The Taipei Dome dispute remains unresolved. Some Taipei city councilors have suggested that if the contract is not going to be dissolved pursuant to the Civil Code as soon as possible, the project will fall under a one-year-long statute of repose, taking away the Taipei City Government’s initiative on the matter. Although it is uncertain whether this suggestion would help resolve the Dome problem, it does highlight the complexity of a build-operate-transfer (BOT) project that is so interlaced with public and private law.
Article 99 of the Government Procurement Act (政府採購法) states that the act is applicable to private sector involvement in public construction. For example, all the procedures and decisions in relation to invitations to tender and award of contract in the Dome project are administrative acts; if the contractor is not happy, it can seek administrative remedies.
However, the contract for financing and construction that the winner of the tender signed with the city government falls within the domain of civil law; if disputes arise, they must be addressed in accordance with the Code of Civil Procedure (民事訴訟法).
In the meantime — and following the same logic — the concessions granted to the contractor would very likely fall within the domain of the autonomy of private law, blurring the border between serving the public and serving private interests.
Article 12 of the Act for Promotion of Private Participation in Infrastructure Projects (促進民間參與公共建設法) states that: “Unless otherwise specified in this Act, the rights and obligations between the authority in charge and the private institution shall be governed by the concession agreement and for matters not specified in the concession agreement, the relevant provisions under the Civil Code shall apply.”
As such, if the Taipei City Government finds a major defect in the Dome, it can, according to Article 514 of the Civil Code, terminate the contract within one year, provided that no special agreements have been reached with the contractor.
However, if there are such agreements, Article 514 will be inapplicable. If the city government insists on the termination of the contract, it might put itself in a very difficult situation.
Although, according to Article 52 of the Act for Promotion of Private Participation in Infrastructure Projects, the authority in charge can order the private institution to make improvements within a given period, delegate the project to another company or even terminate the contract altogether if there are serious construction delays or major defects, to prevent that construction projects, such as the Dome, end in deadlock.
However, regulations like this give the authority in charge so much power that it should only be used as a last resort. Moreover, once the city government takes this coercive measure, it is in effect officially declaring that the negotiations with the contractor have failed.
As a consequence, this case might end up in a long-term or even indefinite legal battle, making the dome the most expensive heap of scrap steel that Taiwan has ever seen.
The difficulties arising from the termination of the Dome contract expose a big problem with current BOT projects: When contracts are placed in the domain of private law and the freedom of contract is prioritized, the government cannot effectively exert power over private entities with the result that public infrastructure, which supposedly exists for the benefit of the general public, can end up as a profit-oriented commercial center.
Wu Ching-chin is an associate professor and chair of Aletheia University’s law department.
Translated by Ethan Zhan
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