I COMMERCIAL OVERVIEW OF THE SHIPPING INDUSTRY
Taiwan has one of the best shipping locations in the world. It sits squarely between Hong Kong, China, Japan and Korea, and is at the gateway to the Far East along the ocean trade routes coming up from South East Asia, working into the Pacific and on to the Americas. Taiwan is home to Evergreen Lines, the fifth-largest container carrier worldwide with 187 owned and chartered vessels and a combined capacity of 989,529 twenty-foot equivalent units (TEUs). Other operators include Yangming Lines, the eighth-largest container carrier with 100 vessels2 and an operating capacity of 576,269 TEUs. Also worth noting is Wan Hai Lines, the 17th-largest carrier with 87 vessels and a capacity of 223,110 TEUs.
Taiwan has international commercial harbours at Taipei, Keelung, Kaohsiung, Hualien and Taichung, of which Kaohsiung is the busiest. It was the sixth-largest port in the world between 2003 and 2006 in terms of container handling, at 9.77 million TEUs. However, with the rise of the Chinese economy and the migration of Taiwanese manufacturers into mainland China, Kaohsiung's ranking dropped to 13th in 2015 – nevertheless, there was an increase in container throughput to 10.26 million TEUs. One of the possible reasons for Kaohsiung being able to maintain its container traffic is the opening of direct cross-strait shipping links with mainland China in 2008, which attracted transshipment opportunities from China.
II GENERAL OVERVIEW OF THE LEGISLATIVE FRAMEWORK
Taiwan adopts the continental legal system, similar to that of PRC China. One of the distinct features is the codification of laws. Judges play an inquisitorial role in court; they investigate evidence and give directions to the parties on the degree, form, character or sufficiency of proof tendered. Legal actions start with very short pretrial proceedings – usually the writ and statement followed by defences. A trial date can be obtained in as little as six to eight weeks after the filing of the writ. Trials are broken up into various adjournments. They do not finish within a single contained setting, but over a long period of time. There is no separate admiralty court in Taiwan; all shipping matters are dealt with by the Civil Court. Court fees are approximately 1.1 per cent of the claim at district court level, payable by the plaintiff. Otherwise each party pays its own costs. There is no case law in Taiwan and all judgments are merely persuasive in nature. A district court judge need not follow a Supreme Court judgment. Therefore, the doctrine of stare decisis is not adhered to. Exceptions to this would be on a list of precedent cases published by the Supreme Court at the end of each legal year. However, these are few in number and infrequent.
III FORUM AND JURISDICTION
Taiwanese jurisdiction is established as long as one of the following criteria is satisfied:
- the defendant is a Taiwanese-registered company;
- there is actual proof that the defendant operates mainly in Taiwan;
- the defendant's assets are in Taiwan;
- the cause of the legal action happened in Taiwan (e.g., collision, contract for bunker);
- Taiwan is the place of torts;
- Taiwan is the place of salvage or the first port of call after salvage;
- the defendant submits to the jurisdiction of the Taiwan courts;
- all the co-defendants are jointly liable and one of them can be sued in Taiwan; or
- there is an established contract between the parties choosing Taiwan as the place of jurisdiction.
The arrest of a vessel establishes Taiwanese jurisdiction to hear the dispute concerning the arrest.
ii Arbitration and ADR
During litigation, either party is entitled to motion the court for a stay of proceedings pending arbitration in the event that there is a prior arbitration agreement between the parties. The Taiwan court will then order the plaintiff to submit his or her claim for arbitration within a specific time frame determined by the court, failing which the court is empowered to dismiss the original legal action.
Taiwan has no maritime arbitration procedures in place. Arbitration rules and proceedings are non-sector-specific in nature.
The Chinese Arbitration Association (CAA) is the leading arbitration centre in Taiwan. It acts according to the Taiwan Arbitration Act of 1998, which is modelled after the UNCITRAL Model Law of 1085 and applies its own Taipei Arbitration Rules to the tribunal proceedings. It is, however, extremely rare to find parties referring dispute resolution of a maritime nature in Taiwan to arbitration or to the CAA. The CAA's own statistics showed that there were seven international cases in a total of 109 for arbitration in 2011, and that shipping-related disputes took up 1.45 per cent of all arbitration cases heard by the association between 2000 and 2009.3 Apparently, the preference for arbitration forum over maritime matters still lies with more shipping-established foreign institutions, such as the London Maritime Arbitrators Association.
Arbitration tribunals in Taiwan have no authority to grant interim relief.
iii Enforcement of foreign arbitral awards
Taiwan is not a contracting state to the 1958 New York Convention. As a general rule, during the review of an application made for the recognition of a foreign award, the Taiwan courts will not consider the merits of the case but simply deal with the procedural aspects.
The Taiwan courts are inclined to approve the recognition of foreign awards unless one of the following three grounds for rejection under the Taiwan Arbitration Act has arisen:
- rejection by the court through its own discretionary powers;
- rejection through lack of mutual reciprocity; and
- rejection on grounds of procedure raised by the respondent.
There are records showing that arbitral awards from the United States, the United Kingdom, Hong Kong, South Korea, France and Switzerland are recognised in Taiwan. Awards from China are dealt with by the Regulations Governing Cross-Straits Relationship and will be recognised as long as they do not contravene public policy and the 'good morals' of Taiwan.
iv Enforcement of foreign judgments
There are two extremely important things to be aware of on the subject of the enforcement of foreign judgments in Taiwan. First, foreign judgments are not given immediate recognition and must be presented to a Taiwan court for approval. Under Article 4(1) of the Mandatory Enforcement Act, a trial must be held and judgment rendered before a foreign judgment can be acknowledged and recognised for enforcement. Second, it would be much more practical to simply sue a Taiwanese defendant in Taiwan rather than obtain a foreign judgment against him or her first and then have to go through a separate process of applying to the Taiwan courts for a full trial to have that foreign judgment recognised before it can be enforced.
Before a foreign judgment can be approved for enforcement, the following requirements must be met:
- the original foreign court has jurisdiction to judge the matter in its own country;
- the defendant has gone through due service process and was notified sufficiently of the action against him or her;
- the original judgment is not against public policy and the good morals of Taiwan; and
- there is reciprocity between the two countries.4
The limitation period for applying to recognise a foreign judgment is 15 years from the date the judgment becomes final and binding on both parties.
IV SHIPPING CONTRACTS
Taiwan is renowned for its luxury yacht building industry. It is the sixth-largest manufacturer of yachts worldwide with annual revenues exceeding US$250 million. It is the biggest produce in Asia of 80ft luxury yachts. Two Taiwanese companies are listed in the world's top 30 yacht builders. For larger ships, China Shipbuilding Corporation is the biggest builder of merchant vessels. It has built more than 670 vessels, including 8,500 TEU eco-friendly container ships, general cargo vessels, tankers and naval missile guided frigates. It has 22 ship types listed by the Royal Institute of Naval Architects as significant ships. It ranks 40th in the global merchant shipbuilding market.
Taiwan shipbuilders usually adopt the frequently used international forms, such as the Norwegian Form or the Shipbuilders' Association of Japan Form, as the basis for contracts. Even for smaller shipbuilders, a choice of foreign law and jurisdiction is common to facilitate the sale to and building for the international market. However, if Taiwan law applies, the shipbuilding contract will be viewed as a common agreement to sell a future product and, hence, provisions in the Taiwan Civil Code regarding description, quality and purpose will govern. Also, there is a special provision under the Taiwan Maritime Code entitling the buyer to take possession and continue with the work at the yard in the event of the builder being declared insolvent. This is on the proviso that the liquidator has refused to proceed with construction work and the buyer is willing to pay the assessed value of the ship minus any monies already paid by him or her.
ii Contracts of carriage
Taiwan is not a signatory to the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 (the Hague Rules), the UN Convention on the Carriage of Goods by Sea 1978 (the Hamburg Rules), the Protocol to amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading 1968 (the Hague-Visby Rules) or any UN conventions for the international carriage of goods by sea. Domestic laws to govern ocean transportation are founded in the Taiwan Maritime Code and the Taiwan Civil Code.
Taiwan law provides that a contract for the carriage of goods by sea shall be made in writing and contain the names and a description of the parties, cargoes and the vessel employed. A contract for the carriage of cargoes cannot be affected by a transfer in the ownership of the indicated vessel. If the vessel is defective to the extent that it is unable to perform carriage, the shipper is entitled to rescind the contract.
The duties of the shipper, according to Taiwanese law, are primarily to pay freight and to guarantee the accuracy of the information provided to the carrier with regard to the cargo for the issuance of the bills of lading. Article 55 of the Taiwan Maritime Code states that the shipper shall be liable for all loss and damage arising from any misstatement it has made. The carrier, however, will not be able to rely on the shipper's wrongdoings as a defence against a third-party bill of lading holder, other than any liability incurred by the shipper.
The duties of the carrier are to perform carriage and exercise due diligence at the beginning of the voyage to make the ship seaworthy, properly man, equip and supply the vessel, and to ensure that the holds and all parts of the ship are fit and safe for the reception, carriage and preservation of the goods.5 Taiwanese law states that the burden of proof is on the carrier seeking to discharge its duties, as aforementioned.
Parts of the Taiwan Maritime Code relating directly to the entitlements of the carrier reflect the provisions of the Hague-Visby Rules. For example, the defences afforded to a carrier in Article 69 of the Taiwan Maritime Code that include error of navigation, act of God and insufficiency of packing defence were taken from Articles 4(2)(a), (b), (c), (e), (g), (i), (m) and (o) of the Hague-Visby Rules.
Upon arrival of the goods at the destination, the carrier is obliged to despatch immediate notification to the notify party or the consignee. Should the situation arise that nobody is available to take delivery of the cargo, Article 51 of the Taiwan Maritime Code provides that the carrier or master may store the goods in a warehouse at the expense of the consignee and notify him or her. If the consignee is unknown or refuses to take delivery, the carrier may petition the court for permission to effect an auction and sale. The carrier is then allowed to deduct its freight and expenses from the proceeds of sale.
Cabotage is prohibited in Taiwan according to Article 4 of the Transportation Industry Act.
Maritime liens are recognised differently under Taiwanese law and are treated as rights of priority for payment against assets in the event of liquidation. This is because there are no in rem actions under the Taiwanese system and therefore a person, for example, will not be able to sue a vessel as the wrongdoer.
The objects of a maritime lien include the vessel and all her machinery and equipment, freight earned on a voyage when the lien occurred, compensation owed to a ship owner for loss or damage to the vessel, indemnities due for general average and a salvage reward. The following is the order of priority of maritime liens recognised by Taiwan law:6
- wages due to the master and crew of the vessel;
- claims against the vessel in respect of loss of life or personal injury in relation to the operation of the vessel;
- rewards for salvage, expenses for wreck removal, and ship's contribution for general average;
- claims based on torts against the shipowner in relation to the operation of the vessel; and
- harbour charges, canal and waterway dues, and pilotage expenses.
These liens rank above the costs incurred for ship construction or repair. Ship mortgages rank last.
There is a one-year limitation period on maritime liens starting from the day they arise.
As for multimodal bills of lading, where Taiwanese law applies, the Taiwan Maritime Code7 governs all claims arising from the leg of the journey involving carriage by sea. The Taiwan courts will usually apply the provisions in the Taiwan Civil Code to deal with claims arising from inland transportation of goods, which carry no package liability limitation.
iii Cargo claims
Taiwan law is uncertain with regard to the treatment and recognition of terms found on the reverse side of bills of lading. Traditionally, the Taiwan courts view such terms as something unilaterally put across by one party to the other without prior or mutual agreement and therefore should not be regarded as binding. An analogy would be a contract that contains the signature of only one party. In 1978, the Civil Branch of the Taiwan Supreme Court issued its 4th Meeting Resolution that confirmed this train of thought. The effect is that most terms contained on the reverse side of the bill are viewed as being invalid.8 The scenario in 2017 is that there are some judges on the Taiwanese Civil Bench who had demonstrated their willingness to take a more modern approach and follow international trends and standards when dealing with these issues. There are, therefore, various judgments from all tiers of the Taiwan courts showing a complete difference in views as to whether printed clauses on the reverse side of a bill of lading should be binding or not.9 The uncertainty has far-reaching effects because it touches on issues relating to the recognition of clauses paramount, demise clauses, law and jurisdiction clauses, and the like.
There is, however, a trend for the courts to reject the application of demise clauses. The clear reason is that the courts see this as unfair to third-party consignees seeking remedy for damages and that the question of the identity of a carrier of a bill should not be decided merely by looking at the inclusion of a printed clause on the reverse side of that bill but by considering all apparent and circumstantial evidence available, including the title of the bill, whether it was signed 'for and on behalf of the master' or 'as agents', and the identity of the party freight was paid to, among other things.
The Taiwan courts commonly reject the validity of foreign law and jurisdiction clauses using the reverse side of the bill as grounds. If a foreign law clause is rejected, the courts will apply Taiwanese law in its place. The courts will then decide whether Taiwan has jurisdiction by considering the issues discussed in Section III.i.
iv Limitation of liability
Shipowners will be able to limit their liability as long as it relates to the following:10
- claims for loss or damages relating to the salvage or operation of a vessel;
- claims resulting from the infringement of rights other than contractual claims relating to the salvage or operation of a ship;
- claims in connection with wreck removal, not including claims relating to a reward or payment made under a contractual obligation; or
- claims for measures taken to avert or minimise the liabilities in points (b) and (c).
The definition of 'shipowners' for the purposes of this limitation includes legal owners, charterers, managers and operators of a vessel. There is no differentiation in the meaning of charterers, and time or voyage charterers may fall within the ambit as long as they are operators and have control over the crew and vessel.
Consideration for the liability limitation process was based on a comparison of the regimes set out in the 1957 Convention on Limitation of Shipowners' Liability and the 1976 Convention on Limitation of Liability for Maritime Claims. Article 22 of the Taiwan Maritime Code in whole states that the principle calculation would be that a shipowner's liability is restricted to the value of the ship, its freight and all other ancillary charges from the last voyage. 'Last voyage' means the previous port-to-port voyage undertaken by the vessel, and 'ancillary charges' covers any compensation payable to the vessel for loss or damages, not including payouts from insurance policies.
The shipowner's principle liability will not be more than the maximum value of the ship. However, where this value is lower than the calculations set out below, the owner is liable to pay the difference:
- 54 special drawing rights (SDRs) for each tonne of the ship's gross tonnage (GT) for claims in respect of loss or damage to property;
- 162 SDRs for each tonne of the ship's GT for claims in respect of loss of life or injury; and
- in the event that there are both property and personal injury claims, 162 SDRs per tonne of the ship's GT, of which the first 108 SDRs go towards the payment of personal injury or death claims, and where this is insufficient to cover all injury or death claims, such claims will rank pari passu with the property claims against the remaining compensation for property damage.
Limitation of shipowners' liability under Taiwanese law does not extend to the following:11
- obligations or liabilities arising out of faults that are intentional or as a result of the wilful acts of the shipowner, obligations or liabilities owed to the master and crew of a vessel;
- rewards for salvage or a contribution to general average, damages arising from toxic chemicals carried on a ship or oil pollution;12
- damages arising from incidents caused by nuclear substances or waste matter carried by vessels; and
- claims for nuclear damage caused by nuclear-powered vessels.
Finally, note that there are no facilities for the filing of a limitation fund to the courts under Taiwanese law or the local legal system.
i Ship arrest
Ship arrests in Taiwan are similar to Mareva injunctions. They are based on an action in personam against a creditor for debts owed. Arrest of sister ships is not allowed.
The procedures involved are complicated but, simply put, they principally involve convincing the court to issue a conditional order for the arrest based on a prima facie case, filing the security amount set by the court, and getting a judge to physically perform the arrest of the vessel. The security amount ordered by the court is usually one-third of the amount of the claim. The courts do not accept Club letters of undertaking. Cash is the best option. However, it takes time for applicants to arrange and transfer funds into Taiwan. Shipowners are able to apply for the release of a vessel by filing a counter-security with the court. This will usually be set at three times the amount of the security filed earlier by the arrest applicant. The Taiwan legal system does not permit the filing of a caveat against ship arrest as a precautionary measure.
There are uncertainties as to whether bunker suppliers can arrest vessels where there is privity of contract with shipowners. Recent non-binding case law, however, seems to indicate that Taiwan judges are willing to allow the arrest as long as the claim is based on a maritime lien recognised under the flag of the vessel.13
ii Court orders for sale of a vessel
Upon acquiring a final judgment from the court, applicants for an order for auction and sale of a vessel will need to pay an execution fee of 0.8 per cent of the judgment amount. The vessel is auctioned on an 'as if, where is' basis and there are no guarantees to bidders for the ship to be 'free of encumbrances'.
Taiwan has not implemented any of the international conventions on safety of ships into its domestic law. The local regime on safety relies heavily on port state control to enforce standards that follow the international conventions. Rights of vessel detention are available in the event of non-compliance. The Taiwan Law of Ships Act, which deals with classification surveys and the certification of ships' nationality, tonnage and load lines, also touches on safety issues in that it imposes a duty on Taiwan-flagged vessels to undergo periodical classification surveys and inspections to ensure the safety of the hull, stability and equipment. Taiwan-flagged vessels are prohibited from sailing otherwise. Foreign vessels calling at a Taiwan port must also possess valid classification certificates issued in accordance with international conventions. The relevant port authority will have a right to detain a vessel where this is lacking.14 Other than that, the Taiwan Pilotage Act establishes compulsory pilotage on all foreign vessels sailing into harbour that are more than 500 GT15 to ensure safety of navigation when approaching a berth. Note that under Taiwan law, a pilot is considered an employee of the shipowner for the leg of the voyage into harbour covered by compulsory pilotage.16 A shipowner, therefore, can be held liable for the acts of the pilot deemed to have been hired by him or her.17 The Commercial Harbours Act further touches on the safety of navigation within a commercial port by providing that ships must comply with the rules on the prevention of collision, and that vessels must cruise at a reduced speed and cannot overtake while in a narrow navigation channel, which no doubt includes sailing along the traffic separation scheme.
ii Port state control
Taiwan is neither a member of the International Maritime Organization (IMO) nor a state party to the Tokyo Memorandum of Understanding on Port State Control in the Asia-Pacific Region 1994 (the Tokyo MOU). The country is, however, well aware of the importance of a fundamentally strong port state control (PSC) system and acknowledges the need to guard against substandard ships calling into port and to protect its marine environment from such vessels. In 1998, the Taiwan Ministry of Transport and Communications contracted the Canadian Trade Office in Taipei to assist with the development of a PSC system in Taiwan. This was introduced and put in place in 2001 with the aim of covering ship safety, pollution prevention, shipboard living and working conditions.
Taiwan's present PSC system aims to meet all aspects of the requirements of the Tokyo MOU by requiring all foreign merchant vessels calling into port to comply with the relevant convention standards. Each of the international ports (Taipei, Keelung, Kaohsiung, Taichung and Hualien) is staffed by a minimum of two PSC officers who are either licensed as a master mariner or chief engineer. PSC officers are authorised to board and conduct ship inspections.
The centrepiece of the PSC's authority comes from its power to delay or officially detain a vessel under the Taiwan Commercial Harbour Act.18 Compliance requirements are the same as those adopted under the Tokyo MOU, which include the International Convention on Load Lines 1966 (the Load Lines Convention), the International Convention on the Tonnage Measurement of Ships 1969 (the Tonnage Convention), the International Regulations for Preventing Collisions at Sea 1972 (COLREGs), the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1995 (the STCW Convention), the International Convention for the Prevention of Pollution from Ships 1973 (as modified by the Protocol of 1978) (MARPOL (73/78)), ILO Convention No. 147 76/81,19 the International Convention for the Safety of Life at Sea (SOLAS) as amended in 1978, 1988 and 2002, the Maritime Labour Convention 2006 (MLC) and the Protocol of 1978 relating to SOLAS 1974. It is possible to challenge a PSC decision to detain a vessel but the appeals process is time-consuming and it is therefore more practical to satisfy the PSC's requirements in order for the vessel to depart expeditiously.
Statistics show that in 2003, when the first PSC was implemented in Taiwan, 140 foreign vessels were boarded for inspection, 74.3 per cent of which were found to have compliance deficiencies; 33.8 per cent of those vessels were detained. Three years later, 261 foreign vessels were boarded for inspection, 47.9 per cent of which were found to have compliance deficiencies; the detention rate was 48 per cent.20 This is an indication of the increasing efficiency of the Taiwan's PSC system as PSC officials have become better trained and equipped to board, scrutinise and enforce standards on incoming vessels.
In 2014, Taiwan went as far as to voluntarily complete an IMO-compliant audit, despite not being a member state. The country was assessed on compliances relating to IMO conventions on safety, security and the environment. This was reported to be 'a proactive move by a non-IMO member state, believed to be a first'.21
iii Registration and classification
A ship can be registered under Taiwanese nationality as long as it is owned by a Taiwanese national or company. Owners are free to choose a port of registry within the country for these purposes. Once a vessel is registered under Taiwanese nationality, it is obliged to undergo periodical inspections and surveys. The China Corporation Register of Shipping (i.e., the CR Classification Society) has been commissioned to conduct these statutory inspections and surveys. Businesses operating in the coastal ports of Taiwan apparently prefer their vessels to acquire Taiwanese nationality because foreign-flagged vessels are only allowed to call at the international ports of Taipei, Keelung, Kaohsiung, Taichung and Hualien.
iv Environmental regulation
The Ocean Pollution Prevention Act (OPPA) is the main regime in Taiwan governing shipowners' responsibility for the prevention and cleaning up of oil pollution following an oil spill. The Environmental Protection Agency (EPA) is the governmental authority established and empowered by the OPPA to supervise and enforce this law. The EPA in turn is empowered under law to order shipowners to remedy or mitigate an oil pollution incident. If the shipowner fails to do so, the EPA may undertake its own clean-up or preventative measures own and seek reimbursement from the shipowner for its costs and expenses.22 Harbour authorities are also given rights under the OPPA to detain or arrest a ship or its crew following an oil pollution incident, except where the shipowner provides the authorities with a satisfactory guarantee.23 In the event that a shipowner has failed to follow the EPA's orders promptly, a daily penalty of between NT$300,000 and NT$1.5 million can be imposed in accordance with Article 49 of the OPPA – as demonstrated in the case of the SAMHO BROTHER in Administrative Supreme Court Case No. 802 of 2010.
A shipowner is defined under the OPPA to include a legal owner, lessee, agent or operator of a vessel. The OPPA requires the owner of a vessel to maintain liability insurance or provide a guarantee at the time of the spillage. This requirement covers tankers of more than 150 GT and all other ships exceeding 400 GT. Liability underwriters of a vessel can be sued directly under the OPPA.24
Shipowners cannot limit their liability for oil pollution under Taiwanese law. Article 22 of the Maritime Code states clearly that the liability against claims for loss or damages arising from chemical or oil pollution cannot be restricted. Article 21 of the Maritime Code further supports this position by failing to list oil pollution as one of the permitted incidents where shipowners are allowed to seek to limit liability under Taiwan law. The claim for loss or damages relating to oil pollution is a claim based on torts. Restitution or pecuniary damages are permitted. Claimants will, however, need to show causation and proximity.
If the pollution occurs within the statutory boundaries of a harbour, the port authority is also empowered under the Commercial Harbours Act to order the master or owner of a vessel to mitigate or clean up the spill, failing which the port authority can elect to undertake its own responsive measures and subsequently claim reimbursement.25 The port authority has a right to detain a vessel from leaving under Article 39 of the Act until all expenses are fully paid. Furthermore, the port authority can impose a fine of between NT$300,000 and NT$1.5 million for each instance if a shipowner fails to comply with orders to mitigate or clean up a spillage expeditiously.
v Collisions, salvage and wrecks
An action for damages accruing from a collision incident is seen in Taiwan as an action based on torts that would allow a claim for repair costs and loss of earnings. Judges sitting in the civil branch of the Taiwanese courts are not maritime experts, so a judge hearing a matter concerning collision will appoint the port authority that has jurisdiction over the incident to convene a special maritime casualty committee from a selected panel of port officials, scholars and experts to decide on liability and apportionment. The rules in the COLREGs are usually applied by such a committee. The findings of this committee will usually be highly persuasive before the judge, who will then decide the issue of quantum. The statutory limitation period for a claim of damages arising from a collision event is two years from the date of the incident.26
International salvage agreements containing a foreign law or jurisdiction clause, such as Lloyd's Open Form, are usually used by parties following a casualty incident so there is no issue on the salvage regime in Taiwan. In the event that Taiwan law applies, Article 103 of the Maritime Code states that the basis for a reward is no-cure-no-pay where a 'useful salvage service' has been provided and thus there is a claim to a 'reasonable salvage reward'. A salvor can claim all his or her incurred expenses if there is a possibility that he or she has through his or her actions prevented damage to the environment. This can be increased up to 200 per cent of the incurred expenses if it is proven that the salvor has indeed prevented damage to the environment. The statutory limitation period for the rights to claim for a salvage reward under Taiwan law is two years from the date of the salvage.27
The Commercial Harbours Act governs situations concerning the sinking and wreckage of a vessel within the statutory boundaries of a commercial harbour in Taiwan. However, Article 53 of the Act extends coverage as far as the grounding, sinking or drifting of a vessel to an area 'outside' the port environs. Under the Act, the port authority is empowered to order the master or owner of a vessel to remove the wreck, failing which the port authority can elect to undertake its own responsive measures and subsequently claim reimbursement.28 Alternatively, the port authority can choose to salvage or retrieve the wreck and have it auctioned to pay for all related expenses. The port authority has a right to request the tendering of a guarantee covering the removal costs and to detain a vessel from leaving under Article 53-2 of the Act until this guarantee has been submitted. Furthermore, the port authority can impose a fine of between NT$100,000 and NT$500,000 if a shipowner fails to comply with orders to remove a wreck expeditiously. Shipowners can seek to limit their liability concerning wreck removal operations under Article 21-1-3 of the Taiwan Maritime Code. The calculation of shipowners' recourse to liability limitation has already been discussed.
vi Passengers' rights
A passenger carrier is obliged to carry its passengers to the place of destination as indicated in the passenger ticket, failing which a claim for breach of contract and damages is allowed under Taiwanese law. Any clause printed on the ticket purporting to limit the liability of a passenger carrier will not be upheld by the Taiwanese courts unless it can be proven that there had been prior mutual consent between the parties, which is usually not the case. The passenger carrier is also required to procure insurance cover for its passengers; however, the sum insured is not specified by law. A passenger carrier must endeavour to carry its passengers to the port of destination to the best of its ability. In the event that this is not possible, the carrier must return passengers to the original port or allow them to alight at the nearest port.
On the other hand, a passenger is obliged to pay the full price of a ticket if he or she fails to board the vessel for the voyage. He or she will also be held responsible for the full price of the ticket if he or she decides not to complete the voyage. However, the passenger can choose to rescind the contract of carriage if a ship fails to start the voyage on the scheduled date.
vii Seafarers' rights
Taiwan is not a party to the MLC nor any conventions concerning seafarers. There is, however, a Seafarers' Act that governs the employment of Taiwanese personnel on board Taiwan-flagged vessels, which deals with a myriad of issues concerning the master and crew, including hiring contracts, welfare, conduct, remuneration, termination, working conditions, safety and retirement.
Under the Seafarers' Act, the qualifications of seafarers must comply with the standards set in the 1978 International Convention on Standards of Training, Certification and Watchkeeping for Seafarers. Employers must provide seafarers with adequate and suitable food, quarters, bedding, medical supplies and protective work gear. The employer must enter into a written contract of employment with the seafarer. This contract must follow a standard set of terms provided by the Taiwan Ministry of Transport and Communications to ensure fairness to the employee. The minimum standard on wages, shore pay and overtime pay is also set by this Ministry. Seafarers must be given one day's rest in every seven, and 30 days of annual leave upon completion of one year of service. The surviving family of a deceased seafarer who dies while performing his or her duties is entitled to receive a lump sum equivalent to 40 times the seafarer's average monthly wage.
Taiwanese seafarers must be members of the National Chinese Seamen's Union of the Republic of China (NCSU). The NCSU may be able to assist seafarers in gaining better employment benefits through collective bargaining agreements. The NCSU also acts as a mediator between seafarers and shipowners in the event of employment disputes.
There will be an complete overhaul of the Taiwan Maritime Code in the next few years. The Code is the primary legislation governing a wide variety of shipping issues, including carriage, insurance, general average, towage and liens. There are 152 articles in the Code. The current proposals seek revisions that will eventually lead to 229 articles in all. The aim of the amendments would be to bring local shipping law in line with international standards by referencing the latest international conventions. However, the Ministry of Transport and Communications has yet to finish considering the proposals and perfecting the final draft, which is required for legislative review. In view of the level of uncertainty, there is little point in discussing the prospective changes at this stage.
There is also a proposal to increase the limit of the maximum penalty for marine oil pollution from NT$1.5 million to NT$300 million. The Taiwan Environmental Protection Agency is currently drafting an amendment to the OPPA to create guidelines for imposing heavier fines and to offer rewards for tip-offs. This follows a recent oil spill that stretched for 10 kilometres along the northern coast of the tourist destination of Green Island. The draft is still in its early stages.
1 Daryl Lai and Jeff Gonzales Lee are partners at JTJB-Taipei. The information in this chapter was accurate as at May 2019.
2 Source: Wikipedia – List of Container Shipping Companies by Ship Fleet.
3 Source: Chinese Arbitration Association.
4 Article 402 of the Taiwan Civil Code.
5 Article 62 of the Taiwan Maritime Code.
6 Article 24 of the Taiwan Maritime Code.
7 Article 75 of the Taiwan Maritime Code.
8 Examples of known cases rejecting the validity of the reverse B/L clauses include Supreme Court Judges' Conference on Precedent Cases 1978, Supreme Court Case No. 2362 of 1991, High Court Maritime Case No. 3 of 2003 and High Court Insurance Case No. 16 of 2004.
9 Examples of known cases upholding the validity of the reverse B/L cases are High Court Maritime Case No. 6 of 2002, High Court Insurance Case No. 44 of 2004, Supreme Court Case No. 2304 of 2004, High Court Insurance Case No. 48 of 2005 and High Court Insurance Case No. 102 of 2005.
10 Article 21 of the Taiwan Maritime Code.
11 Article 22 of the Taiwan Maritime Code.
12 This would form part of the regime covering non-limitation of liability on oil pollution incidents.
13 Article 10(v) of the Taiwan Conflict of Laws Act, Taipei District Court Maritime Case No. 11 of 1996, and Taiwan Appeals Case No. 609 of 2011.
14 Article 32 of the Taiwan Law of Ships Act.
15 Article 16 of the Taiwan Pilotage Act.
16 Taiwan Appeals Case No. 2476 of 1991.
17 Article 98 of the Taiwan Maritime Code.
18 Article 60 of the Commercial Harbour Act.
19 Merchant Shipping (Minimum Standards) Convention, 1976 (No. 147) of the International Labour Organization, which entered into force on 28 November 1981.
20 R H Chiu et al., Journal of Marine Science and Technology Vol. 16, No. 3, pp. 207 to 218 (2008).
21 Reported by Jack Gallagher in The Maritime Executive, 26 January 2015.
22 Article 33 of the Ocean Pollution Prevention Act.
23 Article 35 of the Ocean Pollution Prevention Act.
24 Article 34 of the Ocean Pollution Prevention Act.
25 Article 39 of the Commercial Harbour Act.
26 Article 99 of the Taiwan Maritime Code.
27 Article 103 of the Taiwan Maritime Code.
28 Article 53 of the Commercial Harbour Act.