TAIWAN CONTINUES ITS INDIVIDUAL DEVELOPMENT

TAIWAN is the Mediterranean of the Far East. The people there are generally warm, gregarious and extremely hospitable. Taipei at first glance looks like a chaotic and dirty city, dominated by motorcycles and the manufacture of cheap electronic goods. But behind this facade lies a proud nation with a strong identity and a rich culture. And beyond the smoke of the city is an island of lush mountains and beautiful shorelines.

The sea, of course, has played a key part in the development of Taiwan, and its maritime industry has grown alongside it. Companies such as Evergreen, Yang-Ming, Yu-Ming and Wan-Hai are well-known shipping names in ports around the world.

The island of Taiwan was previously known as Formosa. To strike an independent note, Formosa Transnational took the original name of the island as its name when it established itself as a law firm in 1974. The philosophy of the four founder partners of the firm, KC Fan, John C Chen, Paiff Huang and Henry HM Rai, is still very much in evidence, and it was the collaborative nature of Formosa Transnational that attracted Delphine Chen to join the firm as a partner in 1995.

Before she joined Formosa, Delphine had worked for thirteen years at T C Huang & Partners, one of the major shipping law firms in Taiwan.

Formosa has sixteen partners, matched by sixteen attorneys and nearly ninety staff. What began as a domestic litigation practice has expanded, alongside the financial prosperity of the island, into an international firm. In the maritime field, Formosa acts as a defendant lawyer on behalf of shipowners and their clubs. However, it is best known for its litigation work.

Formosa's policy is to encourage its lawyers onto the world stage and, in this light, Delphine chose a one-year LMM programme in shipping and banking at University College, London.

"Foreign lawyers need to understand that, in Taiwan, lawyers are not necessarily working on an hourly basis. Not all Taiwanese clients are willing to accept hourly rates. They prefer fixed fees and/or contingency fees on a percentage basis only."

"I wanted to develop a deeper understanding of English law for when I deal with foreign lawyers," explains Delphine. Since being in the UK, she has spent time at Ince & Co's London office as well as developing relationships further with various other London maritime firms. So as to gain a better insight into the P& I world, Delphine will also go to the Charterers Mutual Club after her exams this summer, before returning to Formosa at the beginning of October.

On an international note, Delphine was chairman of the Inter-Pacific Bar Association from 1996 to 1998. "This is an important organisation for Taiwan, since it is not a member of the IBA due to political sensitivities with China, which still sees Taipei as a PRC province, not an independent country," she says.

This political sensitivity affects Taiwanese maritime lawyers in a variety of ways. Delphine says, "Taiwanese lawyers cannot practise in the PRC, and no licences are being given to them to open offices in Shanghai or Beijing. But we can directly instruct a PRC lawyer on our behalf.

"In the past, direct voyages between Taiwanese ports and Chinese ports were not permitted. This restriction was equally applicable to foreign flags as well as to Taiwanese flags and Chinese flags. Ships that violated these restrictions were subject to expensive fines. To satisfy the regulatory requirements, shipping companies had to use feeder services and arrange separate bills of lading to cover the separate legs of the journeys.

"It used to be common practice to switch bills of lading in the cross-trade services between Taiwan, Hong Kong and China and, inevitably, this generated a substantial amount of litigation. But the restrictions have certainly been liberalised in recent years."

Direct trade can now take place between Taiwan and certain designated Chinese ports. Taiwanese ships still can't fly the national flag on entry to port, and this problem is mostly overcome by using flags of convenience. Evergreen, for example, flies the Panamanian flag.

But money speaks louder than politics in investment-hungry China, and the Chinese government can neither stop nor restrict commercial activity.

"Mainland China welcomes Taiwanese capital, but the Taiwanese government strictly regulates the flow of investment into China," explains Delphine. "Public-listed companies' investments are, for instance, closely regulated and monitored. Investment in some industries is prohibited and others are subject to approval by the Taiwanese government."

Inevitably, Taiwanese companies have sought to find loopholes in the system, and some have set up Hong Kong subsidiaries, which indirectly invest in China, using places such as Bermuda as tax havens.

Delphine and her colleagues watch developments closely as foreign lawyers are granted licences to practise in China. "As foreign lawyers grow in strength in the PRC," she says, "their presence could affect Taiwanese lawyers, and the answer to this problem, in the long term, will be for us to establish correspondent offices in Shanghai."

Delphine is a well-known face in the maritime communities of London and the Pacific Rim. But how did she become involved in the first place?

"Like many other fathers, my father wanted me to be a lawyer or a doctor," she explains. "I took a law degree in Taiwan and afterwards joined Huang & Partners, where I ended up training as a shipping lawyer. Approximately fifty per cent of the law graduates in Taiwan are women, but they do not necessarily pursue a career as a lawyer. They have tended to choose to become judges and, as a result, we have a lot of females on the bench in Taiwan."

As a woman in shipping, Delphine is certainly not unusual in Taiwan which, due to its equal opportunities policies, has an above-average ratio of females involved in its maritime industry.

The Taiwanese court system works in three layers. Civil law jurisdiction starts in the district court, then the high court, followed by the supreme court. If the supreme court finds that an error has been made, retrial takes place in the high court.

"There is no publication of registers in Taiwan to find out whether or not proceedings have been served," says Delphine. "This can cause logistical problems, but in a small maritime legal community such as ours, it is very easy to find out, usually by making a phone call or two.

"Currently, Taiwanese maritime law is based on the Hague Rules, but an amendment bill to adopt the Hague-Visby Rules has passed the first reading by the legislature".

"Arbitration is widely used in construction disputes in Taiwan. Our commercial arbitration act has recently been amended. It is designed to make arbitration more accessible and to encourage commercial companies to adopt it as their preferred method of dispute resolution. But most shipping companies still have London arbitration in their contracts when it comes to charter party or bills of lading disputes. All major maritime arbitration still goes to London.

"The common problem in enforcement of foreign arbitration awards in Taiwan is the lack of proof of the service of progress. Foreign arbitration awards are recognised and enforced by the Taiwanese courts provided that, among other things, the notice of commencement of the arbitration proceeding has been served to the respondents. Personal service does not necessarily have full effect if the respondents have refused to acknowledge receipt.

"To safeguard enforcement, the service of process must not only comply with the law of the place where the arbitration is conducted, it must also comply with Taiwanese practice. This means serving the documents by 'legally attested letter', a service tested by the Taiwanese post office, which can be sued if the letter is not received, or acknowledged by the respondent."

These problems are overcome by asking the Taiwanese court for judicial assistance to serve a writ from abroad.

There are other impending changes to Taiwanese maritime law. "Currently," says Delphine, "Taiwanese maritime law is based on the Hague Rules, but an amendment bill to adopt the Hague-Visby Rules has passed the first reading by the legislature".

For procedural law in London, Taiwanese lawyers employ London solicitors. What kind of service does Delphine look for from them?"Professional advice is a given," she says, "but I also want to be kept posted on any developments on the case. I also want an estimate of fees in advance.

"Foreign lawyers need to understand that, in Taiwan, lawyers are not necessarily working on an hourly basis. Not all Taiwanese clients are willing to accept hourly rates. They prefer fixed fees and/or contingency fees on a percentage basis only."

On the P&I front, Britannia dominates the Taiwanese market, although Gard has always been the club for Evergreen. Delphine adds, "Although the Taiwanese market has been dominated by certain clubs for years, many clubs are extremely keen to develop their business in Taiwan. Some of them set up exclusive correspondent offices, while others hold conferences and workshops on a regular basis. It has been a long-standing subject for debate among Taiwanese shipowners as to which approach best serves their interests. Should they split their fleet with different clubs, or continue to enter their ships in only one club?

"Fixed premium as opposed to the traditional mutual cover offered by the clubs is another key issue that we will watch from Taiwan with interest," concludes Delphine.