Tag Archives: Taiwan

Case of the Day: Lui-Dix v. Holder

The case of the day is Lui-Dix v. Holder (7th Cir. 2013). Chia-I Lui-Dix was a Taiwan national. In 1996, she and her first husband, Yu-Ping Lin (who later died), were tried in Taiwan for violation of Taiwan’s Drug Eradication Act. The trial lasted fifteen minutes. The only witness was the chief of police; Lui-Dix and Lin were not permitted to cross-examine him. Lin confessed to using heroin and to possession of the 1.22 g of heroin that the police had seized from the couple’s home. Lui-Dix denied using drugs, but a urine test showed that she had morphine in her system. The test did not distinguish between morphine and heroin, but the Taiwan court reasoned: “[M]ost drug users use heroin. Rarely do they use morphine. Therefore, the court believes the illegal drug [Lui-Dix] used was heroin.” It convicted her of heroin use and sentenced her to three years in prison.

In 2000, after she served her sentence, Lui-Dix entered the United States on a student visa. She married Paul Dix, a US citizen, and the couple had a child. After the marriage, Lui-Dix sought adjustment of her status to that of a legal permanent resident, and she disclosed her criminal conviction on the application. The Department of Homeland Security denied the application because of the conviction and began removal proceedings on the grounds that her conviction made her inadmissible at the time of her entry into the United States. Lui-Dix challenged removability on the grounds that the urine test used in Taiwan was unreliable, and that the proceedings in Taiwan did not require proof beyond a reasonable doubt and was otherwise procedurally deficient. The immigration judge rejected her arguments, and on appeal, the Board of Immigration Appeals affirmed, noting that it could rely on the Taiwan conviction “without considering the procedural adequacy of the trial.” Lui-Dix petitioned the Court of Appeals for the Seventh Circuit to review the BIA’s decision.

The court denied her petition. “Only if there is some evidence that the foreign conviction was obtained in a manner that falls below the standards accepted by any civilized system would it be appropriate” to permit a collateral attack on a foreign criminal judgment in US immigration proceedings. The court pointed, by way of example, to Doe v. Gonzales, 484 F.3d 445 (7th Cir. 2007), where a Salvadoran army officer had been convicted by an “Honor Commission” of military officers of participation in the murder of several Jesuits, even though several others, including the commander, were acquitted despite confessing to their participation and even though Doe “did not give orders, fire his gun, seize anyone, or block anyone’s attempted escape.” Doe could collaterally attack his conviction because the trial was “a cover up,” “incomprehensible factually and legally. It was a kangaroo court to make kangaroos blush.” Absent such egregious facts, Lui-Dix could not challenge the Taiwan conviction.

My informal view is that the Taiwan proceedings, if they didn’t cross the line, came pretty close. No cross-examination? Fifteen minutes?

Case of the Day: Brown v. True & Associates

The case of the day, Brown v. True & Associates, Ltd. (S.D. Ga. 2012), is an unfortunate decision. Sage Brown purchased an “executive chair” at a Sam’s Club store in Savannah, Georgia. The chair collapsed while he sat on it, causing personal injury. Brown sued True & Associates, allegedly the chair’s manufacturer. He was proceeding pro se.

True is apparently a Taiwan business, and Brown requested issuance of a letter rogatory. This is an appropriate method of service in Taiwan, which is not a party to the Hague Service Convention. But the judge refused to issue the proposed letter, on what I think are dubious grounds. The judge noted that the letter was addressed to “the Appropriate Taiwanese Official” and complained that Brown was seeking to have the judge “do [Brown's] legal spade work.” But it’s not just acceptable, but recommended by the State Department, to address a letter rogatory to the “appropriate official” in the foreign country. The judge also claimed that Brown was asking the court to transmit the letter rogatory directly to a Taiwanese court, but nothing in Brown’s motion (attached, improperly but not surprisingly given that Brown was acting pro se, to the complaint) suggests that Brown was seeking to do anything other than transmit the letter via the diplomatic channel, which is the usual method. Last, the judge noted that alternate methods of service were available, but it’s not clear why Brown should be required to choose another method rather than a letter rogatory.

I am going to chalk this up to the judge having a bad day.

Mediation and Arbitration Mechanism under the Mainland-Taiwan Bilateral Investment Agreement

Jie Huang is Associate Professor of Law and Director of the Foreign Affairs Department at the Shanghai Institute of Foreign Trade School of Law.

On August 9, 2012, Mainland China and Taiwan concluded the Cross-Strait Bilateral Investment Protection and Promotion Agreement (hereinafter “BIA”) 1 during the eighth Chen-Jiang Meeting (meeting between the Association for Relations across the Taiwan Straits and Straits Exchange Foundation). 2 It is the first cross-strait investment agreement and also the first follow-up agreement to the Economic Cooperative Framework Agreement (hereinafter “ECFA”) concluded on April 26, 2009. 3

As a highlight of the BIA, the dispute resolution mechanism covers three types of disputes: disputes between Parties to the BIA, investment disputes, and investment business disputes. This post focuses on the latter two types. All comments are highly appreciated.

Investment Disputes

The BIA defines “investment dispute” as a dispute between an investor and a host region where the investor claims that the host region fails to fulfill its obligations under the BIA and results in the investor’s losses. 4 The BIA provides five different options to resolve such a dispute: (1) through friendly negotiations between an investor and a host region; (2) through the coordination mechanism at the place of the investment or at the next higher level; (3) through the assistance provided by the investment division of the ECC; (4) through the Mediation Procedure for Investment Disputes Concerning Compensation (hereinafter “Mediation Procedure”); and (5) through the administrative or judicial proceedings in a host region. 5 The Mediation Procedure is different from the other four options, because it only deals with investment disputes concerning compensation. 6 Mainland China and Taiwan shall exchange and publish a name list of the Cross-Strait Investment Dispute Resolution Organization soon after the BIA becomes effective. 7 Investors can submit investment disputes concerning compensation to this Organization according to the Mediation Procedure. 8 Every half a year, the Organization shall report to the investment division of the ECC about results of investment compensation disputes. 9 If an investor has initiated an administrative or judicial proceedings for his or her investment disputes concerning compensation in a host region, the investor is precluded from submitting the same dispute to the Cross-Strait Investment Dispute Resolution Organization, except as otherwise provided by the law of the host region. 10

The Mediation Procedure is an annex to the BIA. An investor can submit an investment dispute concerning compensation to the Cross-Strait Investment Dispute Resolution Organization according to the Mediation Procedure. Notably, a host region cannot reject the jurisdiction of the Organization, because by concluding the BIA, both Mainland China and Taiwan have consented to the jurisdiction of the Organization. The Mediation Procedure requires the Organization to solve investment disputes concerning compensation in an objective, fair, just, and reasonable way. 11 Investors and the host region should actively and honestly participate in the mediation without undue delay. 12 Except as otherwise agreed by the parties, the mediation process is confidential. 13 The confidential obligation also binds the Cross-Strait Investment Dispute Resolution Organization, its staff, and mediators, except as otherwise agreed by the parties. 14 However, the right to mediation under the Mediation Procedure will expire in three years starting from the investors know or should have known the host region breaches the BIA. 15 Nevertheless, the statute of limitation can be suspended if the delay is caused by force majeure. 16

According to the Mediation Procedure, a mediator shall be neutral and try to help both parties to reach a consensus. 17 If parties reach a consensus, the mediator shall prepare a mediation agreement according to the consensus, both parties and the mediator shall sign or seal the agreement, and the Cross-Strait Investment Dispute Resolution Organization shall also affix its stamp to the agreement. 18 Mainland China and Taiwan shall establish a new system or improve the existing one for recognition and enforcement of mediation agreements. 19 Investors can also recognize and enforce mediation agreements in a Party according to its law. 20 If parties fail to reach an agreement in the mediation, they can submit the same dispute to administrative or judicial proceedings of a host region. 21 However, except as otherwise agreed upon by the parties, any indication, confession, and concession made by a party or the mediator in the mediation process shall not be introduced as evidence unfavorable to the party in the administrative or judicial proceedings. 22 Moreover, under the Mediation Procedure, remedies for investment disputes concerning compensation are limited to the following three options: (1) monetary compensation and appropriate interests; (2) property restitution, or using monetary compensation and interests to replace property restitution; (3) other lawful compensation agreed upon by the parties. 23

The five options to resolve investment disputes between an investor and a host region are a distinguished part of the BIA. Except the administrative and judicial proceedings, the other four options are non-adversarial dispute settlement methods different from arbitration and litigation. From this aspect, the BIA is significantly different from international free trade agreements or bilateral investment treaties recently concluded by Mainland China, where international arbitration is a prevalent method to resolve disputes between an investor and a host state. The non-litigious Chinese tradition is only a superficial explanation of why the BIA prefers non-adversarial dispute resolution methods. The deep reason is that Mainland China and Taiwan have not yet resolved the issue of sovereignty, and adopting international investment arbitration for disputes between an investor and a host region may complicate the issue. The cross-strait relationship is so delicate that Mainland China tries to avoid any possibility that may internationalize cross-strait disputes. Therefore, the BIA does not adopt international investment arbitration.

The BIA’s emphasis on non-adversarial methods to resolve investment disputes also probably results from the successful practices of Taiwan Affairs Office at all levels, SEF, ARATS, and mediation practices in both Mainland China and Taiwan. Different from Taiwan Affairs Office, SEF, and ARATS, the Mediation Procedure under the BIA imposes both Mainland China and Taiwan an obligation to recognize and enforce mediation agreements. Also compared with judges in judicial mediation in Mainland China, the Cross-Strait Investment Dispute Resolution Organization is more neutral, because the Organization is an interregional institution. The investment division of the Economic Cooperation Committee (hereinafter “ECC”) is also an interregional authority created under the BIA to handle investment matters. The institutionalized protection will help boost investors’ confidence that their investment will not be discriminated by regional laws. Therefore, the dispute resolution methods under the BIA will combine the advantages of the current non-adversarial methods in regional laws to resolve investment disputes.

Notably, the BIA gives no claim to a host region against an investor in investment dispute. It also does not indicate whether a host region is allowed to bring a counterclaim against an investor in a case brought by the investor under the BIA.

Moreover, investors shall not invoke Article 3.4 of the BIA (most-favoured-nation treatment) to apply dispute resolution mechanisms in the bilateral investment treaties concluded by Mainland China or Taiwan, respectively. 24 In other words, investors must select one of the five options under Article 13 of the BIA to resolve investment disputes with a host region. This is to prevent an investor from picking and choosing from different investment treaties by the most-favoured-nation clause. Importantly, this also avoids Taiwan residents to follow the example of Tza Yap Shum v. The Republic of Peru, to invoke bilateral investment treaties concluded by Mainland China. 25 Furthermore, the definition of the “investor” under the BIA includes a business entity established in a third region but owned or controlled by a Mainland or Taiwan investor. 26 Therefore, theoretically, if this third region has an investment treaty with Mainland China or Taiwan, this business entity can enjoy the protection under the treaty. Therefore, this business entity should have rights to invoke either the BIA or the treaty. However, in terms of dispute resolution mechanism, it cannot combine the BIA and the treaty.

Additionally, the confidentiality of the Mediation Procedure brings pros and cons. Without the exposure to the news media and the interference of interested third parties, a closed procedure may streamline the dispute resolution and promote parties to reach an agreement quickly. In investment arbitrations, parties can also close their procedure and make everything confidential. However, compared with well-developed international arbitration rules, the Mediation Procedure is not a sophisticated procedure. At least, it does not provide rules for joinder of additional parties and it also does not impose parties an obligation to inform interested third parties. Because the Mediation Procedure is confidential, if an investment dispute concerns a third party or the general public, they may have no opportunity to be heard in the Procedure.

Investment Business Disputes

According to the BIA, the concept of “investment business dispute” refers to a business dispute related to investment between an investor of a Party and a natural person, a legal person, or any other business entity of the other Party. 27 Therefore, investment business disputes are between private parties. Private parties can submit their disputes to arbitration if they reach arbitration agreements before or after their disputes. 28 The arbitration should be conducted under the auspices of arbitration institutions in Taiwan or Mainland China (Hong Kong and Macao included). 29 But the seat of arbitration can be outside of China, such as Singapore, as long as it is mutually agreed upon by the parties. 30 The arbitration award can be recognized and enforced in either Mainland or Taiwan courts according to relevant regional laws. 31 Allowing parties to select a Taiwan arbitration institution to resolve investment business disputes is a breakthrough in current Mainland law. Article 24 of the Rules for Implementation of Law on Protecting Taiwan Compatriots’ Investment provides that investment business disputes can be submitted to a Mainland arbitration institution only. 32 Therefore, after the BIA becomes effective, it will prevail against Article 24 of the Rules for Implementation of Law on Protecting Taiwan Compatriots’ Investment. Both Mainland and Taiwan arbitration institutions can hear investment business disputes. In case that parties fail to reach an arbitration agreement, they can bring a lawsuit before a competent court in the two regions.

Notes:

  1. The translation of the BIA in this article is done by the author. A full-fledged analysis of the BIA will be published by the author under the title “Range Far Your Eye Over Long Vistas: An Assessment of The Cross-Strait Bilateral Investment Protection and Promotion Agreement” in 2013.
  2. For more information on the Association for Relations across the Taiwan Straits (hereinafter “ARATS”), see its website. For more information on the Straits Exchange Foundation (hereinafter “SEF”), see its website. Chen Yunlin is the head of ARATS. Jiang Bingkun is the head of SEF.
  3. The ECFA was concluded on April 26, 2009. For an English version, see www.mac.gov.tw/public/data/051116322071.pdf (last visited Sept 4, 2012).
  4. Art. 13.1 of the BIA.
  5. Id., arts. 13.1.1, 13.1.2, 13.1.3 and 13.1.5.
  6. Art. 13.1.4 of the BIA and Mediation Procedure for Investment Compensation Disputes Annex to the BIA.
  7. Art. 13.4 of the BIA.
  8. Id., art. 13.2
  9. Id., art. 13.1.4.
  10. Id., art. 13.4.
  11. Art. 1 of the Mediation Procedure for Investment Disputes Concerning Compensation.
  12. Id.
  13. Id., art. 2.
  14. Id., art. 3.
  15. Id., art. 4.
  16. Id.
  17. Id., art. 2.1.
  18. Id., art. 2.2.
  19. Id.
  20. Id., art. 2.3.
  21. Id., art. 5.
  22. Id., art. 5.
  23. Id., art. 3.
  24. Art. 3.6 of the BIA.
  25. In Tza Yap Shum v. The Republic of Peru (ICSID Case No. ARB/07/6), the plaintiff is a Hong Kong resident who invokes the Mainland-Peru Bilateral Investment Treaty to submit his expropriation dispute with Peru to the International Center for Settlement of Investment Dispute (ICSID). The tribunal held that the Mainland-Peru Bilateral Investment Treaty applies to the plaintiff even if Hong Kong has authority to conclude bilateral investment treaties with foreign countries and Hong Kong has no yet signed such treaty with Peru.
  26. Art. 1.2.3 of the BIA.
  27. Art. 14.1 of the BIA.
  28. Id., arts 14.2 and 14.3.
  29. Id., art. 14.4.
  30. Id., art. 14.4. However, in practice doubts remain whether the parties can really select a seat outside of Mainland China if they select a Mainland arbitration institution. For example, on August 1, 2012, the CIETAC (Beijing) made an announcement that “When the CIETAC Secretariat accepts and administers the above-mentioned cases, unless otherwise agreed by the parties, for cases agreed to be arbitrated by the CIETAC Shanghai Sub-Commission, the place of arbitration and the place of oral hearing shall be Shanghai; for cases agreed to be arbitrated by the CIETAC South China Sub-Commission (the CIETAC Shenzhen Sub-Commission), the place of arbitration and the place of oral hearing shall be Shenzhen.” See China International Economic and Trade Arbitration Commission Announcement On the Administration of Cases Agreed to be Arbitrated by CIETAC Shanghai Sub-Commission and CIETAC South China Sub-Commission, last visited August 2, 2012. Institutional arbitration rules, instead of the BIA, will largely determine whether parties can select a seat outside of Mainland China.
  31. Id., art. 14.5.
  32. Art 24 of the Rules for Implementation of Law on Protecting Taiwan Compatriots’ Investment. It also provides that the Mainland arbitration institution may engage a Taiwan compatriot as the arbitrator in accordance with the relevant Mainland law.