In case a construction company is awarded a public infrastructure contract after participating in a tender by borrowing the construction business registration certificate or project contracting manual of another person, the statute of limitation for sanctioning the violation of Article 54 of the Construction Industry Law shall commence upon expiration of the warranty period(Taiwan)

2017.5.15
Yi-Shan Cheng

The Ministry of Justice issued the Fa-Lu-10603506430 Circular of May 15, 2017 (hereinafter, the “Circular”) to communicate that in case a construction limited company is awarded a public infrastructure contract after participating in a tender by borrowing the construction business registration certificate or project contracting manual of another person, the warranty obligation of such company does not expire until the warranty period under the project contract expires and thus such company should still perform its contractual obligation by using the name and documentation of another person. Therefore, the statute of limitation for sanctioning its violation of Article 54 of the Construction Industry Law shall commence upon expiration of the warranty period.

This Circular is derived from a legal question raised by the Construction and Planning Agency under the Ministry of the Interior to the Ministry of Justice concerning the commencement of the statute of limitation for the penalty of “license revocation” under Article 54 of the Construction Industry Law, which provides: “A construction enterprise shall be subject to a penalty of NT$1,000,000 to NT$5,000,000 and the revocation of its license in any of the following circumstances: (1) use of the construction business registration certificate or project contracting manual of another person to operate construction business; (2) handover of a construction business registration certificate or project contracting manual to another person to operate construction business” (hereinafter, the “Provision at Issue”).

This Circular first pointed out that since the “license revocation” in the Provision at Issue completely deprives the sanctioned party of the qualification to operate construction business in the future, this should fall under the category of other types of administrative penalty under Article 2 of the Administrative Penalty Law, and the authority of the competent authority to impose sanctions is not affected by the fact that the same act also involves criminal penalty. Therefore, the calculation of the statute of limitation for penalty has nothing to do with the date of a final criminal court judgment.

This Circular further pointed out that under Article 27 of the Administrative Penalty Law, the statute of limitation of an administrative penalty shall be three years, commencing when an act that violates administrative law obligations ends. However, if the results of the act take place later, the statute of limitation will commence upon occurrence of the results. Therefore, in case a construction company is awarded a public infrastructure contract after participating in a tender by borrowing the construction business registration certificate or project contracting manual of another person, the warranty obligation of such company does not expire until the warranty period under the project contract expires and thus such company should still perform its contractual obligation by using the name and documentation of another person. Therefore, the statute of limitation for sanctioning its violation of the Provision at Issue shall commence upon expiration of the warranty period.