Anticipating Changes to the Enforcement of Bounced Cheques in Thailand

After a public hearing held during March 2022 by the Ministry of Justice, which was reviewed by the Council of State, the Thai Cabinet resolved to approve the Bill on the Repeal of the Act on Offences Relating to the Use of Cheques B.E. 2534 (1991) (the “Repeal Bill” and the “Cheques Act 1991”, respectively) on 21 November 2023. The Repeal Bill is a State’s adherence to the principle that criminal penalties shall only be prescribed for serious offences, pursuant to Section 77 of the Constitution of the Kingdom of Thailand; and to Article 11 of the International Covenant on Civil and Political Rights, which provides that no one shall be imprisoned merely on the grounds of their inability to fulfil a contractual obligation. Please note that the Repeal Bill will have to undergo the Parliamentary Process which may take another 10 to 12 months before it becomes law. However, we summarize the Cheques Act 1991 and the Repeal Bill for the benefit of the readers to understand the current law and the potential changes of the law.

Under the Cheques Act 1991, an issuer of a bounced cheque which was issued to pay for a real and legally enforceable debt shall be deemed to have committed an offence and thus subject to a criminal penalty of a fine not exceeding Baht 60,000, imprisonment for a term not exceeding one year, or both, if it involves any of the following characteristics or acts: (1) the issuer has an intent to not honour such cheque; (2) at the time of issuance of the cheque, the issuer was aware that there were no sufficient funds to honour the cheque in the relevant bank account; (3) at the time of issuance of the cheque, the ordered amount for payment was higher than the amount of available funds in the relevant account; (4) the issuer has withdrawn all or a partial amount of funds in the relevant bank account until the remaining funds are not suffice to honour the cheque; or (5) the issuer dishonestly directs the bank not to honour such cheque.

If the Repeal Bill successfully passes the legislative process and being enacted, the offences under the Cheques Act 1991 will no longer be considered criminal offences -- with the implementation of Section 2 of the Penal Code, any person performing any act which is an offence under the Cheques Act 1991 shall be relieved from being an offender, if there is a final judgement inflicting the punishment, such person shall be deemed as not having ever been convicted by the judgement for committing such offence; and if such person is still undergoing the punishment, the punishment shall forthwith terminate. The following will be the provisional measures (Section 4 to Section 7 of the Repeal Bill) to provide fairness to creditors and to facilitate the immediate repeal of the Cheques Act 1991:

- Agreements to pay by installments between debtors and creditors which were recorded in the reports of court proceedings of criminal cases on a charge of an offence under the Cheques Act 1991, whereby the payments thereunder have not been fully made, will not be affected and the compromise agreements shall be valid. The creditors shall have the rights to enforce the default payments under such compromise agreements by petitioning for a writ of execution without having to file a new court case (Section 4 of the Repeal Bill).

- The courts shall order disposal of criminal claims on a charge of an offence under the Cheques Act 1991, whereby the courts shall continue to have the powers to adjudicate and make judgement on the civil claims under the Civil Procedure Code in connection with the offence if such civil claims were filed together with the criminal claims (Section 5 of the Repeal Bill).

- The authorised agencies shall expedite and have the authority to release the offenders who have not yet undergone the imprisonment term or who are on probation or suspended sentences (Section 6 of the Repeal Bill).

- If the offender committed several distinct and different offences and has been sentenced to imprisonment for an offence under the Cheques Act 1991 together with the imprisonment for other offences, and the offender has not yet undergone the imprisonment terms, the period during which such offender was imprisoned prior to the Repeal Bill coming into effect shall be deemed and counted as punishment received for the offences other than an offence under the Cheques Act 1991 (Section 7 of the Repeal Bill).

The rights to claim for payment of and civil liability to bounced cheques under Thai Civil and Commercial Code will not be revised or affected by the Repeal Bill. If the Repeal Bill is enacted, even without the Cheques Act 1991 being in effect, a criminal penalty in connection with a bounced cheque can be sought if the act involving misuse of the cheque is considered a fraudulent act. The penalty for an offence of fraud under Section 341 of the Thai Penal Code is an imprisonment for a term not exceeding three years, a fine not exceeding Baht 60,000, or both.

This is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or on other areas of law, please do not hesitate to contact:

Chavalit Uttasart
Managing Partner
Malinee Kriengkrailipikorn
Counsel

Authors

Chavalit UTTASART

Partner
Bangkok

With more than forty years of experience, Chavalit is highly regarded as a leading figure in Thailand. His areas of specialization include dispute resolution, intellectual property, TMT and e-commerce, as well as M&A, foreign investment and corporate law. His extensive experience also includes advising on trade competition, corporate recovery and business reorganization. In particular, Chavalit is renowned in the areas of dispute resolution and intellectual property. He was selected as a Litigation Star by Benchmark Litigation Thailand 2021 and is ranked as a leading individual for intellectual property in Thailand by Chambers Asia-Pacific 2021.

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Malinee KRIENGKRAILIPIKORN

Counsel
Bangkok

+66-2-126-9144

Malinee currently focuses her practice on commercial contract drafting and the provision of expert advice to clients on various corporate and commercial issues. In recent times, Malinee assisted Nok Airlines Public Company Limited (“Nok Airlines”), one of the leading airlines in Thailand in business rehabilitation proceedings to solve the impact of the Covid-19 pandemic crisis. The work includes non-court proceedings, such as advice on the evaluation of obligations under the contracts and laws relating to the Air Aviation business for the client to use in their preparation of appropriate strategies for the business rehabilitation plan and their explanation and negotiation with the creditors, and legal advice during the implementation of the rehabilitation plan.

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