Seminar Proceedings Session 1 | The Significance of the Comprehensive Amendment to the State Compensation Act

On August 26, 2023, in response to the Executive Yuan's comprehensive amendment to the State Compensation Act in 2021—expanding the existing 17 articles to 43 articles—and observing the NGO draft of the State Compensation Act formulated by lawyers and legal practice experts at the end of 2022, the Judicial Reform Foundation, the Administrative Law Committee of the Taiwan Bar Association, the Constitutional Reform Committee of the Taiwan Bar Association, the Judicial Reform Committee of the Taiwan Bar Association, and the Taiwan Law Association jointly held this seminar.

In the first session, led by moderator Attorney Chiang Jung-hsiang, and inspired by the insights and explanations of the legislative background provided by speaker Professor Lin Ming-chiang and three discussants—Director-General Liu Ying-hsiu of the Department of Legal Affairs of the Ministry of Justice, Professor Ch'eng Ming-hsiu, and Professor Lin Hsing-ju—along with the lively discussions among the attending guests, a discussion was initiated regarding the key stances of the official and NGO drafts of the State Compensation Act.

1. State Direct Liability

   Article 3 of the NGO Draft Proposed Provisions

   Where the state or a local autonomous body unlawfully exercises public authority and infringes upon the freedom or rights of the people, it shall bear liability for damages; the same shall apply where it defaults in the performance of its duties, resulting in damage to the freedom or rights of the people. However, this shall not apply if it can prove that its conduct was without fault. The intent or negligence of the head of the state or a local autonomous body, the head of an affiliated organ, an agent, other persons with the power of representation, authorized persons, or civil servants who actually perform the conduct shall be deemed as its own intent or negligence. Civil servants referred to in this Act mean personnel engaged in public affairs according to laws and regulations.

   Professor Lin Ming-chiang mentioned that when state vicarious liability evolves into state direct liability, two aspects must be amended: "deleting the requirement of civil servant intent or negligence" and "deleting the state's right of recourse against the responsible civil servant." Although some commentators question whether Taiwan can implement state direct liability, whether this paradigm shift is too radical, or whether deleting the right of recourse against civil servants will cause civil servants to lower their guard, Professor Lin Ming-chiang still expects the JRF to continuously urge the government to implement legislative reform.

   Discussant Director-General Liu Ying-hsiu of the Department of Legal Affairs of the Ministry of Justice explained that, based on legislative intent and practical legal opinions, Taiwan characterizes state compensation liability as state vicarious liability. Therefore, deleting the requirement of civil servant intent or negligence could create a bottomless pit of financial liability or excessively condone civil servants, which is a point that the Ministry of Justice and various administrative organs must carefully consider. She suggested that the issue of unlawful conduct without liability can be resolved through special legislation (e.g., the Land Act, the Use of Police Weapons Act, the Communication Security and Surveillance Act, the Personal Data Protection Act, etc.).

   Discussant Professor Lin Hsing-ju supported the NGO draft. Based on the two major functions of the state compensation liability system (namely, victim relief and error-correction functions) and referencing Japanese legislation, she believes that removing the requirement of intent or negligence can better achieve victim relief. However, the causal relationship between unlawful conduct and damage remains a relatively difficult hurdle to overcome. When there is joint tortious conduct, state compensation liability is usually precluded or reduced. Therefore, based on foreign legislative precedents, consideration can be given to whether to establish public-law causation or whether the state should bear ultimate guarantee liability.

   Discussant Professor Ch'eng Ming-hsiu believes that the NGO draft's deletion of the concept of illegality under Article 3 of the State Compensation Act (i.e., the requirement of civil servant intent or negligence) aims to establish a risk-liability-style State Compensation Act, but its foundation differs from that established by the Ministry of Justice. At the same time, Professor Ch'eng Ming-hsiu supported Professor Lin Ming-chiang's view, noting that Article 24 of the Constitution shows no trace of vicarious liability nor any argument entrusting the legislature to formulate vicarious liability. Professor Ch'eng Ming-hsiu also mentioned that the right of recourse system in the State Compensation Act is not equivalent to vicarious liability, and the existence of the right of recourse does not diminish personal civil servant liability (for example, the German State Liability Act of 1981 is legislation on state direct liability, but it still retains a recourse mechanism). This is because our country's recourse provisions project the Audit Act's concept of recourse against civil servants, whereas the German legislative logic is that as long as a civil servant's conduct causes damage to the state, that civil servant should bear liability for damages. However, the aforementioned concepts of recourse have no bearing on whether state compensation liability is direct liability or vicarious liability.

2. Reversal of the Burden of Proof

   Paragraph 1, Article 3 of the NGO draft adds a proviso stating, "However, (the state or local autonomous body) can prove that its conduct was without fault, this shall not apply." This means the state should bear the burden of proof for absence of fault, and must prove on its own whether the civil servant was at fault, thereby realizing the view held by Supreme Court judgments. However, Professor Lin Ming-chiang views this amendment as slightly conservative, suggests deleting all requirements of intent and negligence, and argues that the burden of proof provisions in the State Compensation Act should not apply civil tort law principles.

3. Expansion of Protected Objects

   Article 5 of the NGO Draft Proposed Provisions

   Where public facilities established or managed by the state or local autonomous bodies for public or official purposes are defective in their establishment or management, resulting in damage to the freedom or rights of the people, the state or local autonomous bodies shall bear liability for damages. Where the facilities in the preceding paragraph are entrusted to private organizations or individuals for management, and defects in management result in damage to the freedom or rights of the people, the state or local autonomous bodies shall bear liability for damages. （Omitted below）

   Paragraph 1, Article 5 of the NGO draft expands the scope of damage to the people caused by defects in the establishment and management of public facilities to include all freedoms and rights. Professor Lin Ming-chiang mentioned that Professor Liao I-nan once wrote an article suggesting that the types of public facilities under state compensation be expanded to include "digital databases, networks, websites, or other online platforms" to compensate for damage caused to the people by hackers invading digital public facilities. He suggested the JRF could consider incorporating this, though the Ministry of Justice would likely find it difficult to accept.

   Discussant Director-General Liu Ying-hsiu explained that the 2019 amendment to Article 3 included personal liberty within the scope of compensable objects, while Article 2 still maintains freedom or rights as the scope of protected objects. The main reason is that public facility compensation adopts strict liability, and based on the principle of risk-sharing, the scope of state compensation should be appropriately restricted. As for adding personal liberty as a protected object, it is to protect against damage to personal liberty caused by management defects in public facilities (for example, people visiting a government agency getting trapped due to an elevator malfunction, which in turn infringes upon their personal liberty). Regarding other broad freedoms and rights, it is hoped that they can be addressed through special legislation in the future.

   Discussant Professor Ch'eng Ming-hsiu further mentioned that Article 3 of the current State Compensation Act pertains to liability for breach of duties by civil servants rather than strict liability. As for the private management liability of public facilities under Article 3, Paragraph 2 (i.e., where public management authority is entrusted to private parties and management flaws arise, the state shall be responsible), Professor Ch'eng Ming-hsiu believes that the provisions of Article 3, Paragraph 2 should more precisely determine which types of public-private partnerships the government should be responsible for, and it is inadvisable to resolve this with a single provision due to high risk.

4. Deletion of Privileged Protection Clauses for Judges and Prosecutors

   The NGO draft proposes deleting special provisions protecting judges and prosecutors—namely, the application of state compensation requirements for unlawful conduct by civil servants. Professor Lin Ming-chiang believes this can revert to the general civil servant liability under Article 2 of the State Compensation Act, coupled with Article 249 of the Code of Civil Procedure to prevent frivolous lawsuits. Furthermore, since the Criminal Compensation Act provides a recourse mechanism, the paradigm of judge liability under the State Compensation Act can be transferred to the Criminal Compensation Act. At the same time, Professor Lin Ming-chiang considers the Ministry of Justice's amendments to be conservative and minor, yielding limited effect.

   Discussant Professor Lin Hsing-ju mentioned that Japan has neither judicial immunity clauses nor recognizes state compensation liability for judges; instead, it reverts to the concept of unlawful exercise of public authority by civil servants. Regarding judge liability, Japan has gradually moved toward narrowing the scope of illegality, defining unlawful and improper trial conduct as instances where a judge's interpretation of laws and regulations departs from logic and empirical rules and constitutes a clear error.

5. Refining the Organization of the State Compensation Deliberation Committee

   Article 18 of the NGO Draft Proposed Provisions

   Each organ handling state compensation and recourse cases shall establish a state compensation case deliberation committee, consisting jointly of organ personnel, socially impartial persons, scholars, and experts to participate in deliberation and decision-making. At least one-third of the members shall possess legal expertise. However, where a higher-level organ has already established one, it may handle state compensation and recourse cases for lower-level organs. The total number of social figures, scholars, and experts in the preceding paragraph shall not be less than one-half of the total number of members. The number of members of any single gender in the first paragraph shall not be less than one-third of the total. The organizational regulations and deliberation rules for the committee in the first paragraph shall be prescribed by each organ.

   Professor Lin Ming-chiang opposed the mandatory establishment of state compensation case deliberation committees, arguing that this would increase administrative and procedural costs for various organs and potentially waste people's time. Moreover, procedural law already provides mediation and settlement systems, and going directly to court to resolve disputes is more efficient.

   Discussant Director-General Liu Ying-hsiu explained that the Ministry of Justice shares the same opinion as Professor Lin Ming-chiang, believing that there is no need to make the establishment of state compensation case deliberation committees mandatory; individual organs can assess whether to establish them themselves. Furthermore, even without legislation, government organs are not hindered from establishing task-force-style state compensation deliberation panels. Organs can decide whether to establish them through administrative rules to avoid the burden of administrative costs caused by mandatory provisions.

6. Incidental State Compensation Litigation in Criminal Proceedings

   Article 33 of the NGO Draft Proposed Provisions

   Under any of the following circumstances, a claimant may institute a state compensation lawsuit. However, where damages have already been claimed for the same factual cause pursuant to the provisions of the Code of Administrative Procedure, a separate lawsuit may not be filed anew: 1. The compensation-obligated organ refuses compensation. 2. The compensation-obligated organ fails to commence consultations within sixty days from the date of submitting the claim. 3. A certificate of failure of consultation is obtained. Persons suffering damage due to a crime may incidentally institute a state compensation lawsuit in criminal proceedings to claim restoration of damages against persons liable for compensation under the State Compensation Act. In the circumstances of the preceding paragraph, the provisions of Book IX of the Code of Criminal Procedure shall apply mutatis mutandis.

   Professor Lin Ming-chiang opposed this system because injured parties can file claims with civil courts pursuant to Articles 11 and 12 of the State Compensation Act, and can also file administrative lawsuits pursuant to the proviso of Article 11. Thus, there are already instances of state compensation cases overflowing into the Code of Administrative Procedure. Adding an incidental state compensation litigation system in criminal proceedings would likely create a three-headed carriage.

   Discussant Professor Ch'eng Ming-hsiu agreed with Professor Lin Ming-chiang's perspective, believing that the current dual-track system is already cumbersome and therefore disagreeing with a three-pronged approach.

7. Right to File a Lawsuit Directly Without Prior Consultation

   Professor Lin Ming-chiang believes that prior consultation does not serve a very powerful function and suggests completely deleting administrative consultations, reverting directly to court mediation and settlement systems.

   Discussant Director-General Liu Ying-hsiu believes that based on the limited nature of judicial resources and the promotion of alternative dispute resolution (ADR) mechanisms, the Ministry of Justice does not support deleting the prior consultation system. Furthermore, referencing the operation of the Singapore International Mediation Centre, the prior consultation system should effectively reduce litigation caseloads.

   Discussant Professor Lin Hsing-ju explained that referencing the Japanese system, once a state compensation lawsuit is filed, if an organ finds that it has a possibility of losing, it becomes willing to settle. Therefore, fewer cases go all the way to the end in Japan. Additionally, Professor Lin Hsing-ju believes that through deliberation committees, organs find it easier to make compensation payouts.

8. Extension of the Statute of Limitations for Claims

   Paragraph 1, Article 12 of the NGO Draft Proposed Provisions

   The right to claim damages shall be extinguished if not exercised within two years from the time the claimant knows of the damage; the same shall apply if ten years have elapsed since the occurrence of the damage. （Omitted below）

   Most cases likely fall under the 2-year limitation period starting from the time of knowledge. Therefore, Professor Lin Ming-chiang questioned whether extending the objective limitation period for claims—from five years to ten years—provides concrete practical benefits.

9. Conclusions and Reflections Proposed by Professor Lin Ming-chiang

   At the end of his report, Professor Lin proposed the following reflections and conclusions:

   1. Is the timing ripe for the paradigm shift from state vicarious liability to direct liability?
   2. Should legal amendments adopt a gradual approach or major reform?
   3. State compensation should break away from the civil litigation system and return to the public law trial and administrative litigation systems.
   4. Procedural reform is crucial and should achieve the objectives of simplification, promptness, and effectiveness.

   Discussant Director-General Liu Ying-hsiu explained that regarding whether the state compensation litigation system should adopt civil litigation or administrative litigation, the Ministry of Justice had previously stipulated in Paragraph 1, Article 34 of the 2009 draft that: "Except as otherwise provided by this Act or the Code of Administrative Procedure, the Code of Civil Procedure shall apply to state compensation lawsuits." However, due to considerations of the court-tier system and human resource deployment, the Judicial Yuan did not incorporate state compensation types into administrative litigation. Therefore, the latest draft maintains the status quo. Nevertheless, if the Code of Administrative Procedure is reformed into a three-tier, three-instance system in the future, the Ministry of Justice will cooperate with the amendments.

   Discussant Professor Ch'eng Ming-hsiu mentioned that regarding whether the state compensation litigation system should adopt civil or administrative litigation, he believes the key lies in the coordination of the court-tier system. If the administrative courts can coordinate with state compensation litigation or civil litigation after adjustments to the court-tier system, a unified system where litigation procedures revert to administrative litigation can be anticipated.