Taiwan Offshore Wind Series: Dispute resolution and other security matters
In the fourth and last article of our Taiwan Offshore Wind Series, the focus lies on the regulatory framework when working and contracting on a Taiwanese offshore windfarm.
To develop, construct and operate an offshore wind farm, developers must obtain an electricity license. This involves various stages, including getting approval from the Environmental Protection Administration ("EPA") and obtaining an Establishment Permit from the Bureau of Energy ("BOE"). Additionally, offshore wind developers must enter into a Power Purchase Agreement ("PPA") with Taipower, the Taiwanese state-owned energy company and obtain the requisite construction permit from the BOE in advance of construction.
Generally, this licensing process presents a difficult barrier to entry, and it appears that several projects have been caught up in the administrative requirements. Experience has shown that the whole process can take up to 36 months.
Under the underlying contract, contractors are usually responsible for obtaining their own permits, i.e. permits for work equipment, permits and visas for employees etc. Most importantly, the permits for the vessels used for installation need to be obtained well in advance. If Taiwanese flagged vessels are used, this is a relatively easy process (see the second article of our Taiwan Offshore Wind Series on ships and vessels). However, most of the jack-up and heavy-lift vessels required for carrying out work on Taiwanese offshore sites are usually foreign flagged vessels.
In this case, contractors must first obtain documents permitting the use of the vessel from the BOE, the Ministry of Economic Affairs and appoint a shipping agency business to apply for the permit from a Maritime Affairs Center of the Bureau.
While the government states that this process should usually take up to seven working days, it has sometimes proven quite lengthy and complicated for these permits to be issued. All certificates submitted usually need to comply with MARPOL standards.
Many of the Offshore Energy Development Zones and future wind farms are developed by Taipower. Thus, contractors willing to offer their services for these wind parks might need to submit tenders to be employed. Hence, they cannot rely solely on a good reputation or personal connections. At the same time, this also offers the potential to win a tender without any of the above but simply by providing the best offer.
To regulate the procedure for awarding public contracts, Taiwan implemented the Government Procurement Act in 1999 and also signed the World Trade Organisation Agreement on Government Procurement. Article 6 of the Government Procurement Act outlines the general principles regulating such proceedings, which are that an entity shall observe the principle of protecting public interests, fairness and reasonableness, and shall not accord differential treatment to suppliers without due cause. The principles therefore align with the European Principles of Procurement and, more specifically, the fundamental principles are those of non-discrimination and prohibition of improper competition.
When employing seafarers and workers, contractors should consider the law that is applicable to employment contracts, the various legal options available and the minimum standards that might limit the options available.
The Taiwanese Seafarer's Act regulates the working conditions, employment contracts and wages for Taiwanese seafarers on Taiwanese flagged vessels.
For all other seafarers, international rules might apply. On Taiwanese flagged vessels, the Labour Law Act applies as the minimum standard for employment contracts in Taiwan, which inter alia regulates working time and overtime.
Regarding health and safety restrictions, the Occupational Safety and Health Act applies and establishes duties to implement certain safety measures. These minimum standards may also apply for foreigners regardless of the law of choice in their employment contracts. Minimum standards at the work site or the contractually agreed workplace may be considered mandatory rules that apply in any case.
Foreign workers require a work permit as well as a resident visa to enter Taiwan and legally work on site. The process can take up to four weeks and may be especially prolonged during the Covid19-pandemic. In order to apply for a work permit, an employment contract must be submitted to the authorities.
You can read the three other articles of our Taiwan Offshore Wind Series by clicking on the links below:
For more information please contact Dr. Eckehard Volz, Anna-Sophie Waldmann or Dilara Kamphuis in the Hamburg office.