Taiwan has a codified system of law where the Constitution of Taiwan is the supreme law of the land. The Legislative Yuan enacts laws through powers granted to it by the Constitution. The Executive Yuan may also announce regulations and administrative orders in accordance with the law. The codes of law are traditionally drawn from other countries with similar codified legal systems like Japan and Germany and from traditional Chinese law.
All civil matters including commercial transactions are governed substantively by the Civil Code and procedurally by the Code of Civil Procedure. The Civil Code regulates all aspects of trade, agency, employment, contracts, leases, loans, mandates, partnership, suretyship and tort. All criminal matters are governed substantively by the Criminal Code and procedurally by the Code of Criminal Procedure.
As a civil law jurisdiction, legal decisions are made by reference to judicial interpretation of the codes and precedent, although compared with common law jurisdictions, the extent of reliance on case law may be less.
The Courts. The court system in Taiwan is divided into three levels: the District Courts, the High Courts and the Supreme Court, in ascending authority. These courts have jurisdiction over both civil and criminal cases.
The District Courts are usually the courts of first instance and have jurisdiction over civil cases where the amount involved exceeds NTD500,000 (US$16,000). The District Courts also have jurisdiction over non-contentious bankruptcy, marital property registration, guardianship and adoption, inheritance matters, company dissolution and liquidation. Most commercial disputes will therefore commence in the District Courts.
Appeals from the District Courts lie directly to the High Courts. The Supreme Court is the highest court and is found at the seat of the central government, presently located in Taipei. A High Court decision may be appealed to the Supreme Court in limited circumstances such as when there is improper application of laws and/or regulations. To appeal a civil case, the value of the claim must exceed NTD1,000,000 (US$32,000).
A single judge or a panel of three judges usually presides over a case in the District Courts. At the High Court, three judges preside over each case, and usually five judges will review appeals to the Supreme Court.
Apart from civil and criminal proceedings, a litigant may bring administrative proceedings in the Administrative Court if his rights have been affected by an unlawful or improper act of or an omission to act by a government agency.
The Legal Profession. In both criminal and civil proceedings, only Taiwan-licensed lawyers are permitted to appear in court. Lawyers are admitted to the Taiwanese Bar after passing the national bar examinations and completing five months of internship with a firm in Taiwan and one month in the Legal Training Institute. After Taiwan’s accession to the WTO, foreign lawyers with at least five years of experience may apply to become qualified as a foreign-licensed lawyer to practice the law of his or her home jurisdiction in Taiwan.
The Trial Process. Taiwan does not employ a jury system. In most civil cases, the trial process is adversarial in nature and the courts may only render decisions based on claims and evidence submitted by the parties. In criminal cases, however, the judges may on their own initiative take a more active role in the proceedings by investigating facts, questioning witnesses, collecting evidence or defining issues.
Court fees in civil suits must be prepaid by the plaintiff and the appellant upon filing and are usually borne by the losing party at the end of the action. Other court expenses such as expenses for witnesses, translators, mail or stenographers are paid by the party using or requesting such services. Unless otherwise agreed upon or directed by the courts, each party will usually bear its own attorney’s fees.
Enforcement of Judgments. Foreign judgments may be recognized and enforced in Taiwan if:
- the foreign court has jurisdiction over the matter according to the laws of Taiwan;
- the defendant was properly served with notice by the foreign courts;
- the judgment of the foreign court does not offend good morals or public policy; and
- there is reciprocal recognition of judgments between Taiwan and the foreign jurisdiction.
Arbitration. Arbitration in Taiwan is a common method of dispute resolution for construction, intellectual property, technology, international trade, securities and other disputes requiring specific or technical knowledge. Taiwan recently amended its arbitration laws to bring it in line with international standards as defined by the UNCITRAL Model Law. Arbitration in Taiwan is now governed by the Taiwan Arbitration Law.
Under the Arbitration Law, an agreement to arbitrate is only valid if it is in respect of a dispute whose resolution through arbitration is legally permissible and the agreement is in writing or expressed in any tangible format showing a common intention for the parties to submit the dispute to arbitration in Taiwan. An agreement to arbitrate may preclude litigation in the courts.
Where the agreement does not specify the number of arbitrators to be appointed, each party may appoint its own arbitrator and the chairman may be appointed by agreement between the two party approved arbitrators. If the parties cannot agree on the selection of the chairman within the specified period, the chairman may be appointed by the court upon one party’s petition. The ROC Arbitration Association is the only competent authority for arbitration in Taiwan and is in charge of coordinating all arbitration procedures. An arbitrator may be an attorney, a judge, a prosecutor, an arbitrator in another arbitration institution or an expert specialising in a practice area for at least five years. There are no restrictions as to who may represent the parties at an arbitration.
Awards are usually rendered within a period of six months after the arbitration hearing. A party may apply to the courts to revoke the arbitral award if there are found to be substantial procedural defects or misconduct in the arbitration.
A foreign arbitral award may be enforced in Taiwan once it is recognized by a court in Taiwan. A foreign arbitral award will not be recognized if such an award is contrary to public order and good morals or if the subject matter of the dispute is one that may not be settled by arbitration under the laws of Taiwan. The court may also refuse to enforce due to the lack of reciprocity. The courts in Taiwan have, in the past, recognized arbitral awards rendered in the United States, the United Kingdom, Hong Kong and Korea.
Jones Day’s Taiwan Dispute Resolution Practice
Jones Day opened its Taipei Office in 1990 to meet the fastgrowing needs of the Firm’s international and Taiwanese clients. Since then, the Taipei Office has advised many Asian, US and European businesses and individuals in connection with their investments, acquisitions, joint ventures, technology transfers, financings, securities offerings and dispute resolution matters in and outside of Taiwan.
Lawyers in the Taipei Office are fully qualified to practice both Taiwan and US law. Most of them are multilingual (Mandarin Chinese and/or Taiwanese and English) and are experienced in Taiwan and foreign transactions. The Taipei Office regularly advises clients on a wide range of Taiwan legal issues, as well as on US and other international legal matters.
Dispute resolution is a major practice area of the Taipei Office. Our dispute resolution team comprises eight lawyers experienced in handling all facets of commercial dispute resolution matters, including local and international arbitration, mediation, litigation, enforcement of foreign judgments and service of process. We have extensive experience in construction and engineering disputes, intellectual property infringement, tax and other regulatory litigation. Our practice focuses on the following types of dispute:
- Banking and trade financing
- Commercial fraud
- Company law
- Construction, engineering and infrastructure
- Information technology
- International trade and sales of goods
- Judicial review and administrative law
- PRC commercial arbitration
- Financial regulations
- Service of process
- Intellectual property infringement
- Tax litigation
- Regulatory litigation
We work regularly and closely with our colleagues in the Beijing, Shanghai and Hong Kong offices and provide clients with a one-stop option for cross border disputes in the Greater China region.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.