Transcript Gilbert Lee

Introduction to the possible rules for limitation
of carriers’ liability under Taiwan Law while
cargo underwriters file Subrogation claims
against carriers
Lin & Associates, Maritime Law Office
Gilbert Lee (Senior Associate)
1.The condition that one cargo claim may
be applied to Taiwan Law
(1) Both claim parties are expressly and mutually agreed to have the
subject claim case applied to Taiwan Law. (The said mutual
agreement may be reached before litigation procedures start or
after the defendant attends hearing in Taiwan; it is “expressly
agreed” that counts.) Paragraph 1, Article 20 of “Law Governing the
Application of Laws to Civil Matters Involving Foreign Elements”
regulates that “If a contract is completed by a judicial act, its
completion and validity shall be referred to the laws agreed by both
parties.”
(2) If there is a valid article of “Applicable Law” under the reverse
side of B/L, and it regulates Taiwan Law shall be applied to all
disputes arising from the B/L. Paragraph 1, Article 43 of “Law
Governing the Application of Laws to Civil Matters Involving
Foreign Elements” regulates that ”The applicable law of the
contract arising from Bill of Lading shall be referred to the law
inserted in the Bill of Lading.”
(3) Theory of “The most significant contacts/relationship” is mainly
adopted and applied to “Law Governing the Application of Laws
to Civil Matters Involving Foreign Elements”. (Such as “The cargo
receiver is in Taiwan”, or “the location of performance for
contract”).
(4) If the cargo claim is on base of “Torts”, and either “the place of
torts” or “the place that the damage/loss is found” is located in
Taiwan, the said claim would be applied to Taiwan Law.
2.The definition of “Subrogation” under
Taiwan Insurance Law
(1) The contents and conditions of “Subrogation” regulated in
Taiwan Insurance Law:
A.The loss/damage occurred within the duration of policy and
covered by the policy.
B.The designed insurance amount is paid to the insured (or to order
of the insured).
C.The insured is entitled to claim against the third party for
indemnity of the loss/damage.
D.The claim amount of “Subrogation” shall not exceed the amount
that the insurance amount paid to the insured.
(2) The insured’s rights would be automatically and immediately
transferred to the insurer once the designed insurance amount
is paid to the insured. Neither the insured nor the insurer shall
be obliged to send notice to the liable party about the said
transfer of rights; and the liable party would be bound by the
said transfer.(supported by the Majority of the Supreme Court
Judgments)
(3) Comparing with the above mentioned Subrogation claims, the
notice to the debtor/the liable party is a “necessity” for the
transferee to claim against the debtor/the liable party under
Taiwan Civil Law. “The transfer of a claim will NOT be effective as
against the debtor UNTIL the debtor has been notified of it by the
transferor or by the transferee.”(Paragraph 1, Article 297 of
Taiwan Civil Law)
3. Several important issues/disputes of
Subrogation claims in Taiwan Courts.
(1) Applicable Law: In general, the standard form of marine cargo
insurance policy in Taiwan is regulated to be applied to English
Law and practice (such as Institute Cargo Clause). It allows the
liable party to raise a procedural defense of “Title to Sue”,
because of the difference between MIA (1906) and the
interpretation by Taiwan Supreme Court of Article 56 of Taiwan
Insurance Law (Please refer to the above point 2-(2)).
(2) “Title to Sue”: Under Article 79 of MIA (1906) and English law
practices, the title to sue remains on the insured; but among all
cargo claims cases in Taiwan, the party who files claim against
the liable party is cargo underwriter. However, as we
mentioned above, the standard form of insurance policy adopts
English law and practice. Hence, more and more defendants
start to raise a procedural defense of “Title to Sue”; trying to
prevent the cargo claims from unfavorable substantial
judgment.
Regarding to the “Title to Sue” issue, so far no
majority judgment has been made or announced by Supreme
Court.
(3) According to recent judgments made by the Supreme Court,
“title to sue” shall be regarded as a “procedural issue/dispute”
and shall be referred to the law of the court; i.e. Taiwan Civil
Procedure Law. Since Article 79 of MIA (1906) and English law
practices are not adopted into the Taiwan Civil Procedure Law, as
long as the claimant (cargo underwriter) alleged he is entitled to
file the Subrogation claim, there is no reason to overrule this
Subrogation claim procedurally. Of course, “Whether the
Subrogation is sustainable/ would be supported by final
judgment?” will be another question.
3. “Reinsurance” dispute:
A. Question: While the cargo underwriter files Subrogation claims
against the liable party, is it necessary to deduct the amount paid
from the Re-insurer to the cargo underwriter? Since the cargo
underwriter has received the re-insurance amount payment from
the Re-insurer, whether the “title to sue” remains on the cargo
underwriter? or transferred to the Re-insurer?
B. No majority judgment is made or announced by Supreme Court.
C. But recently several judgments made by Supreme Court tend to
stand on a negative position to the above mentioned re-insurance
issue. In other words, from recent Supreme Court judgments we
may note that the Supreme Court Judges accept the following
specifics in re-insurance contract:
(a) In the re-insurance market, it is general accepted and regulated
that the re-insurer would not be automatically subrogated from
the cargo underwriter even though the re-insurance amount is
paid according to the re-insurance contract/policy.
(b)The Re-insurer would agree the cargo underwriter to file
Subrogation claims in the cargo underwriter’s own name; the
condition is once there is any claim amount (no matter
partial/or fully payment) paid by the liable party to cargo
underwriter, the cargo underwriter agrees to return to the Reinsurer proportionally.
(c) It is rare and unseasonable for world-wide re-insurers to take
charge of the Subrogation claims from each cargo underwriter
in its own country.
(d)The Re-insurance contract and payment is for the cargo
underwriter’s interests and safety; it shall not be referred to an
excuse for the liable party to reduce or escape from liability.
(4)In order to prevent cargo claims with merits from being
overruled by the above mentioned procedural defense, the
claimant (cargo interests) would file claims on base of
Subrogation (Insurance Law) and Transfer of Rights (Civil
Law). Even if the Subrogation claim may be regarded as invalid,
the cargo interest may still proceed the claim against the liable
party on base of Civil Law.
4. Carriers’ limitation rules in OCEAN
CARRIAGE
(1) Package limitation: Unless the nature and value of the cargo have
been declared by the shipper before shipment and inserted in the
bill of lading, neither the carrier nor the shipowner shall be liable
for any damage to or loss of the cargo in an amount exceeding
666.67 Special Drawing Rights per package or 2 Special Drawing
Rights per kilogram, whichever is the higher. The “package”
referred to in the preceding paragraph means a unit of the packing
of cargo for shipment. Where a container, pallet or similar article of
transport is used to consolidate cargo, the number of packages
enumerated in the bill of lading as packed in such article of
transport shall be deemed the number of packages. Whereas the
said number of packages did not enumerate in the bill of lading, the
number of the consolidated article is deemed to be the number of
packages. If the container is provided by the shipper, the container
is deemed to be a package.
(2) Independent Contractor who locates within “commercial harbor
area” may refer the protection of package limitation. It is
regulated under Paragraph 2, Article 76 of “Maritime Law”: “The
provisions of the preceding paragraph shall be applicable to any
parties who are performing their duties within the commercial
harbor area for the loading, unloading, handling, carriage, custody,
keep, care, stowage, tally, lashing and dunnage.” Paragraph 4,
Article 3 of the “Commercial Port Law”: “Commercial Port Area”
refers to waterways within the Commercial Port borders, and the
land areas where the need of port construction, development and
operation is called for.”
5. Carriers’ limitation rules in AIR CARRIAGE
: is based on “Rules of Compensation for
Damage Caused to Air Passengers &
Freight” issued and approved by MOTC.
(1) Paragraph 1, Article 4 of “Rules of Compensation for Damage
Caused to Air Passengers & Freight” regulates that “The
compensation liability of the user of aircraft or air carrier for
carried cargo is based on the actual loss / damage but not exceed
NTD 1,000 per kilogram.”
(2) Exception: If the loss/damage is cause by the gross negligence or
willful conduct / act of the user of aircraft or air carrier, the
compensation is not limited by the above quoted regulation.
(Paragraph 1, Article 6)
(3) The above limitation for compensation shall be inserted or
remarked into the written air-carriage contract or any other
document similar to shipping order. (Article 8)
(4) The above limitation for compensation shall be applied to the
person who works onboard for air carrier. (Article 9)
6. Carriers’ limitation rules in INLAND／
TRUCK CARRIAGE
(1) Based on Article 64 of “Highway Act”: “Unless the nature and
value of the cargo have been declared by the shipper before
shipment and inserted in the written carriage contract, the
carrier by means of cars/trucks/vehicles shall not be liable for
any damage to or loss of each cargo in an amount exceeding
NTD3,000; when the loss/damage is resulted by an “traffic
accident”.
(2) This claim is different from “tort” claim. The claimant under
“Highway Act” should not bear any burden of proof to prove the
negligence or willful conduct of the driver or the carrier.
However, it the claimant wishes to claim for the actual
loss/damage amount more than NTD3,000, the claimant shall
prove the negligence or willful conduct of the driver or the
carrier. (supported by the Supreme Court judgments)