1.General

        The registration of ship in Thailand is governed by the Thai Vessel Act B.E.2481 (1938),as amended by the Thai Vessel Act No.2,B.E.2517 (1974),No.3,B.E.2521 (1978),No.4,B.E.2528 (1985),No.5,B.E.2534 (1991)and No.6,B.E.2540 (1997)(hereinafter referred to as the "TVA")administered by the Minister of Transport and Communications.

        By Section 47 of the TVA,only two types of vessels may trade in Thai waters i.e.Thai vessels registered in accordance with the TVA,and vessels below the tonnage prescribed by Section 8 (see below)belonging to the persons specified by Section 7.(1)

        No person who is not qualified to own a Thai vessel shall charter or take delivery by any other means registered Thai vessels of the tonnage prescribed in Section 8 used in trading in Thai waters and use the same for trading in Thai waters (Section 48).

        Vessels owned by persons under Section 7 but not used for trading or fishing in Thai waters or vessels below the tonnage prescribed by Section 8 are not required to be registered (Section 9).

        Vessels which should be registered as Thai vessels but which have not been so registered,are not entitled to the benefits enjoyed by Thai vessels,but in so far as payment of fees,liability to fines and forfeiture, punishment for offences committed on board are concerned,shall be dealt with in the same manner as if such vessels were registered Thai vessels (Section 54).

2.Conditions of Registration

        2.1 Types of Vessels

                (i)For trading in Thai waters

                        a.mechanically propelled vessels of ten tons gross or upwards;

                        b.sea vessels,not mechanically propelled,of twenty tons gross or upwards;

                        c.river vessels,not mechanically propelled,of fifty tons gross or upwards.

                (ii)For fishing

                        a.mechanically propelled vessels of every size;

                        b.vessels,not mechanically propelled,of six tons gross or upwards.

        2.2 Qualifications of Ownership

                There are two types of ownership,the qualifications for holding ownership of a registered Thai vessel and to operate the business of trading in Thai waters are set out in Section 7.The qualifications for holding ownership of a registered Thai vessel and to operate the business of international marine transport are set in Section 7 bis.

                Section 7 requires that the owner of registered Thai vessel for trading in Thai waters be a Thai national in the case of an ordinary person and in the case of a juristic person,be established under Thai law with head office in Thailand.Additionally,such juristic person shall,

                (i)in case it is an ordinary partnership,all partners shall be Thai nationals;

                (ii)in case it is a limited partnership,all partners whose liability is unlimited shall be Thai nationals, and not less than 70%of the capital of the partnership shall belong to ordinary persons who are not aliens;and

                (iii)in case it is a limited company,the majority of the directors shall be Thai nationals,there shall be no regulation allowing the issuance of bearer share certificate,and

not less than 70%of the capital belongs to the persons who are not aliens;and

                (iv)in case it is a public limited company,the majority of the directors shall be Thai nationals and not less than 70%of the capital belongs to the persons who are not aliens.

                Section 50 requires all crew of Thai vessels registered under Section 7 for operating in Thai waters to be Thai nationals.

                Section 7 bis provides that for a registered Thai vessel used only to operate international marine transport and not operating business in Thai waters,the owner shall be a limited company or public limited company established under Thai law with head office in Thailand.The majority of the directors shall be Thai nationals and not less than 51%of the capital belongs to the persons who are not aliens.And in case it is a limited company,there shall be no regulations allowing the issuance of bearer share certificate.

                The ratio of Thai crew on Thai vessels registered under Section 7 bis for operating international marine transport shall not less than 50%as prescribed in the Ministerial Regulation No.8 B.E.2540 (1997).

                "Aliens" under section 7 and section 7 bis means the aliens as defined by the law concerning to the engagement of the business of the alien.

3.Procedure of Registration

        An applicant applying for registration of a Thai vessel(2)shall produce under Section 10 of the TVA.

        (i)    a declaration of ownership in the form prescribed by the Harbour Department (Form Bor.5.5 and Bor.57);

        (ii)    a declaration that the conditions of ownership as provided in Section 7 are fulfilled together with supporting evidence;

        (iii)    a certificate of survey issued by a surveyor of the Harbour Department in accordance with the law on navigation in Thai waters (Section 12 of the TVA);

        (iv)    a statement of the date and place of completement of the vessel;

        (v)    a statement of the previous name of the vessel it formerly belonged to an alien;and

        (vi)    a statement of the person in charge of the vessel.

            Registration fees as follows:

       (Baht)

                Vessels not over 10 tons gross                                                            20

                Vessels over 10 tons gross but not over 50 tons gross                          150

                Vessels over 25 tons gross but not over 50 tons gross                          200

                Vessels over 50 tons gross but not over 75 tons gross                          350

                Vessels over 75 tons gross but not over 100 tons gross                        500

                Vessels over 100 tons gross but not over 150 tons gross                      900

                Vessels over 150 tons gross but not over 200 tons gross                    1000

                Vessels over 200 tons gross but not over 1000 tons gross,

for each ton gross                                                                             5

                Vessels over 1000 tons gross,for each ton gross                                    10

        The port(3)at which a vessel is registered as a Thai vessel shall be the port of registration (Section 15). The port of registration may be transferred to any other port within Thailand on application to the Registrar at the port of registration by all interested persons appearing on the Register(4).The fee for the transfer is Baht 50 for vessels not over 60 tons gross and Baht 100 for vessels over 60 tons gross.

        On registration of a vessel,the Registrar shall issue a Certificate of Registration in the form prescribed by the Harbour Department (Section 16)to be kept on board the vessel at all times (Section 17)(5).

        The Register is not open to the general public;it may be checked by interested persons on payment of Baht 10 per vessel per inspection.A certified copy of the entries can be obtained for the first 100 words or less at Baht 10 and subsequent 100 words or fraction thereof at Baht 1 (Section 59).

4.Transfers of Ownership

        Application to transfer ownership of a Thai vessel shall be made to the Registrar of vessels of the port registration.A contract of transfer of ownership shall be made in writing in the form prescribed by the Harbour Department (Form Bor.56)in the presence of the Registrar (Section 27 para 1).The Registrar shall endorse the Certificate of Registration and make the appropriate entry in the Register.

        If the transfer of ownership takes place outside the port of registration,the endorsement of the Certificate of Registration shall be made by the Registrar of vessels of Thai consular officer,provided that notice thereof shall be given forthwith to the Registrar at the port of registration of the vessel.

        Upon the receipt of the documents (including the contract of transfer,with certified translation,if necessary)and finding them in order,the Registrar of vessels at the port of registration of the vessel shall make an entry of the transfer in the Register (Section 27 para.3).

        Where the transferee is not qualified to own a Thai vessel,the Registrar of vessels at the port of registration shall require the surrender of the Certificate of Registration and cancel the registration of that vessel,or if the transfer takes place outside the port of registration,the Registrar of vessels or Thai consular officer shall require the surrender of the Certificate  of Registration,and forward a report of the circumstances and the Certificate

of Registration to the Registrar of vessels at the port of registration for cancellation (Section 28).

        Where a Thai vessel is acquired otherwise than by a juristic act by a person not qualified to own a Thai vessel,or the owner becomes disqualified for any reason,he shall arrange for the vessel to be transferred to a qualified person or apply for cancellation of registration within 90 days from the date of acquisition.If no action is taken,the Public Prosecutor,upon the request of the Harbour Department,is empowered to file a motion in court within 30 days of the expiry of the 90 days period for an order of sale of the vessel by public auction to a person qualified to own a Thai vessel.Proceeds of the sale shall be paid to the owner of the vessel.If the action has not been taken up by the disqualified owner or the Public Prosecute mentioned above as the case may be,the Registrar of vessels shall cancel the registration after 180 days from the date of acquisition by the disqualified owner has elapsed (Section 31).

        In the case of the owner being a partnership or limited company,the managing partner or the managing director shall inform the Registrar at the port of registration of any change in the shares of the partnership or limited company and submit a report concerning the nationality of the new holder of the share (Section 32).

        If a limited company becomes disqualified to own a registered Thai vessel,any interested person or the Public Prosecutor may apply to the court within 90 days from the date on which such disqualification came to be known to that person or the Public Prosecutor for an order of sale by public auction of the shares to persons entitled

to own a Thai vessel under Section 7.If within 90 days of the date of first notification,no sale is made of the shares so that the company qualifies to own a Thai vessel,the Registrar shall cancel the registration of the vessel (Section 34).

        When the number of directors in a limited company falls short of the requirement under Section 7,the managing director shall report to the Registrar at the port of registration within 30 days from the date this fact came to his knowledge and the Registrar may cancel the registration of the ship if the number of directors is not remedied within 30 days of the report (Section 35).

5.Benefits to Operators of Thai Vessels

        Operators of Thai ships enjoy the following benefits:

                (i)    Tax incentives;

                (ii)    Benefits under the Customs Tariff Act B.E.2530 (1987);

                (iii)    Benefits under the Mercantile Marine Promotion Act B.E.2521 (1978);

                (iv)    Benefits of promotion under the Investment Promotion Act B.E.2520 (1977);and

                (v)    Other benefits.

6.Registration of Mortgages

        6.1 General

                    Before the Mortgage of Vessels and Maritime Liens Act B.E.2537 (1994)(the "Mortgage and Maritime Liens Act")came into force(6)there is no specific law dealing with mortgage of Thai vessels.The Civil and Commercial Code ("CCC")which is the country general law on civil and commercial matters,in particular the provisions related to mortgage is therefore applied to the ship mortgage.

                    As the provisions related to mortgage in the CCC were drafted to cover both immovable and certain movable properties many provisions in the CCC were found to be inappropriate or impracticable as far as mortgage of the vessel is concerned,such as the provisions in relation to enforcement and sale of the mortgaged property in the event of default,the order of priority among the mortgagee and other preferential rights under the CCC,the recognition of mortgage under foreign law.

                    The Mortgage and Maritime Liens Act was thus introduced to redress these defaults.Unfortunately, not all of these defects have been addressed by the Mortgage and Maritime Liens Act as shall be seen from the discussion below.

        6.2 Registration of Mortgage

                    Under Section 4 of the Mortgage and Maritime Liens Act,vessels of 60 gross tons or over which sail by engine or other means can be mortgaged,provided they are registered according to the law.A condition precedent to a mortgage is therefore that the vessel be first registered as a Thai vessel.

                    A contract of mortgage must be made in writing and registered with the Registrar of Vessels of the port of registration of the vessel and endorsed on the Ship Certificate (Sections 11 and 12).An obligation must be stated, and the mortgage sum can be registered with both Thai or foreign currencies for the sum certain or the maximum

amount for which the ship is assigned as security (Section 8).

                    Outside the port of registration or at the Thai Embassy or the Thai Consulate,the Registrar of Vessels or a Thai Diplomatic or a Thai Consular Officer,as the case may be may endorse the Ship Certificate with the mortgage and forward forthwith a copy to the Registrar at the port of registration for entry into the Register (Section 12 para.2).

                    In addition,outside the Kingdom of Thailand or in a country not having the Thai Embassy or the Thai Consulate,the shipowner may ask the Registrar of Vessels of the port of registration of the  vessel to issue a substituted Ship Certificate which can be used temporarily while the Ship Certificate is delivered to the Registrar of Vessels of the port of registration of the vessel for endorsement of the mortgage.However,the said substituted

Certificate is only valid for sixty days and must be remarked that it is issued for said purpose (Section 13).

        Fees for registration of mortgage are as follows (Ministry Regulation No.2 dated December 28,1994)

                    Vessel not over 100 gross tons                                              Baht 500

                    Vessel over 100 gross tons but not over 200 gross tons    Baht 1,000   

                    Vessel over 200 gross tons for each gross ton                    Baht 10

                    In no case shall fees exceed Baht 20,000 per vessel.

        6.3 Coverage

                    The Mortgage and Maritime Liens Act has now clearly stipulated what the mortgage would cover.The mortgage now would extend to include vessel s equipment and other things required by law to be maintained on board whether existing now or in the future unless the parties agree otherwise in the mortgage agreement (Section 9).Where the vessel is lost or damaged the mortgagee is now entitled to claim for compensation against a

wrongdoer done to the vessel,or for general average entitled to the vessel owner,or compensation entitled to the vessel owner as a result of loss or damage to the vessel due to employing such vessel for salvage operation,or compensation against the insurer under an insurance contract for the loss of or damage to the vessel (Section 10).

6.4 Enforcement of Mortgage

                    There are 3 instances in which a mortgagee can enforce its mortgage (Section 16):

                        (i)    Where a debtor was in default of its obligation under the underlying debt and the mortgagee has given written notice to the debtor to perform its obligation within the time stipulated in such notice which must be a reasonable time and the debtor has failed to perform within the time stipulated.The reasonable time depends on the circumstances of each case.However,the normal rule of thumb is for 1 month.

                        (ii)    Where the value of the vessel is depleted due to the loss of or damage to the vessel to the extent that the remaining value is not sufficient to cover the indebtedness unless such loss or damage is not the fault of the mortgagor and the mortgagor undertakes to furnish new collateral or to repair or to provide for the substitute within a reasonable time.

                        (iii)    Where the mortgagor violates or fails to comply with the provisions or conditions stipulated in the mortgage and the mortgagee is allowed under the contract to enforce the mortgage without prior notice (7).

                    Once the mortgagee has the right to enforce as aforesaid,it must commence its action in court.It is not clear whether such court can be any competent court outside Thailand.It is submitted that such court can only be the competent court in Thailand.

In enforcing the mortgage,the mortgagee may request the court either (a)to order the mortgagor to put the vessel on sale within the conditions stipulated by the court,or (b)to allow the mortgagee to sell the vessel within the conditions stipulated by the court,or (c)to seize the vessel to sell by public auction.

                    However,to sell the vessel either in (a)or (b)above the mortgagee must satisfy the court that the said sale would be more beneficial to all parties concerned than the sale in (c)(8).

                    Foreclosure of the mortgage (Section 18)is also available if:

                    (i)    The debtor has failed to pay interest for not less than 2 years;

                    (ii)    The mortgagor has not satisfied the court that the value of the vessel is greater than the amount due;

                    (iii)    There are no other registered mortgagees;and

                    (iv)    There are no maritime liens creditors claiming for their maritime liens.

                    In whatever form of enforcement the mortgagor would still be liable for any shortfall from the sale or foreclosure if he is also the debtor.However,such shortfall will merely be treated as ordinary debt of the debtor/mortgagor.

        6.5 Mortgage of Foreign Vessel

                    The Mortgage and Maritime Liens Act has for the first time introduced a concept of recognition of foreign mortgage of foreign vessel under Thai law.In effect the foreign mortgagee can enforce his mortgage in the Thai court if he can prove that:

                    (i)    The mortgage contract is made with full effect under the law of the country with which such vessel was registered;

                    (ii)    The mortgage contract has been registered at the office of the state having the duty to register such contract and such registration is opened to the public for examination;and

                    (iii)    The mortgagee is eligible to commence the action in the Thai court under the Thai Civil Procedure Code or under the Arrest of the Vessels Act or other laws (Section 21).

ARREST AND SECURITY

1.General

              The arrest of vessels as a means to obtain security is unknown under Thai law until 9th February 1992 when the Arrest of Vessels Act 1991 came into force.The Act allows a creditor domiciled in Thailand to arrest any vessel owned or possessed by its debtor whether or not domiciled in Thailand for any claim related to maritime claims.The vessel subject to arrest must be a sea-going vessel used to operate marine transport for goods or

passengers.There is no concept of the arrest sister ship under the Act.Although the Act allows the arrest of a vessel not owned by the debtor but merely in his possession,his possession must exist both at the time the maritime claim has arisen and at the time of the arrest itself.

2.Procedure for Arrest

              The creditor can file an ex parte request to the Central Intellectual Property &International Trade Court(9)or any provincial court where the vessel is found or expected to come within such jurisdiction,as the case may be.Upon receipt of the request the court must set an ex parte hearing forthwith and if the court is satisfied that there is a reasonable ground on the alleged maritime claim,the court will issue a warrant of arrest.Such order will

be final.It is the discretion of the court to demand any security from the creditor where the debtor is not domiciled in Thailand,but if the debtor is domiciled in Thailand the creditor must provide for the security unless it can satisfy the court that the property of the debtor in the kingdom is not adequate to pay its debt.The Act requires that the court s order must stipulate the amount of security required from the debtor for the release of the vessel under the arrest.The warrant of arrest will thereafter be sent to the executing officer for execution.Upon receipt of the warrant the executing officer must forthwith do the following:

                        (i)    Inform the officers in charge with the release of the vessel from the port not to allow such vessel to leave the port unless received other order from him;

                        (ii)   Serve the warrant of arrest to the master and affix such warrant at a conspicuous place within the vessel;and

                        (iii)   Report the arrest to the consulate of the country with which the vessel is registered.

3.Fee and Expenses

              Fee for the arrest of the vessel is 1%of the amount of the maritime claim in dispute but will not exceed Baht 100,000.Such fee can be include as part of a court fee if the creditor subsequently commences his action against the debtor in court.The creditor is obligated to assist the executing officer and to pay all the expenses necessary for

the execution of his duties.

4.Effect of the Arrest

              The warrant of arrest once issued can be used throughout the Kingdom until the limitation period of such maritime claim expires,and will be enforced unless ordered otherwise by the court.Any transfer or change of ownership or possession occurring while the vessel is under the arrest will not be recognized and valid against the executing officer.

5.Release of the Vessel

              There are six instances whereby the court may release the vessel as follows:

                (i)     The creditor refuses to assist the executing officer or to pay for the expenses.

                (ii)     The debtor pays the full sum required in the order without disputing the claim.

                (iii)    The debtor domiciled in Thailand deposits the amount required in the order to the court without conceding to the claim.

                (iv)    The creditor asks for the release of the vessel.

                (v)    The creditor does not commence an action within 30 days from the date of affixing the warrant at the vessel.

                (vi)    The debtor has furnished the security to the court or other person who may be suffered from such arrest has provided such security to the court in the name of the debtor and the court is satisfied with such security.

MARITIME LIENS

1.General

                The concept of maritime liens exists in the Mortgage and Maritime Liens Act for the first time under Thai law.Maritime liens are not defined in the said Act.It merely stipulates the types of maritime claims which would give rise to maritime liens by operation of law without the need to register such liens.

                    (i)     claim for service rendered as master,crew,or seamen of the vessel;

                    (ii)    claim for loss of life or personal injury arising from the operation of the vessel;

                    (iii)   salvage claim;and

                    (iv)   claim for a wrongful act arising from the operation of the vessel excluding claim for loss or damage of goods or of passenger s belonging carried by the said vessel.

                Headings (i)and (iv)above will not include claims derived from oil pollution,radioactive,or nuclear weapon.

                Maritime lien creditor is entitled to receive performance from the ship before other creditors,no matter whether the debtor is the shipowner.

2.Priority

                The priority among creditors over the vessel ranks as follows:

                (i)     creditors under Section 25 of the Mortgage and Maritime Liens Act discussed below

                (ii)     maritime lien creditors (10)

                (iii)    mortgagee (11)

                (iv)    preferential rights creditors under the CCC (12)

                (v)    other unsecured creditors.

                Creditors under Section 25 include creditors for fees and expenses in respect of the arrest and sale of vessel,cost of maintenance of the vessel from the time of the arrest,cost of repatriation of crew members and expenses for allocation of such fees,expenses,and costs.

3.Transfer

                Maritime liens will pass to a transferee who acquires a claim containing maritime liens (Section 26). Maritime liens still attach to the vessel even though ownership of the vessel is transferred.However, maritime liens will be extinct if the transferee notifies maritime liens creditors to submit their claims to him within a time limit (not less than 60 days from the notified date),and the said creditors do not submit their claims on time (Section 27).

4.Extinction of Maritime Liens

                Maritime Liens will be extinguished as follows (Section 28):

                (i)    under Section 27;

                (ii)    after one year from the occurrence of maritime liens;

                (iii)    after the sale of the vessel according to the court s order;in this case,the proceeds from sale would be subject to maritime liens;

                (iv)    by foreclosure of the mortgage;or

                (v)    by a final judgment or the court s order to confiscate the vessel.

Note

1.Under Section 5 of the navigation in Thai Waters Act (No.6)B.E.2481 (1938)vessels used in Thai waters are required to obtain and operating licence from the Harbour Department except for:

    i Vessels of the Royal Thai Navy.

    ii Vessels of foreign governments temporarily stationed in Thailand.

    iii Foreign vessels temporally visiting Thai waters having licences which are still valid.   

    iv Vessels with capacity of under 25 piculs which are not mechanically propelled.

    v Vessels required as equipment of larger vessels by the rules of survey.

2.Working hours for service of registration is form 8.30 a.m.to 4.30 p.m.,Mondays to Fridays except official holidays -Announcement of the Prime Minister s Office no.12/2502 dated February 21,1959 re:Working Hours and Official Holidays.

3.At present there are eight ports of registration -Bangkok Metropolis, Nakornsawan, Ayuthya, Samutsongkarm,Songkla, Trang, Chachoengsao and Nongkhai.The Harbour Department also acts as the central registry.

4.The Registrar of Thai vessels contains the following particulars (Section 14)

    i The name of the vessel,the name of the port of registration and the name of the person in charge of the vessel;

    ii The class of the vessel,the name of the dock where the vessel was built and the name of the owner of the dock;

    iii The details survey;

    iv Particulars relating to the acquisition of the vessel as shown in the declaration of ownership;

    v The name,residence and occupation of the registered owner.

   In case the owner is a partnership or limited company,the names and residences of the manager or directors are included in the Register.By Section 44 of the TVA,the Register also contains the names of all interested persons.

5.Section 49 of the TVA requires other documents to be kept on board the vessel while in use.The complete list is as follows:

    i Certificate or Registration or Provisional Certificate of Registration.

    ii Certificate of survey.

    iii Crew contract.

    iv Ship charter,if any.

    v Bill of Lading,if any.

    vi Manifest.

    vii Log book.

    viii Vessel discharge certificate and port departure permit,if any.

6.The Mortgage of Vessels and Maritime Liens Act B.E.2537 (1994)came into force on June 5,1994.

7.Under the CCC only the first instance would give rise to the enforcement of mortgage which many mortgagees found inadequate.

8.Under the CCC the sale can only be done by public auction.

9.This court was established pursuant to the Act for the Establishment of and Procedure for Intellectual Property and International Trade Court B.E.2539 (1996)on December 1,1997.The court will deal mainly with cases involving international trade and intellectual property.

10.Among maritime liens creditors Section 24 provides that the order of priority will be as listed in Section 22 except maritime liens related to salvage which will have priority over other maritime liens existing priory to the salvage.In the event of there are more than one maritime liens in the same rank such creditors will receive payment pro rata to their indebtedness.

11.Section 730 of the CCC provides that when one and the same property is mortgaged to several mortgagees,they rank according to the respective dates and hours of registration, and the earlier mortgage shall be satisfied before the later one.

12.There are two types of preferential right -general preferential rights and special preferential rights.The former gives the preferred creditor a preferential right in the whole property of the debtor.The latter comprises of preferential right in movables and immovables giving the preferential creditor a preferential right in any particular movable or immovable.

      Under Section 253 of the CCC the general preferential right cover:

            i Expenses for the common benefit;

            ii Funeral expenses;

            iii Taxes and rates;

            iv Wages of clerk,servant and workman;and

            v Supplies of daily necessaries.

        Under Section 259 of the CCC the special preferential rights in movables cover:   

            i Hiring of an immovable;

            ii Lodging in an inn;

            iii Carriage of passengers or of goods;

            iv Preservation of movables;

            v Sale of movables;

            vi Supply of seeds,plants or manure;and

            vii Agricultural or industrial services.

        Under Section 273 of the CCC,the special preferential right in immovable consists of:

            i Preservation of an immovable;

            ii Work done upon an immovable;and

            iii Sale of an immovable.

    A preferential right for the preservation of a ship will be effective if immediately after the act of preservation it is registered (Section 285 of the CCC).

    A preferential right on any work done on a ship retains its effect by a provisional estimate of the cost being registered before work has begun.If,however,the cost of the work exceeds the provisional estimate,there is no preferential right for the excess (Section 286 of the CCC).

    A preferential right on account of the sale of the ship retains its effect by registering at the same time with the contract of sale the fact that the price or the interest thereon has not been paid (Section 288 of the CCC).