Supreme Administrative Court judgment on the case brought by Chu-Chiang Construction Co., Ltd. against the Fair Trade Commission.

Taiwan

Case:

Supreme Administrative Court judgment on the case brought by Chu-Chiang Construction Co., Ltd. against the Fair Trade Commission.

Key Words:

public construction work, Department of Rapid Transit Systems, abuse market position

Reference:

Supreme Administrative Court Judgment (90) P'an Tzu No. 1298

Industry:

Housing, Construction, and Building Industry (3802)

Relevant Law:

Article 24 of the Fair Trade Law

Summary: 1. In July 1991, the Chu-Chiang Construction Co., Ltd. (plaintiff) won the bid to carry out the public construction work for Nan Kang line CN258 of the Taipei MRT system. The plaintiff subsequently alleged that the Taipei City Department of Rapid Transit Systems (DORTS) abused its market position and canceled the cut and cover tunnel portion of the east end of CN258 part of the public construction work, replaced it with a bored tunnel, and announced a fresh bid for the bored tunnel. It further alleged that the DORTS eliminated the portion for A and D of BL14 station from the original contract under the pretext of concerted development and assigned these portions to a third party to carry out the work. Charging that this violated the Fair Trade Law (FTL) and infringed on its rights under the original contract, the plaintiff filed a complaint with the defendant, the Fair Trade Commission (FTC). The FTC found in its investigation that Article 24 of the FTL was not applicable in this case and that, since altering parts of the public construction work involved the fulfillment of the original contract, the case should be handled through civil litigation procedure to seek relief. The plaintiff was not satisfied with the finding, and instigated an appeal and a second appeal as well as this administrative litigation.

2. The plaintiff had won the bid for the east portion of the public construction work of MRT Nan Kang Line in August 1991 and signed the contract thereof with the DORTS. The plaintiff argued that, the DORTS was fully aware of the alteration required to be made to the public construction work, but still held the tender in the manner applicable to the original terms of the public construction work. Deceptive means was used in the tender, in violation of the FTL. However, amendments to the FTL were announced on 4 February 1991 and took force once year after the announcement pursuant to Article 49(1) of the FTL. At the time that the DORTS engaged in the conduct alleged by the plaintiff, the FTL was not yet legally enforceable. Under its principle of the non-retroactivity, the FTL was not applicable in this case. The DORTS did fail to conform to the resolution of the Taipei City Council to delay construction work contracting until relevant policies were in place and to disclose the possible risk involved in construction work, giving rise to the present dispute with the plaintiff with respect to the construction contract. The DORTS could have been held liable under either civil or administrative law. However, it could not be established that the DORTS violated requirements under the FTL.

3. The reason that the DORTS failed to contract the scope of the construction work pursuant to the original contract to the plaintiff exclusively was because, had it separated the 840-meter road at issue into two bids, factors such as increase in the costs of drillers and public interest issues such as the construction on the platform between the two tendered projects and the traffic on the construction site land would come into play. Although the final determination made by the DORTS may have caused the plaintiff to suffer damage under the original contract, it had the original intent to try and preserve the interest of both parties [to the contract]. It is not the case that the DORTS took obviously unfair actions with intentional abuse of its superior position to cause the plaintiff to suffer damage under the original contract, without legitimate public interest considerations. It was further found that the DORTS altered the design in conformity with relevant laws and regulations. It eliminated the portions for A and D exit/entrance of BL14 station and raised the price for the plaintiff to contract the work. The plaintiff had initially expressed its intent to contract pursuant to the original contractual obligations, but subsequently rescinded its consent after duly assessing the situation. This is supported by minutes of meetings between the plaintiff and the defendant. Since the DORTS had allowed the plaintiff the opportunity to make decisions to pursue its own best interest, it cannot be argued that the DORTS abused its superior market position in violation of the FTL. Thus, the plaintiff's claim was judged groundless and was dismissed.

Appendix: Chu-Chiang Construction Co., Ltd.'s Uniform Invoice Number.: 04652003

Summarized by Lai, Chia-Ching;

Supervised by Wang, Rong-Ging