In brief
After more than half a century, Thailand is now proceeding to de-legislate criminal offenses related to the issuance of checks. The first Thai legislation prescribing criminal offenses arising from check issuance came into effect on 13 October 1954, making Thailand one of the few countries that impose criminal liability on the dishonest use of checks. While the 1954 law significantly deterred the public from using bad checks to commit fraud and other illegal activities, it was largely used by creditors to create bargaining power or to pressure or threaten debtors, who sometimes issued checks honestly. Consequently, there have been criticisms that the law actually deters people from using checks altogether. A notable problem arising from imposing criminal liabilities on check issuers is when a debtor is demanded to issue a pre-dated check to a creditor. If such a check bounces, the creditor can take criminal action against the debtor. It has therefore been a common practice for creditors in many industries across Thailand to demand debtors to issue checks as guarantees for creditors.
Since then, several amendments have been made to balance creditors’ commercial rights and debtors’ human rights.
In more detail
Currently, the Offenses Related to the Issuance of Cheques Act, B.E. 2534 (1991) (“Cheques Act“), which is in effect, still imposes criminal liability on check issuers. Although the Cheques Act attempts to address the preceding critiques by only penalizing bad checks that are issued for payment of genuine and legally enforceable debt, the practice of penalizing individuals for bad checks still remains. The potential penalty includes imprisonment not exceeding one year or a fine not exceeding THB 60,000 or both. The elements of the offense require the issuance of a check to pay for a real and legally enforceable debt (i) with an intent not to honor such check; (ii) with no funds in the account to honor the check at the time of issuance; (iii) for an amount higher than the available funds in the account at the time of issuance; (iv) with the withdrawal of the entire or partial amount in the account to the extent that the remainder is insufficient to cover the check; or (v) with dishonestly directing the bank not to honor such check.
On 27 November 2023, the Thai Cabinet passed a resolution approving the draft act to de-legislate the Cheques Act (“De-Legislate Act“). The legal consequence of this De-Legislate Act is to repeal the Cheques Act entirely. One of the main reasons is to comply with the International Covenant on Civil and Political Rights, which sets out that no one should be imprisoned merely for failing to fulfill contractual obligations. As of today, the De-Legislate Act is under the consideration of the Senate Ad-hoc Committee. The major consequences upon its effective date will be as follows:
- For cases filed under the Cheques Act where plaintiffs have agreed to accept installment payments from defendants and the court has recorded such statement in the memorandum of proceedings, such records will be deemed settlement agreements. If the defendants fail to comply with the deemed settlement agreement, the plaintiffs can proceed with legal enforcement without filing a new civil case.
- Pending criminal cases arising from alleged offenses under the Cheques Act will be dismissed. For cases where plaintiffs have filed civil suits in connection with criminal offenses under the Cheques Act, the criminal part of the case will be dismissed.
- Inmates sentenced for offenses under the Cheques Act will be freed immediately.
- Persons on parole for offenses under the Cheques Act will be freed immediately.
We will closely monitor the progress of this legislation and notify you of any developments.
