gelungen der Anwendung des § 49 EStG vor (vgl. § 2 Abgabenordnung (nachfolgend „AO“)). § 49 EStG ist mithin nur anwendbar, wenn das entsprechende DBA der Bundesre-publik ein Besteuerungsrecht zuweist und ebenso lediglich in der Höhe, die das DBA vorsieht.

 

Ein DBA bestimmt also, in welchem Umfang einem Staat ein Besteuerungsrecht zusteht. Daher kann es keine inländische Steuerpflicht begründen oder erweitern, sondern nur eine bestehende Steuerpflicht einschränken. Durch Verzicht auf eine inländische Besteuerung wird folglich jeder Besteuerungstatbestand des § 49 EStG gegenstandslos, sodass deutsche Ein-kommensteuer nicht zu entrichten ist.

 

 

  1. Steuerpflicht des Geschäftsführers ei-ner GmbH nach § 49 Abs. 1 Nr. 4 lit a) EStG [Ausübung oder Verwertung im Inland]

 

Einkünfte eines Geschäftsführers unterliegen der beschränkten Steuerpflicht, wenn sie aus nichtselbständiger Arbeit stammen, die in Deutschland ausgeübt oder verwertet wird oder worden ist.

 

  1. Merkmal: Ausübung der Tätigkeit

 

Die Problematik, die bezüglich der Geschäfts-führung im Ausland besteht, ist die Bestim-mung des Ortes der Tätigkeit des Geschäfts-führers.

 

Der Ort der Arbeitsausübung befindet sich grundsätzlich dort, wo sich der Arbeitnehmer zur Ausführung seiner Tätigkeit persönlich aufhält.

 

Besonderheiten gelten allerdings für andere als körperliche Tätigkeiten. Hierbei kann sich die

Frage ergeben, ob nicht die „Ausübung“ einer

 

Tätigkeit eher dort geschieht, wo die Tätigkeit Wirkungen entfaltet, als dort, wo sich die Per-son im Augenblick der Tätigkeit tatsächlich aufhält.

 

  1. a) Ältere Rechtsprechung

 

Diesbezüglich wurde von der deutschen Recht-sprechung für Organe von Kapitalge-sellschaften entschieden, dass die Tätigkeit am Ort des Sitzes der Gesellschaft ausgeübt wird. Dies wurde damit begründet, dass bei einer Arbeitsausübung, die maßgeblich in der Wahr-nehmung von Leitungsfunktionen besteht, sich die Tätigkeit der betreffenden Person nicht im Treffen und der Bekanntgabe von Entschei-dungen erschöpft, sondern in der Durchset-zung der erteilten Weisungen kraft der Persön-lichkeit und des Geschickes der Leitungsper-son, sodass das entscheidende Gewicht jeder Einzelanweisung sich am Ort des Unterneh-mens entfaltet, auch wenn die Person dort nicht anwesend ist.

 

 

  1. b) Jüngere Rechtsprechung

 

Dem wurde entgegnet, dass letzten Endes der Ort der Tätigkeit durch den Ort der Verwer-tung ersetzt wird.

 

Dieser Gegenauffassung hat sich nunmehr auch die deutsche Rechtssprechung ange-schlossen und sich damit von der vormals ver-tretenen Auffassung gelöst. Für den Ort der Tätigkeit wird nunmehr auf den tatsächlichen Aufenthaltsort des Geschäftsführers abgestellt. Die Folge dieser Rechtsprechung ist, dass der im Ausland ansässige Geschäftsführer seine Tätigkeit nicht im Inland (Deutschland) ausübt und folglich nach der ersten Alternative keine Steuerpflicht in Deutschland ausgelöst wird, sofern die Tätigkeit ausschließlich im Ausland ausgeübt wird und nicht etwa durch einen be-ruflich veranlassten Aufenthalt in Deutschland als im Inland ausgeübt gilt.

 

  1. Merkmal: Verwertung der Tätigkeit

 

Darüber hinaus ist zu prüfen, wo es bei Ent-scheidungen des Geschäftsführers zu einer Verwertung i. S. v. § 49 Abs. 1 Nr. 4 EStG kommt. Sollte die Tätigkeit des im Ausland an-sässigen Geschäftsführers in Deutschland ver-wertet werden, wäre er im Inland steuer-pflichtig.

 

Hierbei ist zu beachten, dass die reine Arbeits-leistung nicht der Verwertung zugänglich ist. Es genügt auch nicht, dass die Vergütung zu Lasten eines inländischen Auftraggebers ge-zahlt wird.

 

Vielmehr setzt Verwertung einen über die Ar-beitsleistung hinausgehenden Vorgang voraus, ein körperliches oder geistiges Arbeitsprodukt, das der Steuerpflichtige selbst dem Inland zu-führt. Darüber hinaus kann nur derjenige, der die verwertbare Leistung selbst erbracht hat, nicht ein Dritter, der das Ergebnis einer selb-ständigen Tätigkeit erworben hat, verwerten. Befindet sich der Geschäftsführer im Ausland, ist eine Verwertung in Deutschland nicht gege-ben.

 

 

Indem der Geschäftsführer der inländischen Unternehmung lediglich Anweisungen an diese gibt, die Dritte umsetzen, wird die Arbeitsleis-tung des Geschäftsführers nicht i. S. v. § 49 Abs. 1 Nr. 4 EStG verwertet und unterliegt somit nicht der beschränkten Steuerpflicht.

 

  1. Fazit

 

Die beschränkte Steuerpflicht des im Ausland ansässigen Geschäftsführers ist nicht nach § 49 Abs. 1 Nr. 4 lit. a) EStG begründet, da mit Thailand als Ort der Tätigkeit weder eine Ver-wertung noch eine Ausübung der Tätigkeit in Deutschland stattfindet. Deutschland hat in-soweit kein Besteuerungsrecht. Da aus den ge-nannten Gründen keine Doppelbesteuerung des Einkommens stattfindet, kommt es in die-ser Konstellation auf die Regelung des jeweili-gen DBA nicht an, soweit das Unternehmen in Deutschland weiterhin unbeschränkt steuer-pflichtig ist.

 

Bezüglich der Gesellschaft ist jedoch zu beach-ten, dass diese gem. § 1 Abs. 1 Körperschaft-steuergesetz in Deutschland der unbeschränk-ten Steuerpflicht unterliegt, solange sie ihren Sitz (§ 11 AO) in Deutschland hat. Sofern eine Gesellschaft jedoch keinen Sitz in Deutschland hat und sich eine unbeschränkte Steuerpflicht ausschließlich aus dem Ort der Geschäftslei-tung ergibt, kann die unbeschränkte Steuer-pflicht entfallen, sofern die Geschäftsführung ausschließlich aus dem Ausland heraus ausge-führt wird.

 

Im Hinblick auf das Umsatzsteuerrecht können sich im Falle eines ausländischen Ortes der Ge-schäftsleitung besondere Konsequenzen erge-ben:

 

Sonstige Leistungen, die an einen Unternehmer für dessen Unternehmen ausgeführt werden, werden an dem Ort ausgeführt, von dem aus der Empfänger sein Unternehmen betreibt (§ 3a Abs. 2 S. 1 Umsatzsteuergesetz (nachfol-gend „UStG“). Dies ist bei Körperschaften der Ort der Geschäftsleitung (§ 3a Abs. 1 S. 3 Umsatzsteuer-Anwendungserlass). Befindet sich also der Ort der umsatzsteuerlich relevanten Geschäftsleitung nicht in Deutschland (son-dern z. B. in Thailand), werden von der Gesell-schaft bezogene Leistungen nicht in Deutsch-land erbracht und sind in Deutschland nicht steuerbar. Sofern der Leistungserbringer (un-richtigerweise) die Umsatzsteuer in Rechnung stellt, kann diese nicht als Vorsteuer geltend gemacht werden.

 

Der Leistungserbringer hat die in Rechnung gestellte Umsatzsteuer nichtsdestotrotz an das Finanzamt abzuführen (§ 14c Abs. 1 UStG).

 

  • Steuerpflicht des Geschäftsführers einer GmbH nach § 49 Abs. 1 Nr. 4 lit. c) EStG [Ausübung oder Ver-wertung im Inland]

 

Es ist jedoch denkbar, dass der im Ausland an-sässige Geschäftsführer gem. § 49 Abs. 1 Nr. 4 lit. c) EStG in Deutschland beschränkt steuer-pflichtig ist. Die Vorschrift wurde durch das Gesetz zur Änderung steuerlicher Vorschriften (Steueränderungsgesetz 2001) eingeführt.

 

Die Intention des Gesetzgebers war es, einen Steuertatbestand zu schaffen, der die Besteue-rung von Einkünften in Deutschland erweitert und dem Ausgleich der einschränkenden Aus-legung des Verwertungstatbestands durch die Rechtsprechung dient.

 

Die Steuerpflicht in Deutschland ist demnach von zwei Voraussetzungen abhängig. Zum ei-nen muss der im Ausland ansässige und tätige Geschäftsführer eine Vergütung für seine Tä-tigkeit von der Gesellschaft erhalten. Zum an-deren muss sich die Geschäftsleitung (nicht der Sitz) der Kapitalgesellschaft im Inland, also in Deutschland, befinden. Soweit das erste Tatbe-standsmerkmal keine besonderen Schwierig-keiten aufwirft, hängt der Ort der Geschäfts – leitung von den Umständen des Einzelfalls ab.

 

Gem. § 10 AO ist die Geschäftsleitung der Mittelpunkt der geschäftlichen Oberleitung.

 

 

Dieser ist dort, wo der für die laufende Ge-schäftsleitung maßgebende Wille gebildet wird. Bei einer Körperschaft ist das regelmäßig dort, wo die zur Vertretung befugten Personen, die ihnen obliegende laufende Geschäftsführer-tätigkeit entfalten. Das ist der Ort, an dem sie die tatsächlichen, organisatorischen und rechtsgeschäftlichen Handlungen vornehmen, die der gewöhnliche Betrieb der Gesellschaft mit sich bringt, d. h. es kommt auf die Erledi-gung der Tagesgeschäfte an. In der Regel sind dies die Büroräume des Unternehmens, wenn dort die maßgeblichen Entscheidungen getrof-fen werden. Ist dies nicht der Fall, so kommt es auf den Wohnsitz des Geschäftsführers an, falls er von dort aus entscheidend tätig wird.

 

  • Beispiel: GmbH mit einem Geschäfts-führer

 

Der Wohnsitz des Geschäftsführers einer GmbH befindet sich im Ausland, von diesem Wohnsitz aus erledigt der Geschäftsführer das Tagesgeschäft der Gesellschaft. Der Ort der Geschäftsleitung liegt somit weiterhin an dem Ort der Tätigkeit, mithin im Ausland. Die Ge-schäftsleitung findet somit nicht im Inland statt.

 

Ergebnis:

 

Für den alleinigen Geschäftsführers einer deut-schen Gesellschaft im Ausland ergibt sich ent-gegen der eindeutigen Intention des Gesetzge-bers keine Änderung der bisherigen Rechtslage. Weiterhin befindet sich der Ort der „Ein-Mann“-Geschäftsleitung im Ausland, sodass die Bezüge (Gehalt) des Geschäftsführers nicht in Deutschland steuerpflichtig sind.

 

  • Beispiel: GmbH mit zwei Ge-

 

schäftsführern

Komplizierter erscheint jedoch der Fall einer Inlandsgesellschaft, die zwei Geschäftsführer hat, von denen einer im Inland und der andere im Ausland tätig ist.

 

In dieser Konstellation ist der alleinige Ort der Geschäftsführung nicht mehr auf das Ausland beschränkt. Die Geschäftsleitung befindet sich auch im Inland. Eine mögliche Folge wäre die Steuerpflicht beider Geschäftsführer im deut-schen Inland.

 

Denkbar ist auf § 10 AO abzustellen, der auf den Mittelpunkt der geschäftlichen Oberleitung abstellt, um den Ort der Geschäftsleitung zu bestimmen. Es bleibt abzuwarten, wie die Fi-nanzverwaltung und -gerichtsbarkeit diese Fra-gestellung bewerten und ob der Schwerpunkt der Geschäftsführung hierbei eine Rolle spielen wird. In dieser Hinsicht könnte das Besteue-rungsrecht der Bundesrepublik Deutschland bestehen, sodass es maßgeblich auf die Re-gelungen des DBA ankommt.

 

  1. Doppelbesteuerungsabkommen

 

Die speziellen Regelungen der DBA könnten das Recht zur Besteuerung dem anderen Ver-tragsstaat (Thailand) zuweisen und somit einer Anwendung des § 49 Abs. 1 Nr. 4 EStG entge-genstehen. Der folgende Absatz beschäftigt sich mit dem deutsch-thailändischen DBA vom 10. Juli 1967 (nachfolgend „DBA D/TH“), ähnliche Regelungen sind jedoch auch in DBA mit anderen Staaten enthalten, sodass die Ergebnisse einzelfallabhängig über-tragen werden können.

 

Eine entsprechende Regelung findet sich in Art. 14 DBA D/TH.

 

„(…)können  Vergütungen, die eine in einem anderen

Vertragsstaat [Thailand] ansässige natürliche Person

 

[z.B. Geschäftsführer einer deutschen GmbH] für unselbständige oder selbständige Arbeit (…) bezieht, nur in diesem Staat [Thailand] besteuert werden, es sei denn, dass die Arbeit in dem anderen Vertragsstaat

 

[Deutschland] ausgeübt wird.(…)“

 

Nach dem DBA D/TH ist lediglich auf den Ort der Arbeitsausübung abzustellen. Dieser liegt bei dem Geschäftsführer mit Wohnsitz im Ausland einer der deutschen Körperschafts-steuer unterliegenden Gesellschaft, wie oben festgestellt, nicht im Inland sondern im Aus-land. Demzufolge ist das Gehalt des Ge-

 

 

schäftsführers in Deutschland nicht steuer-pflichtig.

 

Eine Ausnahme ergibt sich jedoch für die Zeit der Tätigkeit in Deutschland. Da für diesen Zeitraum der Ort der Ausübung der Tätigkeit Deutschland ist, liegt das Recht zur Besteue-rung für diesen Zeitraum bei Deutschland.

 

Eine Besteuerung wird somit grundsätzlich bei Auslandstätigkeit in einem DBA-Staat durch das jeweilige DBA ausgeschlossen.

 

VII.  Fazit

 

Wie die Darstellung gezeigt hat, besteht für ei-nen im Ausland ansässigen Geschäftsführer meist keine beschränkte Steuerpflicht in Deutschland, sofern er nicht während seines Aufenthaltes in Deutschland tatsächlich für die Gesellschaft beruflich tätig wird.

 

VIII.   Besteuerung eines deutschen Direk-tors in thailändischen Gesellschaften

 

Den weiteren Ausführungen liegt folgender Sachverhalt zugrunde:

 

Eine in Deutschland unbeschränkt steuer-pflichtige Person ist Mitglied des Board of Di-rectors in einer thailändischen Limited Com-pany. Sie ist zur Vertretung der Gesellschaft berechtigt, nimmt aber gleichzeitig auch Kon-trollfunktionen gegenüber anderen Personen wahr.

 

Aufgrund der unbeschränkten Steuerpflicht in Deutschland und der Einkünfte aus Thailand können beide Länder einen Anspruch auf Be-steuerung der Bezüge erheben. Die Abgren-zung der Besteuerungsrechte erfolgt anhand des DBA D/TH. Bei den Bezügen des Direk-tors handelt es sich nach deutschem Verständ-nis um eine unselbständige Tätigkeit, da auch Vertretungsbefugnis gegeben ist. Einschlägig ist somit die Regelung des Art. 14 DBA D/TH. Die Konsequenz der Anwendung von Art. 14 DBA D/TH wäre die Besteuerung in Deutschland als dem Ansässigkeitsstaat. Art. 14 DBA D/TH weist Thailand nur dann das Besteuerungsrecht zu, wenn die Arbeit in Thailand ausgeübt wird. Nach der oben ge-troffenen Annahme wird jedoch die Leitungs-funktion von Deutschland aus wahrgenom-men, sodass es beim Besteuerungsrecht Deutschlands verbleibt.

 

Etwas anderes würde jedoch dann gelten, wenn auf den Sachverhalt Art. 16 DBA D/TH An-wendung finden würde. Dieser erlaubt die Be-steuerung der Bezüge in Thailand als dem Staat, in dem die Gesellschaft ihren Sitz hat. Die Anwendung von Art. 16 DBA D/TH setzt jedoch voraus, dass „Aufsichtsrats- oder Ver-waltungsratsvergütungen“ vorliegen. In dieser Hinsicht ist jedoch darauf hinzuweisen, dass die deutsche Übersetzung von der thailändi-schen/englischen abweicht. In der engli-schen/thailändischen Fassung ist vielmehr von

 

„board of directors“ die Rede.

 

Dieser Begriff ist im DBA D/TH nicht ein-heitlich definiert, sodass grundsätzlich jedes Land den Begriff nach seinem nationalen Recht unter Berücksichtigung des DBA-Zusammenhangs auslegen kann, Art. 3 Abs. 2 DBA D/TH.

 

Aus der thailändischen/englischen Perspektive wird es sich bei dem „board of directors“ um ein Organ handeln, das zur Vertretung der Ge-sellschaft befugt ist.

 

Aus der deutschen Sicht handelt es sich bei dem Begriff des „Aufsichts- oder Verwaltungs-rats“ jedoch um ein Organ, das zur Überwa-chung der Geschäftsführung bestimmt ist. Kein Aufsichtsrat liegt aus der deutschen Sicht dann vor, wenn die Befugnisse nicht nur auf die Überwachung der Geschäftsführung be-schränkt sind. Nimmt ein Organ auch unmit-telbare Leitungs- oder Mitverwaltungsaufgaben wahr, und überschreitet somit den Aufgaben-bereich eines Mitglieds des Aufsichtsrates, kann Art. 16 DBA D/TH in Deutschland kei-ne Anwendung finden. Dieser sprachliche Un-

 

 

terschied führt zu der Konsequenz, dass in dem vorliegenden Beispielsfall Deutschland Art. 14 DBA D/TH [unselbständige Tätigkeit; Besteuerung in Deutschland] und Thailand Art. 16 DBA D/TH [board of directors; Be-steuerung in Thailand] anwenden würde. Die Besteuerung könnte nur durch ein langwieri-ges Verständigungsverfahren vermieden wer-den.

 

In der deutschen Literatur werden unter-schiedliche Ansätze vorgeschlagen, um dieses Problem zu lösen:

 

Nach einer Auffassung1 sollten Organe thai-ländischer Gesellschaften nach dem thailändi-schen Verständnis behandelt werden. Danach sei Art. 16 DBA D/TH anzuwenden, da die Limited Company eine thailändische Ge-sellschaft ist.

 

Eine andere Auffassung2 schlägt vor, den eng-lischsprachigen Wortlaut stets anzuwenden, da dieser dem OECD-Musterabkommen entspre-che, welches als Auslegungshilfe herangezogen werden solle.

 

Der Bundesfinanzhof hat sich jedoch in seiner Rechtsprechung3 einer anderen Literaturauffas-sung4 angeschlossen. Danach soll Art. 14 DBA angewendet werden. Dies ergebe sich aus dem Verhältnis zwischen Art. 14 und Art. 16 DBA. Darüber hinaus solle die deutsche Finanzver-waltung nur das eigene Verständnis zugrunde legen. Diese Auffassung hat damit zur Folge, dass Personen, die geschäftsführende Aufga-ben in Thailand wahrnehmen, aus deutscher Sicht nicht mehr als Aufsichtsratsmitglied nach Art. 16 DBA angesehen werden. Vielmehr fal-

  • Prokisch in: Vogel, DBA, 5. Auflage, 2008, Art. 16, Rn.

 

 

  1. Toilf in: Die Besteuerung von Geschäftsführern, Vor-ständen und Aufsichtsräten, S. 381ff, 389; Land in: SWI 1992, S. 328.

 

  1. 1.1978 (VIII R 159/73, BStBl. 1978 II, 352; 5.10.1994 (I R 67/93, BStBl. 1995 II, 95.

 

  1. Wassermeyer in: Debattin/Wassermeyer, OECD-MA, 16, Rn. 15.


len sie unter Art. 14 DBA. Die thailändische Finanzverwaltung stellt jedoch – nach wie vor – darauf ab, ob jemand Mitglied des „board of directors“ ist und wendet Art. 16 DBA an. Aus den divergierenden Auffassungen kann unter Umständen eine Doppelbesteuerung resultie-ren.

 

 

Zur Vermeidung von Situationen, in denen Be-züge des Direktors doppelt – einmal in Deutschland als Einkünfte aus unselbständiger Tätigkeit und einmal in Thailand als Bezüge ei-nes Mitglieds des „board of directors“ – besteu-ert werden, ist im Vorfeld ein Beratungsge-spräch unentbehrlich.

 

 

 

 

 

 

Newsletter No. 11 (EN)

 

 

 

90 Days Reporting for Foreigners

 

 

 

May 2015

 

 

Although Lorenz & Partners always pays great attention on updating information provided in newsletters and brochures we cannot take responsibility for the completeness, correctness or quality of the information provided. None of the information contained in this newsletter is meant to replace a personal consultation with a qualified lawyer. Liability claims regarding damage caused by the use or disuse of any information provided, including any kind of information which is incomplete or incorrect, will therefore be rejected, if not generated deliberately or grossly negligent.

 

 

I. Overview

 

 

proper reason that he cannot stay at the

 

 

 

 

place  as  indicated  to  the  competent

In case that a foreigner stays in Thailand for

 

official, he shall notify the competent

more than 90 days, he or his representative has

 

official of the change resident, within

to send a written  notice to the  Immigration

 

24 hours from the time of removing to

Bureau  upon  completion  of  every  90  days

 

said place.”

period to inform the authority about his place

 

 

of stay according to the Immigration Act B.E.

2.

If  the  foreigner  changes his  place  of

2522 (1979) Section 37(5).

 

 

stay he has to report at the local police

 

 

 

 

station(s)  within  24  hours  after  such

The foreigner or his representative can inform

 

change.

the  Immigration  Bureau  15  days  before  or  7

 

 

days after the exact date. If he fails to report in

 

“Section  37(3):  [The  foreigner  shall]

time, he has to report by himself and he will be

 

notify  the  police  official  of  the  local

subject to a fine not exceeding Baht 5,000 and a

 

police  station  where  such  foreigner

daily fine not exceeding Baht 200 until complete

 

resides, within 24 hours from the time

rectification according to Section 76.

 

 

of arrival. In the case of a change in

 

 

 

 

residence in which new residence is not

However, in practice, the actual fine will be

 

located the same area with the police

Baht 2,000 if the he reports by himself.  In case

 

station, [the foreigner] must notify the

he  is  being  caught  while trying  to  leave  the

 

police official of the police station for

Kingdom the fine will be Baht 4,000.

 

 

that area within 24hours from the time

Furthermore, in order to ensure the safety of

 

of arrival.”

 

 

the  foreigner  as  well  as  the  safety  of  the

3.

In  case  the  foreigner  travels  to  any

Kingdom  of  Thailand,  the  Immigration  Act

 

other province and will stay longer than

provides  the  following  regulations  governing

 

24 hours, he shall report to the police

the stay of foreigners:

 

 

authority at the police station of that

 

 

 

 

locality within 48 hours from the time

1.

The  foreigner  shall  stay  at  the  place

 

of arrival according to Section 37 (4).

 

reported to the immigration authority,

 

“Section 37(4): If the foreigner travels

 

except  where  it  is  with  a  reasonable

 

to  any  province  and  will  stay  there

 

cause, not possible to stay at the said

 

longer  than  24  hours,  such  foreigner

 

place, in which case the change of the

 

must  notify  the  police  official  of  the

 

place of stay must be reported to the

 

police station for that area within 48

 

immigration authority within 24 hours

 

hours from the time of arrival.”

 

from the time of moving, according to

 

 

 

Section 37 (2):

 

 

NOTE:   However,   according   to   a

 

 

 

 

Police Department Regulation effective

 

“Section  37  (2):  [The  foreigner  shall]

 

since 30 May 1979, an exemption for

 

stay  at  the  place  as  indicated  to  the

 

reporting according to Section 37 (3)

 

competent  official.  Where  there

is

 

and  (4)  applies  to  foreigners  who

 

 

received permission to stay temporarily under certain purposes of stay as follows:

  • Diplomatic or consular mission

 

  • Official duties

 

  • Tourism

 

  • Sports

 

  • Business

 

  • Investment which has been approved by the ministries or departments concerned

 

  • Investment or other affairs connected with an investment under the law governing investment promotion

 

  • Traveling through Thailand to another country

 

  • Crewmembers

 

  • Study or observation

 

  • Scientific research or teaching in a research or educational institution in the Kingdom

 

  • Performance of skilled or expert work

 

  • Mass media

 

  • Missionary work under the concurrence of the ministries and departments concerned

 

  • The householder, owner or possessor of the place or the manager of the hotel must report to the immigration authority of the local immigration office within 24 hours from the time the said foreigner moves in according to Section 38.

 

“Section 38: The house-master, the owner or the possessor of the residence or the hotel manager where the foreigner, receiving permission to stay temporarily in the Kingdom has stayed, must notify the competent official of the Immigration Office located in the same area with that house, dwelling place or hotel, within 24 hours from the time of arrival of the foreigner concerned. If there is no Immigration Office located in that

 

 

area, the local official for that area must be notified.”

 

If the host does not report to the officer within the said period, he will be liable to a fine of Baht 4,000 in practice, even though the law states in Section 77 that he shall be liable to a fine not exceeding Baht 2,000, or if the said person is the manager of the hotel he shall be liable to a fine ranging from Baht 2,000 to Baht 10,000.

 

“Section 77: Whoever fails to comply with Section 38 shall be liable to a fine not exceeding Baht 2,000, but if the said person is the manager of the hotel he shall be liable to a fine ranging from

 

Baht 2,000 to Baht 10,000.”

 

Since 1 April 2015, foreigners who stayed in Thailand over 90 days can make their 90 days report online. Applicants can submit this online application within 15 days and not less than 7 days before the due date of notification at www.immigration.go.th.

 

The applicant needs to fill in the information in the online application as follows:

 

  • Passport number;

 

  • Personal information ( Name, Birthday, Nationality );

 

  • Arrival Card Number;

 

  • Date of arrival in Thailand;

 

  • Mode of transport which the applicant used when last entering Thailand (i.e. via air, land or sea);

 

  • Vehicle number.

 

After submitting the online application, the applicant can check the application status via aforementioned website. The application should be approved within 7 working days.

 

When the application has been approved, the applicant will receive the receipt of notification directly online showing the due date for the

 

  

next 90 days report. The applicant should print

Conclusion

out and keep this notification in his passport.

 

 

 

 

 

In case the application is not approved, the applicant has to submit the application again at the nearest Immigration Office and has to bring his original passport, departure card (TM.6) and completed TM.47 form for the submission.

 

For advice or assistance for using the online service, you can call the Immigration Service

Hotline at 1178 or 1111

 

.

The Immigration Act from 1979 has not yet been amended, although there has been a press release stating that there were some considerations, concerns and efforts. However, the proposed amendments are not yet effective and therefore unenforceable.

Accordingly, any foreigner who is permitted to stay in the Kingdom temporarily and stays in the Kingdom longer than 90 days has to report to the Immigration Bureau for each and every 90 days period.

 

Moreover, if a foreigner stays at a different place than informed to the Immigration Bureau (the address written in the Custom Card submitted to the Immigration Officer upon arrival in Thailand), the law states that such foreigner should also report to the Immigration Bureau.

 

These reporting regulations may be time-consuming for foreigners, but since the Immigration Bureau is acting quite seriously on 90 days reporting, these regulations should not be overlooked since they are still effective and binding by law. Furthermore, in case of emergency and other necessary purposes, it might be helpful if the Immigration Bureau has the foreigner’s contact information.

 

Attachment: 1

 

Translation of the Immigration Bureau Press Release

 

Regarding the 90 days reporting to the Immigration Bureau

 

On October 30th, 1998 at 15:00 p.m.

 

Since the announcement of the Penalty Committee of the Immigration regarding the adjustment of the Penalty fee for any person who is at fault according to the Immigration Act 37(2),(3),(4)and (5), in case where foreigner does not report at the place, and time according to the law, they will be subject to fine of :


 

Canadian Chamber of Commerce arranged a meeting with the General Commissioner of the Immigration Bureau for the purpose of clarification.

 

The General Commissioner of the Immigration has been notified of the matter and would like to clarify as follows:

 

  • The Immigration Bureau understands the problem foreigners have regarding this Act and would like to reduce the problem by taking the following actions:


 

 

 

 

The Immigration Bureau has already written an urgent

(a)  Baht 2,000 if he personally reports to the authority

 

memo   to   the   Penalty   Committee   requesting   the

(Baht 1,000 was the previous rate)

 

 

reduction of the fine so that the one who does not report

(b)  Baht 4,000 and daily fine of Bath 200 for each

 

will not have to be subjected to such a huge amount.

day exceeding the time limit if he is caught by the

 

 

authorities (the old rate was Baht 2,000 and daily

 

Supply the new rules for reporting to the Immigration so

fine of Baht 100)

 

 

that it will not be so much of a burden for the foreigner

 

 

 

and at the same time compromising the security of the

This announcement is effective as of October 1, 1998.

 

 

country. The Immigration has submitted the following

 

 

 

regulations

Before this announcement was made, the BOI organised

 

 

a  seminar  for  foreigners  who  are  doing  business  or

 

Foreigners  residing  in  Thailand  more  than  one  year

residing   in   Thailand.   During   this   seminar,   the

 

have to report once a year. This is a change from the

representative  of  the  immigration  Bureau  made  the

 

previous  90  days  counting  from  the  date  that  the

announcement to all the participants. Since then there

 

foreigner arrives in Thailand.

have been many foreigners reporting to the Immigration

 

If  any  foreigner  changes  his/her  address  they  should

Bureau.  Some  of  the  foreign  communities  are  able  to

 

report to the Immigration the new address within 72

comply with the law but a majority still cannot.

 

 

hours counting from the time of moving.

 

 

 

For foreigners who stay in Thailand not more than a

Therefore some of them were fined at the new rate and

 

year or within one year, it will be the duty of the owner

this caused a lot of dissatisfaction among the foreigners

 

of the condominium, apartment, guesthouse and hotel to

who blamed the Immigration Bureau for not notifying

 

report  to  the  Immigration  within  24  hours  counting

them beforehand. However, in reality, this Act has been

 

from the time of moving in.

enforced by the bureau since the date it promulgated as

 

 

an Act. In addition the foreigners should know this law

2.

Any foreigner, who complies with the law, has

already  since  there  is  a  warning  written  on  the

 

to report to the Immigration every 90 days.

Arrival/Departure  Card  that  everybody  has  in  their

 

 

passport. (Note number 5 of the TMG).

 

3.

In the case where any foreigner does not comply

 

 

 

with  the  law,  they should  wait  for  the  agreement

However,  there  is  a  certain  number  of  foreigners,

 

between  the  Immigration  Bureau  and  its  Penalty

investors who are residing in Thailand confused by this

 

Committee. The Immigration Bureau has already

Act. They have made many inquiries to several places

 

submitted its suggestion for changes in this Act for

regarding  the  enforcement  of  this  Act.  The  Deputy

 

the new revised amount of fine as an urgent matter

Secretary of the Board of Trade, the Japanese Chamber

 

and  it  should  be  corrected  as  soon  as  possible.

of Commerce, the Taiwanese Business Community and

 

 

 

However, the office in charge of this matter cannot use his/her judgement in reducing the fine.

If you report to the Immigration officers, they will proceed according to the present amount of fine. If they don’t, the officers will be neglecting their duties and charged with negligence.

 

Apart from this press release, the Immigration Bureau has already explained to all the Chambers for example, Taiwanese, Japanese and Canadian to help eliminating the confusion.

 

If there is a case of any body try to abuse the Immigration Burea u’s authority to check on any foreigners regarding this 90 days please inform the

 

Immigration

so that legal action can be done from the

Immigration

bureau.

 

 

 

 

Attachment: 2

 

 

 

 

Newsletter No. 12      (EN)

 

 

 

 

 

 

 

New Regulations for Work Permits in Thailand

 

 

 

 

Januar 2013

 

 

 

 

 

All rights reserved © LORENZ & PARTNERS 2013

 

 

 

 

  • Overview

 

The Department of Employment has an-nounced with approval from the Minister of Labour and Social Welfare the new Procedure Order governing criteria and condition for expatriate’s work permit approval in May 2002. The Thailand work permit rules have not been updated since 2002. This procedure order revises the old regulations governing work permit approval, renewal and modification of employment descriptions or locations of a workplace.

 

According to the procedure order, the per-mit may be granted to an expatriate who has the qualification according to one of these conditions:

 

  • Working for an establish-ment with a registered capi-tal of at least 2 million Baht. One expatriate can be hired for every 2 million Baht of capital, but not more than 10 expatriates.

 

Supporting Documents:

 

  • The certificate of juristic person regis-tration with a fully paid-up capital not less than 2 million Baht and a copy of the list of shareholders (Form Bor-Or-Jor 5).

 

  • Financial statement with an initial working capital not less than 2 million Baht certified by a certified auditor. And after deduction of debts, loans and other expenses, the establishment must have assets as cash or bank de-posit not less than 2 million Baht

 

  • Account transaction to proof cash transacting in the bank for business transaction in the amount not less that 2 million Baht.

 

 

  • Working in an establish-ment, which has already paid income tax for juristic company to the Revenue De-partment in the past 3 years not less than 5 million Baht. For every 5 million Baht tax payment is allowed to hire 1 expatriate.

 

Supporting Document::

 

  • Form of tax payment on juristic per-son (Por Ngor Dor 91) and the receipt from the Revenue Department

 

  • Working for an establish-ment, which engages in ex-port business and remit for-eign currency of at least the equivalent of 3 million Baht last year. For every 3 million Baht, an establishment is al-lowed to hire 1 expatriate but not more than 3 expatriates.

 

Supporting Document:

 

  • A copy of Bill of Lading submitted to the Customs Department stating the total value of export goods.

 

 

  • Working in an establish-ment, which employs 50 Thai employees. An establishment is allowed to hire 1 expatriate for every 50 Thai employees but not more than 5 expatriates in total.

 

Supporting Document:

 

  • The proof of payment paid toward the the Social Security Fund.

 

 

  1. An expatriate having an in-come and duty to pay personal income tax to the Revenue Department of equivalent or more than 18,000 Baht, or al-ready paid personal income tax in the past year of equiva-lent or more than 18,000 Baht.

 

Supporting Documents:

 

  • If an expatriate has never worked in the Kingdom, he must pro-vide the employment contract to the officer in order to estimate an expatriate’s ability to pay such tax. Accordingly, in the case of single expatriates, he must have personal income of at least 30,000 Baht, and in the case of married expatriate, he must have personal income of at least 45,000 Baht per month.

 

  • If an expatriate used to have the permit, he must present proof of personal income tax payment of equivalent or more than 18,000 Baht along with a receipt from the Revenue Department.

 

Moreover the Authorized Officers, on reasonable grounds, may consider work per-mit approval, renewal, and modification of employment descriptions and positions or locations of workplace regardless of restric-tions on the number of expatriates stated above, if the work falls under the following:

 

  1. Representative office conducting qual-ity control, procurement, or market-ing research.

 

Supporting Document:

 

  1. The Business Operation License according to the Foreign Busi-

 

 

ness Operation Act B.E. 2542 (2002).

 

  1. The work in investment consulting, administrative consulting, technical and technology, or periodical inter-nal audit.

 

Supporting Document:

 

  • Consulting contract with both parties’ official seals.

 

  • Tourism representatives who bring in foreigners to travel in Thailand.

 

Supporting Document:

 

  • Tourist agent permit issued by Thai Tourism Authority

 

  1. International financial institutions approved by the Bank of Thailand.

 

  1. Temporary business of entertain-ment, religious, social welfare, cul-tural or sporting without intention to make profit and paying income tax to the government.

 

  1. Working as a contractor on projects with the governmental bodies or state enterprises.

 

Supporting Document:

 

  • A supporting letter stating the number of expatriates, expatri-ate’s names and positions.

 

  • Work using mostly local raw material as an essential component in the production process or work that can reduce the use of imported raw material

 

  • Work supporting export of Thai products.

 

  • Work, which brings new technology, which Thai people are not capable of, in order to distribute and transfer to Thai people.

 

  • Work in the area where there is a shortage of Thai labour.

 

  • Having a residency in the Kingdom.

 

 

Supporting Document:

 

  • A resident permit or a certificate of foreigners

 

  • Being a married couple with Thai citizen, with legally married registra-tion, publicly cohabiting as husband and wife, and with a legal profession, which is socially respectable.

 

 

  • Conclusion

 

Compared to the former regulations concerning work permits, most people found that these new conditions sound too good to be true. However, based on our ex-periences, we have proved that in the real practice these new conditions do exist. Re-ceiving work permits is a very major concern for every business. The more options for work permit are available, the more sensible and effective approaches are to be utilized.

 

Attachment:

 

  • Translation of the Department of Employment’s Procedure Order governing criteria and condi-tion for expatriate’s work permit approval consideration B.E. 2545 (2002)
  • Work Permit Application Form (WP.2)

 

  • Work Permit Application Form (WP.1) for BOI approved company

 

 

Although Lorenz & Partners Co., Ltd. al-ways pays greatest attention on updating the information provided in this newsletter we cannot take responsibility for the topicality, completeness or quality of the information provided. None of the information contained in this newsletter is meant to replace a personal consultation. Liability claims regarding damage caused by the use or disuse of any information provided, including any kind of informa-tion which is incomplete or incorrect, will therefore be rejected, if not generated deliberately or grossly negligent.

 

 

 

Newsletter No. 13 (EN)

 

 

 

How to Secure Performances and Obligations under Contracts

 

 

November 2015

 

 

 

A l l r i g ht s r e s e r v e d © L o r e n z & P a r t ne r s  2 0 1 5

 

Although Lorenz & Partners make every effort to provide correct and up to date information in our newslet-ters and brochures, we cannot take responsibility for the accuracy of the information provided. The informa-tion contained in this newsletter is not meant to replace a personal consultation with a qualified lawyer. Li-ability claims regarding damage caused by the use or misuse of any information provided, including infor-mation which is incomplete or incorrect, will therefore be rejected, unless this misinformation is deliberate or grossly negligent.

 

  • Introduction

 

In the ordinary course of business, even though terms and conditions have been agreed, a contracting party assumes the risk that the other party will not perform their contracted obligations. To guard against this, legal regulations have been created to guar-antee performance. The legal instruments commonly used for this are:

 

  • Letters of Credit;

 

  • Guarantees governed by suretyship doc-trine;

 

  • Independent Bank Guarantees;

 

  • Bills of Exchange (Domestic & Interna-tional); and

 

  • Promissory Notes/Cheques.

 

Although these instruments have the same purpose, they function differently. This newsletter will illustrate these differences.

 

  1. Letter of Credit

 

A Letter of Credit (“L/C”) is usually used to secure payments in trades of goods. In such a transaction, the supplier will ask the buyer to provide an L/C in favour of the supplier, which is issued on request by the buyer’s bank.

 

  • Parties involved

 

The parties involved in an L/C transaction are:

 

  • the issuer, which is the bank issuing the L/C;

 

  • the applicant,  which  is  the  buyer;  and


 

  the beneficiary, who is the supplier.

 

The bank usually guarantees to pay the supplier upon presentation of certain documents. Typi-cally these documents would be proofs of shipping to and/or inspection by the buyer, though their exact nature depends inter alia on what terms (e.g. International Commercial Terms) were agreed upon in the L/C.

 

  • Legal Framework

 

The general terms and conditions of L/Cs are usually governed by:

 

  • the Uniform Customs and Practice for Documentary Credits (UCP 600), Inter-national Stand By Practice 1998 (ISP 1998); or

 

  • other internationally accepted rules in-dorsed by the International Chamber of Commerce (ICC), the United Nations Commission on International Trade Law (UNCITRAL), or other internationally recognised private organisations.

 

Subject to certain exceptions, L/Cs gov-erned by such rules will usually have an expi-ration date after which the bank is not obliged to pay.

 

  • Factors to be taken into account

 

L/Cs must be drafted with care as banks may not always honour them, e.g. in situa-tions where the buyer is deemed likely to be-come insolvent. There is also some risk of fraud where supporting documents are forged or falsified. These risks can be se-cured by the agreement, but it is advised to agree on payment only when the goods have been properly inspected.

 

 

  1. Guarantees Governed by Thai Suretyship Doctrine

 

A suretyship is a contract by which one per-son (called the surety or guarantor) guaran-tees the performance of another (the debtor) by taking responsibility for their failure. The surety is liable to pay if the debtor does not perform as required. In Thailand suretyships are governed by Sec. 680-701 of the Thai Civil and Commercial Code (CCC).

 

A guarantee is typically required when there is doubt about the ability of the primary ob-ligor to perform their obligation, or when a public or private interest requires additional protection against possible default. For ex-ample, in the lending business the prospec-tive borrower may be deemed to be insuffi-ciently creditworthy. In such a situation the lender will often require a guarantee by a third party that the borrower will pay the in-curred debt. The guarantor offers their cred-itworthiness on behalf of the borrower, and is liable in case the borrower defaults.

 

  • Parties involved

 

The parties involved in this transaction are respectively:

 

  1. the creditor (lender);

 

  1. the debtor (borrower); and

 

  1. the surety (guarantor) who guarantees the obligations of the debtor.

 

The lender does not need to take legal action against the borrower before demanding payment from the guarantor in the case of default. The lender must, however, fulfil cer-tain legal requirements, e.g calling for pay-ment from the borrower, and giving notice of the default to the guarantor if the bor-rower does not pay. Additionally, the guar-antor does have statutory rights allowing them to contest the demands of the lender in some situations.

 

In a lending transaction, if the borrower de-faults on a payment of either interest or principal, the lender must first send notice

 

 

of the debtor’s default to the guarantor, and can then demand fulfilment of the guaran-tee.

 

  1. Legal Framework

 

As mentioned previously, creditors are not required to take exhaustive action against debtors before demanding satisfaction from the guarantor. Several Thai Supreme Court Decisions, e.g. Decisions No. 804/2500 (1957), 3944/2525 (1980), and 2093/2526 (1983), support this statement.

 

In Thai law, if the guarantor wishes to take responsibility for the debt as co-debtor, or to take the place of the original borrower, then they must be a juristic person.

 

Claims against the guarantor relating to a con-tract secured by a suretyship can be made up to 10 years after first arising, even if the suretyship has expired. However, the grounds for the claim must be from the period when it was valid. Note though that if the creditor does not notify the guarantor of debtor default within 60 days of this default, the guarantor is not liable for any interest, compensation or other en-cumbrance expenses arising from after this 60 day period.

 

If the guarantor is required to pay or perform due to the debtor’s failure to do so, the law will usually give them the right of subrogation. This allows the guarantor to use the contractual rights of the debtor to recover the costs of making payment on their behalf. This is usually the case even when there is no explicit agree-ment to this effect between the debtor and the guarantor.

 

  1. Independent Bank Guarantees

 

A bank guarantee is a legally binding agreement between a bank and a customer. The bank agrees to pay a named beneficiary in the event that the customer is unable to fulfil their con-tractual obligations to this beneficiary. This is somewhat similar to a L/C. The main differ-ence is that the L/C guarantees that payment for a transaction will be made, while the bank guarantee only ensures that some compensa-tion will be paid to the beneficiary in the event of a broken contract.

 

There are various kinds of bank guarantees. For example, down payment guarantees, per-formance guarantees, warranty guarantees etc. An independent bank guarantee is an addi-tional agreement between the bank and its cus-tomer. It is not directly related to the original contract. It is said to have an “abstract nature”.

 

For example, in a construction project it is common for the project owner to make a down payment to a construction company. This down payment is made against a bank guarantee independent of the contract between the construction company and the owner. The beneficiary of this guarantee is the owner, who approves the choice of bank. The owner can directly request payment from the bank at any point without being required to provide evi-dence that their claim against the contractor is justified. This kind of guarantee is known as an Advance Payment Guarantee. In this case it al-lows the owner to recover the cost of down payment in the event that the construction company becomes insolvent or otherwise un-able to continue work on the project.

 

The independent nature of the guarantee en-sures that the undertaking of a guarantor to pay under the guarantee is not subject to claims or defences arising from any relationship other than the relationship between the guarantor and the beneficiary.

 

  • Legal Framework

 

An independent bank guarantee should be drafted in accordance with internationally accepted rules, such as those endorsed by the ICC or UNCITRAL. In particular there is a risk that a poorly drafted document could be wrongly interpreted as a suretyship.

 

 

  1. Non-Return of the Guarantee Document; Legal Significance; Ex-piration

 

The guarantee document is neither a com-mercial paper nor a negotiable instrument, so the retention of the document itself has no legal significance. Once the guarantee has expired in accordance with its own terms, then, assuming expiry dates are effective un-der local law and practice, possession of the physical document does not confer any rights to the beneficiary. This rule is e.g. clearly confirmed in Article 24 Uniform Rules for Demand Guarantees (URDG) en-

 

dorsed by the ICC, which reads:

 

Where a Guarantee has terminated by pay-ment, expiry, cancellation or otherwise, retention of the Guarantee or of any amendments thereto shall not preserve any rights of the Beneficiary under the Guarantee.”

 

  • International Bills of Exchange and Promissory Note

 

Bills of exchange and promissory notes play an important role in the commercial and fi-nancial sectors. They not only provide a way to make payments or provide credit, but can also act as security for credits. In particular using bills and notes will often facilitate the enforcement of accounts receivable.

 

Due to barrier removal and market integra-tion effects, the number of bills and notes signed by foreign parties is steadily increas-ing. As such the legal questions arising from the international use of such documents are becoming increasingly important.

 

  • The Convention on International Bills of Exchange and International Promissory Notes (“Convention”)

 

The UNCITRAL Convention on Interna-tional Bills of Exchange and International Promissory Notes 1988 attempts to harmo-nize various competing systems for using bills of exchange and promissory notes. However, despite unanimous approval by the United Nations General Assembly, the system has yet to come into force, so its use must be expressly agreed upon by all parties.

 

The Convention applies to international bills of exchange and international promissory notes, and, if its use is agreed, allows the sum payable to be expressed in a monetary unit of account. It also allows stipulation to pay interest, either definite or variable rate, or payment of the sum in instalments

 

  • Specific characteristics of the Con-vention

 

Bills and notes governed by the Convention have certain specific and interesting charac-teristics, which may vary considerably from those governed by local laws. For example:

 

  • The form of any contract arising out of a bill of exchange or a promissory note is regulated by the laws of the territory in which the contract is signed.

 

  • The obligations of the acceptor of a bill of exchange or the maker of a promis-sory note are determined by the laws of the place where they are payable.

 

  • The effects of the signatures of the other liable parties on a bill of exchange or a promissory note are determined by the law of the country in which the signa-tures were affixed.

 

  • The form and time limit of a protest are regulated by the laws of the country in which the protest must be drawn up.

 

  • The contracting states shall undertake to alter their laws so that the validity of ob-ligations arising out of a bill or a note shall not be subordinated to the payment of stamp duty.

 

These documents are usually used in the course of business between parties from dif-ferent jurisdictions, so may be particularly useful for international business. However, if used in this way the governing law provision

 

 

of such a bill or note must specify that it is governed by the Convention.

 

  • Permitted delay in making pay-ments

 

Delay in making payments may be permitted according to Art. 56 (1) of the Convention, which reads:

 

Delay in making presentment for payment is excused if the delay is caused by circumstances which are beyond the control of the holder and which he could neither avoid nor overcome. When the cause of the delay ceases to operate, presentment must be made with reasonable dili-gence.”

 

Presentment for payment can be dispensed with if the drawer, an indorser, or a guaran-tor has expressly waived it.

 

  • Additional liability under the Con-vention

 

The expiration of a bill of exchange or promissory note is governed by Art. 28 (3) of the Convention, which stipulates that:

 

A holder who takes an instrument after the expiration of the time -limit for presentment for payment is subject to any claim to, or defence against liability on, the instrument to which his transferor is subject.

 

Therefore, if you wish to purchase an exist-ing bill or note, or have one transferred to you, for any reason, we advise you to care-fully investigate the terms and conditions and proceed with caution.

 

  1. Bills of exchange under Thai Law

 

Under the Thai CCC bills generally consist of:

 

  • Bills of exchange (Sec. 908 – 981);

 

  • Promissory notes (Sec. 982 – 986); and

 

  • Cheques (Sec. 987 – 1000).

 

Subject to certain exceptions, a person execut-ing a bill is personally liable unless they state they are acting on behalf of another party. There is no grace period allowed (Sec. 903 CCC).

 

The holder is normally deemed to be the payee. In bills payable to the bearer, the bearer or indorsee is the payee. Forged or un-authorised signatures do not legally bind the person whose signature has been forged, unless they are precluded from asserting a defence to such forgeries. Note that in some circum-stances unauthorised signatures can be ratified (Sec. 1008 CCC).

 

  • Bills of exchange

 

In a bill of exchange transaction, a person called the “drawer” orders another person, called the “drawee”, to pay to or to the order of a third person called the “payee”.

 

Under Thai law bills must contain an order to pay a sum of money, and a maturity date (Sec. 909 CCC). No other conditions may be put on a bill of exchange. Maturity dates of bills can be (i) fixed, (ii) at the end of a fixed period after the date ascribed to the bills, (iii) on demand or at sight, and (iv) at the end of a fixed period after sight (Sec. 913 CCC) . If no maturity date is specified, the bill will be payable on demand (Sec. 910 CCC). Interest can be imposed on the payable sum (Sec. 911 CCC), and bills can be drawn on account of the drawer or of any third party (Sec. 912 CCC).

 

Under Sec. 914 CCC, any person drawing or indorsing a bill of exchange asserts that the bill will be paid upon presentment. The drawer or indorser also asserts that, if the bill is dishon-oured by non-acceptance or non-payment, they will pay the listed sum to the current holder, or, in the case where the bill has been indorsed multiple times, to the subsequent in-dorsee, who, in turn is compelled to pay the holder or a subsequent indorsee. This chain of payments is conditional on the requisite non-payment or non-acceptance proceedings being taken. Partial or conditional indorsements are not valid (Sec. 922 CCC).

 

 

Subject to some exceptions that can be stipulated by the drawer, the possessor of a bill of exchange may present it for accep-tance to the drawee at the place where the drawee resides up to its maturity date. A third party, or even a party to the bill itself, can guarantee either all or part of the bill payment. This kind of guarantee is called an “aval” (Sec. 938 CCC).

 

The holder of a bill of exchange must present the bill for payment upon its maturity (Sec. 941 CCC). Thai law allows third parties to inter-vene and pay or accept on behalf of the drawee (Sec. 950 CCC).

 

  • Promissory note

 

In a promissory note one person, the “maker”, promises to pay a certain sum of money to, or to the order of, another person, called the “payee” (Sec. 982 CCC). Thai law demands that a promissory note contain certain provi-sions; e.g., an unconditional promise to pay a set sum,, and a maturity date.

 

Most aspects of promissory notes are governed by the law for bills of exchange (Sec. 985 CCC).

 

  • Cheques

 

A cheque is a written document in which a person, called the “drawer”, orders a bank or banker to pay on demand a certain amount of money to, or to the order of, a person called the “payee”. A cheque must contain specific information. For example, among other things, the name or trade name and address of the bank and the name or trade name of the payee, along with the address of the payee or a state-ment indicating that the cheque is payable to the bearer (Sec. 988 CCC).

 

Again, most aspects of cheque transactions are governed by the law for bills of exchange (Sec. 989 CCC).

 

A cheque, if payable in the city where it was is-sued, must be presented for payment within one month of its issuance. If payable elsewhere, the cheque must be presented within three months (Sec. 990 CCC). The bank is not obligated to pay if the cheque is presented later than six months after its issuance (Sec. 991 CCC).

 

Apart from civil liabilities imposed on the drawer of the cheque, if a cheque bounces a criminal case can be prosecuted under the Of-fence Arising from the Use of Cheque Act B.E. 2534. This criminal case is compoundable, so if the drawer pays the payee the correct amount, the case will be ceased.

 

  • Prescription


 

date has passed (Sec. 1001).

 

  • No action can be taken by holders against the drawer of a bill or the maker of a note after one year following its proper protest.

 

In the case of a bill marked “no protest necessary” no action can be taken after one year following its maturity (Sec. 1002).

 

  • Indorsers may not take action, either against each other or the drawer of a bill, after six months following the date an in-dorsee acquired it, or from the date he was sued (Sec. 1003).


 

Subject to certain exceptions, the following comments apply to the prescription period of bills under Thai law:

 

  • There shall be no action against the accep-tor of a bill of exchange or the maker of a promissory note allowed after three years following its maturity date has passed. No action can be taken against the acceptor of a bill or the maker of a promissory note more than three years after its maturity


VII. Summary

 

There are several legal instruments, which can be used to secure the performance and obligations under a contract. Each has in-herent advantages and disadvantages, and care must be taken when deciding which in-strument to use.

 

________________________

 

Attachment: Differences between L/Cs, guarantees, independent bank guarantees, and bills of exchange/international promissory notes

 

 

 

 

Independent/

 

 

Expiration

 

 

Prescription

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

period under

 

 

Instruments

 

 

Abstract

 

 

of

 

 

 

 

 

 

 

 

 

 

 

 

applicable

 

 

 

 

 

Characteristics

 

 

Instrument

 

 

 

 

 

 

 

 

 

 

 

laws

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1) Bills of Exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1a) Under Thai Law

 

Depending on the

 

Can be set by the

 

3 years (holders

 

 

 

 

terms and conditions

 

parties

to

the

 

against

accep-

 

 

 

 

of the instrument

 

transaction

or

6

 

tors)  or

1

year

 

 

 

 

 

 

 

months

after

its

 

(holders against

 

 

 

 

 

 

 

issuance

if

con-

 

indorsers

 

or

 

 

 

 

 

 

 

sidered “at sight”

 

drawers)

 

 

 

1b) Under German Law

 

Yes

 

1  year  by law  or

 

3 years

 

 

 

 

 

 

 

 

 

 

can be set by the

 

 

 

 

 

 

 

 

 

 

 

 

parties

to

the

 

 

 

 

 

 

 

 

 

 

 

 

transaction

 

 

 

 

 

 

 

1c) International

 

Yes

 

Can be set by the

 

Depending

on

 

 

 

 

 

 

 

parties

to

the

 

the laws of ap-

 

 

 

 

 

 

 

transaction

sub-

 

plicable

 

ju-

 

 

 

 

 

 

 

ject to the laws of

 

risdiction

 

 

 

 

 

 

 

 

 

 

applicable

juris-

 

 

 

 

 

 

 

 

 

 

 

 

diction

 

 

 

 

 

 

 

 

2) L/C

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2a) Local

 

Yes

 

Can be set by the

 

N/A

 

 

 

 

 

 

 

 

 

 

parties

to

the

 

 

 

 

 

 

 

 

 

 

 

 

transaction

sub-

 

 

 

 

 

 

 

 

 

 

 

 

ject  to

common

 

 

 

 

 

 

 

 

 

 

 

 

banking practice

 

 

 

 

 

2b) International

 

Yes

 

Can be set by the

 

N/A

 

 

 

 

 

 

 

 

 

 

parties

to

the

 

 

 

 

 

 

 

 

 

 

 

 

transaction

sub-

 

 

 

 

 

 

 

 

 

 

 

 

ject  to

common

 

 

 

 

 

 

 

 

 

 

 

 

banking practice

 

 

 

 

 

 

 

Independent/

Expiration

 

Prescription

Instruments

Abstract

of

 

period under

 

Characteristics

instrument

 

applicable laws

3) Guarantees

 

 

 

 

 

 

 

 

 

3a) Under Thai Law

No

Can be set by the

10 years

 

 

 

 

 

parties

to

the

 

 

 

 

 

 

 

transaction

 

 

 

 

 

 

3b) Under German Law

No

Can be set by the

30 years

 

 

 

 

 

parties

to

the

 

 

 

 

 

 

 

transaction

 

 

 

 

 

 

4) Promissory Notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4a) Under Thai Law

Depending on the

Can be set by the

3 years

 

 

 

 

terms and condi-

parties

to

the

 

 

 

 

 

 

tions of the instru-

transaction

 

 

 

 

 

 

 

ment

 

 

 

 

 

 

 

 

4b) Under German Law

Yes

Can be set by the

30

years

subject

 

 

parties

to

the

to

the

terms

of

 

 

transaction

 

the

underlying

 

 

 

 

 

contract

 

 

4c) International

Yes

Can be set by the

Depending

on

 

 

parties

to

the

the

laws

of

the

 

 

transaction subject

applicable

juris-

 

 

to the laws of the

diction

 

 

 

 

 

applicable

jurisdic-

 

 

 

 

 

 

 

tion

 

 

 

 

 

 

 

5) Independent Bank

 

 

 

 

 

 

 

 

 

Guarantees

 

 

 

 

 

 

 

 

 

 

Yes

Can be set by the

N/A

 

 

 

 

 

parties

to

the

 

 

 

 

 

 

 

transaction subject

 

 

 

 

 

 

 

to common bank-

 

 

 

 

 

 

 

ing practice

 

 

 

 

 

 

6) Cheques

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6a) Local cheques under

Yes

1  month

after

its

1

year

(holders

Thai Law

 

issuance

 

 

against

 

indors-

 

 

 

 

 

ers) or 6 months

 

 

 

 

 

(indorsers

 

 

 

 

 

 

 

against

 

indors-

 

 

 

 

 

ers)

 

 

 

 

 

 

 

 

 

Independent/

 

 

Expiration

 

 

Prescription

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

period under

 

 

 

 

Instruments

 

 

Abstract

 

 

of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

applicable

 

 

 

 

 

 

 

Characteristics

 

 

instrument

 

 

 

 

 

 

 

 

 

 

 

 

 

 

laws

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6b) International cheques

 

Yes

3 months after its

 

1  year  (holders

 

 

 

under Thai Law

 

 

 

issuance

 

against

indors-

 

 

 

 

 

 

 

 

 

 

 

 

ers)

or

6

 

 

 

 

 

 

 

 

 

 

 

 

 

months

 

(in-

 

 

 

 

 

 

 

 

 

 

 

 

dorsers

against

 

 

 

 

 

 

 

 

 

 

 

 

indorsers)

 

 

 

 

6c) Local cheques under

 

Yes

8 days

6

 

months

 

 

 

German Law

 

 

 

 

 

 

 

(holders against

 

 

 

 

 

 

 

 

 

 

 

 

indorsers)

 

 

 

 

6d) Continental cheques

 

Yes

20 days

 

Depending

on

 

 

 

under German Law

 

 

 

 

 

 

 

the  law

of

the

 

 

 

 

 

 

 

 

 

 

 

 

jurisdiction

of

 

 

 

 

 

 

 

 

 

 

 

 

issuance

 

 

 

 

6e) International cheques

 

Yes

70 days

 

Depending

on

 

 

 

under German Law

 

 

 

 

 

 

 

the  law

of

the

 

 

 

 

 

 

 

 

 

 

 

 

jurisdiction

of

 

 

 

 

 

 

 

 

 

 

 

 

issuance

 

 

 

 

 

 

Newsletter No. 14 (EN)

 

 

 

 

 

Retention of Title and Other Securities

 

 

January 2015

 

 

 

 

A l l  r i g h t s r e s e r v e d ©  L o r e n z  & P a r t n e r s  2 0 1 5

 

Although Lorenz & Partners always pays great attention on updating information provided in newsletters and brochures we cannot take responsibility for the completeness, correctness or quality of the information provided. None of the information contained in this newsletter is meant to replace a personal consultation with a qualified lawyer. Liability claims regarding damage caused by the use or disuse of any information provided, including any kind of information which is incomplete or incorrect, will therefore be rejected, if not generated deliberately or grossly negligent.

 

 

 

  1. Introduction

 

  1. Problem upon the Transfer of Ownership

 

Under the Thai Civil and Commercial Code (CCC) the ownership of property is transferred directly in the moment of the conclusion of a contract in case of sale of ascertained property (Sec.458 CCC). If unascertained property is sold, the ownership is transferred when the property has been specified (Sec. 460 CCC). In the event that the contract is subjected to a condition or a time clause, the property will be transferred at the fulfillment of the condition or the time has arrived.

 

Under the Thai CCC there is no clear separa-tion between obligatory (e.g. agreement for purchase) and real legal transaction. By follow-ing the French law system, the Thai CCC doesn’t realise the principle of the abstract na-ture of rights in or against a property.

 

This is in contrast to the German civil law, which distinguishes between obligatory and real legal transaction. The obligatory legal transaction only obligates the seller to transfer the possession of the property but does not transfer the ownership of the property. In or-der to transfer the ownership of the property, it is required that the contracting parties agree to transfer the ownership of the property. This is a second legal transaction that constitutes the fulfillment of the obligatory legal transaction. Therefore, the obligatory legal transaction is the means to transfer the ownership. Although there are two legal transactions under the German law, in practice both legal transactions may be concluded with a conclusion of the ob-ligatory legal transaction and delivery of the property.

 

 

  1. How to secure a claim?

 

In some cases the seller of goods does not know the financial situation of the buyer. How can the seller minimise the risk of loss without knowing so? In principle, there are two possi-bilities to provide security for a claim:

 

  • Creating a certain payment method (e.g. advanced payments, documentary credit, letter of credit, suretyship); or

 

  • Providing securities independent from the exchange of goods and services such as retention of title.

 

  • Definition

 

Sec. 459 CCC governing the transfer of owner-ship states that if a contract of sale is subject to a condition or time clause, the ownership of the property is not transferred until the condi-tion is fulfilled or the time has arrived. Under the law of several countries a condition stipu-lating that the transfer of ownership is under the condition that the purchase price is paid is generally called a “Retention of Title”.

 

For instance, if the buyer is in default of its obligations, the owner of the retained property (the seller) has the right to recover his property from the buyer since the seller still has the ownership of such property (exercise of the right of ownership, Sec. 1336 CCC, compara-ble to the German § 985 BGB). Because of the fact that the seller doesn’t lose his ownership before the payment is fulfilled completely, re-tention of title constitutes a security in proper-ty’s title for the seller.

 

 

III. Retention of Title under the Interna-tional Private Law

 

If the property is located in Thailand, Thai law would govern the transfer of the ownership according to Sec. 16 of the “Act on Conflict of Laws B.E. 2481” which states that movable and immovable property is governed by the law of the place where the property is situated.

 

  1. Acceptance of Foreign Retention of Ti-tle

 

In some countries valid retention of title may require a certain form or even registration. While Thai law does not have specific rules governing validity of retention of title, the va-lidity of retention of title is subject to the law of the country where retention of title was made. In the case of immovable property, the law of the country where the property is situat-ed applies (Sec. 9 of the Thai “Act on Conflict of Laws B.E. 2481”).

 

  1. Special Kinds of Retention of Title

 

  1. Continued form of Retention of Title

 

The continued form of retention of title means that the transfer of ownership of property is under the condition of the purchase price payment and the payment of other debts. Based on contract of sale with conditions un-der Sec. 459 CCC and the freedom of contract doctrine, a continued form of retention of title is acceptable. However, in practice a condition like this is unusual.

 

  1. Extended form of Retention of Title

 

The extended form of retention of title means that the buyer of the property assigns the claim of payment resulting from reselling the proper-ty to the original seller. A condition like this is admissible. However, under Sec. 306 CCC governing transfer of claims, the transfer can be set up against the original seller or third par-ty only if a notice has been given to the seller

 

 

 

or if the seller has given consent to the trans-fer. Such notice or consent must be in writing.

 

  1. Retention of Title and “Combination

 

and Mixing”

 

Combination and mixing occurs when several movable items from different persons are joined together and become component parts or indivisible. In such case, the questions arises who the owner of the new item is.

 

  • In the case mentioned above the different persons become co-owners of the new item under Sec. 1316 CCC. Each person’s share is proportionate to the value of his item. However, under Sec. 1316 Para 2

 

  • there is one exception: if one of the items is considered the principle one, its owner becomes the sole owner. But this owner has to pay the value of the other items to their respective former owners.

 

  • In case a person creates a new item by us-ing materials belonging to another person, the owner of the materials will become the owner of such items and have to pay for the work (Sec. 1317 Para 1 CCC). But if the value of the work greatly exceeds the value of the materials being used, it is the opposite: the worker will become the owner and have to pay to the former owner the value of the used materials (Sec. 1317 Para 2 CCC).

 

  • However, it is possible to stipulate a pro-cessing clause in the contract between par-ties since such clause is valid under the

 

  • The result is that the owner of the property will not lose his ownership in case of processing.

 

  1. Effect on Third Parties acting in Good Faith

 

Under the Thai CCC there are special rules protecting a third party acting in good faith. In case that the buyer of retained property enters into a sale contract with a third par-ty, the original owner will lose his ownership if such third party does not know anything about the retention of title.

 

In the event that a third party is about to exe-cute a court order against the buyer, the seller has the right to secure the enforcement on his property from the third parties. But if the en-forcement against the property is already being executed, the owner can file a petition for resti-tution of the property price against the third party. Although by compulsory auction the ownership of the property will be transferred to another party, the former owner of the property is entitled to reclaim the property by paying the new owner the purchase price or the proceeds of the auction.

 

In case of bankruptcy, the owner of the prop-erty is not entitled to reclaim his property since the property shall be deemed distributable among creditors in bankruptcy suit (Sec. 109

 

Para 3 “Bankruptcy Act B.E. 2542”). However, if the owner suffers damage resulting from the attachment of his property, he can file a peti-tion to the court asking for repayment of the debts in respect of the price of the property. It is important to note that in case of bankruptcy the owner has no better right than other credi-tors even if he has retention of title as a securi-ty (Sec. 92 “Bankruptcy Act B.E. 2542”).

 

VII. Formalities

 

Under the Thai law some contract validities are subject to certain forms, especially a sale con-tract of unmovable property, which must be in writing if the purchase price is higher than THB 500. Under the Thai Law the retention of title can be a subordinate agreement because neither a written form nor a special kind of registration is required. It is also possible to include a retention of title clause in the stand-ard terms and conditions for sale and payment. However, under the Thai law the contracting parties generally have to sign these standard

 

 

 

terms and conditions separately from the sale contract.

 

VIII. Model Clause

 

A model clause stipulating retention of title can be as follows:

 

“The Goods shall remain the sole property of the Seller and the Seller shall remain the sole owner of the Goods until the Sales Price is fully paid. Until that time, the Buyer is not entitled to sell or otherwise dispose the Goods. The Seller is entitled to reclaim possession at any time from any possessor without any precondition and without any compensation or other monies.”

 

 

  1. Other Securities

 

  1. Hire Purchase

 

Similar to the retention of title is the so-called

“Hire-Purchase” contract (Sec. 572-574 CCC), which is comparable to the German leasing contract. Under a hire purchase contract the seller lets his property out on hire and promis-es to sell it to the buyer. The ownership will be transferred by the last payment, which would be the purchase price. This kind of contracts in Thailand is widely used for selling vehicles.

 

  1. Documentary credit / letter of credit

 

Another method to provide security to the par-ties is by using documentary credit (also called letter of credit). A documentary credit is a writ-ten instrument made by a bank guaranteeing payment to an exporter where certain docu-ments are presented in compliance with the terms and conditions of the documentary cred-it such as time limit, amount of money and other documentary requirements that the seller has to fulfill in order to receive the payment. The advantage for the seller is that the pay-ment will be assured without reference to cred-it worthiness of the buyer. The advantage for the buyer is that he would be financially assist-ed during the time of placing the order and receiving the goods since no cash has actually been paid or transferred. The documentary credit is separate and independent from the underlying contract. The issuing bank is only concerned with the problem whether the doc-uments given by the seller are corresponding to the required documents as specified in the documentary credit. Therefore, the bank has to check the conformity of the documents with these requirements to decide whether to pay in exchange to the documents or not.

 

 

 

  1. Other instruments

 

Other kinds of security are varied depending on the parties’ intentions and the nature of contracts. Such securities available under the Thai law are Suretyship (Sec. 680 CCC), Mort-gage (Sec. 702 CCC), Pledge (Sec. 747 CCC) and Bank Guarantee.

 

____________________________

 

 

 

Newsletter No. 15 (EN)

 

 

 

 

 

How to Enforce Court Orders and Arbitration Awards

 

 

 

 

February 2015

 

 

 

 

A l l  r i g h t s r e s e r v e d ©  L o r e n z  & P a r t n e r s  2 0 1 5

 

 

Although Lorenz & Partners always pays great attention on updating information provided in newsletters and brochures we cannot take responsibility for the completeness, correctness or quality of the information provided. None of the information contained in this newsletter is meant to replace a personal consultation with a qualified lawyer. Liability claims regarding damage caused by the use or disuse of any information provided, including any kind of information which is incomplete or incorrect, will therefore be rejected, if not generated deliberately or grossly negligent.

 

 

 

Overview

 

After obtaining a court order or an arbitral award it may occur that the defendant does not comply with the judgments or awards. While the law in principle does not allow private parties to enforce an order or an award by themselves, the enforcement has to be done by the power of the governing law or statute.

 

This Newsletter is made to describe how the execution takes place under the Thai law in respect of civil cases and international commercial disputes, either those resulting from lawsuit or arbitration.

 

 

  1. Execution of Court Orders/Judgments

 

By the virtue of the Civil Procedure Code (CPC), the execution procedures can only begin in the following cases:

 

  • When the Court of First Instance or the Court of Appeal has rendered its judgment and the party who lost the case could not get an order for a stay of execution.

 

  • The case is final because the party who lost the case did not appeal to the higher court within a specific time period.

 

Under the CPC, execution procedures are conducted through the following steps:

 

 

  • Getting a Decree

 

Having the defendant to acknowledge a decree from the Court to perform according to the judgment is the first step necessary before the execution. If the defendant is in the Court during the reading of judgment, the Court may record its decree and have the parties sign for acknowledgement (Sec. 272 CPC), especially in

 

 

the case where a compromise or settlement can be reached and the Court decides according to such compromise or settlement. The Court will decide and have both parties sign for acknowledgement by using the phrase “the Court orders the defendant to …… Otherwise, the defendant will be subject to property seizure or imprisonment” (Sec. 273 Para 4

 

CPC). In this case if the defendant does not perform according to such compromise or set-tlement, the plaintiff can ask the Court to execute the court order immediately without having to submit a statement to the Court asking for a decree.

 

 

In the event that the defendant does not acknowledge the decree of the Court, the plaintiff’s lawyer has to ask the Court to issue a decree by making a statement to the Court saying that the case has been decided but the defendant has not yet acknowledged the

 

Court’s decree. In practice, the Court will issue a decree and send it to a Warrant Delivering Officer. Then, the lawyer has to follow up with such officer regarding when a decree would be issued and request the officer to deliver the issued decree. If the lawyer does not do so within 15 days after the decree is issued by the Court, the officer will return the decree to the Court. Furthermore, the lawyer also has to check the date the defendant receives a decree in order to determine the default period. Nor-mally, the Court will demand the defendant to perform within 1 month after the defendant received the decree. If the decree is delivered by posting at the defendant’s premises, it will be deemed received 15 days after posting (Sec. 79 CPC). After the due date according to the decree and in case of a debt payment where the defendant can deposit money to the Court as a payment, the lawyer has to check whether the defendant has deposited the money to the Court according to the decree or not. This can be done either by making a statement to examine the file or by checking with the Court’s

Treasury Department.

 

 

In order to obtain the deposited money from the Court, the lawyer has to contact the plaintiff to submit a statement for taking the money. The plaintiff can receive the money by himself or authorise the lawyer to do so.

 

 

  • Appointing an Executing Officer

 

The purpose of appointing an executing officer is to enforce the Court decision. Since the plaintiff cannot enforce the Court decision by himself, the enforcement has to be done by the virtue of Sec. 271 CPC which states that in case the defendant does not comply in whole or in part with the judgment or order and such defendant already acknowledged a decree from the Court to perform according to the judgment or order, the party who wins the case is entitled to ask the Court to execute by virtue of and in accordance with the decree issued by the Court within 10 years from the date of pronouncement of the judgment or order.

 

 

Although the CPC does not mention an appointment of an executing officer, Sec. 275 CPC provides that the creditor according to the judgement may submit an application by motion to the Court for a writ of execution and Sec. 276 provides that the Court shall notify such writ to the executing officer. In practice, such application shall include a wording asking the Court to appoint an exe-cuting officer to seize the defendant’s property in the case of money debt.

 

 

 

After submitting an application mentioned above, if the motion is granted, the Court officer will issue a writ appointing an executing officer. This writ will be sent to the Execution Department in Bangkok or to the Execution Office in other provinces.

 

 

  • Seizure of Properties

 

After the writ appointing an executing officer has been delivered, the lawyer has to contact the executing officer for further proceedings. To do so, the lawyer must have another power of attorney signed by the plaintiff. The executing officer will then ask the lawyer to submit deposit money for expenses and then set the seizure date. However, it is also necessary to submit to the executing officer a request form and a property list.

 

 

To seize property, the lawyer has to accompany the executing officer to the defendant’s residence, land, or other real estate listed (Sec. 279 CPC). The executing officer will record the seizure and announce that the property is seized. In case of movable property, the executing officer may ask the plaintiff or its representative to deliver such property to the Execution Department for the further compulsory auction. If the property is land or other real estate (immovable property), the executing officer will post a notice there stating that the property is under attachment.

 

 

The lawyer then has to follow up with the executing officer regarding the public auction date. On the auction date, the lawyer will conduct the auction. If the lawyer sees that the price would be too low, he may ask the executing officer to postpone the auction. If in the next auction, the highest bidder bids at a higher price than the price bid by the highest bidder in the last auction, the executing officer may decide to sell the property to such highest bidder. However, if the lawyer still thinks that the price is too low and such unreasonably low price has taken place in pursuance of a fraud among persons relating to the bidding, or under bad faith or gross negligence of the executing officer in exercising his function, the lawyer may file an application by motion with the Court for an order setting aside the sale by auction.

 

 

After the property has been sold, the officer will deduct expenses and executing fees and then give the money to the lawyer or the plaintiff, as the case may be.

 

 

  1. Attachment of Claims against Third Parties

 

In some cases the defendant may not have property to be seized, but has monies which will be subsequently received from other persons, e.g. salary or claims against third parties. The executing officer may ask the Court to detain such amount, which is to prohibit the defendant to dispose of such claims and prohibit third parties to make payment or submit property to the defendant but to submit it to the Court instead.

 

 

In order to attach money or property of the defendant, the lawyer has to submit a petition to the executing officer stating the information of where to attach the defendant’s money or from whom the defendant would receive money.

 

According to Sec. 310 (3) and 311 CPC, it can be inferred that the executing officer may submit an application by motion to the Court in order to attach such claims. However, in practice there are some rare cases that the executing officer issues an attachment order on his own.

 

 

  1. Execution of Foreign Court Orders

 

It is a fact that every country has a different le-gal system and different rules dealing with the civil procedure. The enforcement of foreign

 

 

 

court orders in principle is quite complicated and subject to certain approval procedures under Thai law. Unlike domestic court orders, foreign court orders (e.g. a judgment of a German civil court) are not likely to be enforceable under Thai law because Thailand did not sign any bilateral agreement or reciprocal agreement with Germany. To execute against a party in Thailand, a new case has to be filed again in Thai jurisdiction. Moreover, the foreign judgment is merely treated by the Thai court as one piece of supporting document to the case. Therefore, it is advisable for the parties to enter into an arbitration agreement in order to secure the enforcement and execution in case of cross-border commercial disputes.

 

 

III. Execution of Arbitral Awards

 

Arbitration can be defined as a voluntary agreement between the parties to submit a dispute to an impartial person (Arbitral Tribunal) to determine an equitable settlement in a judicial manner.

 

 

Arbitration can be divided into two categories, national and international arbitration. According to Chapter III of the CPC concerning national arbitration, this type of arbitration is exclusively for the case pending before a Court of First Instance where the parties can choose to submit the dispute to one or more arbitrators for settlement by filing a joint-application to the Court. If the Court is of the opinion that it is not contrary to the law, the Court shall grant the application (Sec. 210 CPC). The award given by the national arbitration is a final binding judgement. However, it is still considered a domestic court order, which is still subject to enforcement and execution limitation in foreign countries.

 

The Arbitration Act B.E. 2545 (2002) was enacted on 29 April 2002 and enforced on 30 April 2002. This Act replaced the Arbitration Act B.E. 2530 (1987), which was criticized because it did not correspond with the principles of international arbitration law and the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration, which has been widely accepted and recognized as a prototype for international arbitration law. Therefore, a significant consideration behind the current Act (2002) was to adopt the UNCITRAL Model Law as a basis for the core development of the arbitration system in Thailand in order to keep pace with other developed economies and to develop the Thai arbitration system to be on equal terms with international communities, and thereby promoted the use of arbitration proceedings in the settlement of international civil and commercial disputes.

 

Outlined below are several advantages for the parties to refer their dispute to arbitration rather than to commence an action in court:

 

 

  • The parties can choose the place of jurisdiction, the language used and the applicable law.

 

  • The process consumes less time and effort than those in a civil court, and is often more cost effective. Most organizations that provide arbitration offer fee schedules based on the size of the claim.

 

  • In case that the dispute involves a technical matter, the parties have the ability to select an arbitral tribunal with expertise in a certain subject matter that generally posseses the more appropriate qualifications.

 

  • Unwanted publicity can be avoided because the proceedings are presumed to be confidential and private.

 

  • Since an arbitral award can only be appealed in certain limited cases, it is usually a final and binding decision.

 

 

 

  • Recognition and Enforcement

 

Although one of the most important advantages for the parties to settle their dispute in arbitration is the international recognition of the arbitral award, it is important to note that according to the new Arbitration Act if the award was made in a foreign country, the Court having the jurisdiction may pass its judgement enforcing the award only when such award is subject to a Treaty, Convention, or International Agreement to which Thailand is a member, and it shall be enforceable as long as Thailand agrees to be bound by them only (Sec. 41 Para 2). At present, 149 countries have signed the 1958 United Nations “Convention on the Recognition and Enforcement of

 

Foreign Arbitral Awards”, known as the “New York Convention”. This Convention facilitates the enforcement of awards in all contracting countries and Thailand became a member in 1961.

 

 

  • Application

 

Under Section 9 of the Arbitration Act, parties can file an application to execute an arbitral award to one of the following Courts:

 

 

  1. The Central International Trade and Intellectual Property Court

 

  1. The Court having the jurisdiction over the place where the arbitration took place

 

  1. The Court having the jurisdiction where either party is domiciled

 

  1. The Court having the jurisdiction over the dispute duly forwarded to the arbitrator

 

 

According to Section 42 of the Arbitration Act, to enforce an arbitral award the winning party has to submit an application to the court having jurisdiction within three years from the date the award is enforceable. Along with an application, the following documents shall be attached:

 

 

  • Original of the arbitral award or its duly certified copy

 

  • Original arbitration contract or its certified copy

 

  • Thai translation of the arbitral award and arbitration contract made by a publicly appointed and sworn translator.

 

 

  1. Judicial Review

 

Although the Arbitration Act is meant to promote the recognition and the use of ar-bitration proceedings to enforce an arbitral award, the award may be rejected by the Court having jurisdiction, irrespective of the country in which it was made, if the party against whom the enforcement is invoked can prove that:

 

 

(1)

A   party   to   the   arbitration

 

agreement is incapable under the law

 

applicable to the said party;

(2)

The arbitration contract is not

 

legally binding under the law of the country to which the parties have agreed upon or, in the case where there is no such agreement, under the law of the country where the award was made;

 

(3) The party whom the award shall be imposed on was not given proper notice of the appointment of the arbitral tribunal or the arbitral proceedings, or the said person was unable to present its case in the

 

arbitration   proceedings   by   other

 

reasons.

(4)

The award deals with a dispute

 

not falling within the terms of the ar-bitration contract, or contains decisions on matters beyond the scope of the

 

 

 

 

 

agreement. However, if the dispute can

 

be separated, the court may withdraw

 

only that part.

(5)

The composition of the arbitral

 

tribunal  or  the  arbitration  procedure

 

was   not   in   accordance   with   the

 

agreement of the parties, or was not in

 

accordance with the law of the country

 

the award was made in case the parties

 

have not made an agreement.

(6)

The award has not yet become

 

binding or has been withdrawn or suspended by a court having the jurisdiction or under the law of the country the award was made, except in the case it is during the period of asking the court to withdraw or suspend the award, when the court may postpone the proceedings of the ap-plication for the enforcement as it deems fit, and if the party applying for the court to enforce the award makes a request, the Court may order the party whom the award shall be imposed on to furnish a suitable security.

 

 

These conditions are also in accordance with the conditions set forth in the UNCITRAL Model Law on International Commercial Arbitration.

 

 

In addition, according to Section 44 the court having jurisdiction may refuse an application if the Court is of the opinion that an award deals with a dispute that cannot be settled by arbitration under the law, or if the enforcement under the said award would be against the peace and order or the good morals of the public.

 

 

However, Section 45 prohibits parties to appeal to the higher court against the order or judgement of the court having jurisdiction, ex-cept:

 

 

  1. The recognition or the enforcement of the said award would be against the peace and order or the good morals of the public.

 

  1. The said order or judgement is against the provisions of the law governing the peace and order of the public.

 

  1. The said order or judgement does not correspond to the award of the arbitral tribunal.

 

 

 

  • The judge or the justice hearing the case has made a counter-opinion in the judgement.

 

  • It is an order relating to the temporary measure to protect the benefits of the party.

 

 

  1. Further procedure

 

After the Court has passed the order or judgment stating that the award is enforceable, the further execution procedure shall be the same as for a civil court judgment, i.e. getting a decree, appointing an executing officer, seizure, and so on (see page: 2).

 

Table 1: Enforcement of Court Orders

 

Court Order/Judgment

 

 

 

Default of a Decree

 

 

 

 

Moveable/immoveable Property

of the defendant

 

Court

Application to appoint an executing officer

 

 

 

Executing officer

 

 

 

 

 

 

Claims of the defendant to third parties

 

 

 

 

 

 

Seizure of the defendant’s property

 

 

 

 

 

Request to prohibit the defendant to dispose and prohibit third parties to make any payment

 

 

Auction

Court

 

 

 

Attachment/Prohibition

Third Party

 

Money                                                                                      Money/Claim

Court

 

Plaintiff

Money/Claim

 

 

 

Table 2: Enforcement of Arbitral Awards

 

 

Arbitral Award

 

 

Application to the Court having Jurisdiction

Court having Jurisdiction

 

 

 

 

Rejection by the

 

 

 

 

 

 

 

Rejection by party’s

Court’s opinion, Sec.

 

 

 

objection, Sec. 43

Executing officer

 

43 Arbitration Act

 

 

Arbitration Act

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moveable/immoveable Property

of the defendant

 

 

 

Seizure of the defendant’s property

 

 

 

 

 

 

Claims of the defendant to third parties

 

 

Request to prohibit the defendant to dispose and prohibit third parties to make any payment

 

 

Auction

Court

 

 

Attachment/Prohibition

 

Money

Third Party

 

Money/Claim

Court

Plaintiff

Money/Claim

 

 

 

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