The Ministry of Transportation and Communications issued an ultimatum last Saturday to Far Eastern Electronic Toll Collection Co, giving the company three working days to provide concrete plans to protect the public good and consumer interests, or risk termination of its electronic toll collection system (ETC) contract.
The decision to deal with the ETC problem is a legitimate move to prevent the public from paying further social costs incurred by procedural delays in the courts. It therefore deserves support. But, the ministry's decision to base the termination on the premise that the contract between the government and Far Eastern is "an administrative contract" is questionable.
The First Item of Article 12 of the Law 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 law, 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." There is no debate that the concession agreement with Far Eastern is a civil contract.
The Taipei High Administrative Court's decision on Feb. 24 that the ETC contract falls under the administrative category conflicts with the provisions of this article. Nevertheless, based on this decision, the ministry accepted the ETC contract as an administrative contract and demanded that Far Eastern take immediate action to temper public criticism (by offering cheaper or free on-board units) otherwise, the contract would be terminated based on Article 146 of the Administrative Procedure Act (行政程序法). This stipulates the government can unilaterally terminate or adjust an administrative contract to protect the public's interests and rights.
In fact, Item Two of Article 12 of the Law for Promotion of Private Participation in Infrastructure Projects already states that: "The parties, shall, taking into account protection of the public interest, enter into the concession agreement on a fair and reasonable basis, and shall perform the concession agreement in good faith."
The ministry, therefore, could directly notify Far Eastern that it would proceed to resolve the issue in accordance with Article 146, without recourse to the judiciary. It has no need to rely on a judgement by the high court before proceeding. And how does the ministry explain the conflict between the "administrative contract" mentioned in the judgement of the high court and the Law for Promotion of Private Participation in Infrastructure Projects?
Apart from Item Two of Article 12, the ministry has at least two other ways of proceeding. Given that the Taipei District Prosecutors' Office on March 17 indicted Far Eastern officials for corruption in the bidding process, it could argue that public faith in Far Eastern's operations had been undermined to such an extent that the government had to take immediate action against the group.
Although a criminal verdict is still pending, the ministry could still move to terminate the contract as a preemptive measure. Although the final verdict could entitle Far Eastern to compensation, the ministry, based on its pursuit of the public's interest, has the responsibility to prevent the situation from deteriorating due to the uncertainty of the project.
It is not known whether there is a prevention of bribery ordinance in the contract, but we these are commonly used in BOT contracts elsewhere. These models serve as a reference point for Taiwan so if bribery was involved in the BOT bidding process, the government has the right to halt the contract without paying the contractor compensation.
Article 53 of the Law for Promotion of Private Participation in Infrastructure Projects stipulates that "If during the construction and/or the operation of the infrastructure project, there is any serious delay in the work schedule, serious defects in quality of work, poor operation, or other grave events and due to the emergency thereof that any delay may jeopardize major public interest or result in present danger, the central authorities in charge of the relevant industries may order the relevant private institutions to cease part or all of the construction or the operation for the relevant infrastructure project" and if necessary, take over the management of the project.
Whether the ministry decides to terminate the ETC contract or run the project as a state-run enterprise, it would have a solid legal basis for doing so. But in seeking a legal judgement, which has defined the ETC contract as an administrative contract, it has confused the issue. It could also have an impact on other cases related to the Law for Promotion of Private Participation in Infrastructure Projects, a matter that cannot be ignored.
I support the government in doing the right thing, but I hope the ETC project will not lead to legal warfare between Far Eastern and the ministry. Both parties should work things out through negotiation, otherwise both will end up losers.
Huang Yu-lin is an associate professor of civil engineering at National Chiao Tung University.
TRANSLATED BY LIN YA-TI
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