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Mediated solution not an option for Taiwan in Lafayette case

ROC Central News Agency

2010/05/31 17:51:08

Taipei, May 31 (CNA) Taiwan did not renege on a tacit agreement to solve the Lafayette frigate case dispute with France as has been reported and will not opt for a mediated solution in the future, the Ministry of National Defense (MND) said Monday.

The ministry said in a statement that it has not made contact with French defense contractor Thales over a possible out-of-court settlement and that it would resolve the case based on the law.

"We insist that the dispute be solved in accordance with the verdict of the International Court of Arbitration under the International Chamber of Commerce," the MND said.

The ICC court on May 3 ordered contractor Thales and the French government to pay a penalty of more than US$591 million to Taiwan for paying commissions on the sale of six Lafayettte-class frigates to the country's Navy in 1991, in violation of the contract on the deal.

The Liberty Times reported Monday that because Taiwan reneged on a consensus that the commission dispute would be solved out of court, France is closing down its military liaison office under its de facto embassy in Taiwan, the French Institute in Taipei.

The Chinese-language newspaper also said that as part of an out-of-court settlement, France had agreed to sell new weapons to Taiwan, help raise the technical levels of the Lafayette frigates and French-made Mirage jet fighters, and offer more technical services to Taiwan's military.

The MND denied the report, saying it was completely off base. It said that logistics, technical maintenance and personnel training related to the Lafayette frigates and Mirage fighters have proceeded smoothly and normally according to existing contracts.

If the contracts were violated, Taiwan's military could sue the French suppliers, the MND statement said.

The court case was launched in 2001 by Taiwan's Navy to investigate claims that much of the US$2.8 billion paid for the warships were for commissions to middlemen, politicians and military officers in Taiwan, China and France, in violation of Article 18 of the procurement contract.

The court gave its ruling only this year.

Thales and the French government, which would be liable for nearly 75 percent of the overall penalty because of its critical role in the contract, were expected to have to pay a total of up to US$861 million when interest, litigation fees and other expenses were added in, according to a Navy attorney.

Thales issued a statement on May 3 saying that the company will fight the ruling, including requesting the Paris Court of Appeals to revoke it.

Meanwhile, Ko Kuang-yueh, deputy secretary-general of the National Security Council, said at a legislative meeting Monday that although France is closing down its military liaison office in Taiwan in July, the French government will come up with a better substitute plan.

"Existing exchange programs, including military and technical support and services will not be affected, " Ko said at a hearing of the Legislature's Judiciary and Organic Laws and Statutes Committee.

Also speaking on the issue at the meeting, Foreign Minister Timothy Yang said the Lafayette arbitration was a business issue and would not have any adverse impact on bilateral relations between Taiwan and France.

Yang said it remains to be verified whether the French government will indeed close its military liaison office in Taiwan in July.

(By Lee Ming-tsung, Hsieh Chia-chen, Su Lung-chi and Deborah Kuo) enditem/ls