Interest in Restitution of Money under the Thai Civil and Commercial Code

Abstract

Money, by nature, produces interest or benefit to the owner of money, for example, the money owner may make a deposit of money to a bank or put money for an investment. In case that there is a legal cause for money restituition, it is important to consider the issues concerning the interest of such money. The interest may be categorized into two types; (a) the interest as the benefit of the money to be returned. In this case, if there is no agreement otherwise, the law sets the interest rate to be 3 percent per year which is the statutory interest rate given in Section 7 of the Thai Civil and Commercial Code, (b) the default interest which is the interest that can be claimed when a debtor in money debt becomes a debtor in default. Without any agreement from the parties, the interest rate for default interest is set to be 5 percent per year as given in Section 224 of the Thai Civil and Commercial Code.
This article focuses on the study and analysis with regard to the issues of interest in restitution of money under the Thai Civil and Commercial Code in two cases as follows.
(1) Restitution of money as the effect from the rescission of contract: The study comes to a conclusion that the provision in Section 391 paragraph 2 of the Thai Civil and Commercial Code is appropriate without any need for amendment. The law requires one party to restore the other to the previous condition and, in case of money, the money must be returned with interest starting from the time of receiving such money. One issue to be pointed out is that when the interest is calculated, since the interest rates in Section 7 and Section 224 are not the same, the parties must be cautious in determining the period to be used for the interest calculation. The statutory interest of 3 percent per year is to be computed based on the money starting from the time of receiving such money while the default interest of 5 percent per year is to be calculated starting from the time of debtor being in default.
(2) Restitution of money obtained from undue enrichment: The current version of Section 412 of the Thai Civil and Commercial Code considers good faith and bad faith of the person with the duty to return money. The person in good faith has the duty to return only the amount of money remained at the returning time while the person in bad faith must return the full amout of money. A proposal for amendment is suggested in this article to add the interest of 3 percent per year to the money to be returned when the person is in bad faith. In addition, if the person still fails to return the money, then such person will become the debtor in default and must pay the default interest in the rate of 5 percent per year starting from the time of being default.