Commercial Debt Business in Thailand

Commercial Debt Recovery in Thailand: Legal Strategies for Businesses

For foreign companies trading with Thai counterparties, unpaid invoices or defaulted loans can quickly turn into seven-figure problems. Thailand has a developed legal framework for commercial debt recovery, but turning a contract or judgment into actual cash requires strategic planning, good evidence, and a clear understanding of how Thai courts and enforcement work.

 

1. Legal Framework for Commercial Debt Recovery in Thailand

1.1 Core laws and concepts

Commercial debt recovery in Thailand is mainly governed by:

    • Thai Civil and Commercial Code (TCCC) – governs obligations, contracts, guarantees, security, default, damages, and prescription (limitation) periods.

    • Thai Civil Procedure Code (TCPC) – governs how to sue in Thai courts and how to enforce judgments (execution and seizure).

Some key legal principles for creditors:

    • Creditor’s right to be paid from debtor’s property – Under the TCCC, a creditor is generally entitled to have obligations performed out of all the debtor’s property, including money and property due from third parties.

    • Statutory interest and default interest – If the contract does not specify interest, the statutory rate under Section 7 TCCC is currently 3% per year, with default interest typically 2% above that (currently 5% per year) for many monetary debts, subject to periodic review.

    • Limitation (prescription) periods – If no special rule applies, the general prescription period is 10 years. Claims established by a final judgment or a settlement (compromise) also have a 10-year enforcement period under the TCCC.

In addition, a recent Thai Supreme Court ruling in 2025 reconfirmed the 10-year deadline to enforce judgments, reinforcing the importance of monitoring enforcement time limits. Read more

 

2. Strategic Groundwork Before a Dispute Arises 

For high-value B2B relationships, your recovery prospects depend heavily on how the contract was drafted long before anyone was in default.

2.1 Drafting contracts for enforceability in Thailand for Commercial Debt Recovery Thailand

When negotiating with a Thai company, foreign creditors should pay close attention to:

1. Governing law and jurisdiction / arbitration clauses

    • Thai courts generally respect a choice of foreign law and foreign jurisdiction, but in practice, foreign court judgments cannot be enforced directly in Thailand and must be re-litigated.

    • Foreign arbitral awards, however, benefit from direct enforcement under the New York Convention and the Arbitration Act, without re-trying the merits.

    • For contracts with significant Thai-based assets, it is often more practical to:
        • Use Thai law + Thai courts, or

        • Use neutral law + international arbitration, with enforcement in Thailand in mind.

2.Security and guarantees
Where the sums are large, creditors should consider:

  • Personal or corporate guarantees (suretyship).
  • Mortgages over Thai immovable property.
  • Pledges / possessory security over movable property, such as inventory or equipment.
  • Assignments of receivables or other contractual rights.

Properly structured security greatly improves your position at the enforcement stage.

3. Payment terms and default clauses

    • Clear payment milestones, invoicing procedures, and events of default (e.g. late payment, insolvency events, breach of covenants).

    • Contractual default interest rate, within reasonable limits, to avoid being challenged as contrary to Thai public order or mandatory law.

    • Acceleration clauses for instalment payments.

4. Evidence and language

    • Use bilingual contracts (Thai–English) whenever practical, or at least ensure a Thai translation can be produced reliably later.

    • Make sure purchase orders, delivery notes, tax invoices, and acceptance records are consistent and signed by authorized persons.

A well-structured contract does not guarantee payment, but it substantially increases your leverage once the debtor is in default.

 

3. Pre-Litigation Debt Recovery: Getting Paid Without Court

Most foreign creditors prefer to recover without filing a lawsuit in Thailand, especially when the business relationship is ongoing or the debtor is part of a larger group.

3.1 Internal credit control and “soft collection”

Typical first steps:

    • Confirm the exact debt amount, due dates, and interest calculation under the contract and Thai law.

    • Check whether the debtor has raised any written disputes or counterclaims.

    • Send internal reminders and statements of account to record the default.

This phase is useful to gather evidence and to test whether the default is temporary (cash-flow) or structural (insolvency / fraud).

3.2 Formal demand letters

If informal reminders fail, the next step is usually a formal demand letter:

    • States clearly:
        • Parties and contractual basis

        • Outstanding principal, interest, and any agreed penalties or costs

        • A deadline to pay (e.g. 7–15 days)

        • A warning that court or arbitration proceedings and enforcement measures will follow if payment is not made

Well-crafted demand letters in Thai and English often lead to swift settlements, particularly when the debtor wants to avoid public litigation or reputational damage.

3.3 Negotiated solutions and settlement agreements

For sizeable debts, commercial solutions can be more valuable than immediate litigation:

    • Structured payment plans (instalments with clear due dates, default clauses, and consent to judgment or arbitration where possible).

    • Debt restructuring, including partial write-offs in exchange for accelerated or secured payment of the remainder.

    • Conversion to equity or other interests in Thai entities, where appropriate.

Any settlement should be:

    • Clearly documented (preferably bilingual),

    • Signed by duly authorized signatories, and

    • Supported by new security where possible (e.g., fresh guarantees, additional charges, or reservations of ownership).

 

4. Litigation in Thai Courts for Commercial Debt

If amicable solutions fail or the debtor is clearly unwilling to pay, you may need to sue in the Thai courts to obtain a judgment.

 

Jurisdiction and venue

Thai courts generally have jurisdiction where:

    • The defendant (debtor) is domiciled in Thailand, or

    • The obligation is to be performed in Thailand, such as payment in Thailand or delivery in Thailand.

Foreign companies can sue in Thai courts even if they have no presence in Thailand. Service of process on foreign defendants follows CPC rules, which may include service via international post or at the Thai place of business or appointed agent. 

 

Typical steps in a Thai civil debt claim

While details vary, a commercial debt case usually follows this pattern:

  1. Filing the complaint (statement of claim)

    • The creditor (plaintiff) files a plaint in Thai, attaching key documents (contracts, invoices, delivery receipts, correspondence).

    • Court fees are usually a percentage of the claim, subject to caps.

   2. Service of process

    • The court arranges service on the debtor. If the debtor ignores the claim, the court may issue a default judgment, provided service is proven.

    3. Debtor’s answer and counterclaim

    • The debtor may dispute the debt, raise defenses (e.g., defective goods, set-off), or file a counterclaim.

    4. Evidence stage (trial)

    • The court will hear documentary and witness evidence. Thai courts place strong emphasis on properly authenticated documents and credible witness testimony.

    5. Judgment and appeals

    • The court issues a written judgment. If either party appeals, the case may go to the Court of Appeal and, in limited circumstances, the Supreme Court.

Even after a favorable judgment, you are not paid automatically, you must move into enforcement.

5. Enforcement of Judgments in Thailand

For high-value B2B debts, the enforcement phase is often where the real work begins.

5.1 Application for writ of execution

Once the judgment is final or temporarily enforceable, the creditor may apply to the court for a writ of execution:

    • Under the CPC, a judgment creditor files an ex parte application specifying:
        • The judgment or order to be enforced,

        • The unpaid balance, and

        • The requested enforcement measures.

If the court grants the application, it issues a writ and forwards it to the Legal Execution Department (LED), whose officers (bailiffs) handle practical enforcement.

5.2 Measures of civil enforcement

Common enforcement measures include:

  • Seizure of movable and immovable property
    • The LED can seize movable assets (vehicles, equipment, inventory) and immovable property (land, buildings) of the judgment debtor.

    • The TCPC contains detailed provisions on how to seize immovable property (e.g., sections on methods of seizure and effects of seizure).
  • Garnishment / attachment of receivables and bank accounts
    • The creditor can request the court to garnish debts owed to the judgment debtor by third parties—such as bank balances, customer receivables, or rental income.
  • Sale of assets and distribution
    • Seized assets are sold or auctioned, and the proceeds are applied to pay the judgment creditor, taking into account:
        • Secured and preferential creditors, and

        • Persons with possessory liens or preferential rights under the TCCC.

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  • Examination of debtor’s assets
    • Creditors may request the court to order the debtor to disclose its assets and financial situation, and to examine relevant witnesses and documents.

Where the debtor is a company with little in its own name, it is crucial to identify assets early, shares in subsidiaries, real estate, receivables, or valuable equipment that can realistically be seized and sold.

5.3 Time limits for enforcement

Enforcement is subject to statutory time limits:

    • Under the TCCC, a claim established by a final judgment or settlement generally prescribes in 10 years.

    • Commentary and case law confirm a 10-year period to initiate enforcement of civil judgments in Thailand, now reinforced by recent Supreme Court decisions. Read more

In practice, waiting years to enforce is risky. Debtors may dissipate assets, restructure, or move funds abroad. For high-value claims, foreign creditors should move into enforcement promptly once a judgment is obtained.

 

6. Foreign Judgments vs. Arbitral Awards: Enforcement Against Thai Assets

 

Cross-border B2B relationships often involve litigation or arbitration overseas. If the debtor’s assets are in Thailand, the enforcement route matters enormously.

6.1 Foreign court judgments

Thailand currently does not have a general statute or treaty allowing direct recognition of foreign court judgments in civil and commercial matters.

Key points:

    • No exequatur procedure – A foreign judgment cannot simply be “registered” and enforced.

    • The judgment creditor usually must file a lawsuit in Thailand, pleading the underlying cause of action (e.g., unpaid price, loan repayment).

    • The foreign judgment is treated as evidence, not as binding on the Thai court.

This means that even if you have already litigated and won abroad, you must be prepared, if Thai assets are involved, to re-prove your case in Thai court, with translated documents and witness evidence.

6.2 Foreign and domestic arbitral awards

By contrast, arbitral awards, both domestic and foreign, benefit from a clear enforcement framework:

    • The Arbitration Act B.E. 2545 (2002), modeled on the UNCITRAL Model Law, governs enforcement of arbitral awards.

    • Thailand is a party to the New York Convention, so qualifying foreign awards can be recognized and enforced in Thailand if certain procedural conditions are met.

Key practical points:

    • A petition for enforcement must usually be filed within three years from the date the award becomes enforceable.

    • The applying party must provide:
        • The original or certified copy of the award,

        • The arbitration agreement, and

        • Certified Thai translations.

    • The Thai court does not re-try the merits; it only reviews limited grounds for refusal (e.g., invalid arbitration agreement, lack of due process, public policy).

Once recognized, an arbitral award is enforced like a Thai judgment, using the same seizure, attachment, and sale procedures under the CPC.

For foreign B2B creditors, this is why arbitration is often the preferred dispute mechanism when significant Thai assets are involved.

 

7. Practical Tips for Foreign B2B Creditors

For high-value, cross-border debts in Thailand, consider the following practical strategies:

7.1 Before contracting

    • Choose dispute resolution mechanisms that can realistically be enforced against Thai assets (Thai courts or arbitration suitable for New York Convention enforcement).

    • Negotiate robust security, such as mortgages, pledges, guarantees, or assignments.

    • Ensure your contract and key documents will be easily translatable and accepted by Thai courts.

7.2 Once the debtor is in default

    • Move quickly to:
        • Document the default (emails, notices, statements),

        • Issue a formal demand letter in Thai and English, and

        • Explore commercial settlement options.

    • Conduct preliminary asset checks (corporate information, land office records, bank relationships where known) to gauge the feasibility of enforcement.

7.3 Litigation and enforcement planning

    • If you sue in Thailand, verify:
        • The correct defendant (parent vs. subsidiary, trading company vs. holding company),

        • The timing of the claim against limitation periods, and

        • Whether to seek interim measures (e.g., freezing orders, provisional attachment) to prevent dissipation of assets. 

    • After obtaining a judgment or award, prepare early for enforcement:
        • Identify target assets,

        • Gather information needed for seizure or garnishment,

        • File the writ of execution application without delay.

For very large sums, it is often worthwhile to coordinate enforcement across multiple jurisdictions where group assets are located, using Thai actions as part of a wider recovery strategy.

 

FAQs: Commercial Debt Recovery in Thailand

1. How long do I have to enforce a judgment in Thailand?

Generally, a claim established by a final judgment or a settlement has a 10-year prescription period under the Civil and Commercial Code.

However, you should not wait anywhere near that long, practically, enforcement should be pursued as soon as possible after judgment to avoid asset dissipation.

2. Can I enforce a foreign court judgment directly in Thailand?

No. Thailand does not currently provide a general mechanism to “register” and directly enforce foreign court judgments in civil and commercial matters. A foreign judgment is admissible as evidence, but you must generally file a new lawsuit in the Thai courts and re-prove your claim.

3. Are foreign arbitral awards easier to enforce in Thailand?

Yes. Thailand is a party to the New York Convention, and its Arbitration Act allows recognition and enforcement of qualifying foreign arbitral awards, subject to limited refusal grounds. Once recognized by a Thai court, the award is enforceable like a Thai judgment, through seizure, garnishment, and sale of assets.

4. What interest can I claim on unpaid commercial debts?

If your contract specifies an interest rate, Thai courts will generally respect it, provided it is not excessively high or contrary to mandatory law. Where no rate is agreed:

    • The statutory interest rate is currently 3% per year (Section 7 TCCC), and

    • The default interest rate for many debts is statutory rate + 2%, currently 5% per year.

You should obtain tailored legal advice on interest calculations, especially for long-running or instalment debts.

5. Can I hold directors or shareholders personally liable for a Thai company’s debt?

As a starting point, a Thai limited company is a separate legal entity, and shareholders are not personally liable beyond their capital contributions. Directors can, in some circumstances, incur personal liability (for example, in cases of fraud, wrongful acts in tort, or specific statutory breaches), but this is exceptional, fact-specific, and requires careful analysis under Thai law.

You should not rely on an assumption of automatic director liability; instead, the contract should be backed by explicit guarantees if personal exposure is desired.

6. How long does debt litigation and enforcement typically take?

Timeframes vary widely depending on:

    • Complexity of the case,

    • Whether the debtor contests the claim,

    • Appeal activity, and

    • The nature and location of assets.

Uncontested cases can potentially be resolved in under a year; heavily contested, high-value cases with appeals and complex enforcement can take several years. Enforcement of arbitral awards tends to be faster than full-scale litigation, because Thai courts do not re-examine the merits of the dispute.

 

How Lex Bangkok Can Help

For foreign companies facing high-value, cross-border commercial debts in Thailand, careful planning at each stage, contract drafting, pre-litigation, proceedings, and enforcement—is essential.

Lex Bangkok can assist with, among other things:

If your company needs to recover a significant commercial debt in Thailand or stress-test an existing enforcement strategy, consider arranging a consultation with our team so that a Thai-qualified lawyer can review your specific documents, counterparties, and objectives.

info@lexbangkok.com 

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