The regulations in the dispute had been issued in the form of two emergency decree (Phraraatchgamnod). One decree of 1997 amended an Act regulating investment institutions passed in 1979. Another decree of 1998 amended the Act on Commercial Banks passed in 1962. The decrees were initiated by the Ministry of Finance in order to merge State owned banks with private investment companies. Those investment companies were virtually bankrupt and had to be redeemed by the State following a big financial crisis which shook Thai economy in 1997(4). All assets and debts of those companies had been transferred to the state owned bank. The government used public money to cover the debts incurred by private financial institutions and in its turn tried to recover some of the debts owed to the bankrupt investment companies.

The defendants challenged those regulations as unconstitutional. First, they argued that the Ministry of Finance did not have any power to order a merger between banks and investment companies, because those decrees substantially affected the rights and freedoms protected by the Constitution such as related to residence, property and work. Second, they argued that the measures at the dispute had significantly limited the freedom of public to choose between financial services. Thirdly, the emergency decrees were claimed to fail to meet the requirement of the second part of section 29 on general applicability of restrictions on constitutional rights and freedoms.

The plaintiff challenged the move of the defendants to question the legality of its right to sue the defendants. The plaintiff asked the Court to refuse to hear the case because the defendants tried to impede the case.

Part  3

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(4) For a good account of the crisis and its influence on the financial policy of Thai government see: Pasuk Phongpachit, Baker Ch. Thailand’s Boom and Bust. – Chiang Mai: Silkworm Books, 1998.