COMPARATIVE GUIDE
14 October 2024

International Arbitration Comparative Guide

International Arbitration Comparative Guide for the jurisdiction of Taiwan, check out our comparative guides section to compare across multiple countries
Taiwan Litigation, Mediation & Arbitration

1 Legal framework

1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?

The Arbitration Law of the ROC (Taiwan) is the key statute governing arbitration in Taiwan. It was first enacted in 1961 as the Commercial Arbitration Law before being revised to its current iteration in 1998. The Arbitration Law was last amended on 2 December 2015. It is intended to cover all arbitrations in Taiwan, both domestic and foreign; and save for the mandatory clauses detailed in question 1.4, it serves as the default rules for matters that have not already been stipulated between the parties in the arbitration agreement and/or the procedural rules of the arbitration institution chosen by the parties.

Regarding oral arbitration agreements, the Arbitration Law specifically requires arbitration agreements to be in writing; thus, oral arbitration agreements are not valid in Taiwan.

1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?

The Arbitration Law differentiates between domestic awards and foreign/international awards based on the place where the arbitration takes place and the lex arbitri. Pursuant to Article 47, paragraph 1 of the Arbitration Law, the following are considered 'foreign awards':

  • awards that are made outside the territory of Taiwan; and
  • awards that are made inside the territory of Taiwan but that are based on 'foreign law' (which the Taiwan courts have held to include the procedural rules of foreign/international arbitration institutions).

The key difference between the two is that foreign awards must be recognised by a domestic court before they have the same binding power on parties as a final court decision; by contrast, domestic awards automatically have the same power as a final court decision upon issuance by the tribunal (please see question 14).

1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?

While the legislative history of the Arbitration Law shows that the drafters have taken numerous cues from the UNCITRAL Model Law, as well as the arbitration laws of the United Kingdom, the United States, Germany, Japan and France, there are still certain important differences:

  • The Arbitration Law does not expressly permit ad hoc arbitrations, so the current legal status of ad hoc arbitrations in Taiwan remains unclear;
  • The Arbitration Law does not expressly allow tribunals to grant interim relief or issue preliminary orders; and
  • The Arbitration Law prescribes a six-month time limit, which may be extended once for an additional three months, for a tribunal to render an award.

1.4 Are all provisions of the legislation in your jurisdiction mandatory?

The Arbitration Law generally respects the parties' agreement on matters pertaining to the procedural rules of the arbitration, so only clauses that involve fairness between the parties, public propriety and post-arbitration procedures are considered mandatory and cannot be contracted otherwise in the arbitration agreement. These cover the following issues:

  • arbitrator eligibility requirements (please see question 8.2);
  • the independence and impartiality of arbitrators (Article 15, paragraph 1 of the Arbitration Law);
  • notification of the parties if an arbitrator is required by law to be recused (Article 15, paragraph 2 of the Arbitration Law);
  • full due process afforded to the parties in the arbitration proceedings and the conduct of the necessary investigations by the tribunal regarding the parties' arguments and evidence (Article 23 of the Arbitration Law);
  • confidential deliberation of the award (Article 32, paragraph 1 of the Arbitration Law);
  • the grounds and timing for setting aside a domestic award and the cancellation of any enforcement action if the underlying award is set aside (Articles 40, 41 and 42 of the Arbitration Law); and
  • if the award is foreign, rules on the recognition of foreign awards (Articles 47 to 51 of the Arbitration Law).

1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?

There have been efforts by, among others, the Chinese Arbitration Association (CAA) – the main arbitration institution in Taiwan – to amend the Arbitration Law. The CAA was involved in the most recent draft amendment proposed to the legislature in October 2021. Although the proposal was reviewed by the Judiciary and Organic Laws and Statutes Committee of the Legislative Yuan (Taiwan's legislature) earlier in 2022, it failed to pass the review session and will be re-examined at a later time.

1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?

No.

1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?

Taiwan is a party to investment protection/bilateral free trade agreements with several jurisdictions, as well as a cross-strait investment protection and promotion agreement with China. All of these agreements contain provisions on the use of arbitration as a dispute resolution mechanism.

2 Arbitrability and restrictions on arbitration

2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?

Pursuant to Article 1, paragraph 2 of the Arbitration Law, any matter that "may be settled in accordance with the law" may be agreed by the parties to be resolved through arbitration, which generally includes any matter in relation to which a party has the capacity to act on its own behalf. Examples of exceptions to arbitrable disputes include:

  • criminal matters;
  • some family law matters, such as wills and trusts; and
  • disputes that must be resolved under specific laws, such as those involving competition and patent/trademark issues.

2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?

Article 20 of the Arbitration Law provides that the parties are free to select the location of the seat of arbitration. If the parties have not designated a location in their arbitration agreement, the tribunal may decide on this.

While the parties are free to select the arbitration institution, Article 5, paragraph 2 of the Arbitration Law provides that the parties cannot designate a corporate entity or organisation that is not an arbitration institution as an arbitrator.

3 Arbitration agreement

3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?

The validity requirements for an arbitration agreement are set out in Articles 1 and 2 of the Arbitration Law:

  • The arbitration agreement must be in writing but need not necessarily be a formal contract. An arbitration agreement may be deemed to exist if it can be sufficiently discerned from the communications between the parties (regardless of form).
  • The arbitration agreement must relate to the resolution of disputes to which settlement is allowed under law.
  • The arbitration agreement must relate to a particular legal relationship between the parties and must concern the resolution (via arbitration) of disputes arising from that particular legal relationship.

3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?

Article 3 of the Arbitration Law specifically recognises the validity of the arbitration agreement as independent and separate from the validity of the contract in which the arbitration agreement is included. The validity of the arbitration agreement will not be affected even if the overall contract has been nullified, revoked, rescinded or terminated.

3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?

As mentioned in question 2.2, Article 20 of the Arbitration Law provides that if the parties have not designated a seat, the tribunal may decide on this. The Arbitration Law is silent as to how the language of the arbitration will be decided if the parties have not designated this.

4 Objections to jurisdiction

4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?

Article 22 of the Arbitration Law provides that a party may raise jurisdiction objections as long as it has not submitted a statement of defence regarding the subject matter of the dispute. There is no express stipulation in the Arbitration Law on the form of this objection; in practice, the respondent usually makes a jurisdiction objection in its response to the claimant's request for arbitration statement.

4.2 Can a tribunal rule on its own jurisdiction?

Yes. Article 22 of the Arbitration Law stipulates that a party's objection to the tribunal's jurisdiction will be determined by the tribunal itself. The legislative reasoning for this provision specifically references the kompetenz-kompetenz principle in Articles 16(1) and 16(2) of the UNCITRAL Model Law. A July 2021 interpretation letter from the Ministry of Justice (Fa-Lu-Zi-11003509450) further reasons that the tribunal should be able to determine a party's challenges to its jurisdiction because of the inefficiencies that would result if a party were allowed to unduly prevent the arbitration proceedings from continuing (or even from commencing) by making jurisdiction objections that can only be decided by a separate adjudicating body.

4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?

Although the Arbitration Law is silent on whether the parties can turn to a court for a jurisdiction ruling, the Taipei District Court (Decision 109-Su-Zi-1534) has held that Article 22 of the Arbitration Law is clear in requiring a party that has an issue with the jurisdiction of the tribunal to make this objection to the tribunal instead of a court. The party can still make a jurisdiction argument in court after the award has been issued as grounds for setting aside the award.

The reasoning in the Ministry of Justice's July 2021 interpretation letter (see question 4.2) also suggests that allowing a party to seek a jurisdiction ruling from the court would needlessly hinder the arbitration proceedings and thus should not be allowed given the potential for abuse. As such, it is unlikely that a Taiwan court will entertain a party's request for a ruling on the tribunal's jurisdiction.

5 The parties

5.1 Are there any restrictions on who can be a party to an arbitration agreement?

No. Other than parties who do not have the legal capacity to enter into an arbitration agreement (eg, minors), neither the Arbitration Law nor the rules of the Chinese Arbitration Association or any other arbitration institution in Taiwan impose restrictions on who may be a party to an arbitration agreement.

5.2 Are the parties under any duties in relation to the arbitration?

The only express duties that the Arbitration Law imposes on the parties in relation to the arbitration are:

  • notification of the respondent upon submission of the request for arbitration statement (Article 18, paragraph 1); and
  • notification of the other party and the arbitrators upon choosing an arbitrator for the tribunal (Article 10, paragraph 1).

In practice, on the commencement of arbitration, the arbitrator may confer with the parties to stipulate certain additional procedural instructions and ground rules for the sake of housekeeping.

5.3 Are there any provisions of law which deal with multi-party disputes?

No. While Article 9 of the Arbitration Law and the arbitration rules of all Taiwan arbitration institutions contain some language on arbitration with more than two parties, these are limited to co-claimants/respondents; the Arbitration Law has no language that directly relates to 'multi-party' disputes. However, Article 19 provides the tribunal with the discretion to apply the Code of Civil Procedure or any other instrument that it believes to be appropriate if neither the parties nor the Arbitration Law have addressed a particular point of procedure. Therefore, in practice, if the parties' stipulated procedure does not cover multi-party procedural issues, these will be handled pursuant to the Code of Civil Procedure (see question 7.2).

6 Applicable law issues

6.1 How is the law of the arbitration agreement determined in your jurisdiction?

The Arbitration Law has no specific language on the choice of law for the arbitration agreement. From a jurisprudence and practice perspective, the following is generally understood:

  • The parties' choice of governing law for the arbitration agreement will take precedence. However, if the parties have agreed that the seat of arbitration is Taiwan and that foreign law will apply to the arbitration agreement, but the application of such foreign law would be contrary to the public order and morals of Taiwan, then the parties' choice of foreign law for the arbitration agreement may be disregarded in favour of Taiwan law.
  • If the parties have not agreed on the governing law for the arbitration agreement, in the absence of specific language in the Arbitration Law, a Taiwan court adjudicating a dispute over the governing law of the arbitration agreement will, pursuant to the lex loci, apply the Act Governing the Choice of Law in Civil Matters Involving Foreign Elements, under which the court will examine a wide variety of factors in determining the scope and effect of the arbitration agreement, such as:
    • the domicile of the parties;
    • where the subject of the arbitration and other relevant assets are located;
    • the location of the seat of arbitration;
    • where the arbitration agreement was executed; and
    • the governing law of the main contract containing the arbitration agreement.

6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?

Yes: if the parties have clearly stipulated the governing law that applies to substantive matters, the tribunal will defer to the parties' agreement. If the parties' choice is unclear and a Taiwan arbitration institution is conducting the arbitration, the tribunal will apply the Act Governing the Choice of Law in Civil Matters Involving Foreign Elements in determining the governing law for substantive matters. However, in ad hoc arbitration, the arbitrator will apply the international private law of the place where the arbitration is taking place instead.

7 Consolidation and third parties

7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?

The Arbitration Law is silent on the consolidation of separate arbitrations; and even where the arbitration institution rules mention consolidation, this appears to be in a limited context. For example, the Chinese Arbitration Association (CAA) considers counterclaims raised by the respondent as a 'separate arbitration' that may be combined with the claimant's as long as:

  • the scope of the counterclaims does not exceed the scope of the arbitration agreement; and
  • the counterclaims have not been raised as a delay tactic.

However, the CAA rules do not mention consolidation in other possible scenarios, such as:

  • the same parties in different contracts;
  • different parties in the same contract; or
  • different parties in different contracts.

While the tribunal may, in principle and upon the parties' request, apply other procedural rules – such as the Code of Civil Procedure – on the consolidation of proceedings by analogy, we are unaware of any case in which this has been requested and successfully executed.

7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?

Although the Arbitration Law is silent on the joinder of additional parties to an ongoing arbitration, as mentioned in question 5.3, Article 19 of the Arbitration Law allows the tribunal to apply the Code of Civil Procedure or any other law that it feels appropriate to resolve this procedural matter. Article 58 of the Code of Civil Procedure provides that the elements for joinder of a third party to ongoing litigation are as follows:

  • There is an ongoing case between two parties;
  • The third party is being joined to support one party; and
  • The third party has a legal interest in the result of the case.

In practice, there have been arbitrations in which the tribunal has allowed a third party to participate as an intervener in support of one of the primary parties to the arbitration. The Supreme Court has also ruled (Decision 95-Tai-Shang-Zi-2277) that the intervener, based on the relevant provisions of the Code of Civil Procedure, may not subsequently claim against the party that it supported during the arbitration that the award was deficient.

7.3 Does an arbitration agreement bind assignees or other third parties?

Under certain circumstances, a third party that was not party to the arbitration agreement may be deemed a claimant or respondent in arbitration. This third party could be, among other things:

  • an heir;
  • an assignee of the main contract;
  • a receiver;
  • a creditor assignee;
  • a guarantor; or
  • an insurance company under subrogation.

In one Taiwan High Court case (Decision 89-Kang-Zi-81), the parties contracted to submit disputes to the International Chamber of Commerce in the United States; but there was a separate clause under which the distributor (one party to the arbitration agreement) was obliged to recognise that the property rights and interests associated with the trademarks and product names used for the products under the contract were all owned by the other party to the arbitration agreement, as well as its affiliates. This caused the High Court to find that those affiliates were also bound by the arbitration agreement.

8 The tribunal

8.1 How is the tribunal appointed?

Article 1, paragraph 1 of the Arbitration Law provides that the tribunal will be appointed based on the parties' stipulation in the arbitration agreement. If the parties have not named the arbitrators or specified how the arbitrators will be chosen, the default rule in Article 9, paragraph 1 of the Arbitration Law is for each party to select an arbitrator, and for the parties' chosen arbitrators to jointly select a third arbitrator to serve as president of the tribunal.

8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?

Article 1, paragraph 1 of the Arbitration Law requires there to be an odd number of arbitrators in a tribunal. Neither the Arbitration Law nor the arbitration institutions impose limitations on the nationality of the arbitrators.

The Arbitration Law contains several provisions (Articles 5, 6, 7 and 8) on the qualifications to serve as an arbitrator. An arbitrator must:

  • be a natural person;
  • possess legal or other professional knowledge or experience;
  • have a reputation for integrity and impartiality; and
  • meet any one of the following criteria:
    • have served as a judge, magistrate or prosecutor;
    • have experience as a lawyer, accountant, architect, technician or other commerce-related profession for at least five years;
    • have served as an arbitrator in a dispute under a domestic or foreign arbitration institution;
    • have served as an assistant professor or higher for more than five years at a domestic or foreign college, university or vocational school recognised by the Ministry of Education; or
    • possess expertise or know-how in a specialised field and have provided services in that field for at least five years.

An arbitrator must not have any faced any of the following circumstances:

  • have been convicted of corruption or dereliction of duty;
  • have been convicted of any other offence and sentenced to at least one year's imprisonment;
  • have been stripped of public rights, if the penalty has not yet expired;
  • have been declared bankruptcy and have not yet recovered his or her property rights;
  • have been subject to guardianship or assistantship, if the order has not yet been cancelled; or
  • be a minor.

A candidate arbitrator meeting the above positive and negative rules must undergo training before applying to an arbitration institution to become an arbitrator. Some arbitration institutions may have additional specialised requirements that the candidate must meet before becoming a member arbitrator.

8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?

Yes. Besides the special circumstance of both parties calling for the recusal of an arbitrator – in which case the arbitrator must immediately recuse himself or herself – pursuant to Articles 15 and 16 of the Arbitration Law, the parties may request recusal under the following circumstances:

  • The arbitrator lacks the qualifications stipulated by the parties;
  • The same circumstances for the recusal of a judge under the Code of Civil Procedure exist for the arbitrator;
  • The arbitrator has had or is currently having an employment or agency relationship with any of the parties' representatives or key witnesses; or
  • Any other circumstance exists that would cause the parties to believe that the arbitrator cannot independently and impartially perform his or her duties.

A party cannot recuse its own nominee arbitrator unless the circumstances giving rise to the recusal happen or become known to the party after the selection was made.

According to Article 17 of the Arbitration Law, the party making the recusal request must submit the request in writing to the tribunal within 14 days of becoming aware of the relevant facts; and the tribunal must decide within 10 days of receipt of the request. If the tribunal has not yet been established, the timing on the party's request will start to toll after the tribunal has been established. While a party may subsequently petition a court to contest the tribunal's decision on recusal within 14 days of the tribunal's decision, it may not appeal the court's decision thereafter. Finally, in the special case of a request for recusal in an arbitration presided by a sole arbitrator, the request must be made to a court.

8.4 If a challenge is successful, how is the arbitrator replaced?

The replacement arbitrator will be chosen in accordance with Article 9 of the Arbitration Law, as detailed in question 8.1.

8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?

The duties of the arbitrators under the Arbitration Law are as follows:

  • The arbitrators must handle the arbitration independently and impartially, and must uphold confidentiality (Article 15, paragraph 1).
  • The arbitrators must notify the parties upon the occurrence of any of the following: (Article 15, paragraph 2):
    • The same circumstances for recusal of a judge under the Code of Civil Procedure exist for the arbitrator;
    • The arbitrator is currently or has been in an employment or agency relationship with one of the parties;
    • The arbitrator is currently or has been in an employment or agency relationship with the representative of one of the parties or a key witness; or
    • Any other circumstance exists that would raise justifiable doubts as to the independence and impartiality of the arbitrator.

Each arbitration institution has also enacted a set of ethical obligations for arbitrators (eg, the Chinese Arbitration Association's (CAA) Code of Ethics for Arbitrators), which is mandated pursuant to Article 22 of the Regulation Governing Organisation, Mediation Procedures and Fees of Arbitration Institution and must be submitted to the industry competent authority for recordation. The ethics obligations generally include the following:

  • The arbitrator must handle the arbitration in an impartial and responsible manner, and must uphold confidentiality;
  • The arbitrator must avoid causing others to raise justifiable doubts of acting as a representative for a particular party;
  • The arbitrator may not accept entrustments or improper benefits from the parties;
  • The arbitrator may not delegate to another the performance of his or her duties as an arbitrator;
  • The arbitrator must maintain neutrality and refrain from engaging in improper contact with the parties, their representatives, witnesses, experts and other interested entities; and
  • The arbitrator may not resign from his or her duties without proper cause.

These ethical obligations will also include any other necessary matter that is consistent with the spirit of self-regulation and self-governance of an arbitrator.

8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?

(a) Procedure, including evidence?

If not expressly stipulated by the parties, the Arbitration Law's default rules expressly confer the following powers on the tribunal with respect to the arbitration proceedings:

  • the power to decide the seat and the dates/schedule of the proceedings (Articles 20 and 21);
  • the power to request the parties to provide translations of documents related to the arbitration (Article 25); and
  • the power to summon witnesses or experts to testify at a hearing, and to petition the court to order such persons to attend if they fail to show at the hearing without proper cause (Article 26).

However, since Article 19 of the Arbitration Law provides the tribunal with the discretion to apply other procedural rules if neither the parties nor the Arbitration Law has stipulated language that pertains to the situation, the actual latitude of the tribunals' potential powers in relation to evidence may be quite broad. For example, if the tribunal believes that one party holds a key document that would establish a material fact of the arbitration, the tribunal may, on the requesting party's petition, order that other party to produce the relevant document pursuant to Article 343 of the Code of Civil Procedure.

(b) Interim relief?

Unlike the UNCITRAL Model Law, the Arbitration Law does not expressly allow tribunals to issue interim relief or render preliminary orders. However, some arbitration institutions, such as the CAA, provide for certain forms of interim relief in their rules. For example, pursuant to Article 36 of the CAA rules, a tribunal may, upon request by a party and with the consent of the other party, order the preservation of perishable goods or provide emergency secured storage to items that are at high risk of imminent damage.

(c) Parties which do not comply with its orders?

There is no mechanism in the Arbitration Law for the tribunal to compel the parties to comply with its orders. In practice, as described in question 8.7 and depending on the circumstances, where a party refuses to comply with the tribunal's order without cause, the tribunal will refer to the Code of Civil Procedure and treat such party as absent for the relevant issue, and will likely decide that issue in the other party's favour. For example, if the tribunal orders a party to produce a certain document pursuant to Article 343 of the Code of Civil Procedure and that party refuses to do so, the tribunal can deem the other party's arguments in relation to the document as persuasive pursuant to Article 345, paragraph 1 of the Code of Civil Procedure.

(d) Issuing partial final awards?

The Arbitration Law is silent on partial or interim awards. However, Article 40 of the CAA rules specifically provides that the tribunal is entitled to issue partial or interim awards.

(e) The remedies it can grant in a final award?

Other than the obvious case of a remedy that would cause a party to act in violation of the law, the Arbitration Law does not specifically limit the remedies that a tribunal may provide in the final award. Since Article 31 of the Arbitration Law requires the express consent of the parties before the tribunal can determine the final award based on the principles of equity, the tribunal cannot grant remedies based on principles of equity in the final award unless the parties have consented to this beforehand.

(f) Interest?

If requested by the parties as relief, the tribunal has the power to order a party to pay the requested interest. In the absence of a stipulated interest rate between the parties, the tribunal generally applies the statutory rate of the jurisdiction whose laws govern the substantive matters of the dispute. For Taiwan, pursuant to Article 203 of the Civil Code, the interest rate will be set at 5% annual percentage yield if no other special rules are applicable.

8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?

The Arbitration Law has no language directly on this point. Pursuant to Article 19 of the Arbitration Law, the tribunal may apply Article 385 of the Code of Civil Procedure to proceedings with absentee parties – that is, it may consider the appearing party's arguments and decide whether to enter a default award upon a motion by the appearing party to do so. The tribunal cannot compel (eg, physically haul in) an absent party to attend a hearing.

Similarly, Article 48 of the CAA rules states that if the other party fails to appear at a hearing, the tribunal may make a decision based solely on the attending party's statements and responses to questions; but it must still take account of the statements and evidence that the absent party has submitted so far.

8.8 Are arbitrators immune from liability?

There is no language in the Arbitration Law or the arbitration institution rules that affords arbitrators immunity in the performance of their duties such as those found in Article 21 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States or Article 77 of the World Intellectual Property Organization arbitration rules.

9 The role of the court during an arbitration

9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?

Yes. The court must suspend the proceedings pursuant to Article 4 of the Arbitration Law upon a party's notice that there is an arbitration agreement and that the plaintiff is in breach of the arbitration agreement by initiating litigation. The court will further order the plaintiff to request the commencement of arbitration within a specified timeframe; if the plaintiff fails to do so, the court will dismiss the plaintiff's lawsuit. If arbitration is successfully concluded after the court order to suspend litigation proceedings has been issued, the lawsuit will be deemed withdrawn at the time the tribunal rendered the award.

The above does not apply if the defendant (in the litigation) has made oral arguments, as the defendant is considered to have waived the right to request the court to suspend litigation by allowing the litigation to proceed to such extent.

9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?

The court's powers differ depending on whether the arbitration is domestic or foreign. In all cases, the court's powers are initiated upon the petition of a party or the tribunal.

In domestic arbitrations, the court has the following powers:

  • to name the president of a three-member tribunal upon a party's petition if the two arbitrators chosen by the parties have been unable to nominate a president of the tribunal within 30 days of being chosen as arbitrators (Article 9, paragraph 2 of the Arbitration Law);
  • to name the sole arbitrator upon a party's petition if the parties have been unable to agree on the arbitrator (Article 9, paragraph 3 of the Arbitration Law);
  • to replace an arbitrator upon a party's petition if the arbitrator has become unable to perform his or her duties or is unreasonably delaying the performance of those duties, and the parties have been unable to agree on a replacement (Article 13 of the Arbitration Law);
  • to adjudicate a party's complaint regarding the tribunal's decision on that party's request for the recusal of an arbitrator (Article 17 of the Arbitration Law);
  • to order a witness to appear at the arbitration hearing upon the tribunal's petition if the witness has failed to appear without proper cause (Article 26, paragraph 2 of the Arbitration Law);
  • to provide assistance to the tribunal regarding the investigation of evidence (Article 28 of the Arbitration Law);
  • to enforce the arbitration award when the requirements are met (Articles 37 and 38 of the Arbitration Law – please see question 14); and
  • to set aside the arbitration award (Article 40 of the Arbitration Law – please see question 13).

For the first three items involving arbitrator selection, the matter may be handled by the arbitration institution chosen by the parties for the arbitration instead of the court.

For foreign arbitrations, the court is in principle only involved in the recognition and enforcement of the foreign award after the arbitration proceedings proper have concluded. Please see question 14 for more details.

9.3 Can the parties exclude the court's powers by agreement?

In principle, as the Arbitration Law only defers to the parties' stipulations on arbitration procedure in the arbitration agreement, the court's powers on matters that are outside the ambit of arbitration procedure – such as the enforcement and setting aside of the award – cannot be excluded by the parties by agreement. In addition, given the overriding public policy-based concerns of fairness and due process for the parties (see question 1.4) in arbitration, contracting around the court's powers designed to uphold those concerns will likely also be deemed invalid.

10 Costs

10.1 How will the tribunal approach the issue of costs?

Neither the Arbitration Law nor the rules of the arbitration institutions in Taiwan contain any bright-line rules on how the tribunal should handle cost allocation matters. If the parties have not stipulated any rules regarding cost allocation, the tribunal may refer to the cost allocation rules in the Code of Civil Procedure and cause the losing party to bear the entirety of the arbitration fees, while making each party bear its own attorneys' fees and other in-house fees. In the alternative, the tribunal may also combine both parties' total costs and allocate them between the parties based on the win-loss proportion of the claims.

10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?

There are no known restrictions in this regard. In practice, parties often stipulate in the arbitration agreement that the costs (including attorneys' fees and witness costs) shall be allocated based on the tribunal's determination of the win-loss proportion between the parties.

11 Funding

11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?

There is no law on third-party funding of arbitration proceedings in Taiwan and none of the arbitration institutions in Taiwan has established any rules on this issue. As such, although third-party funding is in principle not prohibited in Taiwan, Article 157 of the Criminal Code considers it to constitute a criminal offence where one party encourages (including by providing financial support) another to file suit for the purpose of financial gain upon prevailing in the suit.

12 Award

12.1 What procedural and substantive requirements must be met by an award?

Pursuant to Article 32, paragraphs 2 and 4 of the Arbitration Law, the award must be based on the decision of a simple majority of the tribunal. In the event of a plurality or other issue that makes a simple majority impossible, the arbitration is still considered concluded and the tribunal must inform the parties of the reason for such.

Article 33 stipulates the minimum required content of an award, as follows:

  • the names and addresses/domiciles of the parties. If the parties are corporate persons or other groups/organisations, the award must list their names and the address of their office or place of business;
  • the names and addresses/domiciles of legal representatives or attorneys of the parties, if present;
  • the names, nationalities and addresses/domiciles of interpreters, if present;
  • the holdings of the tribunal;
  • unless the parties do not require the tribunal to do so, the facts of the case and the tribunal's reasoning;
  • the date and the place where the award is rendered; and
  • for the original copy of the award, the signatures of the arbitrators who participated in the deliberations. The arbitrators who have signed the award must provide an explanation if any arbitrator has refused or been unable to provide his or her signature.

Article 34, paragraph 1 of the Arbitration Law requires the tribunal to deliver official copies of the award to the parties.

12.2 Must the award be produced within a certain timeframe?

Article 21 of the Arbitration Law stipulates a six-month time limit, which may be extended once for an additional three months, for tribunals to render an award. The time starts tolling once the arbitrators receive their confirmation notifications to serve on the tribunal. If the tribunal fails to render the award within this timeframe, the parties may commence litigation or resume previously suspended litigation, both of which will bring the arbitration proceedings to an immediate end.

13 Enforcement of awards

13.1 Are awards enforced in your jurisdiction? Under what procedure?

Domestic awards: A domestic award automatically binds the parties just as a final court decision would; there is no need to recognise a domestic award before enforcement. Save for certain exceptions mentioned below, per Article 37 of the Arbitration Law, a party must apply to court for an enforcement order before compulsory enforcement is possible. The parties may agree in writing beforehand to omit this enforcement proceeding for matters that involve:

  • the payment of a specific amount of money or other objects or negotiable instruments as a substitute; or
  • the handover of particular movable assets.

Per Article 38 of the Arbitration Law, the court may reject a petition for enforcement of an award in any of the following circumstances:

  • The award is unrelated to the dispute that is the subject of the arbitration agreement or otherwise exceeds the scope of the arbitration agreement (unless the improper parts may be severed without affecting the integrity of the award);
  • The tribunal rendered the award without providing proper reasoning (unless later corrected by the tribunal); or
  • The award orders a party to act in violation of the law.

Foreign awards: Per Article 47 of the Arbitration Law, an award must be recognised before it can attain the same power as a final court decision and be enforced against a party. The rules of the recognition process are found in Articles 48 to 50 of the Arbitration Law. A party petitioning a court to recognise a foreign award must submit the following documents:

  • an official or an authenticated copy of the award;
  • the original or an authenticated copy of the arbitration agreement; and
  • the full text of the foreign arbitration law or the rules of the foreign/international arbitration institution governing the foreign award.

If any of the above documents are in a foreign language, a Chinese translation must be attached.

In place of the action to set aside a domestic award under Article 40, the only way that a party can contest a foreign award is to successfully argue that the foreign award in question should not be recognised pursuant to the enumerated reasons under Articles 49 and 50 of the Arbitration Law, as follows:

  • Grounds for the court to refuse recognition (Article 49):
    • Recognition or enforcement of the foreign award would be contrary to the public order and morals of Taiwan;
    • The subject matter of the foreign award is not arbitrable in Taiwan; or
    • The jurisdiction of the foreign law in question has refused to recognise a domestic award (reciprocity).
  • Grounds to be raised by a party within 20 days of becoming aware of their existence (Article 50):
    • The arbitration agreement is not binding because a party lacks capacity to act under the chosen applicable law;
    • The arbitration agreement is invalid under the chosen applicable law or the law of the jurisdiction in which the award was rendered if no governing law has been chosen;
    • A party failed to receive proper notice with respect to the selection of the arbitrators or any matter for which notification is required under the relevant arbitration procedure, or any other circumstance exists that is sufficient to deem the arbitration as procedurally deficient;
    • The award is unrelated to or exceeds the scope of the arbitration agreement, unless the offending parts may be excised without affecting the rest of the award;
    • The constitution of the tribunal or the arbitration procedure conflicts with the agreement between the parties, or the law of the place where the arbitration was conducted if there was no agreement between the parties; or
    • The award does not bind the parties or the law has been revoked or its effects cancelled by an authority with jurisdiction to do so.

Once a foreign award has been recognised, it is also considered enforceable without needing to go through an enforcement court proceeding, as for domestic awards; the party may proceed directly to compulsory enforcement.

14 Grounds for challenging an award

14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?

There is no mechanism in the Arbitration Law or the arbitration institutions for a party to appeal an arbitration award before either the tribunal or a court. The parties can only attempt to set aside the award once the arbitration proceedings have concluded. Article 40, paragraph 1 of the Arbitration Law enumerates the grounds upon which a party may petition a court to set aside an award, as follows:

  • Circumstances exist pursuant to Article 38 of the Arbitration Law by which a court is entitled to refuse enforcement of the award (please see question 14.1);
  • The arbitration agreement was not constituted, is invalid or had not entered into effect or had become invalid at the time the tribunal concluded the arbitration hearings;
  • The tribunal failed to provide a party a full opportunity to present its position or a party was not properly represented during the arbitration proceedings;
  • The constitution of the tribunal was in violation of the arbitration agreement or the law to the extent that the award is affected;
  • The tribunal failed to comply with the disclosure requirements in the Arbitration Law and has shown clear bias or continued to participate in the arbitration despite a request for recusal (unless this request for recusal was denied per the Arbitration Law);
  • One or more arbitrators of the tribunal have committed a criminal offence in relation to the arbitration;
  • The parties or their representatives have committed a criminal offence in relation to the arbitration;
  • The translation of the evidence on which the award's reasoning was based was forged, altered or contains other falsities; or
  • A civil, criminal or administrative decision that was used as the basis for the award's reasoning has subsequently been reversed by a final court or administrative decision.

In the case of the sixth to eighth bullets above, the person(s) must have been convicted of the offence; or it must not have been possible for the criminal proceedings to start or continue for reasons other than insufficient evidence.

In the case of the fifth to ninth bullets above, the issue must be sufficiently material to have affected the award.

14.2 Are there are any time limits and/or other requirements to bring a challenge?

Pursuant to Article 41, paragraph 2 of the Arbitration Law, a petition to set aside the award must be submitted within 30 days of the party's service or receipt of the award.

For an action to set aside an award based on the sixth to ninth bullets in question 13.1, if it has been adequately shown that the failure to bring the action within the specified timeframe cannot be attributed to the party, the 30-day deadline will start to toll from the date on which the party became aware of the existence of such circumstances. However, no petition to set aside an award will be accepted if the award was rendered more than five years ago.

14.3 Are parties permitted to exclude any rights of challenge or appeal?

No. Article 40 of the Arbitration Law is a mandatory provision (please see question 1.4). An attempt to waive the right of setting aside the award in the arbitration agreement will be deemed unenforceable.

15 Confidentiality

15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?

The Arbitration Law has several provisions imposing a confidentiality obligation on various aspects of the arbitration:

  • Article 15, paragraph 1 requires the arbitrators to uphold the principle of confidentiality in conducting the arbitration;
  • Article 23, paragraph 2 stipulates that the arbitration proceedings must be conducted in confidence unless the parties have agreed otherwise; and
  • Article 32, paragraph 1 requires the deliberation of the award to be conducted in confidence.

The rules of arbitration institutions in Taiwan often echo the confidentiality obligations in the Arbitration Law. For example, unless stipulated otherwise by the law or agreed by the parties, Article 6 of the Chinese Arbitration Association (CAA) rules requires the CAA and the arbitrators conducting the arbitration to keep all matters relating to the arbitration confidential.

15.2 Are there any exceptions to confidentiality?

While the parties may agree in advance to conduct the arbitration in public, the arbitrators must still uphold confidentiality where required to do so by the parties and must deliberate on the award in a confidential manner. There is no special type of arbitration or subject matter for which proceedings must be conducted in public.

Co-Authored by Julian Lai and Hannah Kuo.

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.

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