The Work

August 10, 2011 5:56 PM

Bangkok Business: DLA Helps Thai Prince Get Plane Back From Germany

Posted by Brian Baxter

A German court released a Thai prince's personal plane Wednesday after the government of Thailand agreed to post a bond for the roughly $54 million it owes a defunct German construction company from an international arbitration ruling.

The Boeing 737-400 owned by Prince Maha Vajiralongkorn was seized last month at an airport in Munich as a result of a long-running dispute between a receiver for insolvent Walter Bau, once the third-largest construction company in Germany, and the Thai state.

An arbitration tribunal operating under the United Nations Commission on International Trade Law (Uncitral) ruled in 2009 that Thailand should pay more than 30 million euros to Walter Bau as a result of the country's breach of a bilateral investment treaty with Germany. (Click here for a confirmation of the arbitration award filed in federal court in Manhattan earlier this year and here for a copy of the ruling itself.)

The insolvency administrator for Walter Bau seized the Thai prince's plane on July 11 in a bid to force the Thai government to pay the arbitration award. DLA Piper international arbitration practice cohead Claudia Salomon in New York, the Thai government's adviser in the arbitration proceedings, took the lead in arranging for the firm to represent the Kingdom of Thailand in court proceedings in Germany.

A Berlin court ruled in late July that Thailand must put up 20 million euros to secure the release of the aircraft owned by the prince. German court proceedings in Landshut, near Munich, focused on whether the plane was the personal property of the Royal Thai Air Force or Vajiralongkorn. (The prince is an accomplished pilot who holds a senior rank in the country's air force.)

The seizure of the plane strained Thailand's relations with Germany to the point that Vajiralongkorn himself offered to advance 20 million euros of his own personal funds to release the plane and preserve diplomatic relations between the countries. The German government refused to participate in the dispute—which reportedly dates back 20 years to a scuttled contract that a predecessor company of Walter Bau had to build a highway between Bangkok and Don Mueang International Airport—claiming that the issue was a matter reserved for the courts.

On Tuesday, the Thai government agreed to put up 38 million euros in a bond requested by a German court to free the plane. DLA litigation and regulatory partner Frank Roth in Cologne is handling German court proceedings for Thailand, which presented a letter of guarantee from state-run Thai Bank to secure the release.

"The Kingdom of Thailand values its close relationship with Germany, is fully committed to honoring its obligations, and wants to rule out and terminate any premature enforcement measures directed against assets of Thailand or third parties," Salomon said in a statement.

Represented by DLA, Thailand filed a notice of appeal of the Walter Bau arbitration ruling in federal court in Manhattan earlier this year. "Thailand has strong grounds for challenging the confirmation of the award," Roth said in a statement.

The arbitrators in the ruling against Thailand in the Walter Bau matter are Sir Ian Barker of New Zealand's Bankside Chambers, retired Canadian politician and former Stikeman Elliott partner Marc Lalonde, and Jayavadh Bunnag of Bangkok's Russin & Vecchi, according to federal court records in Manhattan.

Last year several leading Am Law 100 and international firms temporarily shuttered their offices in Bangkok as a result of political unrest in the country. This week the U.S. Department of Justice agreed to halt attempts at extraditing a former Thai government official and her daughter while they argue for the dismissal of criminal charges tied to the Foreign Corrupt Practices Act, according to sibling publication The National Law Journal.

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