The international standards on secured transactions law recognize that substance should prevail over form—a functional approach. The functional approach aims to subject any transactions creating a right that secures performance of an obligation to a unified security regime. Moreover, because outright transfers of claims (rights to payment), particularly when used to acquire cash based on the value of claims, function in a similar manner as security rights in claims, they also should be governed by a security regime providing for a registration requirement and a first-to-register priority rule. International organizations providing assistance in law reform in different parts of the world have encouraged countries to adopt this approach. In Thailand, the World Bank recently suggested that retention of ownership for security purposes, called hire-purchase, and outright transfers of claims should be subject to an integrated security regime. However, implementation of this approach is opposed in particular because of the fundamental distinctions between security rights and ownership and between outright transfers of claims and security rights in claims. Therefore, the dissertation aims to analyze the possibility that the functional approach could be adopted in the Thai legal system and to thereby provide guidance and incentives for law reform in other civil law countries.
To achieve these goals, the dissertation scrutinizes the non-compliance of Thai laws with the functional approach and explains that the continued rejection of that approach deprives debtors of a right to surplus value of collateral, prevents debtors from using the entire value of an asset as collateral, and fails to protect third parties. With such inadequacies, the reasons why the functional approach has been resisted and soundness of the resistance are identified and evaluated. Then, legal transplantation theories are investigated to pinpoint principal factors affecting transplantation of the approach to the Thai legal system. Moreover, because the significant opposition is based on doctrinal conflicts, the dissertation explores the compatibility of the functional approach with civil law perceptions of security. In particular, it considers the right of a secured creditor to enjoy the value of the encumbered property up to the amount of the secured debt, as opposed to the indivisible right of ownership, and the difference in the location of ownership of claims in case of outright transfers of claims and the case of security rights in claims. Furthermore, proposals for implementation of the functional approach without interfering with traditional civil law doctrines are proposed. In addition, because changing the law does not guarantee successfulness of a law reform, the study on capacity building is offered to emphasize the importance of involving all stakeholders in the process of reforming the law and of building the relevant capacity for all stakeholders after adoption of the functional approach. Finally, the lessons learned from the case study of Thai secured transaction laws reform are extracted and proposed for application to law reform in general.
Kasatinon, Parawee, "Implementation of International Standards on Secured Transactions into Thai Legal System: Possibilities and Proposals for Law Reform in Civil Law Countries" (2019). SJD Dissertations. 2.