Transplantation of Fiduciary Duties into Civil Law Jurisdiction: Experiences from Taiwan

Abstract

The insertion of a duty of loyalty into the Trust Enterprise Act in 2000 and the Companies Act in 2001 marks the invasion of fiduciary duties into Taiwan law, a long civil law jurisdiction. Unlike common law jurisdictions, such transplantation was prescribed by legislation and only the general concept was introduced. This creates a situation where common law concepts, developed by case law, are incorporated conceptually into a civil law system, where facts of judicial decisions are considered secondary to the ‘doctrine’ specified in any statute or judicial precedent. Based on current judicial interpretation in Taiwan, this paper will argue that the way Taiwan transplanted fiduciary duties created several problems. First, the lack of substance creates a danger of misusing and extending the concept beyond that was recognised in common law jurisdictions. Secondly, the heavy inclination toward US law leads to the Americanisation of common law in Taiwan. Thirdly, the flexibility of common law is sacrificed if transplantation is only conducted in a very abstract way. Fourthly, Taiwan so far lacks further development on the duty of loyalty, which was ironically considered the main reason of the introduction of the fiduciary duties. The next question is how to deal with the vacuum left by abstract legislative transplantation. One way to address the problem is to re-enact the whole doctrine with more substance in the Civil Code or in a statute (as in Japan and China). However, as long as the application of fiduciary duties are based on a general doctrine rather than on the incremental development of case law, the transplantation of a common law or equitable concept in Taiwan will ensure that there will be some uncommon development in the future.