Newsletter
THE NEW ADMINISTRATIVE RELIEF SYSTEM AND ITS IMPACT
The amendment to the Law of Administrative Appeal (LAA) and the Code of Administrative Procedure (Code) came into force on 1 July 2000. This marks a new era in the administrative relief system. The old LAA was comprised of only 28 articles but the amended law has 108. The Code has undergone an even greater overhaul, having been expanded from 34 articles to 308. Our November 1998 issue has already reported the content of the amended laws. The present article merely gives a brief description of some struc-tural changes.
Change in Administrative Relief Procedures
The old procedural sequence when seeking ad-ministrative remedies was a three-instance sys-tem of appeal and re-appeal to the administrative agency, and then a suit in the administrative court. From 1 July 2000, the re-appeal stage would be abolished, leaving only one stage of administrative appeal. Any one who is not sat-isfied with the outcome of an appeal can seek remedy directly in the High Administrative Court. Meanwhile the procedure for adminis-trative suits has been expanded to two instances. The High Administrative Court will be in charge of the first instance and the Supreme Adminis-trative Court the second instance. Where a per-son is not satisfied with the result of an admin-istrative appeal, or where the agency appealed to has not rendered a decision within three months after the appeal was filed, or, after postponing its decision, has still not rendered one after a further two months, he may turn the matter over to ju-dicial process by bringing a suit in the High Administrative Court.
Additional Types of Administrative Remedies
The amended LAA relaxes restrictions on filing an appeal, to increase the opportunities for remedies. Meanwhile the amended Code pro-vides for new types of suits in the administrative courts. The old Code recognized only suits for revocation; the new one explicitly recognizes suits for fulfillment of obligations (including suits against omission or refusal to consider an application), suits for confirmation (including to confirm invalidity of an administrative act or existence of a public legal relationship), suits for performance, joint suits for damages, and suits to uphold the public interest, along with procedures for the provisional protection of rights (including petition to suspend execution of an administra-tive act, provisional seizure and provisional execution). However, because of the great in-crease in the types of remedy available, a plain-tiff must be able to choose the appropriate one or it may be difficult to effectively enforce his rights. This proliferation of remedies also makes the system of administrative remedies somewhat complicated.
Greater Emphasis on Due Process
The new laws lay particular stress on the demand for due process. This is especially prominent in the administrative appeals procedure. In the past, administrative appeal was considered behind closed doors, and appellants had no insight into or opportunity to participate in the process by which appellate agencies considered and decided cases. The fact that documentary proceedings were the rule made it still more difficult for ap-pellants to fully express all available means of attack and defense. As a result, there has been a general lack of public confidence in administra-tive remedies. The new laws introduce substan-tial reforms in terms of due process. In the ad-ministrative appeals procedure, appellants may request the laying-open of case files, may have the right to state their position orally, may peti-tion for holding oral debate proceedings, and may petition for examination and verification of evidence. Thus the status of appellants in the appeals procedure has been greatly enhanced. In the administrative courts, oral debate proceed-ings will now be the rule in first-instance pro-ceedings, so that plaintiffs can directly enter into debates with the administrative agency con-cerned. This will be of crucial importance in clarifying the points at issue. This change will surely encourage appellate agencies to be more rigorous in their application of the law and their determination of evidence, and will impose checks on administrative agencies' exercise of their discretionary powers.
Greater Rights for Third Parties
In the past, when making administrative deci-sions, administrative agencies generally only considered the interests of the persons with whom they were directly dealing, and rarely concerned themselves with how the interests of third parties might be affected. The new laws greatly enhance the status of third parties in the administrative remedies procedure, and this too will encourage agencies to give broader consid-eration to the effects of their decisions. The new administrative appeals procedure gives inter-ested parties the explicit rights to file an appeal, to be a party to an appeal, to state their case and to examine case files. In terms of the adminis-trative court proceedings, a system for third par-ties to participate in the administration suits is also introduced. In brief, where administrative measures applied to others affect one's own rights and interests, one may seek administrative remedies on his own initiative.
Circumstantial Decisions Allowed
Following the practice of some other countries, the new laws also allow for decisions to take account of prevailing circumstances. Thus if the administrative act under review is not fully lawful, but the appellate agency or the adminis-trative court finds that it is in accordance with the overall public interest, and that its revocation or alteration would cause major harm to the public interest, it may decide to uphold the original measure and reject the appeal or suit. But in such cases it must award appropriate compensation for the loss or damage suffered by the appellant or plaintiff, and record this in its decision or judgment so that the appellant or plaintiff can quickly receive a suitable remedy.
Settlement in Administrative Relief Proce-dures
Current tax collection practice includes so-called conciliation procedures, whereby before making a final assessment of the tax due, the authorities may attempt to reach a settlement with the tax-payer. Yet once matters enter the administrative litigation process, there is little possibility of further conciliation. In reality, the tax authorities and the taxpayer often hold different opinions regarding the facts and evidence applicable to a particular tax matter. If a dispute could be settled by conciliation, this would no doubt allow citi-zens to more quickly confirm their relevant rights and duties. The new Code explicitly pro-vides that the parties may attempt to reach a set-tlement, and the tax authorities can take this as the basis for their handling of cases. However, whether settling tax disputes by conciliation will be feasible in practice remains to be seen. It is noteworthy that although the Code allows ad-ministrative agencies to enter into settlements, the new LAA does not have any provisions re-lating to settlements. Therefore, it remains open to question whether attempts at conciliation are permissible during the appeals procedure.
Conclusion
The new system certainly enhances the protec-tion to the people; but it also makes the process of administrative remedies more rigorous and sophisticated. Tax matters have always ac-counted for the lion share of administrative relief procedures. For example, among the 5,538 cases concluded in the administrative court in 1999, 3,592, or some 65%, were tax cases. Hence the entry into force on 1 July of the new LAA and the Code can be expected to lead to a substantial increase in the demand for professional legal representation.
In the past, the tax authorities have often made assessment based on their view on the circum-stances and completely negated legitimate transaction arrangements between taxpayers. In the future, this approach will be open to chal-lenge, and in particular the tendency to place matters in the hands of judicial review would make administrative agencies (in particular, tax authorities) more attentive to the need to act ac-cording to the law. The situation often seen in the past where tax authorities ignore arguments set forth by taxpayers is likely to receive little support from appellate agencies or the adminis-trative court. Thus, the role of professional legal representation in the administrative relief pro-cedure (particularly tax matters) will be more and more important.
In response to this trend, Lee and Li organized a special task force to closely monitor these de-velopments, particularly in the field of taxation matters. In addition to our professional legal staff, we already recruited several experienced CPAs to join our practice with a view to com-bining expertise in law, tax and accounting so as to offer our clients more professional, efficient and in-depth services.