Motion for Temporary Injunction against the Council of Agriculture, regarding the Auction of Garlic Import Rights
Chinese Taipei
Case:
Motion for Temporary Injunction against the Council of Agriculture, regarding the Auction of Garlic Import Rights
Key Words:
market supply and demand, market fluctuations, market prices
Reference:
Taiwan High Court Ruling (84) Kang Tzu No. 2814
Industry:
Vegetable Plantation Industry (0114)
Relevant Laws:
Articles 19(ii) and (iii), Article 24, Article 30 of the Fair Trade Law
Summary:
According to its investigation, the Council of Agriculture (hereafter the Council) announced on July 25, 1995 that there would be a shortage of 4,000 metric tons of garlic prior to the 1996 harvest. The Council therefore decided to auction the import quotas, after negotiation with the different production units on issues relating to the amount, time, and method of garlic import. The Council commissioned the Central Trust of China to handle the bidding in accordance with the schedule set by the Council.
The auctions were held on schedule in August and September 1995, and on October 17, 1995. Import quotas for 4,000 metric tons of garlic were sold in the three auctions, the total volume of which was sufficient to meet the market demands until the 1996 harvests. Accordingly, the fourth bidding, which was scheduled on November 10, 1995, would be unnecessary since it did not have taken into consideration the market supply and demand.
The appellant claimed that the Council obviously violated Item 7 of the Bidding Requirements by commissioning the Central Trust of China to handle the bidding for the import quotas of 1,500 metric tons of garlic, and opening the bid on November 10. Thus the appellant requested the Taipei District Court to grant a temporary injunction against the Council. The Taipei District Court, in its Ruling (84) Tsai Chuan Tzu No. 4504 dated November 6, 1995, dismissed the appellant‘s motion. An appeal was made against the Ruling.
The appeal may be summarized as follows:
The decision of the Council to determine whether agricultural products were to be imported or exported was an act of commercial transaction rather than an exercise of administrative authority. This case should thus be categorized as a civil case (see, the Interpretation of the Council of Grand Justices Shih-89). Furthermore, the fact that the Council commissioned the Central Trust of China to conduct the auction of the import quotas also indicated that it was a civil matter.
The temporary injunction in this case was moved to prevent the Council from auctioning the garlic import quotas. The motion was based on Item 7 of the Bidding Requirements, which stated: “ [t]he Council will keep monitoring the market supply and demand on a monthly basis, and then determine whether or not to continue auctioning the import quotas.” Item 7 was incorporated as a part of the purchase contract, which was binding on the Council.
The Council on October 28 and October 26, 1995 again commissioned the Central Trust of China to conduct the fourth bidding for 1,500 metric tons of garlic, which obviously violated Item 7 of the Bidding Requirements. The reasons were as follows:
(1) Such decision could not possibly be based on the monthly monitoring;
(2) The first three auctions had been held on schedule, the total volume of which was 4,000 metric tons and was sufficient to meet the market demands until the 1996 harvests. Accordingly, the fourth bidding, which was scheduled on November 10, 1995, would be unnecessary since it did not have taken into consideration the market supply and demand.
Based on the above facts, the Council had seriously violated the stipulations of Item 7. In accordance with Article 30 of the Law, the appellant could apply for temporary injunction with the posting of bond. Therefore, a motion was made to dismiss the Ruling, prohibiting the Central Trust of China from conducting the auction for 1,500 metric tons of garlic on November 10, 1995, and further prohibiting the Council from offering import quotas before December 10, 1995.
Investigation showed that in order to ensure steady supply, stabilize prices and balance supply and demand, the Council commissioned the Central Trust of China to conduct auctions of garlic import quotas based on the market supply and demand. Therefore, it was also an administrative objective or duty of the Council to continue the auction for the import of garlic in order to stabilize prices.
In addition, the Central Trust of China stated, in Item 7 of the “Bidding Requirements for the Import of 2,000 Metric Tons of Garlic” , that “ [a]fter the Council has commissioned the Central Trust of China to conduct auctions for the import of 2,000 metric tons of garlic, the Council will keep monitoring the market supply and demand on a monthly basis, and then determine whether or not to continue auctioning the import quotas.” Item 7 served as a notice to the appellant that the Council reserved a right to conduct future auctions after evaluation.
As the highest authority in charge of agricultural affairs, the Council has the power under public law to make the aforementioned decision. Thus, it is not an obligation of the Council. Item 7 did not require the Council to obtain consent from the appellant (the bidder awarded the quotas) prior to conducting future auctions.
In addition, the above term “ monthly monitoring” meant “ to monitor closely” ; the term did not mean that the market situation could only be monitored after one month. With respect to the above “ market supply and demand,” a balanced supply and demand and stable market prices could not be attained simply by making the schedule of import quota auctions, as was asserted by the appellant. Rather, other market factors should also be taken into consideration. Therefore, the appellant could not rely on Item 7 of the Bidding Requirements as the basis for temporary injunction.
Further, the appellant asserted that it was unnecessary for the Council to conduct another auction on the import of 1,500 metric tons of garlic before December 1995. The reasons offered by the appellant were that “ the above import has reached 4,000 metric tons, which is sufficient to meet market demands until the 1995 harvests ” and that “ in accordance to the market demand before February 1996, it is unnecessary for the Council to conduct auctions for the import of 1,500 metric tons of garlic on November 10, 1995” Due to the above reasons, the appellant submitted its bid proposal based on its prediction that the Council would not import more garlic before the end of December 1995. The reasons, however, were the appellant‘s subjective assumptions.
In addition, public auctions were conducted to ensure reasonable prices, rather than to guarantee profit for the bidders. Although the bid prices were too high, it was due to the appellant’ s errors in estimating future market prices. As stated earlier, the Council’ s objective was to stabilize garlic prices, therefore high bid prices would be contrary to the Council’ s policy. Thus the appellant could not use cost as a ground for requesting the Council to terminate import. It was evident that the appellant committed an error in estimating market prices, thus the reasons for applying for a temporary injunction were unacceptable.
The Commission has determined that the Council’ s right to conduct auctions on garlic import quota is in accordance with the “ Statute for Agricultural Development” ; the Law is not applicable in this case. Thus, the appellant’ s claim that the case violated Article 19(ii) and (iii), and Article 24 of the Law was also unfounded. The court was correct in dismissing the appellant’ s motion. The appellant’ s claim that the Ruling was improper and its motion for the dismissal of the Ruling were also unfounded. The case is thereby dismissed.
Summarized by Lin, Pen-yuan
Supervised by Chen, Hui-ping