New Civil Procedural Law for Maritime Claims in Taiwan

Published 12 January 2004

Roger KC Wang of Sotonors Attorneys-at-law,Taipei, describes the new procedure for maritime claims in Taiwan

Taiwan does not have a specific civil procedural law for maritime claims so ordinary civil procedural law applies. When a claimant lodges a maritime claim with the Court or requests the arrest of a vessel, the claimant is required to comply with the provisions of the Taiwan Civil Procedural Law. After the Court approves an application to arrest, a claimant has to enforce the arrest warrant in accordance with the relevant section of the Taiwan Compulsory Execution Law. We set out below the procedure for filing a maritime claim and arresting a vessel in Taiwan.

JURISDICTION

Taiwanese Courts have jurisdiction over maritime claims when

1. A defendant’s domicile, head office or principal business is located in Taiwan.
2. There are assets located within the jurisdiction (for example, a vessel calls at a Taiwanese port) and the defendant is a foreign company and has no office in Taiwan.
3. In relation to maritime liens or mortgages, the vessel in question calls at a Taiwanese port. 
4. In relation to cargo claims arising under Bs/L, the load port or discharge port is in Taiwan. 
5. In relation to collision claims,
    a collision occurs within Taiwanese territorial waters, or
    the offending vessel is registered in Taiwan, or is arrested in Taiwan, or
    the damaged vessel comes to a Taiwanese port.
6. The parties agree or have agreed to Taiwanese jurisdiction. If there is no agreement and a defendant fails to object to the Court’s jurisdiction but directly proceeds with arguments about the claim’s merits, then they are regarded as having accepted the Court’s jurisdiction and forfeit their right to dispute it.

SHIP ARREST

1. The Taiwan Civil Procedural Law does not recognize the existence of actions in rem and therefore, no action in rem may be brought directly against the vessel. However, the claimants are entitled to provisionally seize the defendants’ assets, including their vessels, if they can establish a prima facie case against the vessel's owners and provide security as required by the Court. The claimants can only arrest the offending vessel and a sister ship registered as belonging to the same defendants. When exercising a maritime lien over a vessel, the claimants are entitled to arrest the said vessel. However, the claimants are not entitled to arrest vessels of which the defendants are the beneficial owners or vessels merely under the defendant’s management or control.
   
2. In practice, three steps are required for claimants to arrest a vessel in a Taiwanese port. First, they must obtain a Court order to provisionally seize the vessel. Secondly, they have to furnish the Court with a specified security bond. Lastly, they have to make a further application to the Court to execute the seizure order and arrest the vessel.
   
3. In accordance with the Instructions for Dealing With Civil Precautionary Proceedings, the Courts are required to complete the ship arrest procedure within three working days from the claimants' initial application. This is subject to the claimants’ documentation being in order and the security bond being lodged with the Court. In urgent cases, the Court may, upon the claimants’ request, execute the ship arrest on a public holiday or during non-working hours.
   
4. The Court will order a security bond to be furnished before execution of the ship arrest. The security bond will range from one-third to the full amount of the claim, and has to be in the form of cash, a transferable bank deposit certificate, or a guarantee letter issued by Taiwanese insurers or banks.
   
5. The ship arrest is only executed after the ship enters the port or before the Master receives port clearance to leave. The Court will not execute a ship arrest if a vessel is anchored outside the port but within Taiwanese territorial waters.
   
6. The Taiwan Civil Procedural Law does not allow a bond to be lodged with the Court in advance to prevent a possible ship arrest.
   
7. To release the vessel, the defendants or the debtor interests may lodge the amount of the claim plus arrest fees with the Court. Alternatively, the debtor interests can persuade the claimants to accept a P & I Club letter of guarantee. Upon release of the vessel, the claimants are entitled to retrieve their security bond from the Court.
   
8. The laws do not provide a time limit for the duration of a ship arrest. A ship will remain arrested so long as the debtor interests fail to provide the counter bond to the Court or fail to reach an agreement with the claimants concerning the vessel’s release.  The port authority will normally request the ship’s agent to advance supplies and crew provisions to the vessel. Their claim for reimbursement of these costs will then be ranked as first priority. If a vessel has been arrested for a long time, its value may decline and/or the expenses of preserving the vessel may rapidly accumulate. Under such circumstances, the Court may decide to auction the vessel and hold the sale proceeds.
   
9. It is difficult to claim compensation for wrongful arrest. However, compensation may be claimed in the following situations:
   (1) The order for arrest is withdrawn for being improper.
   (2) The claimants fail to timely lodge their action with the Court.
   (3) The claimants withdraw the Court’s order for arrest. 

SERVICE OF PROCESS

1. If the Court summons or other documents are to be served upon a foreign company, the Court has to ask for the assistance of Taiwanese diplomatic representation.
   
2. When service is properly executed but the foreign defendant fails to attend the hearing, the Court is entitled to render a default judgment.
   
3. When the Court executes a ship arrest, the relevant documents are served directly upon the Master of the vessel as the Master is deemed to be the owners’ representative and has authority to deal with all matters in connection with the operation of the vessel.

SEIZURE ORDER

1. The Taiwan Civil Procedural Law allows for the seizure of the debtor’s specific assets to prevent their dissipation or removal from the jurisdiction.
   
2. Upon the application of the claimants, the Court may order the debtors to disclose their assets. The claimants may then ask the Court to provisionally seize those assets. To prevent the debtors from concealing or disposing of their assets, the Court may order the debtors to comply with such provisional measures as the Court in its discretion deems necessary.
   
3. If debtors are able to pay their debts but refuse to do so, or if they are found to have concealed or disposed of assets subject to the Court’s jurisdiction, the Court may order the arrest of the debtors and hold them in custody for a maximum of three months.

PRESERVATION OF EVIDENCE

1. Before or after litigation has commenced, the Court may, by its own authority or upon the request of an interested party, order the preservation of evidence.
   
2. The Court may make this order if evidence might be destroyed or lost or rendered difficult to obtain at a later stage.
   
3. The Court may order:
     original or copy documents to be provided,
     photos, pictures, audio tapes, or videotapes to be taken, and
     a written record of the investigation of evidence. The interested parties are entitled to render opinions which will be recorded in this written record.
   
4. If the applicants fail to commence legal action within thirty days of such an order, the Court may rescind its order.

MARITIME CLAIMS AND CIVIL PROCEDURE LAW

1. A maritime claim is identical to other civil claims as regards civil procedure. Before a final judgment is rendered, the claim may pass through three courts: the District Court at first instance, on appeal to the High Court and finally on appeal to the Supreme Court. A judgment will become final when an appeal is dismissed by the Supreme Court.
   
2. For maritime claims not exceeding NTD 1,500,000, the losing party is not entitled to appeal to the Supreme Court and the decision of the High Court is final.
   
3. For all claims including collision claims, the claimants are required to give a statement of their claim with evidence attached. The Court will then instruct the defendants to provide their defence with supporting evidence.
   
4. It is the claimant’s duty to pay the court fee at the time of lodging the action while the appellants are obliged to pay the appeal court fees. The losing party (as determined by final judgment) becomes liable for all of the court fees in the action. The court fees are calculated according to a sliding scale, increasing as the amount claimed increases.
   
5. When a claimant has lodged the statement of claim and the relevant court fees are paid, the Court will dispatch a copy of the statement to the opponents and schedule a hearing date. The judge requires the parties to present their written arguments with supporting evidence before a hearing. The Court normally schedules several hearings before winding up the proceedings and at each hearing the parties have limited time to argue their positions and provide supporting evidence.
   
6. The Court will not conduct special “discovery” proceedings to facilitate the exchange of evidence. When the parties allege a fact in their favour, they bear the burden of proving this fact. Therefore, the parties are not obliged to present all the evidence in their possession. If a party is able to prove to the Court that certain documents are in the opponent’s possession, the Court may order submission of these documents. If the opponent fails to submit such documents then the Court may rule the claimants’ allegations regarding such documents to be deemed true.
   
7. After commencement of litigation, the parties may reach an amicable settlement at any time in front of the judge. Such a settlement in court has the same effect as a final judgment to bind the parties. Additionally, when the settlement is ultimately reached in Court, the claimants are entitled to reimbursement of half of the Court fees advanced to the Court.
   
8. On appeal, the High Court will not deal with issues and arguments that have not been raised in the District Court. These provisions of the Civil Procedural Law only came into force on 1 September 2003 and the High Court’s attitude towards enforcing these provisions remains to be seen.
   
9. The judgment of the High Court is not final. An appeal to the Supreme Court can only be filed on grounds that the High Court judgment is contrary to law or to the Supreme Court precedents. If the Supreme Court dismisses the appeal, the High Court judgment is final. If the appeal is affirmed, the claim will be remanded to the High Court for re-trial. The parties are entitled to appeal to the Supreme Court once more after the High Court has given judgment on the re-trial.
   
10. Maritime claims lodged with certain District Courts, such as the Taipei District Court, will be dealt with by special judges, who also hear other civil cases. The parties may also agree to appoint a specific District Court judge to hear their case. In this case, once judgment has been given, the parties may appeal to the Supreme Court but may not dispute the facts as determined by the District Court. In other words, the parties waive the right to appeal in exchange for the opportunity of choosing the presiding judge
    
11. The Courts have now also introduced a system to allow for the assistance of maritime experts in proceedings. The Court may consult with maritime experts listed by the Courts or other experts whenever they deem it necessary, whether during a hearing or outside a hearing. However, the Courts are not bound by the experts’ opinions and are free to render their judgment without reference to the opinion of the experts.

Roger KC Wang
Sotonors Attorneys-at-Law
21, Lane 8, Kwang-Chow St
Chung-Chen District
Taipei, Taiwan 100
Tel: 886-2-23811997
Fax: 886-2-23703546
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