After the liquidator seized the plane that is used by the Crown Prince in Munich, HRH’s office issued a statement date July 31 2011 saying that he would pay out of his own pocket to settle the “aforementioned” dispute (เพื่อให้ข้อพิพาทดังกล่าวจบลงด้วยดี). As BP noted:

BP understands that the payment to settle the dispute is just referring to paying for the cost of the current dispute in German courts relating to the seizure of the plane and NOT payment of the arbitration award although I am unsure because of the wording.

BP: It is a question of what dispute is being settled? Is it the dispute over the seizure of the plane which requires a bond of 20 million euros OR the “dispute” between WB over the Thai government about the arbitration award which would require the settlement (or payment) of the arbitration award which is 36 million euros (and counting, with interest and other expenses)?*

The news has been reported differently. The Bangkok Post with the headline “Prince to pay for his jet’s release”. Key excerpts:

His Royal Highness Crown Prince Maha Vajiralongkorn has promised to pay from his own pocket to secure the release of his private jet impounded in Germany as a result of a commercial dispute between the Thai government and German contractor Walter Bau AG.

Ampon Kitti-ampon, the cabinet’s secretary-general, yesterday said that the cabinet would act on the recommendations of the Crown Prince and would take measures to end the dispute between the government and Walter Bau AG quickly.

Mr Ampon stressed that this was a dispute between the government and Walter Bau AG and that impounding of the jet had offended the Crown Prince.

Mr Ampon said the cabinet had decided that measures would also be taken to protect assets of overseas Thais, who were not involved in the case, from being impounded.

The case has not been finalised and any further efforts to impound the government’s assets could lead to further mistakes, Mr Ampon said.

The Nation with the headline “Royal assets to end dispute”

The Cabinet yesterday agreed to follow recommendations made by HRH Crown Prince Maha Vajiralongkorn to use his personal assets to settle the dispute with Germany over the impounded Boeing 737 – and to seek a quick end to the dispute with a German firm to avoid damaging relations between the two countries, according to Cabinet secretary Amphon Kittiampon.

The Office of the Attorney-General and the Cabinet have acknowledged the Crown Prince’s intentions and will follow his recommendation to settle the conflict quickly, Amphon said.

With the Crown Prince’s recommendations, the Cabinet agreed to find ways to wind up the conflict with Walter Bau, he said.

To prevent further seizure of any Thai national’s assets, the Office of the Attorney-General suggested that the Cabinet deposit a bank guarantee while court action with the company is underway, he said.

The Crown Prince yesterday granted Abhisit a royal audience to receive information on the latest development of the case, he said.

BP: That last sentence is interesting….

MCOT story with headline “Crown Prince offers personal assets to settle aircraft dispute”

AFP:

Thailand’s crown prince has offered to pay from his own pocket to end an awkward episode between his country and German authorities, who seized his plane in a long-running debt dispute.


A statement released by the prince’s office late Sunday said that to avoid problems between the two countries, the royal would “offer his personal money to stop the dispute” involving the German firm Walter Bau.

“Even though Crown Prince Maha Vajiralongkorn does not have any part in the dispute between the Thai government and Walter Bau AG, it has affected him and his reputation,” the statement said.

It did not make clear how much the prince would pay out.

Reuters:

Thailand’s crown prince has pledged 20 million euros ($28.4 million) to secure the release of a plane that has been caught up in a long-running commercial dispute and impounded in Germany.

Crown Prince Maha Vajiralongkorn would offer the bond from his personal funds to a court in Bavaria to maintain the good diplomatic relationship between Thailand and Germany, the office of the prince’s secretary said in a statement released late on Sunday.

BP: Re-reading the letter, BP is certain that the letter only refers to paying the bond (i.e the dispute over the plane). If the bond was paid, this would NOT  settle/stop the dispute with WB. WB won the arbitration award. Paying the bond doesn’t end that. Proceedings will continue in Germany and New York until Thailand settles/pays WB in full for the amount of the arbitration award.*

However, the statement issued by HRH’s secretariat and the audience with Abhisit seems to have quickly changed the position from the Thai side. Now, we are talking about paying a bond/guarantee, which presumably would be for the entire arbitration award and is a separate and distinct bond from the bond for the plane as required by the German court for the release of the plane. The bond/guarantee would not settle the dispute, but it would give WB the peace of mind to no longer need to seize assets.** Then, the question is, will Thailand settle/pay without waiting for the US appeals court decision? There is no specific need, aside from delaying the process, to wait for the US appeals court decision as the arbitration award is final; however, if Thailand does settle, it will be interesting to see how they frame the settlement given the strident language 1-2 weeks ago.

Reading between the lines

*Having said that, this could be negotiated/settled between the parties where the Thai government agrees to immediately pay a lower amount. Of course, how much lower is the question. BP doubts the liquidator would settle for a significantly lower amount, but say 90% or 95% immediate payment without having to continue to go through the courts incurring legal expenses and the cost of seizing assets etc., and the problem of finding assets to seize if Thailand refuses to pay, and well the liquidator may just prefer money in hand.

**Payment of the bond would also negate the need for the Crown Prince to pay the bond to secure the release of the plane and stop other assets being seized….If a bond was paid, then this would  show that the seizure of the plane was the right strategic step for the WB liquidator.