By
Jonathan Leeds
Chaninat & Leeds Co., Ltd., Thailand Attorneys

I. Background

Thailand's first court designed specifically for bankruptcy cases became operational on June 18, 1999. The Act Establishing the Bankruptcy Court and Bankruptcy Case Procedure was one of a series of legislative bills designed to rectify problems in the legal infrastructure of Thailand that became highlighted in Thailand's recent economic crisis.

The rationale for establishing a special Bankruptcy Court is that bankruptcy cases are fundamentally different from general civil cases and that the results of bankruptcy cases may have effects on the economy as a whole. Further, it was considered necessary to have judges with specialized experience and training in bankruptcy cases presiding in these cases.

The Act Establishing the Bankruptcy Court and Bankruptcy Case Procedure ('the Act") creates a Central Bankruptcy for the Bangkok Metropolitan District as well as Area Bankruptcy Courts and sets out the procedures to be followed in accepting and handling bankruptcy cases. The Act mandates the appointment of judges, gives the Court limited authority to establish its own procedures, and sets out transitory provisions to handle existing cases and cases that arose prior to the establishment of Area Bankruptcy Courts

II. Jurisdiction

The Act provides that the Central Bankruptcy Court shall have jurisdiction throughout the Bangkok metropolis. Cases from outside of Bangkok may be submitted to the Central Bankruptcy Court and it is within the Court's discretion to accept or decline these cases. Once the Central Bankruptcy Court has accepted jurisdiction of a case, other Courts of First Instance are prohibited from accepting or considering the same case.

The Bankruptcy Court shall be considered a Court of First Instance pursuant to the Court of Justice Institution rules and the provisions of the Court Constitution shall apply to the Bankruptcy Court. If there is a question of jurisdiction of the Bankruptcy Court as opposed to any other Court of Justice, the Court is required to stay consideration of the case and submit the issue of jurisdiction to the president of the Supreme (Dika) Court to decide the issue. The decision of the Supreme Court in this regard will be final.

III. Bankruptcy Court Judges

Pursuant to the Act, the Central Bankruptcy Court will have one Director Judge and one Deputy Director Judge. The number of Deputy Director judges may be increased by decree of the Ministry of Justice. Initially, the Central Bankruptcy Court will have 53 judges and 53 administrative clerks.

IV. Procedures in the Court of First Instance

The procedure to be followed in case before the Bankruptcy Court shall be in addition to existing laws and acts on bankruptcy.

One of the unique aspects of the Act is that it empowers the Bankruptcy Court to draft its own new rules of procedure as it deems necessary, thereby bypassing the normal legislative process. Pursuant to Section 19 of the Bankruptcy Court Act, the Director-Judges of the Bankruptcy Court shall have the authority to enact any additional procedural rules that are deemed necessary, subject to the approval of the President of the Supreme Court. Any new provision of the Court shall be enforceable once published in the Government Gazette.

Pursuant to Section 90/11 of the Bankruptcy Act, B.E. 2483, the Court is required to sit in consideration of a case continuously without postponement until that case is completed. Also the court is required to render its decision as soon as possible.

In cases where a party to a bankruptcy proceeding is concerned that evidence is in danger of being lost or destroyed, Section 16 of the Act provides for the party to apply to the Bankruptcy Court for an expedited hearing to receive the evidence or testimony in question. When the Court receives such a request, it will send a writ to either the applicant, the other party or third person who is required in Court. Thereafter the Court will make such orders as are appropriate for the taking of that person's testimony or evidence. Section 17 concerns those instances where there is an emergency making the procedures set out in Section 16 more urgent. If time is of the essence, the Bankruptcy Court will issue a writ without delay as well as empower the Official Receiver to seize or impound any document or material witness according to the conditions which the Court states.

Section 18 of the Act provides that the Court may grant other courts or court officials the right to take testimony of a witness. This testimony may take place either at the Court or outside of the Court. Expert testimony is permitted pursuant to Section 20 of the Act. Pursuant to said section, any party shall be entitled to to present his own expert to either rebut the testimony of another party's expert or to present new testimony. Any expert providing testimony shall be entitled to expert witness fees, traveling expenses and room and board pursuant to Ministry of Justice regulations.

Section 22 of the Act provides that the parties may appoint any person within the jurisdiction of the Bankruptcy Court to be a receiver of the documents or to receive documents on the behalf of a party. If the parties to a case do not have a domicile within the jurisdiction of the Bankruptcy Court, the Court may order said parties to appoint a representative within the jurisdiction of the Central Bankruptcy Court to accept any documents. Section 22 provides that the Court set a time frame for compliance with this section. If the parties to the case do not comply with an order to designate a representative to receive documents, the Court may order that the notice of any documents be made by affixing the document at the Court and notifying the parties as to the place where the document is affixed. Notice becomes effective fifteen days after the date that the document is affixed.

The procedure for sending documents shall be pursuant to the procedures as set out in the Civil and Commercial Code. Pursuant to Section 23 of the Act, the Court may order that documents be sent to any party or person by registered reply mail. In these cases, the sending of any document shall have the same effect as if sent by a Court official.

V. Appeal

Pursuant to the bankruptcy law, a judgement or order of the Bankruptcy Court in rehabilitation of debtor cases and civil cases relating to said rehabilitation case, may be appealed to the Supreme (Dika) Court within one month form the date of judgement. Section 25 of the Act provides that the President of the Supreme Court shall establish a Bankruptcy Division for consideration of appeals from the Central Bankruptcy Court. Acceptance of any appeal is to be determined whether the appeal is lawful pursuant to the existing Bankruptcy law and the decision rests with the Supreme (Dika) Court. If the President of the Supreme Court deems it appropriate to consider any point of the bankruptcy case, he may have the General Assembly of the Supreme Court consider it.

VI.Transitory Provisions

The Act provides for transitory measures for cases that have been commenced prior to the establishment of the Bankruptcy Court. Pursuant to Section 29 of the Act, cases commenced earlier than the opening of the Central Bankruptcy Court shall be transferred to the jurisdiction of the Central Bankruptcy Court. Such cases which are transferred from a Court of First Instance to the Central Bankruptcy Court must be transferred within one hundred and eighty days from the date the Central Bankruptcy Court has opened.

During the period prior to the opening of the Area Bankruptcy Court, the Central Bankruptcy Court shall have jurisdiction of those cases. However, the plaint or application shall be submitted to the Provincial Court where the debtor is domiciled. Thereafter, pursuant to Section 30 of the Act, the Provincial Court shall notify the Central Bankruptcy Court. Ater the Central Bankruptcy Court has accepted jurisdiction of the case, the Court may decide whether to sit in consideration of the case at the Provincial Court or at the Central Bankruptcy Court. The Central Bankruptcy Court may also direct the Provincial Court to carry out any procedure which does not amount to the rendering of a decision.

Conclusion

The new Act Establishing the Bankruptcy Court and Bankruptcy Procedure became effective on July 18, 1999. The Act establishes a Central Bankruptcy Court for the Bangkok Metropolitan District as well as Area Bankruptcy Courts. The Act sets out certain procedures to be followed, requires the appointment of judges, and gives the Court limited authority to establish its own procedures. The Act also sets out transitory provisions to handle existing cases and cases that arise prior to the establishment of Area Bankruptcy Courts. With the establishment of the Central Bankruptcy Court, Thailand's debtors and creditors can expect a faster and more efficient disposition ot their bankruptcy and debtor rehabilitation cases.