Kudun & Partners

Kudun and Partners (KAP), one of Thailand’s leading full-service law firms, and Jipyong LLC, a premier South Korean law firm with a strong international presence, have formalized a strategic alliance through the signing of a Memorandum of Understanding (MOU) at a ceremony held at the Grand Central Building in Seoul, South Korea, on Tuesday, 27 May 2025. The agreement marks a significant milestone in advancing legal cooperation between Thailand and Korea. Notably, the collaboration between these two full-service, award-winning law firms represents the first and most comprehensive alliances to date between Thai and Korean legal practices—setting a new benchmark for regional cooperation. The MOU was signed by Mr. Haeng Gyu Lee, Managing Partner of Jipyong, and Mr. Kudun Sukhumananda, Managing Partner of Kudun and Partners. Under the terms of the MOU, both firms commit to a strategic framework for mutual client referrals, cross-border legal support, and joint business development initiatives. Each firm will serve as the legal partner of the other within its respective jurisdiction—KAP in Thailand and Jipyong in Korea. This reciprocal arrangement is designed to provide clients with seamless, high-quality legal services across both markets. In addition to the referral structure, the MOU also outlines plans for lawyer secondments, joint marketing and promotional activities, and continued knowledge-sharing initiatives to foster deeper integration and professional development across both firms. “This alliance reflects our mutual commitment to international collaboration and reinforces our ability to support clients expanding between Thailand and Korea,” said Mr. Kudun Sukhumananda. “We are excited to deepen our ties with Jipyong and jointly offer truly integrated legal solutions.” Following the signing ceremony, the firms co-hosted a seminar focused on "Navigating the Thai Legal Landscape: Key Regulatory Considerations for Korean Investors." Speakers included Ms. Kim Jinhee, Senior Foreign Attorney and Mr. Ban Ki-Il, Senior Foreign Attorney from Jipyong as well as Mr. Chai Lertvittayachaikul, Partner and Ms. Yanin Sirilak, Senior Associate of Kudun and Partners. We were especially grateful to have Ms. Kritsana Saeheng, Director of Thailand’s Board of Investment (BOI), Seoul Office, join the session and share valuable insights from a Thai governmental perspective. The session, attended by Korean corporates, investors, and in-house counsel, explored the critical legal frameworks, regulatory compliance issues, and investment structuring strategies that Korean companies should be aware of when entering or expanding in the Thai market. The seminar underscored both firms' commitment to knowledge sharing and client education as part of their broader collaborative agenda. Mr. Lee Seung-Min, Foreign Attorney and Head of the Cross-Border Transactions team at Jipyong LLC, added, “It is our sincere hope through this seminar to deepen the understanding of Thailand's investment environment for companies considering entry or further investment there. We also wish to provide a constructive opportunity for these businesses to explore strategic pathways for their successful future expansion.” This partnership reflects a broader trend of regional collaboration among Asia’s leading independent law firms, particularly in supporting clients navigating increasingly complex cross-border transactions and regulatory landscapes. About Kudun and Partners Kudun and Partners is a modern, full-service law firm headquartered in Bangkok, Thailand. Known for its bold approach and commercial acumen, the firm is recognized for advising domestic and international clients on a wide range of practice areas including Corporate, M&A, Capital markets, Dispute resolution, Labour and Employment, Tax, and Restructuring. About Jipyong Jipyong is a top-tier Korean law firm with a strong reputation for delivering practical, high-quality legal services. With offices across Asia and Europe, Jipyong provides strategic counsel across all major practice areas, with particular strength in cross-border transactions, dispute resolution, and investment advisory.   For media inquiries, please contact: Kudun and Partners - [email protected] Jipyong LLC – [email protected]  

Topic Content Kudun and Partners Facilitates Maguro Group’s Successful Listing on the SET   Kudun and Partners have successfully represented Maguro Group Public Company Limited in the offering of 21 million ordinary shares through an initial public offering (IPO) on the Market for Alternative Investment (mai). The offering totaled approximately THB 541 million on the first trading day, June 5, 2024, making MAGURO the second Thai-listed Japanese restaurant on the stock exchange. The team, led by Kom Vachiravarakarn, partner and co-head of Capital Markets Practice, Supatra Kerinsaguna, senior associate, and Napassaporn Trakulroong, associate, played pivotal roles in the successful listing of MAGURO. Kudun and Partners Teams Up with IEAT To Launch Industry Legal Co., Ltd.   Kudun and Partners has recently signed a joint venture agreement with Industry Alpha Limited, a holding company of Industry Promotion Limited, which is an affiliate of the Industrial Estate Authority of Thailand (IEAT), to provide comprehensive legal services and support to IEAT. This collaboration aims to streamline and enhance IEAT’s role as a one-stop service provider for both foreign and local companies conducting business with the authority.   The Industrial Estate Authority of Thailand is tasked with the development and management of industrial estates, organizing areas for factories in a systematic and orderly manner. As a government entity, IEAT’s goal is to distribute industrial development across the country using industrial estates as a key tool. IEAT provides end-to-end support for businesses investing in industrial estates, facilitating everything from land acquisition and factory setup, facilitating easy access to permits, authorizations, and credit applications, as well as providing strategic advice on securities trading. Currently, IEAT operates 68 industrial estates across 16 provinces, with 15 managed directly by IEAT and 53 operated in partnership with developers.   Kudun and Partners is the first and only law firm currently collaborating with IEAT in this venture and will play a leading role in advising on investments, particularly regarding the Industrial Estate Authority of Thailand Act, B.E. 2522 (1979). Leading this initiative is Thanyaluck Thongrompo, Partner and Head of Permits and Licensing. With over 20 years of experience, Thanyaluck excels in a wide range of legal issues, including establishing and registering legal entities, advising on foreign ownership structures and restrictions, corporate and commercial matters, conducting legal due diligence, and managing licenses, permits, and contracts related to IEAT and Board of Investment (BOI) incentives. Recognized as one of Thailand’s Top 100 lawyers by Asia Business Law Journal in 2023, Thanyaluck brings a wealth of expertise to this venture.   Kudun and Partners Represents Dusit Thani in a THB 570 million Joint Venture Project   Kudun and Partners is pleased to announce its successful representation of Dusit Thani Public Company Limited (DUSIT) in a significant joint venture arrangement valued at approximately THB 570 million. Dusit Thani, a prominent Thai listed company renowned for its expertise in properties, hotels, and residential developments, entered this strategic partnership through its subsidiary, Dusit Hospitality Services Company Limited with a subsidiary company of one of the largest and oldest listed companies in the construction materials sector in Thailand and Southeast Asia. This collaboration aims to develop, construct, and sell or lease residential buildings and villas for a multi-generation living project located in the picturesque Cha-am District of Phetchaburi Province, Thailand, a famous tourist destination.   The negotiation process for this joint venture was intricate, involving detailed discussions and reconciling differing perspectives to reach a mutually beneficial agreement, spearheaded by our partner, Kongkoch Yongsavasdikul. He was ably supported by a dedicated team, including Supatra Kerinsaguna, senior associate, and our associates, Napat Adulyanubap and Thanchon Phetroocheang. Kudun and Partners is proud to have played a pivotal role in facilitating this joint venture, which promises to enhance the residential development landscape in Thailand.   Kudun and Partners Represents an Affiliate of B.Grimm Power, and Energy China, for the 35 MW Solar Rooftop Project with Zhongce Rubber (Thailand)   Kudun and Partners has represented an affiliate of B.Grimm Power Public Company Limited and Energy China in entering into a significant energy management contract with Zhongce Rubber (Thailand) Co., Ltd., a subsidiary of the renowned Chinese tire manufacturer Zhongce Rubber. This landmark project involves the development, installation, and management of energy for a 35-MW solar rooftop system at Zhongce Rubber’s manufacturing facilities in Thailand.   The meticulous execution and successful completion of this complex matter were spearheaded by Kudun Sukhumanada, founding partner, Chai Lertvittayachaikul, partner and co-head of the projects and energy practice at Kudun and Partners. They were ably supported by a dedicated team, including Yanin Sirilak, senior associate, Korapat Sukhummek and Panupong Wongmueang, associates. Kudun and Partners Navigates Tri Petch Isuzu Sales Co., Ltd. in THB 159 million Used Car Business Expansion   Kudun and Partners has successfully represented Tri Petch Isuzu Sales Co., Ltd. in a significant expansion of its used car business. This expansion was achieved through a strategic acquisition and investment, which involved acquiring shares from shareholders of one of Thailand’s leading distributors of high-quality used cars, and the subscription of newly issued shares.   The total investment, amounting to approximately THB 159 million, has resulted in Tri Petch Isuzu Sales Co., Ltd.’s investment arm, i.e. TPG X Co., Ltd., holding approximately 85% of the shares in the target company and its two subsidiaries.   The matter was led by our partners, Kongkoch Yongsavasdikul and Emi Rowse. They were ably supported by a dedicated team, including Supatra Kerinsaguna, senior associate, Sirivipa Kittisubun, Teerachai Boonyaratgalin and Thanchon Phetroocheang, associates. Their dedication and expertise were instrumental in driving this transaction to success. Kudun and Partners Advises Prima Marine in Strategic THB 200 Million Acquisition of V.C. Shipping   Kudun and Partners has successfully led Prima Marine Public Co., Ltd. (PRM), a leading public listed company in Thailand’s integrated marine transport sector, through the acquisition of all equity interest in V.C. Shipping and Services Co., Ltd. (V.C. Shipping), a key player in logistics and shipping valued at THB 200 million.   The transaction is led by Kom Vachiravarakarn, partner and co-head of the Corporate and M&A Practice, and supported by a team of associates; Natdanai Chitsakdanon, Natthamol Dechpokked, and Thamonwan Koosuwan.   Kudun and Partners Advises Interroyal Engineering (IROYAL) on IPO Launch on Thailand’s Market for Alternative Investment   Kudun and Partners successfully represented Interroyal Engineering Public Company Limited (IROYAL), a provider of engineering services and specialized products, in its initial public offering (IPO) on the Market for Alternative Investment (mai). The IPO filing, submitted to Thailand’s Securities and Exchange Commission on November 5, 2024, offers up to 58 million ordinary shares at THB 0.50 each, marking a milestone in IROYAL’s mission to drive innovation in sustainable electric power solutions.   The transaction was led by partner, Thitawan Thanasombatpaisarn, with support from associates Supajit Koosittiphon and Sirivipa Kittisubun, ensuring a successful listing for IROYAL.  

The ‘E’ in ESG (Environmental, Social, and Governance) has become a critical driver of business success worldwide.In Thailand, as environmental challenges rise on the agendas of regulators, investors, and consumers alike, embracing environmental responsibility is both a legal necessity and a strategic advantage. With the Thai government strengthening environmental regulations, businesses that integrate sustainability into their operations are positioning themselves as market leaders. This article explores how companies can navigate Thailand’s evolving environmental regulatory landscape, transforming compliance into a competitive advantage while contributing to long-term sustainable growth. Why Environmental Responsibility matters in Thailand Environmental responsibility is becoming essential for businesses operating in Thailand, as regulatory shifts, investor expectations, and consumer behavior converge. Companies that adapt to these trends will be well-positioned for success. Consumer Demand: According to a 2022 Nielsen report, 81% of global consumers, including those in Thailand, believe companies should actively contribute to the improvement of the environment, and 66% are willing to pay a premium for sustainable products. Companies that meet these expectations can gain significant market share. Investor Confidence: ESG assets reached USD 35 trillion globally in 2020 and are projected to skyrocket to USD 50 trillion by 2025, according to Bloomberg. In Thailand, companies listed on the SETTHSI index, which tracks businesses with strong sustainability practices, have attracted higher levels of investment. Regulatory Pressure: The Thai government has ramped up environmental regulations, including stricter Environmental Impact Assessments (EIAs) and pollution control measures. Companies that stay ahead and respond to these regulatory shifts can avoid penalties and protect their reputations. Turning Compliance into Competitive Advantage Thailand’s environmental regulatory framework is constantly evolving, and businesses that lead in compliance can transform this into a competitive edge. 2020-2021: Laying the Foundation for Sustainable Growth EIAs: The scope of EIA requirements is revised annually to stay up-to-date, resulting in more projects falling under environmental scrutiny. Companies that integrate sustainability into project designs from the outset can avoid development delays and costly adjustments when the EIA compliance is required by the authorities. Pollution Control: Stricter emissions standards, particularly in cities like Bangkok, where air pollution has ranked among the highest globally, are encouraging businesses to adopt cleaner technologies. 2022: Accelerating Climate Action Nationally Determined Contributions (NDCs): Thailand’s updated NDC targets a 30-40% reduction in greenhouse gas emissions by 2030. The long-term strategies also include achieving carbon neutrality by 2050 and net-zero emissions by 2065. This indicates that the ​renewable energy and energy efficiency projects are key drivers of this ambitious goal. Sustainable Finance: Green bonds and sustainability-linked bonds are gaining traction in Thailand. In 2022, Thai companies issued USD 1.2 billion in green bonds, allowing them to finance environmentally focused projects while attracting a broader pool of investors. Notably, in August 2024, the Provincial Electricity Authority (PEA) successfully issued its first sustainability bond to fund environmentally friendly infrastructure projects, marking a milestone in Thailand’s green finance journey. 2023-2024: Expanding ESG Footprints Corporate Governance and ESG Integration: The SEC now requires Thai companies to disclose their environmental performance. Companies that excel in ESG disclosures often enjoy better stock performance and increased investor trust. Enhanced Enforcement: The Ministry of Natural Resources and Environment (MNRE) and the Department of Industrial Works (DIW) have intensified their inspection and enforcement actions. Penalties for environmental violations have increased, underscoring the need for strong compliance frameworks. Looking Ahead: The Future (2024-2029) As Thailand moves forward, the regulatory landscape will continue to evolve, presenting opportunities for businesses that lead in sustainability. National Cap-and-Trade System: Thailand’s potential carbon trading market could provide businesses with opportunities to profit from carbon credits, making early adoption of emissions reduction strategies a sound investment. The Thailand Greenhouse Gas Management Organization (TGO) plays a pivotal role in developing the carbon credit market through its Thailand Voluntary Emission Reduction (T-VER) program, a platform that allows participants to earn and trade carbon credits by reducing their emissions. Circular Economy and Waste Management: New regulations promoting the circular economy will focus on reducing waste and enhancing resource efficiency. Companies that shift towards sustainable packaging and recycling practices will be well-positioned to capitalize on these developments. The Clean Air Management Act: A Landmark Development Among the most critical legislative developments to watch is the Clean Air Management Act, which is set to become a landmark law in Thailand’s environmental governance. The draft Act, currently under parliamentary review, is expected to introduce a comprehensive framework for regulating air quality, with stringent limits on pollutants like PM2.5, which has been a persistent issue in major cities such as Bangkok and Chiang Mai. If passed, the Act will impose tighter controls on emissions from both industrial and transportation sectors, placing greater accountability on businesses to manage their environmental impact. The objectives of the Act include mandatory reporting requirements, emissions caps, and penalties for non-compliance, which could lead to operational disruptions for companies that are not prepared. A key element is the introduction of a clean air tax, designed to create financial incentives for companies to reduce their emissions. As this Act progresses, businesses must closely monitor its development and take proactive steps to adopt cleaner technologies, improve air quality management, and ensure compliance with the forthcoming regulations. Legal advisors will be essential in guiding companies through the implications of this Act, ensuring that businesses are not only compliant but also positioned to mitigate risks and capitalize on new opportunities arising from stricter air quality standards. The Role of Legal Advisors: Navigating Compliance and Opportunities Legal advisors are crucial in helping businesses turn regulatory compliance into strategic advantage. They ensure that companies remain compliant with evolving regulations, identify opportunities for sustainable financing through green bonds, and help businesses communicate their environmental strategies to stakeholders. By providing expert guidance, legal advisors help businesses avoid penalties, improve their ESG performance, and gain a competitive edge in an increasingly eco-conscious market. Conclusion: Leading in Thailand’s ESG Evolution Thailand’s advancing the environmental regulatory framework presents a unique opportunity for businesses to lead in sustainability. By staying ahead of regulatory changes, investing in innovation, and adopting comprehensive ESG strategies, companies can not only ensure compliance but also secure a competitive advantage in the market. With the support of legal advisors as trusted partners, businesses can navigate complex regulations, unlock new opportunities, and drive long-term success in a market that increasingly values environmental responsibility. Now is the time to turn environmental challenges into business opportunities. Lead the way in Thailand’s ESG revolution—and watch your business thrive. For more information, please get in touch with our author at [email protected] or visit www.kap.co.th  

Obtaining a business license is a crucial step for anyone looking to establish and operate a business in Thailand. Business licenses ensure that companies comply with local laws and regulations, promoting a fair and transparent business environment. For foreign-owned businesses, understanding the Foreign Business Act is essential, as it significantly impacts how they can operate within the country. What is a Business License? A business license in Thailand is a government-issued authorization that permits people or businesses to engage in particular commercial activities. A business license regulates and monitors business activities to ensure they meet legal and industry requirements. General Requirements for Obtaining a Business License To obtain a business license in Thailand, applicants generally need to meet the following requirements: Legal Entity: The business must be registered as a legal entity in Thailand, such as a partnership, or sole proprietorship, or limited company, or public limited company. Compliance: The business must follow all applicable laws and regulations. Application: The completed application form must be submitted to the appropriate government authority. Costs: The applicable license costs must be paid to the government authority. Documentation: Required documentation includes business plans, estimated financial cost, and confirmation of identification. Types of Business Licenses in Thailand Thailand offers a variety of business licenses depending on the nature of the business activity. Here are some common and industry-specific licenses: Common Business Licenses E-Commerce License: Required for online businesses, including retail and service providers. Restaurant License: Necessary for operating a food and beverage establishment. Import/Export License: Needed for businesses involved in the import and export of goods. Industry-Specific Licenses Tourism License: Required for travel agencies, tour operators, and other tourism-related businesses. Education License: Necessary for operating educational institutions, such as schools and language centers. Financial Services License: Required for businesses providing financial services, including banks and insurance companies. Foreign Business License in Thailand The Foreign Business License (FBL) is a specific permit that allows foreign-owned businesses to operate in Thailand. The Foreign Business Act governs the issuance of FBLs and categorizes business activities into three types: When is an FBL Required? An FBL is required when a foreign-owned business intends to engage in activities restricted or regulated under the Foreign Business Act. Types of Business Activities Under the Foreign Business Act Business Not Permitted to Foreigners: These are restricted business activities that foreign entities cannot engage in, such as certain types of media and agricultural businesses. Business Permitted to Foreigners under Conditions: These activities can be conducted by foreign businesses under specific conditions, often requiring an FBL. Businesses in Respect of Which Thai Nationals are Not Yet Ready to Compete with Foreigners: These enterprises need certain permission and usually include industries where the government wants to support local companies. Requirements for Obtaining a Foreign Business License To obtain a foreign business license, applicants must meet specific qualifications and provide the necessary documentation: General Qualifications for Applicants Legal Status: The applicant must be a legal entity or individual with the legal capacity to operate a business in Thailand. Good Standing: The applicant should have no criminal record or history of legal violations related to business operations. Documentation Needed Business Plan: A detailed business plan outlining the nature of the business, market analysis, and financial projections. Financial Statements: Recent financial statements demonstrating the business’s financial health. Proof of Identity: Identification documents for the business owner(s) or directors. Corporate Documents: Corporate registration documents, personal documents of authorized director(s), and other relevant documents. Minimum Capital Requirements Different types of business licenses may have varying minimum capital requirements. Foreign businesses typically need to meet higher capital thresholds, often ranging from 2 million to 100 million baht, depending on the business activity and the specific license required. Special Considerations for Foreign-Owned Businesses Foreign-owned businesses must navigate additional regulations and requirements: Thailand-United States Treaty of Amity The Treaty of Amity between Thailand and the United States permits American corporations to operate under identical terms as registered Thai companies, therefore avoiding some of the limitations imposed by the Foreign Business Act. Board of Investment (BOI) Promotion and Its Benefits The BOI provides promotional benefits to foreign investors, such as personal tax and corporate tax exemption or reduction, streamlined visa and work permit requirements, and the permission to own property. Businesses that seek BOI promotion must fulfill particular requirements and fit with the government's investment plans. Common Pitfalls & Solutions Navigating the licensing procedure can be difficult. Common errors include: Incomplete Applications: Failure to present the required paperwork might result in delays or rejections. Non-compliance: Failure to follow local regulations may result in fines or license revocation. Misunderstanding Requirements: Misreading licensing regulations could lead to costly mistakes. Tips to Avoid These Pitfalls Thorough Research: Conduct comprehensive research to understand all licensing requirements. Professional Advice: Seek guidance from legal experts or corporate law firms to ensure compliance. Detailed Documentation: Prepare all necessary documents meticulously and ensure they meet the required standards. Importance of Legal Advice in Obtaining Business Licenses Engaging a corporate law firm is crucial in navigating the complexities of obtaining business licenses in Thailand. Legal professionals can provide invaluable assistance by: Conducting Due Diligence: Ensuring all requirements are met and identifying potential legal issues. Preparing Documentation: Assisting in the preparation and submission of accurate and complete documentation. Advising on Compliance: Offering guidance on regulatory compliance and best practices. The role of legal advice is pivotal in ensuring that businesses obtain the necessary licenses smoothly and avoid legal pitfalls. Navigating Businesses Licenses in Thailand Obtaining a business license in Thailand is an important step toward starting a successful business. Understanding the many types of licenses, the processes for getting them, and the unique considerations for foreign-owned enterprises is critical. Engaging a competent corporate law firm may give the knowledge and assistance required to navigate this difficult procedure, assuring compliance and aiding commercial success in Thailand. Get Updated with Business License Thailand Essentials The recent amendments to Thailand's Foreign Business Act represent a significant shift in the Thai business landscape. Understanding and complying with these changes is crucial for any business endeavor in Thailand, be it a new venture or an existing operation seeking renewal and compliance. For businesses navigating the intricacies of the Thai market, professional legal assistance is invaluable. Our expertise in Thai business registration and licensing can guide you seamlessly through the process. For more information, please get in touch with our foreign direct investment practice, or alternatively, please contact the author at [email protected] or visit www.kap.co.th  

Mergers and acquisitions (M&A) can be exciting ventures, but they can also lead to a whole range of disagreements between the parties post acquisition. When these disagreements turn into disputes, legal battles can ensue, and the costs can quickly spiral out of control. That's where cost management becomes crucial. The good news? There are many strategies parties can use to keep costs in M&A disputes under control. In this article jointly co-authored by Kudun and Partners, Aon, LCM and TIVACO Experts following a successful joint event held in March this year, we address how costs can be managed throughout the life cycle of an M&A transaction and provide input from a diverse range of views including legal, insurance, third party funder and quantum expert to explore some of the practical and effective approaches to managing costs for parties. Trends in M&A Disputes  The M&A market has shifted from the COVID era to an environment of high interest rates, large amounts of private equity “dry powder” and geopolitical uncertainty, ultimately resulting in a decline of deal count and value in 2023 in the Asia-Pacific region and globally. The gap in valuation expectations of sellers and buyers can stimulate the use of contingent / earn-out consideration structures in the sale and purchase agreement (SPA), and the inclusion of call / put option provisions to increase the flexibility for the stakeholders. In a highly volatile market where buyers become even more cautious with their overall corporate risks, they are increasingly concerned over known risks identified in the due diligence process, potential breaches of the seller’s representations and warranties, along with the risk of deals being aborted. These have led to parties in a transaction becoming more careful in implementing risk management measures during and throughout the transaction process. Despite these (and other) measures, disputes are sometimes inevitable. Parties are typically confronted with seller’s breaches of representations and warranties in the SPAs such as inaccurate financial statements and non-compliance with the law. The recent years have also seen disputes on the quantification of earn-outs and disagreements on option exercises. Before the Dispute Even Starts The best way to avoid expensive M&A disputes is to prevent one from happening. By taking proactive steps at the negotiations and drafting stages, parties can significantly reduce the chances of a full-blown legal battle. Clear and Concise M&A Agreements Solid M&A agreements are the first line of defence, and for businesses operating in Thailand, it's crucial to ensure these agreements comply with Thai law. This includes clear representations, warranties (guarantees) as outlined according to Thailand's Civil and Commercial Code (CCC). Whilst dispute resolution clauses are often ignored or not considered at length, it is one of the most important clauses to pay attention to in minimising future costs. Some key considerations for Thai M&A agreements include: Due diligence: It is crucial to ensure that due diligence is thoroughly conducted. It is better to spend more on doing a proper due diligence than incurring damages at a later stage. Representations and Warranties: Ensure these accurately reflect the state of the business being acquired. Consider including specific language required under the CCC, such as warranties regarding ownership of assets and solvency. Warranties and Indemnities Insurance (W&I): Globally, there has been a surge in the utilization of W&I (or more commonly known as Representations and Warranties Insurance (RWI) in the United States) as parties, to a large extent, can be protected from financial losses arising from breaches of certain warranties and indemnities given under the SPA. This provides the seller with a clean exit whilst the buyer has recourse to the insurance policy when it suffers financial loss due to a breach of an insured representation or warranty, thereby facilitating a smooth negotiation process for the transaction. Escrow Arrangement: Consider using escrow arrangement to hold a portion of the purchase price to cover potential breach of warranty/indemnity claims. Contingent and litigation risk insurance: Identified known risks (ranging from legal issues arising from permits, licenses as well as live disputes to regulatory issues and tax liability) may be identified as red flags in the due diligence process and consequently cause an impasse in transactions from proceeding as neither party wants to bear the ongoing risk. Contingent and litigation risk insurance protects against the adverse consequences of these known risks and ringfences the total financial exposure for parties. These insurance solutions could also act as an alternative to escrow arrangements so that the seller can walk away with a clean exit, with the buyer seeking recourse from the insurers instead. Dispute Resolution Clause: Parties should consider which dispute resolution mechanism (courts, arbitration and/or mediation) would be best suited for the transaction in question. Every mechanism has its advantages and disadvantages and the clause should be tailored to suit the needs of each party to the extent possible. Factors that need to be considered include enforceability (and where assets are located), convenience, costs, speed, flexibility and whether specialist knowledge is required for adjudicating the dispute. The clause should be drafted clearly and unambiguously, so as to avoid any disputes about the dispute resolution clause. By following some of the above guidelines and seeking advice from local lawyers, parties can significantly reduce the risk of misunderstandings and disputes that could lead to costly litigation/arbitration. Strategies When A Dispute Arises When a dispute does arise, there are steps you can take to manage the associated costs. Here are some effective strategies to keep your finances in check: 1.      Early Case Assessment It is essential to carry out an analysis of each claim’s strengths and weaknesses early on in the process by considering the legal merits and the presence or absence of key evidence. Identifying the strongest claims early, or the areas that need further work, are vital to developing a successful strategy going forward and ensuring costs are kept under control. In terms of identifying key documentation and evidence, this can be done by pinpointing key custodians, document sets and document locations. One option that can keep costs down is using appropriate software and AI to quickly categorise and analyse the documents. Doing this early can help the team to develop its legal strategy and settle on appropriate methods of alternate dispute resolution to facilitate early settlement. Obtain accurate cost forecasting and budgeting To prevent cost overruns, it is important to obtain an accurate budget for the proceedings. Factors that affect costs include jurisdiction, the size and complexity of the dispute, the basis of the claim, the level of expert witness involvement and the overall strategy. An accurate budget is also important if a third-party funder is involved in the proceedings (discussed in greater detail below). Firstly, for a funder to assess if it is able to fund the proceedings, an accurate and comprehensive budget is necessary. Such a budget should include all legal costs, expert costs, tribunal fees, and other disbursements. Secondly, once on board, the funder closely monitors the costs incurred against the agreed budget. This is in the interests of the client as well as the funder. This is because funding is often priced by reference to a multiple of the amount invested. If the amount invested increases, this reduces the recovery for the client. Manage Financial Risks through insurance Financial uncertainty is always an issue for any company going through a dispute. On top of escalating legal costs to consider, provisioning also has to be made for the potential losses in a suit. As part of a company’s dispute management process, it should also consider various insurances which it can procure to ringfence its unlimited downside risks in a dispute. After-the-Event Insurance (ATE): It is crucial to understand if the dispute takes place in a costs-shifting jurisdiction. For instance, if a Thai entity is facing a dispute in Singapore, Australia or Hong Kong courts, the losing party in the litigation would need to pay the adverse costs of the opposing party ordered by the court. In arbitration, costs can also escalate as tribunals typically have the discretion to order costs in the winning party’s favour. Disputing parties can be protected from any adverse legal costs exposure through After-the-Event insurance which protects against the risk of having to pay the other side’s legal costs, the party’s own disbursements and part of their own legal fees. Adverse judgment insurance (AJI): As a defending party, the risk of facing a catastrophic loss from a judgment may cause cash flow concerns within the company and erode shareholder confidence. The defence-side AJI guards against an adverse award by insuring a large proportion of damages which the defendant is being sued for. Judgment preservation insurance (JPI): Even when one party has secured a favourable judgment or arbitral award, there is a still a possibility that the losing party may appeal the judgment to a higher court or, in an arbitration, make an application to set the award aside. These proceedings take time, leading to duration and financial uncertainty for the company and its stakeholders. JPI removes these uncertainties by protecting the successful party against the risk of the judgment or award from being overturned or the quantum awarded from being reduced on appeal or setting aside respectively. Engage Quantum Expert Engage your damages expert as early as possible to understand the approximate amounts at stake (and whether these are “worth the fight”), requirements for evidence and/or external market expertise, and for expert assistance in any potential settlement of the dispute via means of mediation. In certain cases where quantum issues are less complex, the costs can be reduced by engaging an expert advisor, as opposed to an independent expert witness. Other potential avenues to save expert costs include: (a) using a common set of facts and/or instructions for expert witnesses; (b) sequential submission of expert reports; (c) Tribunal/Court-led “hot-tubbing” of experts; and (d) use of video conferencing for experts to give evidence remotely. Consider third party funding Third party funding is when a third party (a funder) pays the costs of the legal proceedings in return for a commission or premium, which is paid back only if and when the claimant makes a financial recovery. Historically, funding was used by impecunious claimants but is now being used by multinational corporates who are looking at a way of moving costs off their balance sheet. Litigation finance is non-recourse, which means that if the claimant loses the case or is unable to enforce the judgment or award, the funder does not get paid its commission. As mentioned above, the commission or premium charged by the funder is often a multiple of what has been invested. It can also be a percentage of the recovery. A funder can fund some or all of the cost of the proceedings, such as expert fees or security for costs ordered by a court or tribunal. It can also fund a portion of the proceedings. It is important to note that in some jurisdictions, such as Thailand, third party funding is not established or well known yet. In others, such as Hong Kong, third party funding is permitted in arbitration and insolvency related proceedings but still prohibited in commercial litigation.  Third party funding would be permitted in an arbitration seated in Singapore or Hong Kong between a Thai company and a foreign company, although this issue has not been raised in the Thai Courts as yet. Aftermath of a dispute – enforcement Once a judgment or award is obtained, parties will need to enforce the judgment/award in order to recover its damages. This is a separate procedure and the enforcement/execution process differs from one jurisdiction to another. In order to avoid throwing good money after bad, parties should instruct lawyers to determine which jurisdiction they can/should enforce their judgment/award in and instruct experienced local lawyers for the enforcement/execution process. As mentioned above, a funder will fund proceedings all the way through to recovery, whether that happens by voluntary payment or as a result of enforcement proceedings. A funder can also fund only the enforcement proceedings, after a judgment or award has been issued. As described above, a funder manages the budget carefully to prevent cost overruns. Further, professional and established funders have significant experience of enforcement globally and relationships with specialist asset tracers and business intelligence consultants, which are key benefits of working with a funder. If the dispute is an arbitration that is against a wholly state-owned entity, the claimant may also consider insuring its outcome through arbitral award default insurance which ensures that the winning party is paid the amounts awarded in its favour after a waiting period of 120 days from the date of issuance of a legally enforceable award. This provides much financial certainty to the claimant as to when it can receive its payout of damages. The Bottom Line Costs cannot be avoided, particularly where a dispute arises. However, rather than being controlled by costs, by implementing the above strategies, parties will be able to control and manage the costs from spiraling out of control and save significant costs and resources.  Parties do not have to be in the dark regarding costs when it comes to M&A disputes as costs can be managed at various stages of an M&A transaction, when a dispute arises and even at the enforcement stage. Please get in touch with our dispute resolution, litigation and arbitration practice, or alternatively, please contact any of the authors and/or Emi Rowse (Igusa) at [email protected] or visit www.kap.co.th.  

The direct power purchase agreement between an energy producer and a consumer (the “Direct PPA”) in Thailand are currently restricted to very limited circumstances.However, following the National Energy Policy Council (the “NEPC”)’s Resolution No. 1/2024 on June 25, 2024 (the “NEPC’s Resolution”), we are excited to announce a groundbreaking development in Thailand’s electricity landscape: the launch of the pilot project permitting the Direct PPA with a capacity of up to 2,000 megawatts. This NEPC’s Resolution signals an eagerness to liberalize the energy limitation and attract investment, especially the data center industry, by enabling broader access to the electricity market. The major change is that this pilot project will allow an energy producer to directly deliver to its consumer under the Direct PPA through Third-Party Access (the “TPA”). This article aims to recap the development of TPA in Thailand. We hope that you found it helpful. TPA Framework The TPA first appeared on our radar since the Notification of the Energy Regulatory Commission (the “ERC”) re: Third Party Access Framework Guideline B.E. 2565 (2022), which became effective on May 3, 2022 (the “ERC Notification”). This ERC Notification is a key component of Thailand’s National Reform Plan for the year 2017, aiming to open the electricity sector to private participation and boost market competition. The ERC Notification provides the overview and guidelines for the implementation of TPA. It specifies the key definition of the relevant parties, which are: Regulated Entities: The transmission system licensee or distribution system licensee, meaning the Electricity Generating Authority of Thailand, Metropolitan Electricity Authority, or Provincial Electricity Authority (as the case may be); and Third Party: Any electricity license holders who wish to connect to the grid connection under the TPA Code. The ERC Notification requires the Regulated Entities to prepare the TPA Code and submit it to the ERC for approval within 180 days from the date of the ERC Notification. The Regulated Entities must ensure fair access principles and transparent fee structures for the Third Party. The TPA Code must also prevent preferential treatment for affiliates and subsidiaries of these Regulated Entities. However, we note that each of the Regulated Entities has already developed their TPA Codes but are still pending ERC’s approval. Once we receive any further updates, we will keep you informed of these developments.  Ongoing Developments in 2024 With the NEPC’s Resolution, a pilot project for Direct PPA having a capacity of up to 2,000 megawatts was initiated. Companies eligible for participation must be large-scale investments, operate in a consistent manner across all countries where they invest in, and not sell electricity back to the national grid. However, the criteria for the investment remain unclear. The NEPC has delegated the Ministry of Energy and the ERC to study the impact of Direct PPA and the use of TPA through the grid connection of Regulated Entities. They are also tasked with determining appropriate fees for the TPA mechanism, which include (1) Wheeling Charges, (2) Connection Charges, (3) System Security Charges or Ancillary Services Charges, (4) Imbalance Charges, (5) Policy Expenses, and other relevant costs. This applicable service fees are set to be finalized by the end of this year. Development in ASEAN For the development of Direct PPA and TPA from our neighbors, we have observed a growing trend of Direct PPA. On July 3, 2024, the Government of Vietnam enacted Decree 80/2024/ND-CP, which allows consumers to purchase electricity from producers through two main models: the virtual PPA model and the private line model. We are awaiting clarification from the related-competent authority whether Thailand will adopt either or both of these models in the future. Impact and Future Prospects This regulatory shift is expected to drive down electricity costs and improve service quality by introducing competition into the market. We will be closely monitoring these developments and wish to assist clients in navigating this new landscape. For more information on Projects and Energy in Thailand, please get in touch with our projects and energy practice, or alternatively, please contact the author at [email protected] or visit www.kap.co.th  

Thailand is generally not known to be a litigious country, yet when it comes to labour related disputes, it is a different story. Based on the Annual Statistical Report conducted by the Thai office of the Judiciary, there have been over 10,000 labour disputes cases annually over the past 5 years. One of the most common issues faced by employers in Thailand is the claim for unfair termination by their employees. Thailand is known to be a “pro-employee” jurisdiction, meaning the labour protection laws are very protective of employees and termination of employees without good reasons are generally frowned upon by the Courts (as well as culturally). Hence, unfair termination claims are not uncommon, and often create significant financial and resourcing problems for foreign and local employers. In this article, we address the general legal principles surrounding unfair termination in Thailand, common claims for unfair termination brought by employees, what employers can do to minimise the risk of such claims and how employers can manage the claims if and when they arise. General legal principles regarding unfair dismissals Generally, under the Labour Protection Act B.E. 2541 (1998) (LPA) in Thailand, employers must pay severance pay to the employee upon termination, unless the termination was “with cause” for specific categories listed in section 119 of LPA. Employers are not required to pay severance pay in very limited circumstances, including where the employee has been terminated due to dishonesty, committing a criminal offence, intentionally or negligently causing damage to the employer, violating work rules, neglecting duty without justifiable reason or due to imprisonment.[1] Therefore, if the employee is terminated “without cause”, then severance and other statutory payments must be made to the employee. Severance pay is calculated by reference to the employee’s last wages and the number of days the employee has worked for the employer.[2] Service years with employer Rate of severance payment 120 days to 1 year The last 30 days’ wage 1 year to 3 years The last 90 days’ wage 3 years to 6 years The last 180 days’ wage 6 years to 10 years The last 240 days’ wage 10 years to 20 years The last 300 days’ wage More than 20 years The last 400 days’ wage For a list of statutory payments that need to be made in addition to severance pay, please see our article on Termination of Employment in Thailand here. Even where the termination is “without cause” and the employer pays all the statutory payments to the employee, there is still a possibility that the aggrieved employee may bring a claim for “unfair termination” in the Thai courts.  There is no clear definition of what constitutes “unfair” and the Thai Courts will decide if there were reasonable grounds to terminate the employee on a case-by-case basis, not usually from an employer's perspective.[3]  Therefore, to minimise the potential exposure of unfair termination, we suggest that the employer consult a Thai lawyer even at the stage of considering to terminate an employee in Thailand. Common claims for unfair termination  Based on our experience and Court precedents, the main causes for unfair termination broadly fall into the following categories: The employer discriminates against or persecutes a specific employee in management, resulting in the termination of their employment. There was no valid reason for termination, and insufficient notice was given to the employee. The employee did not meet the performance criteria, but the employer did not officially warn the employee nor provide an opportunity for training and improvement for the employee. The termination was due to a mistake by the employee, but it was not a severe or significant mistake.[4] The termination was due to a petty mistake or minor violation of disciplinary rules without written warning.[5] The termination was due to a loss of profit, but the employer did not face a significant loss in its principal capital.[6] The termination was due to the employer’s own reasons (such as redundancy/reorganisation/restructuring or transfer of business) even though the business was still profitable and/or not facing significant losses.[7] The employee was forced or coerced to resign and/or sign a resignation letter or mutual separation agreement. What employers can do to minimise the risk of unfair dismissal claims In practice, the most common reason why employers want to terminate an employee is due to the employee’s poor performance or lack of ability to get along with other employees. In such situations, the most effective way to terminate an employee and minimising the risk of an unfair dismissal claim is to: give sufficient notice to the employee of his/her performance so that it does not come as a “surprise” to the employee when he/she is terminated. The notice should contain detailed examples of the employee’s performance and/or behaviour and a performance improvement plan (PIP). These should be communicated verbally and in writing to the employee; if the employee’s performance does not improve, prepare a termination letter and provide reasons for the termination in the termination letter. Where possible, the employee should be encouraged (but not forced) to resign; ensure that all statutory payments and contractual entitlements are paid to the employee; and where possible, enter into a Mutual Separation Agreement with the employee (often with an additional “ex-gratia” payment) containing confidentiality clauses and a waiver of claims. In addition, if the grounds of termination fall into any of the following categories, the employer should bear the following factors in mind: Where the termination is due to the company’s redundancy/reorganisation/restructuring The employer must ensure that firstly, it possesses evidence to show that the termination was necessary, as the company is in need of reorganisation/restructuring due to financial difficulties; secondly, that its selection process in determining who to terminate was fair; and thirdly, its actions were consistent with the company’s financial position. For example, where an employer terminated some employees as its business was not doing well but treated all employees the same on termination and did not refill the positions, the Court considered the termination fair.[8] Even if the employers later hired other people to fill in the positions, as long as there was sufficient length of time between the terminations and re-hiring, the termination of the employees as deemed to be fair.[9] When termination is due to redundancy, reorganization, or restructuring due to improvements or changes in machinery or technology, the employer must notify the termination date, reason for termination, and names of the affected employees to the labor inspection officer and the employees at least 60 days before the termination date. The employer is still required to pay severance pay and if the employer fails to notify an employee in advance, or provides less notice than the period prescribed, the employer must also pay “Special Severance Pay in lieu of advance notice” equivalent to the Employee’s last rate of Wages for 60 days[10]. In addition, if the employee has worked for an uninterrupted period of more than six years, the employer will also be required to pay “Special Severance Pay” in addition to Severance Pay of an amount not less than the Employee’s last rate of Wages for fifteen days for each year of employment. [11] Where the termination is due to office or workplace relocation   The employer must announce the details, including the names of the affected employees, the new location's address, and the relocation date, at the workplace where employees can easily be notified at least 30 days before the relocation. If the relocation significantly affects the employee's normal living conditions and the employee does not wish to work at the new location, the employee must inform the employer within 30 days of the announcement. In such cases, the employer is obligated to pay “special severance pay”[12].   In the event that there is a business transfer   The transferor/employer must bear in mind that there is no automatic transfer of employees to the transferee/new employer. Therefore, the employer must ensure that consent is obtained from the employees and the transferee must also continue to provide the employees with the same rights and terms of employment. If an employee objects to being transferred to the transferee/new employer, then the transferee must consider entering into a new contract with the employee or terminate the employee with all the statutory payments and contractual entitlements. How employers can manage unfair termination claims if and when they arise Notwithstanding the above, if the employee still brings a claim for unfair termination, the employer should consider taking the following steps: Note the date of the first hearing and instruct local lawyers who specialise in labour claims and are familiar with the Thai Court process. Consider whether an extension of time needs to be requested for filing a Defense. The employer should consider and gather evidence of its grounds for termination (e.g. showing the employee’s poor performance/behaviour, company’s financial performance, fair selection process etc.) and any grounds to refute the employee’s claims. Consider if there is room for negotiation and settlement with the employee considering the amount of compensation the Thai Courts may award the employee if he/she is successful in the claim. The Thai Courts will usually encourage the parties to negotiate and enter into a settlement at the first hearing (and throughout the process). If a settlement can be reached, ensure that a settlement agreement is prepared and contains clauses such as confidentiality and waiver of further claims. Conclusion Whilst unfair termination claims are fairly common in Thailand, there are ways to avoid or minimise the risk of such claims as set out above. Employers in Thailand should be aware of the requirements under the LPA and ensure that steps are taken to avoid unnecessary exposure when terminating employees. If an unfair termination claim is brought against them, there are also practical ways in which the employer can take control of the process to reduce the burden of such claims, saving time and costs for the company. For more information on termination of employment in Thailand, please contact the authors. Footnotes [1] Section 119 of the LPA. [2] Section 118 of the LPA. [3] Supreme Court Decision No. 1256-1259/2549, 5509-5510/2550, 4505-4506/2557. [4] Supreme Court Decision No. 16805/2555. [5] Supreme Court Decision No. 1864/2526. [6] Supreme Court Decision No.7083/2548, 933/2546 and 1256-1259/2549. [7] Supreme Court Decision No.6099/2556. [8] Supreme Court Decision No. 4753-4760/2003. [9] Supreme Court Decision No. 10659-10665/2003. [10] Section 121 of the LPA. [11] The total of this Special Severance Pay should not exceed the Employee’s last rate of Wages for 365 days. Nonetheless, where a period of employment is less than one year, a fraction of the period of employment of more than 180 days shall be counted as one year of employment.[11] [12] Section 120 of the LPA.