Newbuilding contractsTransfer of title
When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass?
In principle, title in the ship passes from the shipbuilder to the shipowner when the shipowner takes possession of the ship and the parties agree that the title shall pass. The parties can agree on the exact time when the title shall pass. However, to defend against a good faith third party, according to the laws in Taiwan, transfer of title in the ship shall be done in writing and in conformity with the following conditions:
- where the transfer takes place in Taiwan, an application to local shipping administrative authority for their certification and seal; and
- where the transfer takes place in a foreign country, an application to the consular or representative office of Taiwan or any other equivalent institute empowered by the Taiwan government located in that country for their certification and seal.
What formalities need to be complied with for the refund guarantee to be valid?
In principle, the formalities to be complied with for the refund guarantee are subject to the agreements between the parties. However, if the guarantee is provided in the form of a bank letter, the bank, in addition to the parties, may have its own requirements on the formality.Court-ordered delivery
Are there any remedies available in local courts to compel delivery of the vessel when the yard refuses to do so?
The shipowner may file a claim with the court to compel the delivery of the vessel. If the shipowner wins and obtains a final and binding judgment, he or she may enforce the judgment and compel delivery of the vessel. In addition, before the judgement becomes final and binding, the shipowner may also apply for the provisional measure (preliminary injunction) for the delivery of the vessel, if the relevant requirements can be met.Defects
Where the vessel is defective and damage results, would a claim lie in contract or under product liability against the shipbuilder at the suit of the shipowner; a purchaser from the original shipowner; or a third party that has sustained damage?
Where the vessel is defective and damage results, the shipowner may bring a claim against the shipbuilder on the grounds of breach of contract between the shipowner and the shipbuilder. However, a purchaser from the original shipowner or a third party may not have a claim under the shipbuilding contract due to the principle of privity of contract.
Nevertheless, article 191-1(1) of the Civil Code provides that:
The manufacturer is liable for the injury to another arising from the common use or consumption of his merchandise, unless there is no defectiveness in the production, manufacture, process, or design of the merchandise, or the injury is not caused by the defectiveness, or the manufacturer has exercised reasonable care to prevent the injury.
Therefore, the purchaser and the third party may be able to have a claim under product liability against the shipbuilder in accordance with article 191-1(1) of the Civil Code on a case-by-case basis.
Ship registration and mortgagesEligibility for registration
What vessels are eligible for registration under the flag of your country? Is it possible to register vessels under construction under the flag of your country?
If a vessel wishes to be registered under the flag of Taiwan, it has to meet the definition of ‘ship’ under the Law of the Ships. Pursuant to article 3 of the Law of the Ships, a ship is a water vehicle that carries people or cargo on the surface or in the water, including passenger ships, cargo ships, fishing boats, vessels with special purposes, yachts and small ships. Usually, a vessel under construction will not be considered as a ‘ship’ under the Law of the Ships.
It is not practical to register a vessel under construction under the flag of Taiwan. However, it is possible to register a mortgage on vessels under construction.
Who may apply to register a ship in your jurisdiction?
Pursuant to article 5(2) of the Law of Ships, a ship may be applied for registration as a Taiwanese-flagged ship under one of the following conditions:
- the ship is owned by the Taiwanese government;
- the ship is owned by a Taiwanese national; or
- the ship is owned by a company established in accordance with the law of Taiwan with a principal office within the territory of Taiwan, and meets one of the following requirements:
- an unlimited company, of which all shareholders are nationals of Taiwan; or
- a limited company, of which at least half of the capital is owned by nationals of Taiwan, and the director authorised to represent such company is a national of Taiwan; or
- a joint company, of which all shareholders with unlimited liabilities are nationals of Taiwan; or
- a company limited by shares, of which the chairman of the board and at least half of the directors are nationals of Taiwan, and at least half of the capital is owned by nationals of Taiwan.
- the ship is owned by a juristic entity, which is established in accordance with the law of Taiwan with its main office within the territory of Taiwan, and at least two-thirds of its members and its statutory representative are nationals of Taiwan.
What are the documentary requirements for registration?
Pursuant to article 11 of the Ship Registration Law, the following are required for ship registration:
- application form;
- documents evidencing the cause of registration;
- certificate of former registration, if any;
- if a third party is to be included in the registration, documentary proof thereof; and
- documents evidencing the registration of the obligor.
The last two items are not required if the cause of registration is based on an enforceable judgment.Dual registration
Is dual registration and flagging out possible and what is the procedure?
In principle, dual registration and flagging out are not allowed in Taiwan.Mortgage register
Who maintains the register of mortgages and what information does it contain?
The Maritime and Port Bureau (MPB) of the Ministry of Transportation and Communications maintains the register of the mortgages of ships.
The information in the register of ship mortgages includes, among others:
- the basic particulars of the ship;
- the basic information of the mortgagee and the mortgagor (eg, name and contact details); and
- the amount of the debt, date of repayment, interest, payment date of interest, ranking of the mortgage, and the formerly registered mortgage.
Limitation of liabilityRegime
What limitation regime applies? What claims can be limited? Which parties can limit their liability?
Taiwan is not a party to the Convention on Limitation of Liability for Maritime Claims 1976, and thus the limitation of liability is governed by the Maritime Act of Taiwan (Maritime Act).
This is applicable to the registered owner, charterer, manager and operator of the ship.
Pursuant to article 21(1) of the Maritime Act, the liability of a shipowner is, in principle, limited to an amount equal to the value of the ship, the freight and other accessories of the particular voyage for the following claims:
- claims in respect of the loss of life, personal injury or loss of or damage to property, occurring on board or which directly resulted from the operation of the ship or salvage operations;
- claims in respect of damage resulted from the infringement of interests or rights caused by the operation of the ship or salvage operations; provided, however, that any damage resulting from a contractual relationship should be excluded;
- claims in respect of the removal or destruction of a sunken ship or property lost overboard; provided, however, that a reward or payment made under a contract should be excluded; and
- claims in respect to the obligations incurred for taking measures to avert or minimise the liabilities set out in above items (2) and (3).
Pursuant to article 70(1) and article 70(2) of the Maritime Act, where the nature or value of the cargo is fraudulently declared by the shipper at the time of shipment, neither the carrier nor the shipowner shall be liable for any damage to, or loss of, the cargo. Unless the nature and value of the cargo have been declared by the shipper before shipment and stipulated on the bill of lading, neither the carrier nor the shipowner shall be liable for any damage to or loss of the cargo in an amount exceeding 666.67 special drawing rights (SDR) per package or 2 SDR per kilogram, whichever is the higher.Procedure
What is the procedure for establishing limitation?
In Taiwan, it is not necessary to provide a cash deposit or set up a limitation fund to assert limitation of liability. The shipowner or carrier only needs to raise the limitation defence in court if a case arises.Break of limitation
In what circumstances can the limit be broken? Has limitation been broken in your jurisdiction?
In Taiwan, there is no mechanism to establish the limitation fund, and thus there are no issues regarding what happens to the fund if the limitation is broken. Nevertheless, the shipowner’s limitation and the package limitation may not be applicable under certain situations.
Pursuant to article 22 of the Maritime Act, the shipowner’s limitation of liability does not apply for the following claims:
- claims arising out of an intentional act or negligence of the shipowner;
- claims arising from the contract of employment with the shipmaster, seafarers or any other person serving on board the ship;
- claims for salvage reward or general average contribution;
- claims arising from the carriage of toxic chemical substances or oil pollution;
- claims arising out of nuclear incidents caused by nuclear substances or nuclear waste carried by ships; and
- claims arising out of nuclear damages caused by nuclear ships.
According to article 70(4) of the Maritime Act, neither the carrier nor the shipowner shall be entitled to the benefit of the package limitation if the damage or loss resulted from an intentional act or gross negligence of the carrier or the shipowner.
In practice, however, there are few cases where the plaintiff can successfully prove the intentional act or gross negligence of the carrier or the shipowner and then break the limitation. There are more cases where the parties dispute over whether the value of cargo has been stipulated on the bill of lading or what the ‘per package’ is.Passenger and luggage claims
What limitation regime applies in your jurisdiction in respect of passenger and luggage claims?
Taiwan is not a party to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea. However, pursuant to article 81 of the Maritime Act, a carrier must take out accident insurance for transporting passengers in specific navigation routes and areas. The routes and areas, and the amount to be insured, are set by the Ministry of Transportation and Communication.
The insured amount must be stated in the passenger ticket and constitutes part of the contract. It is deemed to be the maximum amount for damage compensation. The insurance premium is included in the ticket fare.
Port state controlAuthorities
Which body is the port state control agency? Under what authority does it operate?
The Maritime Port Bureau (MPB) is authorised under the Commercial Port Law and the Laws of the Ships to conduct the examination of ship certificate, security, equipment, crew quotas and other matters towards the entrance and departure of foreign merchant ships.Sanctions
What sanctions may the port state control inspector impose?
The shipping administration authority may impose a fine or order certain performance on the owner or master of a ship. For example, pursuant to article 92 of the Law of Ships, in the event of a violation of certain inspection provisions under the Law of Ships, the shipping administration authority may impose a fine on the owner or master of a ship, prohibit the ship from sailing and order to make corrections within a fixed time period. The ship may be released for sailing only after the correction is made.
In addition, pursuant to article 32 of the Law of Ships, for a non-Taiwanese flagged ship that departs from a Taiwanese international port, the master of the ship shall submit the inspection document or proof of passing inspection to the shipping administration authority of the port for examination. Failing which the shipping administration authority of the port may order the master of the ship to make corrections within a fixed time period, and the ship may not depart from the port before the fulfilment of the order.Appeal
What is the appeal process against detention orders or fines?
Unless otherwise provided by law, detention orders or fines may be appealed in accordance with the Administrative Appeal Act, and if the decision of the administrative appeal is not satisfactory, the interested party may file further administrative litigation with the administrative court.
Classification societiesApproved classification societies
Which are the approved classification societies?
CR Classification Society is the approved classification society in Taiwan.Liability
In what circumstances can a classification society be held liable, if at all?
A classification society may be held liable for breach of contract with its clients or for the violation of its duties (eg, surveys and inspections) commissioned by the government authorities.
Collision, salvage, wreck removal and pollutionWreck removal orders
Can the state or local authority order wreck removal?
Yes. If a ship strands, sinks or malfunctions and drifts outside the commercial port area due to beaching or other accidents, the competent authority may order wreck removal at the expense of the shipowner. If the sunken ships, objects, flotsam, pollutants and rafts within the fishing port area endanger or could endanger voyage and anchoring of vessels entering or departing the port, or contaminate or could contaminate the fishing port area, the competent authority may also order wreck removal at the expense of the shipowner.
In addition, if a ship suffers a maritime disaster or other accident that causes marine pollution or concern of pollution, the shipmaster and shipowner shall promptly take measures to prevent, eliminate or mitigate such pollution and shall promptly notify the local navigation and aviation competent authority, port management authority and local competent authority. For the above circumstance, the competent authority may order the adoption of necessary measures and, when necessary, the competent authority may directly take the measures at the expense of the shipowner, such measures including wreck removal.International conventions
Which international conventions or protocols are in force in relation to collision, wreck removal, salvage and pollution?
Taiwan is not a party to any international convention or protocol in respect of collision, wreck removal, salvage and pollution. Nevertheless, where there is a lack of applicable provisions under Taiwanese laws, as a standard practice, the government authorities and courts often refer to the relevant international conventions or protocols.Salvage
Is there a mandatory local form of salvage agreement or is Lloyd’s standard form of salvage agreement acceptable? Who may carry out salvage operations?
There is no mandatory local form for salvage agreements in Taiwan. The parties may negotiate and agree on their own terms and conditions. Therefore, the parties are free to use Lloyd’s standard form of salvage agreement and it is commonly used in practice. Although there are no legal restrictions on who may carry out salvage operations in Taiwan. In practice, most salvage work is done by companies that have the expertise and reputations in the market.
Ship arrestInternational conventions
Which international convention regarding the arrest of ships is in force in your jurisdiction?
Taiwan is neither a party to the International Convention Relating to the Arrest of Sea-Going Ships 1952 nor a party to the International Convention on the Arrest of Ships 1999. Nevertheless, where there is a lack of applicable provisions under Taiwanese laws, as a standard practice, Taiwanese courts often refer to the relevant international conventions.Claims
In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested? Can a bareboat (demise) chartered vessel be arrested for a claim against the bareboat charterer? Can a time-chartered vessel be arrested for a claim against a time-charterer?
There is no restriction on the nature of the claims for the arrest of a vessel provided always that the debtor of the claim is the shipowner. A shipowner’s creditor may arrest the shipowner’s vessel if such creditor has obtained a writ of execution against the shipowner. However, there is no action in rem under the jurisdiction in Taiwan. Creditors whose claims are secured by maritime liens or mortgages against the vessel would have to obtain a writ of execution against the vessel first to apply for the ship arrest.
In principle, associated ships may not be arrested.
A bareboat (demise) chartered vessel, in principle, cannot be arrested for the claim against the bareboat charterer because the bareboat charterer is not the owner of the vessel. The same also applies to the claim against a time charterer. However, if the shipowner and the bareboat charterer or time charterer are co-debtors, it is possible to arrest the vessel subject to the court’s discretion.Maritime liens
Does your country recognise the concept of maritime liens and, if so, what claims give rise to maritime liens?
Taiwan recognises the concept of maritime liens. Pursuant to article 24 of the Maritime Act, the following claims are secured by maritime liens and entitled to a preferential right of compensation:
- claims of the shipmaster, seafarer and other members of the ship’s complement arising from their contracts of employment;
- claims against the shipowner in respect of loss of life or personal injury directly arising from the operation of the vessel;
- claims for salvage rewards, wreck removal expenses and general average contributions;
- claims against the shipowner, based on tort in respect of damage to or loss of property occurring, whether on land or on water, in direct connection with the operation of the vessel; and
- harbour charges, canal and other waterway dues and pilotage dues.
What is the test for wrongful arrest?
If an arresting party intentionally or negligently applies for the arrest of the ship of an irrelevant third party, such a third party may have a claim in tort against the arresting party for damages on a case-by-case basis.Bunker suppliers
Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel?
Essentially, only creditors of the shipowner can arrest the ship. Therefore, the bunker supplier may apply for the arrest of the vessel if the charterer is considered as the agent of the shipowner for the purchase of the bunker.Security
Will the arresting party have to provide security and in what form and amount?
Yes. In the event of a provisional attachment (ship arrest), subject to the discretion of the competent court, the arresting party usually would be ordered to provide cash, a letter of undertaking or guarantee issued by an appropriate bank or insurance company in the amount equivalent between one-third and the full monetary value of the claim as security.
How is the amount of security the court will order the arrested party to provide calculated and can this amount be reviewed subsequently? In what form must the security be provided? Can the amount of security exceed the value of the ship?
Usually, the competent court would order the arrested party to provide the full monetary value of the claim as counter-security and, in principle, the amount of the counter-security cannot exceed the value of the arrested ship. The arrested party may request a review on the amount of the counter-security if it has justifiable reasons. Subject to the discretion of the competent court, the counter-security may usually be provided in the form of cash, a letter of undertaking or a guarantee issued by an appropriate bank or insurance company.Formalities
What formalities are required for the appointment of a lawyer to make the arrest application? Must a power of attorney or other documents be provided to the court? If so, what formalities must be followed with regard to these documents?
An original power of attorney (POA) is required for the appointment of a lawyer to file the arrest application. Taiwan is not a party to the Apostille Convention. In principle, if the POA is issued by a foreign entity, the POA needs to be notarised and legalised. If the POA is made in a language other than Chinese, a translation is required, but the translation is usually not required to be made from a sworn public translator. The POA and other documents for arrest cannot be filed electronically. In practice, due to the time pressure, the arresting party might be allowed to submit a POA without notarisation and legalisation first and supplement the duly notarised and legalised POA at a later stage. Nevertheless, all the above are still subject to the discretion of the competent court.Ship maintenance
Who is responsible for the maintenance of the vessel while under arrest?
In practice, the court may appoint the shipping government authority, the shipmaster or other appropriate person to maintain the vessel while under arrest. The court may also order the creditor to pay for the maintenance costs in advance.Proceedings on the merits
Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?
In the event of a provisional attachment, the court would, upon the motion of the arrested party, order the arresting party to pursue the claim on its merits within a specified period of time (the period of time shall be decided by the court on a case-by-case basis). In principle, the claim on its merits should be pursued in Taiwan unless there is an arbitration agreement.Injunctions and other forms of attachment
Apart from ship arrest, are there other forms of attachment order or injunctions available to obtain security?
In practice, provisional attachment is the most common form adopted to obtain security for a monetary claim. If the arresting party’s claim is non-monetary, he or she may apply for provisional measure (preliminary injunction). To obtain a preliminary injunction, the creditor should demonstrate the impossibility or extreme difficulty to satisfy the claim by future compulsory execution should there be any change in the status quo.Delivery up and preservation orders
Are orders for delivery up or preservation of evidence or property available?
Yes. If it is likely that the evidence would be destroyed or its use in court would be difficult, or with the consent of the opposing party, a party may move the court for perpetuation of such evidence; where necessary, the party who has legal interests in ascertaining the status quo of a matter or an object may move for expert testimony, inspection or perpetuation of documentary evidence. A motion for the perpetuation of evidence may be made before or after initiating a lawsuit.Bunker arrest and attachment
Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?
If the bunkers belong to the shipowner, the bunkers may be arrested by the creditors of the shipowner through the provisional attachment or compulsory execution after the final judgment.
Judicial sale of vesselsEligible applicants
Who can apply for judicial sale of an arrested vessel?
In general, creditors who have obtained writs of execution (eg, final and binding judgments and arbitral awards, however, provisional attachments and injunction orders are not writs of execution here mentioned) may apply for the judicial sale of an arrested vessel.Procedure
What is the procedure for initiating and conducting judicial sale of a vessel? How long on average does it take for the judicial sale to be concluded following an application for sale? What are the court costs associated with the judicial sale? How are these costs calculated?
The court would ask shipyards, shipping government authorities, the master mariners’ association or other appropriate bodies to evaluate the value of the ship and determine the basic auction price. The court would then publicise the information on the auction of the ship and inform the relevant parties of the auction. The auction is usually carried out through a bidding process.
It might take several months for the judicial sale to be concluded following an application for sale. If a second (or even third) auction is necessary, it will take a longer time to conclude the sale. The judicial sale is a part of the compulsory execution procedure. The fee for applying for the compulsory execution is 0.8 per cent of the claim or the value of the ship, depending on the nature of the claim, and there will probably be other fees incurred in relation to the judicial sale (eg, fees of evaluation and maintenance). In principle, the applicant will be requested to pay such fees in advance.Claim priority
What is the order of priority of claims against the proceeds of sale?
The proceeds of the sale are first used to pay for the fees in relation to the compulsory execution. The remainder of the proceeds will then be paid in the following order: debts secured by maritime liens, debts secured by retention (in respect of claims in relation to building or repairing the ship), debts secured by ship mortgages and then debts without any security.Legal effects
What are the legal effects or consequences of judicial sale of a vessel?
In principle, the judicial sale of a vessel will extinguish all prior liens and encumbrances on the sold vessel, including maritime liens.Foreign sales
Will judicial sale of a vessel in a foreign jurisdiction be recognised?
Taiwanese law is not clear on this issue; however, we believe that most Taiwanese courts would consider the principle of reciprocity.International conventions
Is your country a signatory to the International Convention on Maritime Liens and Mortgages 1993?
Carriage of goods by sea and bills of ladingInternational conventions
Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules?
Taiwan is not a party to the Hague Rules, the Hague-Visby Rules, the Hamburg Rules or the Rotterdam Rules. Nevertheless, the Maritime Act is partly based on, or modelled, after these Rules, and Taiwanese courts often make reference to them in their judgments.
In principle, carriage at sea begins when the carrier loads the cargo and ends after the carrier discharges the cargo.Multimodal carriage
Are there conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading?
Taiwan is not a party to the international conventions in respect of road, rail or air transport. In terms of domestic law, there is no provision specifically regulating combined transport and multimodal bill of lading. Nevertheless, article 75 of the Maritime Act provides that:
Where there is a consecutive carriage of cargo involving carriage by sea and other modes of carriage, the leg of the journey involving carriage by sea shall be governed by the Maritime Act. If the time of the loss of or damage to the cargo occurred could not be ascertained, it shall be presumed as occurring during the carriage by sea.
Title to sue
Who has title to sue on a bill of lading?
In principle, the holder of the bill of lading or the assignee of the holder of the bill of lading has the title to sue for the disputes arising from the bill of lading.Charter parties
To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsee of the bill?
Even the bill of lading explicitly prescribes the incorporation of the terms in a charter party (including the jurisdiction or arbitration clause), many Taiwanese courts would still consider that such terms in a charter party do not bind a third-party holder or endorsee of the bill unless there is clear evidence indicating that the third party or endorsee has knowledge of the terms and still accepts them.Demise and identity of carrier clauses
Is the ‘demise’ clause or identity of carrier clause recognised and binding?
Taiwanese law is not very clear on the demise clause or identity of carrier clause. In determining who should be liable as a carrier, Taiwanese courts basically would look, among other factors, at who issued the bill of lading and who gave the authority for the issuance. In practice, if the identity of the carrier cannot be determined, some courts would assume that the shipowner is the carrier.Shipowner liability and defences
Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual carriers?
If it is clear from the bill of lading that the shipowner did not issue or authorise others for the issuance of the bill of lading, the shipowner might be able to avoid the liability for cargo damage. However, if the identity of the carrier cannot be determined, some Taiwanese courts did consider the shipowner as the carrier. Under such circumstances, the shipowner may rely on the terms of the bill of lading provided always that the court has the discretion on the validity of such terms.Deviation from route
What is the effect of deviation from a vessel’s route on contractual defences?
Deviation usually results in a breach of contract under the carriage. However, pursuant to article 71 of the Maritime Act, a deviation for the purpose of saving or attempting to save life or property at sea or for other reasonable cause shall not be deemed as a breach of the contract of carriage, and neither the carrier nor the shipowner shall be liable for the damage or loss resulting therefrom.Liens
What liens can be exercised?
According to article 27 of the Maritime Act, maritime liens can be exercised on the following objects:
- the ship, all her equipment and appurtenances, and any other residual materials;
- the freight to be earned for the voyage where the maritime lien occurred;
- compensation due to the shipowner for the damage sustained by the ship or loss of freight during that particular voyage;
- compensation due to the shipowner in respect of general average; and
- remuneration due to the shipowner for salvage rendered at any time before the end of the voyage.
Carriers may exercise liens on cargo to secure payment of freights and other fees. In addition, shipyards may exercise liens on the vessel in order to secure payment in relation to the building or repairing of the ships.Delivery without bill of lading
What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability?
If a carrier delivers cargo without one or all bills of lading being surrendered (depending on whether the delivery is made at the port of destination or not), it will probably be liable for delivery of the same cargo or damage compensation to the holder of the bill of lading. Since delivery of cargo without production of the bill of lading is likely to constitute gross negligence, the carrier is unlikely to limit such liability.Shipper responsibilities and liabilities
What are the responsibilities and liabilities of the shipper?
Pursuant to article 55 of the Maritime Act, the shipper shall guarantee to the carrier the accuracy of the title, quantity, the kind of packing, and the number of packages of the cargo to be delivered, and the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such particulars.
Shipping emissionsEmission control areas
Is there an emission control area (ECA) in force in your domestic territorial waters?
Yes. The emission control areas in Taiwan includes the ports of Keelung, Taichung, Kaohsiung, Hualien, Taipei Suao, Anping and Mailiao.Sulphur cap
What is the cap on the sulphur content of fuel oil used in your domestic territorial waters? How do the authorities enforce the regulatory requirements relating to low-sulphur fuel? What sanctions are available for non-compliance?
The Ministry of Transportation and Communications issued guidance on the adoption of article 14.1.3 and article 4 of Annex VI Regulations for Prevention of Air Pollution from Ships under the International Convention for the Prevention of Pollution from Ships (MARPOL) and such guidance has become effective since 1 January 2019. According to the guidance, foreign vessels and flag ships sailing in international routes shall utilise low sulphur fuel oil (sulphur-bearing not more than 0.5 per cent by weight), or equipment or alternative fuels that achieve the equivalent effect of emission reduction when entering into an international commercial port area under the jurisdiction of Taiwan.
The inspector of the flag state or the port state control would use the current selection rule to appoint the target vessels and conduct the inspection on board. Where the vessel fails to comply with the above guidelines, a fine ranging from NT$100,000 to NT$500,000 can be issued by the commercial port authorities.
Ship recyclingRegulation and facilities
What domestic or international ship recycling regulations apply in your jurisdiction? Are there any ship recycling facilities in your jurisdiction?
The Commercial Port Law and the regulations thereunder apply to ship scrapping and recycling in Taiwan. Ship scrapping and recycling require approval from the port authorities and should be carried out in the areas designated by the port authorities. Usually, the port authority will take reference from the international ship recycling regulations; however, it is difficult to predict which international ship recycling regulations will apply as Taiwan is not a signatory to any international convention. There might be ship scrapping and recycling facilities in some shipyards in Taiwan, but there are fewer and fewer ship scrapping and recycling businesses in Taiwan owing to environmental protection and labour difficulties.
Jurisdiction and dispute resolutionCompetent courts
Which courts exercise jurisdiction over maritime disputes?
There is no court that specialises in maritime disputes in Taiwan. Maritime disputes may be submitted to any court in Taiwan that has jurisdiction over the dispute under the Code of Civil Procedure or Maritime Act. Nevertheless, a few courts in Taiwan have internal maritime divisions designated to handle maritime disputes.Service of proceedings
In brief, what rules govern service of court proceedings on a defendant located out of the jurisdiction?
Pursuant to article 145(1) of the Code of Civil Procedure, where service is to be made in a foreign country, it shall be effectuated by the competent authorities of such country, or the relevant ambassador, minister envoy or consul of Taiwan or other authorised institutes or organisations in such country to make the service. In practice, the court would request the Ministry of Foreign Affairs to further make a request to the relevant ambassador, minister envoy or consul of Taiwan, or other authorised institutes or organisations in that country to make the service.Arbitration
Is there a domestic arbitral institution with a panel of maritime arbitrators specialising in maritime arbitration?
The domestic arbitral institution in Taiwan is the Chinese Arbitration Association (CAA), however, there is no specific panel of maritime arbitrators in the CAA. Nevertheless, there are some arbitrators specialising in maritime disputes in the list of arbitrators of the CAA.
In principle, if there is an arbitration clause between the parties, most parties would choose to conduct the arbitration in London. Also, if there is no arbitration clause, the parties would most likely submit the disputes to the competent court instead of referring to the CAA.Foreign judgments and arbitral awards
What rules govern recognition and enforcement of foreign judgments and arbitral awards?
A final and binding judgment rendered by a foreign court may be enforced in Taiwan provided that such foreign judgment is recognised by a Taiwanese court. In principle, a foreign judgment may be recognised except where:
- the foreign court lacks jurisdiction pursuant to the law of Taiwan;
- a default judgment is rendered against the losing defendant unless the notice or summons of the initiation of action had been legally served within a reasonable time in the foreign country or had been served through judicial assistance provided under the law of Taiwan;
- the performance ordered by such judgment or the proceeding of the lawsuit is contrary to the public policy or morals of Taiwan; or
- there is no mutual recognition between the foreign country and Taiwan (in practice, as long as there is no precedent in the foreign country that rejects the recognition of a judgment rendered by a Taiwanese court, the Taiwanese courts tend to consider that this does not apply).
Similarly, a foreign arbitral award is enforceable if it is recognised by a Taiwanese court. In principle, a foreign arbitral award may be recognised except where:
- the recognition or enforcement of the arbitral award is contrary to the public order or good morals of Taiwan; or
- the dispute is not arbitrable under Taiwanese laws.
Furthermore, the court may dismiss an application for recognition of a foreign arbitral award if the country where the arbitral award is made or whose laws govern the arbitral award does not recognise arbitral awards of Taiwan.Asymmetric agreements
Are asymmetric jurisdiction and arbitration agreements valid and enforceable in your jurisdiction?
Taiwanese courts’ position on this issue has been unclear to date. Nevertheless, asymmetric jurisdiction and arbitration agreements are likely to be valid and enforceable in Taiwan, if the court considers there is mutual consent between the parties, except where the applicable law provides for exclusive jurisdictions.Breach of jurisdiction clause
What remedies are available if the claimants, in breach of a jurisdiction clause, issue proceedings elsewhere?
If a Taiwanese court has exclusive jurisdiction over a dispute but the claimant issued proceedings in a foreign country, the defendant might not be able to apply for an injunction to force the claimant to submit the case to the Taiwanese court. Nevertheless, if the claimant obtains a foreign judgment in its favour and applies for the enforcement of the foreign judgment (or arbitral award) in Taiwan, the defendant may argue the lack of jurisdiction of the foreign forum and request the Taiwanese court to reject the claimant’s application for recognition or enforcement.
What remedies are there for the defendant to stop domestic proceedings that breach a clause providing for a foreign court or arbitral tribunal to have jurisdiction?
The defendant may raise an objection and request the court to dismiss the case. However, in practice, some Taiwanese courts would still review the case regardless of a jurisdiction’s clause providing for a foreign forum.
If the arbitration shall be conducted in a foreign country, the court will order the claimant to apply for the arbitration within a certain period of time. If the claimant fails to do so accordingly, the court will dismiss the domestic court proceeding. If the claimant applies for the arbitration within the prescribed period, the court will suspend the proceeding pending the result of the arbitration.
Limitation periods for liabilityTime limits
What time limits apply to claims? Is it possible to extend the time limit by agreement?
The applicable time limits differ in accordance with the different nature of the claims as follows:
- claims for compensation for loss, damage or delay in the transportation of cargo are extinguished by prescription if not exercised within one year from the date of completion of transport, or from the date when completion of the transport ought to have taken place;
- claims arising out of a collision are extinguished if not duly exercised within two years commencing from the date of the collision; and
- claims for salvage rewards shall be extinguished if not duly exercised within two years commencing from the date of the completion of the salvage operation.
The time limits may not be extended or reduced by mutual agreement. In addition, time limits may not be waived in advance either.Court-ordered extension
May courts or arbitral tribunals extend the time limits?
MiscellaneousMaritime Labour Convention
How does the Maritime Labour Convention apply in your jurisdiction and to vessels flying the flag of your jurisdiction?
Taiwan is not a party to the Maritime Labour Convention.Relief from contractual obligations
Is it possible to seek relief from the strict enforcement of the legal rights and liabilities of the parties to a shipping contract where economic conditions have made contractual obligations more onerous to perform?
Yes. Pursuant to article 227-2(1) of the Civil Code:
Where there is a change of circumstances after the constitution of the contract, which is unforeseeable when signing the contact and the performance of the original obligation becomes obviously unfair to a party, such party may apply to the court for the change or adjustment of the original obligation or effect.
Other noteworthy points
Are there any other noteworthy points relating to shipping in your jurisdiction not covered by any of the above?
Although Taiwan is not a party to most international conventions, the maritime legislation in Taiwan is deeply influenced by them. In addition, where there is a lack of applicable provisions in Taiwanese laws, the courts may use the relevant international conventions for reference.
Update and trendsKey developments of the past year
Are there any emerging trends or hot topics that may affect shipping law and regulation in your jurisdiction in the foreseeable future?
The traditional view of Taiwanese courts is that the clauses on the back of bills of lading are only unilateral presentations, rather than mutual agreements between the carrier and the bill of lading’s holder, and therefore they are not binding on the cargo owner. However, in July 2020 the Supreme Court took a new position and ruled that the governing law clause on the back of the bill of lading is binding on the shipper, carrier and the bill of lading holder. It also implies that all the clauses on the bill of lading are binding unless they lessen or discharge the carrier’s statutory liability under the Taiwan Maritime Law. Nonetheless, given the drastic change in the court’s legal view, it is uncertain whether the lower courts will follow this new view and recognise the effects of all clauses of bills of lading in the future.Coronavirus
What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?
The Maritime and Port Bureau (MPB) has announced a series of measures in response to the covid-19 pandemic, including issuing the Operating Principles of Seafarer Epidemic Prevention and Health Control Measures (Operating Principles) in Chinese and English on 14 April 2020. The Operating Principles is available on the MPB’s official website.
According to the Operating Principles, ships should replace seafarers at ports where covid-19 infections are at moderate levels and crew should take measures against infection (eg, wearing personal protective equipment, having designated personnel measure the seafarers’ body temperature twice a day during voyages, and keeping records). If any seafarer shows signs of illness, their replacement should be suspended and the ship’s master should notify the parties they are required to in accordance with pandemic prevention measures. In addition, any seafarer who is confirmed or suspected as having covid-19, has a fever, or shows symptoms of respiratory illness must be quarantined for 14 days and strictly follow relevant infection control requirements.
As the impact of covid-19 in Taiwan is not severe, if the performance of a contract is impacted by covid-19, a party may have to rely on provisions under the Civil Code that provide for force majeure events as grounds for liability exemptions. For instance, if a carrier can prove that the delay in the delivery of goods resulted from a force majeure event, he or she would be discharged from liability for compensation. However, covid-19 itself may not be a sufficient reason for a party to be discharged from liabilities arising from an inability or delay in performing their duties under a contract, as they must show a direct causal link between covid-19 and the impossibility or delay of their performance.
Furthermore, the standard of duty of care for ordinary people in the same or similar field of business may also be used by a court when evaluating the influence of covid-19 or whether it was a causal factor.
Law stated dateCorrect on
Give the date on which the information above is accurate.
6 May 2020.