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Thai Law Insights

Presumption of Innocence: A Sea Change in Directors’ Joint Criminal Liability with Companies

Chatchawarl Sornsurarsdr

chatchawarls@csbc-law.com
charles@csbc-law.com

Under a wide range of Thai laws, if a Company was prosecuted for an offense, its Directors were once required to prove that “he or she was not involved in committing such offense” to avoid being jointly liable with the Company. That presumption of liability was a heavy legal burden on Directors, who were forced to produce evidence to prove their innocence or face the penalties imposed by the Court.

However, the landmark decision No. 12/2555 (2012) of the Thai Constitutional Court on 28 March 2012 held that the Direct Sale and Marketing Act of 2002 subjecting Directors to a presumption of joint liability for their Company’s offense were unconstitutional. The Constitution of the Kingdom of Thailand of 2007, according to Section 6, is the “supreme law of the State,” and any laws that conflict with it “shall be unenforceable.” Accordingly, the ruling struck down all laws in conflict with Section 39 para 2 of the Constitution, which states, “In a criminal case, it shall be presumed that the accused is not guilty.” The burden of proof of Directors’ liability in such cases has shifted to the prosecution following this holding.

The implications of the Thai Constitutional Court’s decision are substantial, as Directors have gained an enormous advantage in defending themselves from liability arising from their Companies’ violation of certain laws including, Direct Sale and Marketing Act of 2002, Securities and Stock Exchange Act of 1992, Private School Act of 2007, Life Insurance Act of 1992 and so on.

Instead of fighting an uphill battle to avoid liability and prove their own innocence, Directors are presumed innocent until proven guilty. As such, Directors’ chances of successfully avoiding joint liability can be significantly improved by citing the unconstitutionality of the law’s presumption of guilt.