Sep 2023

Taiwan

Law Over Borders Comparative Guide:

Commercial Litigation and Cross-border Enforcement

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1 . What is the structure and organisation of local courts dealing with commercial claims? What are the main procedural rules governing commercial litigation?

There are three levels of ordinary courts in Taiwan: the District, High, and Supreme Courts. These courts are further sub-divided into several civil and criminal tribunals at each level.

Each District Court has jurisdiction over civil and criminal cases at first instance and appeals against decisions from summary divisions, which try relatively minor cases in each District Court. The High Court has jurisdiction over certain felonies at first instance and appeals against decisions of the District Court. The Supreme Court has jurisdiction over appeals against court judgments except where the value of the benefits of the appeal do not exceed NTD 1,500,000. The civil tribunals for each level of the ordinary courts deal with most commercial claims.

The Commercial Case Adjudication Act came into force on July 1, 2020 to ensure a proper, expeditious, and professional process for adjudicating major commercial disputes, improving corporate governance, and elevating the business environment. Since the Act has been implemented, if a case can be defined as a “Commercial Case” as outlined under the Act, the Intellectual Property and Commercial Court has exclusive jurisdiction over it.[1] If a party is dissatisfied with the judgment rendered in the first instance (i.e., by the Intellectual Property and Commercial Court), that party may appeal to the Supreme Court.

The provisions of the Commercial Case Adjudication Act govern the hearings and the adjudication of Commercial Cases. However, where matters are not stipulated in the Commercial Case Adjudication Act, provisions from the Code of Civil Procedure apply. The Code of Civil Procedure also applies to all other commercial matters that cannot be defined as Commercial Cases under the Commercial Case Adjudication Act.


[1] Paragraphs 2 and 3, Article 2 of the Commercial Case Adjudication Act define Commercial Litigation Cases and Commercial Non-Litigation Cases. Commercial Litigation Cases are generally commercial disputes where the price or value of the claim is equal to or more than NTD 100,000,000.

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2 . What pre-action considerations apply?

In principle, parties can freely decide whether they are willing to try to settle their differences through mediation or private negotiation. However, the law also requires that certain matters undergo court mediation before litigation begins. For example, Article 403 of the Code of Civil Procedure stipulates the types of disputes subject to mandatory mediation proceedings. These include disputes arising from proprietary rights where the price or value of the object in dispute is less than NTD 500,000.

According to Chapter 2 of the Commercial Case Adjudication Act "Commercial Mediation Procedures," pretrial mediation is mandatory for all Commercial Litigation Cases. The process involves the following: 

  • When a party initiates an action directly with the Commercial Court, or where a case transfers to the Commercial Court, this should be deemed a petition for mediation.
  • A petition for mediation should be filed in writing by the applicant, and the opposing party must submit a statement of defense within 10 days of receiving the petition.
  • Pre-trial mediation may be conducted by:
    • judges of the Commercial Court;
    • one to three members of the Commercial Mediation Committee of the Commercial Court who have been appointed by judges and who possess appropriate expertise and experience; or 
    • one to three members of the Committee who have been agreed upon and designated by the parties to the mediation proceeding.
  • The court may order a maximum penalty of NTD 300,000 if the parties to the mediation, their legal representatives, or their attorneys are lawfully served but do not appear on the day of mediation and give no justification for their non-appearance.
  • Mediation should be concluded within 60 days of the appointment of the mediators. However, with the consent of the concerned parties, this restriction may be waived.
  • If the mediation is successful, the applicant may file a petition for a refund of three-quarters of the mediation filing fee. 
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3 . What are the main alternative dispute resolution (ADR) methods used to settle large commercial disputes?

Commercial arbitration is a popular alternative dispute resolution (ADR) method in Taiwan. According to Article 1 of the Arbitration Act, arbitrable disputes are disputes that can be settled under Taiwan law. The legislative reasoning for Article 1 further elaborates that “disputes that can be settled under Taiwan law” refers to disputes concerning rights or legal relationships in property law that can be disposed of freely by the parties. Cases that are considered as not appropriate for settlement, such as criminal cases or disputes relating to rights or legal relationships in family law and inheritance law, are not arbitrable because they are related to the public interest. Commercial disputes, the majority of which may be settled by the parties involved, are typically arbitrable.

Institutional arbitration in Taiwan may be conducted by international arbitration centers, such as the International Chamber of Commerce (ICC), or by local arbitration organizations, such as the Chinese Arbitration Association, Taipei (CAA).

Pretrial mediation is mandatory under the Commercial Case Adjudication Act. 

According to the Government Procurement Act, for government procurement contracts, when an entity and a supplier dispute the performance of a contract, the parties may apply to the Complaint Review Board for Government Procurement for mediation. If the supplier makes the application for mediation, the entity is not able to object to such an application.

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4 . How long, on average, do court proceedings take to reach trial?

There are no pre-trial proceedings. As opposed to the practice in common law jurisdictions, court hearings for civil matters in Taiwan are usually not scheduled in a compact or condensed manner. Judges typically schedule the next hearing date at the end of each hearing, and, generally, at least one month passes between each hearing. Several months are required at the very least to receive a first-instance judgment. 

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5 . What disclosure obligations apply? Are parties required to disclose unhelpful documents as well as those on which they rely?

Under Taiwan’s legal system, there are no general obligations of disclosure in civil lawsuits. The Code of Civil Procedure (the Code) has long adopted the adversarial system. That is, the parties concerned in a suit must prove the facts they claim in their favor and collect the evidentiary materials involved to prove their claim during a trial (see Article 277 of the Code). 

However, the Code also contains exceptions to this rule: Where the law provides or where the circumstances are manifestly unfair, the burden of proof may be waived or redistributed from one party to another. Previous court precedents have observed that for public hazard cases, traffic accidents, liabilities concerning product manufacturers, and medical disputes, only one of the parties might possess evidence relevant to the case, and it might be difficult for the other party to collect proof due to its lack of ability and financial resources. Under such circumstances, the court may redistribute the burden of proof between the parties.

Moreover, according to Article 282-1 of the Code, if a party intentionally destroys or hides a piece of evidence or makes it difficult to use or obstructs the opposing party from obtaining the evidence, the court may, at its discretion, accept the opposing party’s allegations concerning the evidence or the disputed fact to be proved by such evidence as the truth.

By contrast, the Commercial Case Adjudication Act (the Act) refers to discovery procedures from the common law system. According to Article 43 of the Act, when preparing to make assertions or provide proof, the parties to a case may request the opposing parties to make specific explanation of necessary matters relating to facts or provide evidence within a period designated by the court or before the end of the preparatory proceedings. However, if any one of the following conditions exists when such requests are made, the opposing party may refuse to respond:

  • The requests are vague or not relevant to the issues in dispute.
  • The requests are repetitious.
  • The requests are about matters of opinion.
  • The time and costs required for explanations are disproportionate to the party’s requests.
  • The requests include matters that the witness is allowed to refuse to testify about under Taiwanese law.

If the party to whom the request is made refuses to address them without justifiable cause, the court may consider the situation and accept the opposing party’s allegation concerning the evidence or the disputed fact to be proved by such evidence as the truth (see Article 45 of the Act).

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6 . Can witnesses be required to attend trial and face cross-examination?

As stated above, in civil lawsuits, parties bear the burden of proof concerning the facts they allege in their favor. Therefore, the parties usually petition the court to summon certain witnesses, and the court calls these witnesses if it deems it necessary.

According to Article 303 of the Code of Civil Procedure, if a witness who has been legally summoned fails to appear in court without giving a justifiable reason, the court may impose a fine of up to NTD 30,000. If a witness who has been fined once still fails to appear after being summoned, he/she may be fined again in an amount up to NTD 60,000 and may even be apprehended and forced to appear.

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7 . What discretion do the courts have in making costs orders?

The courts usually render costs orders together with rulings on disputes. However, the “costs” are generally limited to the fees paid to the court (i.e., the court fees). When a party initiates a lawsuit, it pays court fees based on the amount it claims in the lawsuit, and the party initiating the lawsuit may ask the opposing party to reimburse these fees in its statement of claim. When the court renders a judgment, the court states in the main text of the judgment how the parties should pay or reimburse the court fees. The losing party typically has to bear the cost of them. 

The current law does not require parties involved in litigation to retain lawyers in civil proceedings at the first and second instances and attorney fees are not deemed inevitable losses for the winning party. Therefore, asking the losing party to compensate the winning party for attorney fees in first- and second-instance cases is extremely difficult. 

By contrast, as the current law requires parties to retain lawyers in civil proceedings at the third instance, the law provides that compensation paid to the attorney in the court of third instance is included as a part of the litigation costs, and the capped amount for these fees is NTD 500,000, which may be reduced at the court’s discretion. 

The Commercial Case Adjudication Act also provides that parties should retain lawyers as agents ad litem in cases subject to the Act. Therefore, the litigation costs include a certain amount for the remuneration of lawyers as determined by the law. The maximum amount of the litigation costs claimable for Commercial Litigation Cases is NTD 5 million. 

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8 . What are the main types of interim remedies available?

The Code of Civil Procedure provides for two ex parte interim remedies: provisional attachment and provisional injunction. There is also a special type of provisional injunction that serves to maintain the status quo pending a solution of the dispute to prevent inflicting irreparable harm upon either party.

Provisional attachment

Before filing a lawsuit based on a monetary claim or a claim convertible to a monetary claim or when the lawsuit is pending, the plaintiff may apply to the District Court with jurisdiction over the lawsuit or the jurisdiction where the assets to be seized are located, for a provisional attachment order. The applicant for this order needs to demonstrate to the court a risk that the compulsory enforcement of a favorable judgment may be impossible or very difficult and express their willingness to post a bond at an amount to be determined by the court (usually one-third of the amount claimed). The provisional attachment order cannot commence until the bond is posted.

Provisional injunction

In the case of a non-monetary claim, the plaintiff may apply to the court for a provisional injunction to force the defendant to take or refrain from taking specific actions. The applicant for this injunction needs to demonstrate a risk that the compulsory execution of a judgment in their favor may be impossible or very difficult without the provisional injunction and express their willingness to post a bond at an amount to be determined by the court, taking into account the possible adverse effects of the injunction on the defendant.

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9 . What approach do the local courts adopt with respect to arbitration? What arbitration law applies and is it based on the UNCITRAL Model Law?

Most Taiwanese courts have taken a pro-arbitration attitude. Thus, it can typically be expected that domestic arbitral awards will be upheld in Taiwan and that foreign arbitral awards will be recognized and enforced unless any of the circumstances specified by the Arbitration Act are met. 

The current Taiwan Arbitration Act was promulgated in 1998, and many provisions in the Act are influenced by the UNCITRAL Model Law promulgated in 1985. However, the Arbitration Act is still different from the current UNCITRAL Model Law as amended in 2006 in certain aspects. For example, the Arbitration Act provides a much longer list of grounds that can be used to set aside a domestic award (see Article 40) than grounds that can be used to refuse recognition or enforcement of a foreign arbitral award (see Articles 49 and 50). By contrast, in the 2006 UNCITRAL Model Law, the grounds to set aside a domestic award (see Article 34) overlap greatly with the grounds to refuse recognition or enforcement of a foreign arbitral award (see Article 36). Additionally, unlike the 2006 UNCITAL Model Law, the Arbitration Act does not include a chapter dealing with interim measures supporting arbitration.

To better integrate Taiwan into the international community, enhance its global visibility, and stimulate its economic development, the CAA has assiduously lobbied for an amendment to the Arbitration Act. The draft amendment, which is mainly based on the 2006 UNCITRAL Model Law, was proposed to Taiwan’s Legislative Yuan and sent to Taiwanese legislators for review at the end of 2021.

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10 . Can arbitrators grant interim relief?

In the current Arbitration Act there are no provisions which allow arbitrators to grant interim relief. However, the draft amendment prepared by the CAA includes provisions applicable to interim measures and preliminary orders based on the UNCITRAL Model Law. 

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11 . On what grounds can an arbitration award be appealed?

No appeal can be filed against arbitral awards.

If a party is not satisfied with an arbitral award, it may apply to the court to set the award aside under the circumstances stipulated in Article 40 of the Arbitration Act as follows:

  • The arbitral award concerns a dispute not contemplated in the terms of the arbitration agreement or exceeds the scope of the agreement. If the offending portion of the award may be severed, and this severance will not affect the remainder of the award, the remainder need not be set aside.
  • The reasons for the arbitral award were not stated as required (this ground does not apply if the arbitral tribunal corrected the omission).
  • The arbitral award directs a party to act contrary to the law.
  • The arbitration agreement is void, invalid, has yet to come into effect, or has become invalid prior to the conclusion of the arbitral proceedings.
  • The arbitral tribunal fails to allow one or more of the parties to present its case before the conclusion of the arbitral proceedings, or one or more of the parties is not lawfully represented in the arbitral proceedings.
  • The composition of the arbitral tribunal or the arbitral proceedings is contrary to the arbitration agreement or the law.
  • An arbitrator fails to fulfill the duty of disclosure prescribed in Paragraph 2, Article 15 of the Arbitration Act and appears to be partial to one of the parties or has been requested to withdraw but continues to participate (provided that the court has not dismissed the withdrawal request).
  • An arbitrator violates any of their duties during the arbitration, and such violation carries criminal liability.
  • A party or any representative has committed a criminal offense concerning the arbitration.
  • Any evidence or the content of any translation upon which the arbitration award relies has been forged or fraudulently altered or contains any other misrepresentations.
  • The judgment of a criminal or civil matter, or an administrative ruling, upon which the arbitration award relies has been reversed or materially altered by a subsequent judgment or administrative ruling.
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12 . What international conventions and agreements on enforcement of judgments or arbitral awards is your jurisdiction a party to?

Taiwan has signed several bilateral agreements through different institutions concerning the recognition and enforcement of judgments and arbitral awards. For example, in the Agreement between the Taipei Economic and Cultural Office in Vietnam and the Vietnam Economic and Cultural Office in Taipei on Judicial Assistance in Civil Matters, Vietnam and Taiwan have agreed to mutually recognize and enforce civil judgments on commercial, labor, marital, and family matters if such judgments meet all the conditions stipulated in the Agreement. Taiwan and Vietnam also agree to recognize and enforce arbitral awards rendered in the territory of the other party in accordance with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards concluded in New York on June 10, 1958 (the New York Convention) and the arbitration laws of the two parties. In the Cross-Strait Joint Crime-Fighting and Judicial Mutual Assistance Agreement, mainland China and Taiwan have agreed that based on the principle of reciprocity, one party shall recognize and enforce the final civil judgments and arbitral awards of the other party if doing so is not contrary to the public order or morality of the first party.

Although Taiwan is not a signatory to the New York Convention, Taiwan’s Arbitration Act voluntarily adopts grounds similar to those under the New York Convention for refusing to recognize foreign arbitral awards. Taiwan’s Code of Civil Procedure also adopts relatively limited grounds for denying recognition of final and binding foreign judgments. For years, Taiwanese courts have recognized many foreign judgments and arbitral awards.[2] 


[2] Based on our search of the Judgment System for Taiwan’s Judicial Yuan, Taiwanese courts have recognized final judgments made in at least the following jurisdictions: Belgium, Canada, Germany, Hong Kong, Italy, Japan, mainland China, Malaysia, New Zealand, Singapore, South Africa, South Korea, the United Kingdom, and the United States. Furthermore, Taiwanese courts have at least recognized arbitral awards made in the following jurisdictions: the Czech Republic, Finland, France, Hong Kong, Japan, mainland China, Russia, Singapore, South Korea, Switzerland, the United Kingdom, the United States, and Vietnam.

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13 . What types of judgments in commercial matters are enforceable and what types are excluded?

Domestic judgments

According to Article 4 of the Compulsory Enforcement Act, irrevocable final judgments are generally enforceable. Please refer to Question 15 for the available methods of execution.

Foreign judgments

Final judgments rendered by foreign courts concerning commercial matters are enforceable in Taiwan except as provided under Article 402 of the Code of Civil Procedure. 

Article 402 of the Code stipulates the following: 

“A final and binding judgment rendered by a foreign court shall be recognized, except in [the] case of any of the following circumstances:

  1. where the foreign court lacks jurisdiction pursuant to the R.O.C. laws;
  2. where a default judgment is rendered against the losing defendant, except in the case where the notice or summons initiating the action had been legally served in a reasonable time in the foreign country or had been served through judicial assistance provided under the R.O.C. laws;
  3. where the performance ordered by such judgment or its litigation procedure is contrary to R.O.C. public policy or morals;
  4. where there exists no mutual recognition between the foreign country and the R.O.C.

The provision of the preceding paragraph shall apply mutatis mutandis to a final and binding ruling rendered by a foreign court.”

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14 . What is the process for registration of foreign judgments and arbitral awards?

Taiwan laws do not require registration of a judgment or award.

According to Article 4-1 of the Compulsory Enforcement Act, petitions for compulsory enforcement based on an irrevocable foreign court judgment can be granted when none of the conditions outlined under Article 402 of the Code of Civil Procedure apply and when a Taiwanese court has approved enforcement by means of a judgment. Therefore, if the winning party in a final and binding foreign judgment wants to enforce the judgment in Taiwan, it should first initiate a lawsuit to petition the court to approve enforcement against the losing party in the District Court where the losing party resides. Where the losing party does not have a place of residence in Taiwan, the lawsuit should be commenced in the place where the object of enforcement is located or where the enforcement action will be performed. 

For an enforcement proceeding, the judge will not revisit the case’s merits but will only review whether the foreign judgment falls into any situations for denying recognition.

Like an ordinary lawsuit, obtaining an enforcement judgment may be subject to three levels of courts. For a foreign plaintiff who has no business establishment or domicile in Taiwan, the court will, at the request of the defendant, order the foreign plaintiff to post a bond equal to the court fees for the High Court and Supreme Court levels plus reasonable attorney’s fees at the Supreme Court level to secure payment of relevant costs in case the plaintiff ultimately loses the lawsuit. No bond will be required if the plaintiff has assets in Taiwan that can cover the fees.

According to Article 47 of the Arbitration Act, after the court has granted an application for recognition, a foreign arbitral award will be binding on the parties, have the same force as a final court judgment, and become enforceable. Therefore, if the winning party of a foreign arbitral award wants to enforce the award in Taiwan, it must first initiate a lawsuit to petition the court to recognize the award against the losing party in the District Court that has jurisdiction over the award according to section I, Chapter I of the Code of Civil Procedure.

According to Article 48 of the Arbitration Act, the following documents (including the Chinese translation) are required for the application of recognition of the arbitral award:

  • the arbitral award (or the notarized and legalized copy thereof);
  • the arbitration contract (or the notarized and legalized copy thereof);
  • the Arbitration Law and the Rules of the Arbitration Institution based on which the arbitral award was made.

Nevertheless, the court may also require other supporting documents in the course of its review.

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15 . Once the judgment or award is registered, what are the available methods of execution?

Execution concerning monetary debt

Monetary claims can be enforced through compulsory execution on a debtor’s movables, immovables, and other assets. Other creditors, including creditors with any execution title, mortgage, pledge, lien, or other preferential rights, and government agencies entitled to enforce any monetary claim against the debtor, may participate in distributing the proceeds derived from the compulsory execution. 

The process of implementing a compulsory execution on movables and immovables commences via an attachment. After an attachment order is granted, the judge is usually required to fix a date for the auction of the property. The court can only sell the property without conducting an auction if the exceptions provided under the law apply.

When the execution is implemented on a debtor’s account receivable against a third party, the court should issue an order prohibiting the debtor from collecting payments and the third party from making payments to the debtor. The court may also issue an order allowing the creditor to collect payments from the third party or transferring the debtor’s right against the third party to the creditor. Where appropriate, the court may order the third party to pay the court directly, and the court can then hand over the funds to the creditor.

Execution concerning claims for the delivery of objects

When the execution title demands that the debtor deliver specific movables, the court may seize such property and deliver it to the creditor. When the object is a certificate, and execution cannot be conducted, the court may declare the validity of a piece of the certificate null and void by a public announcement and issue a new certificate to the creditor.

Where a third party takes possession of movables, immovables, or vessels and aircraft to be delivered to the creditor, the enforcement court may transfer to the creditor the debtor’s right against the third party.

Execution concerning claims for feasance or non-feasance

When the creditor seeks to enforce a judgment ordering the debtor to perform a specific act, and the act may be performed by a third party (e.g., the delivery of goods or the construction of a building), the court may order the third party to act on behalf of the debtor and charge the debtor for the costs of third-party performance.

However, when the act is personal and cannot be performed by anyone other than the debtor (such as an artistic performance), the court may set a finite period within which the debtor’s performance must be completed. If the debtor fails to comply, the court may impose a fine on the debtor. If the debtor still fails to comply, the court may impose another fine or place the debtor under arrest. 

When the creditor seeks to enforce a judgment prohibiting the debtor from performing a specific act but the debtor fails to comply, the above rules on fines and arrest similarly apply.

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16 . What interim measures are available pending enforcement?

According to the Code of Civil Procedure, a party must demonstrate that there is a risk that the compulsory execution of a judgment obtained in their favor may be impossible or very difficult to successfully apply for any interim measures. If a party is already entitled to seek enforcement (such as upon a final and binding judgment), it will have no recourse to interim measures because the premise for taking interim measures no longer exists. Therefore, it is highly recommended that a party should apply for appropriate interim measures during or before the conclusion of legal proceedings. Once a party obtains a title to enforcement, it should also immediately apply for compulsory execution. After a party applies for compulsory execution, the court usually takes approximately 15 days to act upon the execution.

EXPERT ANALYSIS

Chapters

Bermuda

Charlotte Donnelly
Keith Robinson
Mahogany Bean

British Virgin Islands

Kate Lan
Nicholas Lee
James Noble

Canada

Robert J.C. Deane
Sean Gallagher

Cayman Islands

Amelia Tan
Joni Khoo
James Noble

China

Jessica Fei

England and Wales

Ben Bruton
Jake White
Suzanne Labi

Germany

Dr. Justus Jansen
Jamsched Amiri

Guernsey

Elaine Gray
Rebekah Johnston
Robin Gist

Hong Kong

Ian De Witt
Natalie Lam

Japan

Claire Chong
Kaori Sugimoto

Jersey

Christopher Tan
John Kelleher

Malaysia

Janice Ooi Huey Peng
Sharon Chong Tze Ying

Norway

Carl E. Roberts
Eline Hellem Langeland

Pakistan

Mansoor Hassan Khan

Saudi Arabia

Fahad AlDehais AlMalki
Salman AlAnazi
Talal AlOtaibi

Singapore

Calvin Ong
Monisha Cheong
Wendy Lin
Josephine Choo

South Korea

Daniel Chua
SeungMin Lee
Youjoun Ha

Thailand

Jittipong Champreechar
Napassorn Panitchewakul
Sarocha Thongperm

United Arab Emirates

Ayman Ibrahim
Hassan Al Shaqsi
Nasser Al Osaiba
Sleiman Jorr

United States

Arthur Schoen
Julia Mano Johnson
Natalie Holden

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