The Nation

Plane stupid: the damage is done

Last Thursday, the Boeing 737 used by HRH Crown Prince Maha Vajiralongkorn was seized at Munich Airport in Germany.

The insolvency administrator for the German company Walter Bau, Werner Schneider, ordered the seizure of the aircraft. However this issue is eventually resolved, the damage to bilateral relations has been done.The background to this story concerns a contract between the German construction company Dywidag and the Thai government in the 1990s to construct the Don Muang Tollway. The insolvency administrator for the Walter Bau construction group is demanding over ¤30 million from the Thai government because of a payment that was apparently never received in return for Dywidag's work on the 26 kilometre road. Dywidag merged with Walter Bau in 2001. In 2005, Walter Bau went insolvent and was partially acquired by an Austrian company.After the construction of the highway, a legal row erupted, with the German construction company saying contractual obligations had not been met. After years of negotiations, an international court in Geneva awarded Walter Bau US$42 million (Bt1.26 billion) in compensation, a decision the Thai government rejected.This contractual dispute has now become political and caused bilateral irritations. It goes without saying that legally binding contracts have to be fulfilled by all parties concerned. This is the fundamental principle of such contracts. However, legal disputes over highly complicated construction contracts such as building highways or other public mega-projects are far from uncommon. Big contracts of this sort between governments and contractors are often disputed, or have to be renegotiated, even after they have been signed and the project completed.However, the seizure of a royal aircraft goes far beyond being a reasonable approach to settle such a dispute.There are several question marks over how this issue has been dealt with on the company's side: first of all, the seizure of a plane from a royal fleet is simply not the most straightforward approach. One cannot help thinking that the insolvency manager went for the most sensational approach. Seizing a plane from the Thai royal fleet guarantees media attention and exposure. It is questionable whether causing bilateral irritation to such an extent is helping to solve the legal issue, which concerns, after all, a private contract between a company and a government.Further, it is surprising that the insolvency manager went for an aircraft under royal service. The initial contract between Walter Bau was with the Thai government. Thailand is a constitutional monarchy in which the government, elected by the Thai people, governs the country. HM the King is the head of state and represents the country. The construction contract was therefore between Thailand and Walter Bau, and not with the Royal Family.The approach of the insolvency administrator would only make sense if the plane belonged to the Thai government. But the legal ownership of the plane is far from clear. A simple look at the plane reveals the words "Royal Flight". The plane also carries royal insignias. But while the identity of the aircraft's owner may remain unclear, the action of seizing a vehicle used by a member of the Royal Family exceeds all bounds of a reasonable approach towards a solution. The damage is done.The Thai side tried to solve the issue on a political level last week. Foreign Minister Kasit flew to Germany where he met with Cornelia Piper, an under secretary of the German foreign ministry. The German side does not want to intervene in the case and refers to the independence of the judiciary. A German court subsequently declined the Thai government's request for an injunction to release the plane held at Munich Airport. The judge said the court was not fully convinced the plane was HRH Crown Prince Maha Vajiralongkorn's personal property, as asserted by the lawyer for Thailand. The Royal Thai Air Force (RTAF) confirmed the Thai government's contention that the RTAF in 2007 presented the Boeing 737 jet to the Prince for his personal use. RTAF spokesman Air Vice Marshal Monthon Satchukorn said last week that there is an official document to prove the presentation. The Foreign Ministry asked for that document to be presented to the German authorities and the RTAF has supplied that document," the spokesman said.Meanwhile caretaker Prime Minister Abhisit Vejjajiva has tried to take the heat out of the situation by instructing the Thai Aviation Department to probe his suspicion that the German company's objections are based on out-of-date information that the plane is under the supervision of the RTAF. The PM also said that the German government expressed its regret about the case and is cooperating with Thai officials.It is very likely the dispute will be settled soon. However, the avoidable damage caused to bilateral relations between Germany and Thailand is done, with both the economic and also political ties suffering.

Dr Alexander Mohr is partner for International Relations at the government relations firm Alber & Geiger in Brussels and was lecturer on International Relations at the French university Institut d'Études Politiques de Paris in France.

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