International Arbitration 2022 Comparisons

In general, most disputes in Taiwan are resolved through the courts, and international arbitration is generally elected where disputes involve foreign elements, such as where one party is a non-Taiwanese entity, the performance or subject of the arbitration is outside of Taiwan, or where the governing law of the dispute is a foreign law.

Due to the COVID-19 pandemic, the Chinese Arbitration Association (CAA), the oldest and most prominent arbitral institution in Taiwan, has permitted arbitration proceedings to be conducted via video-conferencing if all parties involved agree to this. 

Construction disputes account for most of the arbitration cases in Taiwan, followed by commercial and trade cases. There has also been a recent increase in medical and pharmaceutical disputes being referred to international arbitration. In general, due to the efficiency of arbitration compared to traditional litigation and the possibility to select adjudicators with a technical background, parties often prefer arbitration as a dispute resolution mechanism for cases where the amount under dispute is significant, which are time-sensitive, or which require specialised/professional knowledge. 

Although COVID-19 affected some industries, at the time of writing, it did not appear to have had any noticeable effect on the preference for using arbitration to resolve disputes. 

Main Arbitral Institutions in Taiwan

The CAA administers most domestic and international arbitrations in Taiwan. Besides being able to administer arbitrations in both Chinese and English, the CAA’s panel of arbitrators consists of renowned foreign and domestic attorneys, engineers, professors and other professionals who are experienced in handling complex and cross-border disputes.

In addition to the CAA, parties frequently refer their cross-border disputes to the International Chamber of Commerce. The Taiwan Arbitration Association, the Chinese Real Estate Arbitration Association, and the Chinese Construction Industry Arbitration Association are also alternatives for resolving construction disputes.

New Arbitral Institutions

According to the Arbitration Measures for Sports Disputes established in 2019, the Taiwan Society for Sport and Entertainment Law, the Taiwan Assessment and Evaluation Association, and other arbitral institutions were established in 2020 to handle disputes between athletes, coaches and sports organisations.

In October 2021, the CAA established the “CAA Court of Arbitration”, an independent and dedicated organisation within the Association. The CAA Court of Arbitration was established to manage the procedural matters of the arbitration process (eg, the designation and removal of arbitrators, the determination of the arbitration fee, and the final interpretation of the CAA arbitration rules). The CAA expects the CAA Court of Arbitration will make the process more efficient.

There are no specific courts in Taiwan designated to hear disputes related to international arbitration or domestic arbitrations. Instead, cases involving such matters are referred to a court of jurisdiction. Based on the Code of Civil Procedure, the Arbitration Law provides that actions to set aside arbitral awards may be filed at the district court of the place of arbitration, and other special regulations that contain rules governing the jurisdiction over specific matters (eg, actions to enforce or set aside an arbitral award concerning commercial disputes, as defined under the Commercial Case Adjudication Act) will be filed with the Intellectual Property and Commercial Court.

The Arbitration Law is the key legislation governing arbitrations, including international arbitrations that are subject to Taiwan laws. 

The Arbitration Law, enacted in 1998, took specific references from the 1985 UNCITRAL Model Law and the arbitration laws of other major jurisdictions at that time. There are, however, still some significant differences between the Arbitration Law and the latest UNCITRAL Model Law, as explained below.

• The Arbitration Law does not expressly allow for ad hoc arbitrations. As such, the courts in Taiwan have different opinions on whether arbitral awards rendered by ad hoc arbitrations can have the same effect as final court judgments and, thus, whether they can be enforced in Taiwan.
• The Arbitration Law expressly sets a nine-month time limit for rendering the award (the arbitral tribunal is required to issue the award within six months, with an extension of three months), which is not found in the UNCITRAL Model Law.
• If the arbitral tribunal rules in advance that it has jurisdiction, the parties can only request that the court review such ruling after the final award is rendered, while the parties may immediately escalate such ruling for the court’s review in the UNCITRAL Model Law.
• Article 17 of the UNCITRAL Model Law allows arbitral tribunals to grant interim awards and requires the parties to provide security. No equivalent provision exists in the Arbitration Law.

Since its reform in 1998, there have been no further significant changes to the Arbitration Law, despite certain provisions being amended in 2002, 2009 and 2015. To harmonise the Arbitration Law with recent trends in international arbitration, the CAA established a task force to propose further reform of the Arbitration Law, which mainly referenced the UNCITRAL Model Law on International Commercial Arbitration amended in 2006 by the United Nations. The draft amendment to the Arbitration Law proposed by the CAA was submitted for review by resolution of the Legislative Yuan on 29 October and 2 November 2021. However, it is not yet known whether the proposals will be adopted. 

For an arbitration agreement to be valid and enforceable, it must be in writing, which includes written documents, correspondence, facsimiles, telegrams or any other similar types of communication between the parties evidencing their consensus to arbitrate any disputes. For example, Taiwanese courts have held that meeting minutes that contain parties’ agreement to arbitrate are valid and enforceable arbitration agreements.

Disputes that parties may settle under Taiwanese law are arbitrable (Article 1 of the Arbitration Law). However, criminal offences or disputes concerning family law that are irreconcilable under Taiwanese laws are not arbitrable. In addition, although disputes concerning construction contracts entered into with government agencies under the Government Procurement Act are arbitrable due to the express permission under the Act, whether other disputes with government agencies are arbitrable, especially those that involve public interests, is controversial in practice.   

Taiwan's courts interpret the parties’ real intent to determine the validity and enforceability of arbitration agreements. This principle also applies to the determination of the governing law of the arbitration agreement. However, if the agreement is silent on the governing law of the arbitration agreement, the agreed governing law of the contract that contains the arbitration agreement would generally apply. If the contract is also silent on the governing law, then the courts in Taiwan will apply the conflict of law rules (ie, the Act Governing the Choice of Law in Civil Matters Involving Foreign Elements) to determine the governing law of the arbitration agreement.

Courts in Taiwan adopt a pro-arbitration attitude in interpreting arbitration agreements, which means that Taiwan's courts will enforce the arbitration agreement as long as the parties’ intention to arbitrate the dispute has been recorded in written form and the scope meets the arbitrability requirements.

The rule of separability is adopted in Article 3 of the Arbitration Law, which provides that the validity of an arbitration clause will be determined independently and separately from the rest of the contract in which it is contained. The validity of the arbitration clause will not be affected even if the subject contract is null, invalid, revoked, rescinded or terminated.

Party-appointed arbitrators must meet the requirements outlined in the Arbitration Law, and, where applicable, in the parties’ agreement.

Must-Have Requirements

Under the Arbitration Law, to act as an arbitrator, an individual must have done one of the following:

• served as a judge or prosecutor;
• practised as a lawyer, accountant, architect, mechanic, or in any other commerce-related profession for more than five years; 
• previously acted as an arbitrator in an arbitration administered by a domestic or foreign arbitral institution; or 
• taught as an assistant professor or higher post in a domestic or foreign college certified or recognised by the Ministry of Education.

Blocks to Acting as an Arbitrator

The individual may not act as an arbitrator in domestic arbitration administered by a Taiwanese arbitral institution if the individual:

• has been convicted of a criminal offence for corruption or misconduct;
• has been convicted of any offence other than those in the preceding category and sentenced to serve a prison term of one year or more;
• has been deprived of the right to serve as a public officer, and the period of deprivation has not expired;
• has been declared bankrupt and has not recovered their property rights;
• is subject to the order of commencement of guardianship or assistantship and the order has not been cancelled; or
• is a minor, ie, younger than 18 years of age at the time of appointment.

If an individual designated by a party to act as the arbitrator does not meet the requirements agreed to by the parties in the arbitration agreement, such an individual may be replaced upon challenge by the opposing party. 

Where the arbitration agreement is silent on the process for the selection of arbitrators, each party will appoint an arbitrator, and the party-appointed arbitrators will jointly designate the third arbitrator to be the president of the arbitral tribunal.   

Where a third arbitrator cannot be designated, or where the parties have agreed to have a single arbitrator in their arbitration agreement, but the parties are unable to agree upon an arbitrator, either party may ask the arbitral institution to appoint the arbitrator. Where the parties have not agreed upon the arbitral institution, the request may be made to the court (Article 9 of the Arbitration Law).

Where the arbitrator agreed on in the arbitration agreement is unable to serve as arbitrator, and the parties are unable to agree on an alternative candidate, either party may ask the arbitral institution or the court to appoint the arbitrator (Article 13 of the Arbitration Law).

Multiparty Arbitrations

There is no default procedure in the Arbitration Law on the appointment of arbitrators in multi-party arbitrations where there are more than two opposing sides. However, where there are two opposing sides to the arbitration, and the parties on one side of the arbitration are unable to agree on the appointment of the representative, the Arbitration Law provides that a majority vote will be used to decide on the appointment and, in the case of a deadlock, the appointment will be made by drawing lots. 

In principle, a court may only intervene in the selection of arbitrators upon a party’s application when an arbitrator cannot be appointed (see 4.2 Default Procedures), or where there is a request for the appointed arbitrator to be removed on a ground stated in 4.4 Challenge and Removal of Arbitrators. 

Articles 15 and 16 of the Arbitration Law provide that a party may challenge the appointment of an arbitrator if the arbitrator does not meet the requirements agreed to by the parties or if there is any circumstance that raises any justifiable doubts as to the impartiality or independence of the arbitrator. Specifically, an arbitrator may be challenged or removed if they:

• have a close relationship with one of the parties, as specified under Article 32 of the Code of Civil Procedure, eg, a spouse of a party;
• have or have had an employment or agency relationship with either party, its attorney or key witnesses; and
• have served as a witness or appraiser for the dispute.

Arbitrators are required to be independent and impartial and to keep the confidentiality of the case in accordance with the Arbitration Law. In addition, an arbitrator is required to disclose matters that may give rise to the party being challenged, as noted in 4.4 Challenge and Removal of Arbitrators.

See 3.2 Arbitrability.

An arbitral tribunal is empowered to determine challenges to the arbitral tribunal’s jurisdiction. Jurisdictional challenges must be made before substantive arguments are made. 

While the parties are not allowed to escalate the arbitral tribunal’s decision on the jurisdiction to a court during the arbitration proceeding, the parties may file a lawsuit to set aside the final arbitral award on the grounds that the arbitral tribunal lacked jurisdiction. 

Courts in Taiwan will not intervene to address jurisdictional challenges while an arbitration is still proceeding. Courts will only review the jurisdictional challenges upon a party’s complaint to set aside the final award.

If an arbitral tribunal renders a ruling that it lacks jurisdiction to hear a case, the court will review such ruling per the plaintiff’s motion to set aside such arbitral ruling on the grounds that such ruling violates the parties’ arbitration agreement. 

See 5.2 Challenges to Jurisdiction.

Courts in Taiwan will conduct a de novo review of challenges to arbitrability and jurisdiction.

If a party breaches an arbitration agreement by initiating a legal action before a court in Taiwan, the court will suspend its proceeding, provided that the defendant objects to the jurisdiction before substantive arguments are made. If the defendant fails to raise its jurisdictional challenge to the courts in a timely way and responds to the plaintiff’s complaint on the merits, the court will proceed with the lawsuit and deny any subsequent jurisdictional objection.

While the Arbitration Law is silent on whether an arbitral tribunal may assume jurisdiction over individuals or entities that are neither party to an arbitration agreement nor signatories to the contract containing the arbitration agreement, in practice, an arbitral tribunal in Taiwan will not assume jurisdiction over such third party except where the third party falls in one of the two categories below.

Legal Succession

The arbitral tribunal will assume jurisdiction over third parties that are successors to the arbitration agreement by way of inheritance, merger, etc.

Third Party’s Intervention in the Proceeding

If a third party, without any arbitration agreement with the parties to the arbitration proceeding, applies to join or intervene in an arbitration proceeding, the arbitral tribunal may grant such application if the original parties to the arbitration have no objection to such intervention in accordance with Article 19 of the Arbitration Law. According to a Taiwanese Supreme Court decision with Ref No 95-Tai-Shang-2277, the third party will, in principle, then be bound by the arbitral award. However, in practice, if any party to the arbitration proceeding objects to the intervention of such third party, or if the third party is unwilling to participate in the proceeding at the request of either party to the proceeding, the arbitral tribunal would not assume jurisdiction over such third party, and the arbitral award will not bind such third party.

The Arbitration Law does not explicitly allow arbitral tribunals to render preliminary or interim reliefs. As such, parties are required to apply to a court for an order in accordance with the Code of Civil Procedure.

As stated in 6.1 Types of Relief, preliminary or interim reliefs can only be granted by courts in Taiwan, regardless of whether the petition for such reliefs is made prior to or during an arbitration proceeding.

Theoretically, the court is not restricted from granting interim relief to a petitioner who is or will be a party to an arbitration proceeding whose seat of arbitration is outside of Taiwan, as long as the assets or party to be subject to the interim relief are within the territory of Taiwan. However, it is rare to see interim relief ordered by a Taiwanese court in aid of foreign-seated arbitrations.

The main types of preliminary or interim relief orders that Taiwanese courts may grant are:

• provisional attachment to a party’s assets which prohibits the party from disposing of such assets; and
• preliminary injunctions, including orders to maintain a temporary status quo.

For a provisional attachment, the petitioner must demonstrate that it would be difficult to satisfy a monetary award through compulsory execution without the provisional measure. For a preliminary injunction, especially for a status quo order, the petitioner must show the imminent harm or irreparable damage it may suffer to justify the granting of such preliminary injunction.

While the emergency arbitrator mechanism has been discussed as part of the proposed reform to the Arbitration Law, the current Arbitration Law does not provide for such a mechanism. Under the current legal scheme, petitioners may seek an emergency order from the court, which may be granted for a period of up to seven days before the court reviews the merits of the petition of a preliminary injunction.

When a court grants a provisional measure, the court may order the petitioner to provide security as a condition precedent to such provisional measure. For example, the court would typically order that upon the petitioner’s provision of a particular security, the respondent will take or refrain from taking a particular action.

The Arbitration Law contains provisions on the procedures applicable to arbitrations in Taiwan; however, in principle, the procedures explicitly agreed upon by the parties to an arbitration will govern the arbitration proceedings, unless they violate the mandatory rules under the Arbitration Law. In the absence of an explicit agreement by the parties on the procedures, the default assumption is that the parties have consented to applying the procedural rules of the arbitral institution selected to administer the arbitration. If the parties have not agreed on the procedures, whether explicitly or implicitly, then the procedures stipulated in the Arbitration Law will govern, and for matters that are not addressed in the Arbitration Law, the arbitral tribunal may refer to the Code of Civil Procedure or any other appropriate regulation. 

The Limited Procedural Steps Specified in the Arbitration Law

The Arbitration Law requires the following procedural steps.

• Written notice should be given to the respondents when the claimants file the arbitration, which will be deemed as the commencement date of the arbitration proceeding unless otherwise agreed by the parties.
• If the parties have not agreed upon the seat of arbitration, the arbitral tribunal will make such a determination.
• The arbitral tribunal should render the arbitral award within six months of the date on which the arbitral tribunal is formed, and this can be extended once for three months. The parties will be permitted to initiate a litigation for the arbitrated disputes if the arbitral tribunal fails to render its award within the above time limit.

The Parties’ Chosen Rules

The Arbitration Law does not provide detailed steps for conducting arbitration in Taiwan. As a result, the parties’ chosen rules of the selected arbitral institution may provide more guidance as to the required steps. It should be noted that failure to comply with the mandatory procedural rules in the Arbitration Law or the parties’ agreed-upon rules, may provide grounds to set aside the rendered award. 

Arbitrators' Obligations

Arbitrators must handle each case independently and impartially. They are bound to confidentiality and are required to handle the arbitration proceedings in an efficient manner. Specifically, the obligations of arbitrators include the following. 

Duty to disclose

The arbitrator must inform the parties of anything that may give rise to reasonable doubt about the arbitrator’s ability to independently and impartially handle the case, based on the matters stated in 4.4 Challenge and Removal of Arbitrators (Article 15(2) of the Arbitration Law).

Obligation of confidentiality

The arbitrator may not disclose any information regarding the proceedings of the arbitration or the deliberations among the tribunal members (Articles 15(1), 23(2) and 32(1) of the Arbitration Law). 

Duty to conclude arbitration within the statutory time limit

Unless otherwise agreed by the parties, the arbitral tribunal must submit the award within nine months of the tribunal being formed (see 7.2 Procedural Steps). 

Duty to ensure due process

The arbitrators must ensure that the parties are given sufficient opportunity to present their cases (Article 23(1) of the Arbitration Law); conduct necessary investigation into the parties’ claims, including examination of witnesses or expert witnesses (Articles 23(1) and 26 of the Arbitration Law); and apply appropriate procedures according to the matters of the case (Article 19 of the Arbitration Law).

Authority of Arbitral Tribunals

The authority given to arbitral tribunals by the Arbitration Law includes the authority to: 

• determine the seat of arbitration, unless otherwise agreed by the parties (Article 20 of the Arbitration Law);
• rule on objections to the jurisdiction of the arbitral tribunal (Article 22 of the Arbitration Law);
• determine procedural matters, such as ruling on objections to procedural matters (Articles 29 and 30 of the Arbitration Law), summoning witnesses or expert witnesses (Article 26(1) of the Arbitration Law), requesting assistance from the court to compel witnesses to present at the hearing, and calling evidentiary hearings (Article 28(1) of the Arbitration Law); and
• conclude the procedure and rule on the merits of the dispute; the arbitral tribunal may apply the principle of equity in rendering the arbitral award upon the explicit consent of the parties to the arbitration proceedings (Articles 31, 33(1) of the Arbitration Law).

There are no qualifications or other requirements for acting as a legal representative of a party to an arbitration, eg, individuals without a licence to practise law in Taiwan may still represent a party in arbitration.

The Arbitration Law is silent on the collection and submission of evidence during the arbitration procedure. The arbitral tribunal should first apply the rules agreed upon by the parties on the taking of evidence, which would implicitly include the agreed arbitration rules promulgated by the arbitral institution selected to administer the arbitration, if any. 

In the absence of the parties’ agreement on the taking of evidence, the arbitral tribunal may apply the rules set forth in the Code of Civil Procedure or other rules the tribunal deems appropriate (Article 19 of the Arbitration Law). Although this means the arbitral tribunal may potentially have a wide range of discretion to determine how evidence is collected, in practice, arbitrators presiding over Taiwan-seated arbitrations generally defer to the Code of Civil Procedure for the guiding principles in determining the collection and submission of evidence.

Production of Documents

In practice, discovery (as used in the Anglo-American legal system) is unlikely to be applicable in Taiwan as there is no equivalent provision under the Code of Civil Procedure. However, if a party believes that certain documentary evidence is held by the opposing party, it may request the arbitral tribunal to order the opposing party to present such evidence and it would be at the arbitral tribunal’s discretion whether to grant such an order. As mentioned above, the arbitral tribunal may apply the Code of Civil Procedure to determine whether to grant such request. If so granted by the arbitral tribunal, it would need to take into account whether the requested document is specific enough, whether it is relevant and material to the outcome of the case, and why the opposing party is obliged to produce such document (Article 19 of the Arbitration Law and Articles 342 and 343 of the Code of Civil Procedure). If the party subject to the order fails to produce the document mandated in the order without reasonable justification, the arbitral tribunal may further file an application to the court for an order for the production of such document (Article 28(1) of the Arbitration Law) and even make an adverse inference against the party that it is not compliant with the order (Article 19 of the Arbitration Law and Article 345 of the Code of Civil Procedure).

Summoning of Witnesses

In practice, an arbitral tribunal in Taiwan may summon witnesses to the hearing on its own initiative or at the parties’ request so that witness statements can be presented and heard, and the witnesses can be examined and cross-examined by the parties and the arbitral tribunal. While written witness statements are not required, the arbitral tribunal in Taiwan may allow the parties to submit the same in advance. When necessary, the arbitral tribunal may seek the court’s assistance to compel a witness to be present at the hearing (Article 26 of the Arbitration Law).

Privilege

There are no clear rules regarding the privilege of documents under the Arbitration Law or the Code of Civil Procedure. As a result, it would be at the arbitral tribunal’s discretion whether certain documents can be withheld from production under the principle of privilege. 

It should also be noted that when a foreign or international arbitral institution’s arbitration rules are applicable in the subject case, eg, the parties have agreed to conduct the arbitration in Taiwan per the arbitration rules of the International Chamber of Commerce, the arbitral tribunal may be more willing to use the IBA Rules on the Taking of Evidence as guidance with respect to the submission of evidence. 

The Arbitration Law is silent on the detailed rules of evidence that the arbitrators should follow and does not require the arbitrators to strictly follow the rules of evidence set forth under the Code of Civil Procedures. For international arbitration seated in Taiwan that is conducted in accordance with the arbitration rules of foreign arbitral institutions, the arbitral tribunal tends to apply the IBA Rules on the Taking of Evidence as guidance. 

Summoning of Witnesses

According to Article 26 of the Arbitration Law, an arbitral tribunal may summon witnesses and expert witnesses for examination at the hearing, but it has no authority to compel their presence. If a witness or expert witness fails to make an appearance without reasonable justification, the arbitral tribunal may seek assistance from the court to subpoena the witness.

Production of Documents

Although the Arbitration Law is silent on whether an arbitral tribunal has the authority to order a party to produce documents that it holds in its possession, in practice, an arbitral tribunal may still do so at the request of the other party (Taipei District Court Decision No 104-Chong-Sheng-Zi-7). If the party subject to the arbitral tribunal’s order fails to produce the requested documents, the arbitral tribunal may apply to the court for a court order for the production of the documents (Article 28 of the Arbitration Law). In this regard, if the arbitral tribunal wishes to seek the court’s assistance in granting an order to compel document production by the party, the tribunal, in practice, would generally apply the standards relating to the production of documents under the Code of Civil Procedure to determine whether the requested document production should be granted, since the court will eventually apply the Code of Civil Procedure to determine whether such an order should be granted.

The Arbitration Law does not make any distinction between a party and a non-party in terms of summoning witnesses or ordering the production of documents.

Confidentiality Obligation During Arbitration Proceedings

The Arbitration Law specifies that the arbitration process will remain confidential unless agreed otherwise by the parties involved. The general assumption is that every person involved in arbitration is bound by confidentiality; however, there are still disputes on the content and scope of information subject to confidentiality under the Arbitration Law. The Arbitration Law only strictly prohibits disclosing information in the deliberation process and requires that arbitrators are bound by confidentiality. As the Arbitration Law does not explicitly include further regulations, it would be advisable for the parties to form their own agreements on confidentiality.

Potential Disclosure During Court Proceedings

Information disclosed in arbitration proceedings may be disclosed in subsequent court proceedings initiated by either party to protect or in pursuit of their legal rights. In principle, Taiwan's court proceedings and court decisions are made publicly; therefore, the information disclosed in arbitration proceedings could potentially be disclosed to or be made available to third parties, unless the relevant laws governing the dispute provide otherwise or the court permits that certain information regarding the arbitration proceedings be kept confidential (eg, be redacted from the court decision) upon a party’s application.

Time Requirement

Arbitral tribunals are required to render an arbitral award within six months of the constitution of the arbitral tribunal, subject to a one-time extension of three months. However, in practice, a further extension is permissible upon the parties’ agreement (Article 21(1) of the Arbitration Law).

Items Required to Be Addressed

For an arbitral award to be enforceable, it must include the following information (Article 33(2) of the Arbitration Law):

• the names and addresses of the parties involved;
• the names and addresses of the legal representatives and counsels of the parties, if any;
• the names, nationality, and addresses of the translators, if any;
• holdings;
• relevant facts and reasons for the arbitral award, unless otherwise agreed upon by the parties; and 
• the date and place of arbitration.

Arbitrators' Signatures

The arbitral award must be signed by the arbitrators who participated in the deliberations. If an arbitrator refuses or is not able to sign the arbitral award, the reason should be noted in the award (Article 33(3) of the Arbitration Law).

The Arbitration Law does not limit the types of remedies that may be awarded by an arbitral tribunal. However, arbitral tribunals would generally refrain from rendering an award that orders a party to take action that is not permissible under the laws of Taiwan or that is against public order or good morals, as such an award would not be recognised and would not be enforceable by the court (see 11.1 Grounds for Appeal, and 12.2 Enforcement Procedure).

Exceptions

• Punitive damages may not be awarded unless otherwise explicitly provided for under the law or in the parties’ contract. 
• Rectification can be awarded as long as the action required to be taken as rectification is specified.
• Specificity: it is worth noting that a vaguely worded award may be unenforceable in practice.
• Injunction: see 6. Preliminary and Interim Relief.

Legal Costs

The Arbitration Law does not provide relevant rules on how the legal costs should be allocated among the parties. However, in practice, arbitral tribunals usually follow the principle that costs follow the event, unless otherwise agreed by the parties, and may be bound by the rules of practice of the arbitral institution administering the arbitration. For arbitration cases administered by the CAA, in the absence of agreement between the parties, the prevailing party in arbitration would be entitled to claim arbitration costs; however, attorneys’ fees will not be included in such costs, which means attorneys’ fees cannot be recovered.

Interest

In the absence of an agreement between the parties regarding the applicable interest rate, the interest awardable would be calculated according to the statutory interest rate, which is 5% for civil claims as of the date of writing. The amount of interest and the ratio of costs to be borne by the non-prevailing party should be indicated in the main text of the award.

An arbitral award is final and binding on the parties and has the same effect as a final court decision (Article 37(1) of the Arbitration Law). As such, arbitral awards are not appealed. 

However, a party may file an action with the court to set aside an arbitral award in accordance with Article 40 of the Arbitration Law, which provides an exhaustive list of circumstances where parties may seek to set aside an arbitral award:

1) the arbitral award concerns a dispute that exceeds the scope of the arbitration agreement, unless the breaching portion of the award may be removed without affecting the remainder of the award;

2) the reasons for the arbitral award were not stated, as required;

3) the arbitral award directs a party to act contrary to the law;

4) the arbitration agreement is nullified, invalid or has yet to come into effect, or became invalid prior to the conclusion of the arbitration proceedings;

5) the arbitral tribunal fails to give a party an opportunity to present its case prior to the conclusion of the arbitration proceedings, or a party is not lawfully represented in the arbitration proceedings;

6) the composition of the arbitral tribunal or the arbitration proceedings is in violation of the arbitration agreement or the law;

7) an arbitrator fails to fulfil the duty of disclosure prescribed in the Arbitration Law and appears to be obviously partial or continues to serve as an arbitrator even after being requested to withdraw, provided that the request for withdrawal has not been dismissed by the court;

8) an arbitrator violates any duty with respect to the arbitration during the arbitration proceeding that constitutes criminal liability;

9) a party or any representative has committed a criminal offence in relation to the arbitration;

10) if any evidence or content of any translation upon which the arbitration award relies has been forged, fraudulently altered or contains any other misrepresentations; and

11) if a 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. 

The foregoing points eight to ten are limited to instances where a final conviction has been rendered or the criminal proceeding is unable to be commenced or to continue for reasons other than insufficient evidence.

Applicants requesting the court to set aside an arbitral award based on a violation of the arbitration agreement under point six and based on the circumstances listed in points seven to 11 are also required to demonstrate that the existence of such circumstances affected the result of the arbitral award.

Article 40 of the Arbitration Law does not entitle the court to review the merits of the disputes; rather, the purpose of Article 40 is to give recourse to a party where the arbitration proceedings were not duly conducted. As such, Article 40 of the Arbitration Law would not be considered as an appeal.

If a party wishes to set aside an arbitral award, it should file the action within 30 days upon receipt of the arbitral award (Article 41 of the Arbitration Law).

It should be noted that only domestic arbitral awards can be set aside according to Article 40 of the Arbitration Law. Foreign arbitral awards, even if rendered in Taiwan, cannot be set aside before Taiwan courts (Supreme Court Decision No 110-Tai-Shang-Zi-1563). For the scope of foreign arbitral awards, see 12.2 Enforcement Procedure.

While the Arbitration Law is silent on this issue, the parties cannot agree in practice to exclude or expand the scope of circumstances that parties may seek to use to set aside the arbitral award. 

The arbitral tribunal’s findings and interpretation of the law are not subject to further review by the courts. In other words, the courts are limited to reviewing the procedures of the arbitration and cannot conduct a de novo review of the merits of the case (Supreme Court Decision No 100-Tai-Shang-Zi-671).

Taiwan is not a signatory of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). 

Taiwan has signed the Treaty of Friendship, Commerce and Navigation with the United States of America.

Although Taiwan is not a member of the New York Convention, the arbitral awards made in Taiwan can still be recognised and enforced in other jurisdictions. For example, China’s Supreme People’s Court issued the Regulations on Recognition and Enforcement of Arbitral Awards rendered in Taiwan on 29 June 2015, which provides that Taiwanese arbitral awards may be recognised and enforced in Mainland China unless certain exceptional circumstances occurred during the arbitration proceeding, such as that the appealing party was not duly notified to participate in the arbitration proceeding. Also, Taiwan's courts rarely refuse to recognise foreign arbitral awards on the ground of absence of reciprocity (see 12.2 Enforcement Procedure) or that Taiwan is not a signatory of the New York Convention.

As the Arbitration Law distinguishes between foreign arbitral awards and domestic arbitral awards, the enforcement procedures are explained separately below.

Enforcement of Domestic Arbitral Awards

Although arbitral awards have the same effect as final court decisions, the parties must file an application to the court to obtain an enforcement order before the arbitral award can be compulsorily enforced. However, the following two types of arbitral awards can be compulsorily enforced without a prior court enforcement order if the parties have so agreed in writing: i) arbitral awards concerning monetary relief or fungible goods or securities; and ii) arbitral awards concerning delivery of a specified moveable property (eg, cars, trucks).

The court will deny an application to enforce an arbitral award if any of the following circumstances exist (Article 38 of the Arbitration Law):

• the arbitral award concerns a dispute that exceeds the scope of the arbitration agreement, unless the breaching part of the award may be removed without affecting the remainder of the award;
• the reasons for the arbitral award were not stated, as required, unless the arbitral tribunal corrected the omission; and
• the arbitral award directs a party to act in a way that is contrary to the law.

Enforcement of Foreign Arbitral Awards

It should be noted that, under Article 47 of the Arbitration Law, arbitral awards rendered outside Taiwan and those rendered in Taiwan, but in accordance with foreign laws, are both deemed foreign arbitral awards. In addition, in practice, the aforesaid “foreign law” includes the arbitration rules of foreign jurisdictions, foreign arbitral institutions, and international arbitral institutions (Supreme Court Decision No 110-Tai-Shang-Zi-1563).

A foreign arbitral award is required to be recognised by a court in Taiwan before it attains the same effect as a final court decision and can be enforced in Taiwan (Article 47(2) of the Arbitration Law). 

The court may dismiss an application for recognition of a foreign arbitral award where any one of the following circumstances (Articles 49 and 50 of the Arbitration Law) exists:

• the recognition or enforcement of the arbitral award is contrary to public order or good morals;
• the dispute is not arbitrable under Taiwan's laws;
• the arbitration agreement is invalid as a result of the legal incapacity of a party chosen by the parties to govern the arbitration agreement;
• the arbitration agreement is null and void according to the law chosen to govern the agreement or, in the absence of a choice of law, the law of the country where the arbitral award was made;
• a party is not given proper notice to participate in the arbitration proceedings, or any other situations which give rise to lack of due process;
• the arbitral award is not relevant to the subject matter of the dispute covered by the arbitral agreement or exceeds the scope of the arbitration agreement, unless the breaching part can be removed without affecting the remainder of the arbitral award;
• the composition of the arbitral tribunal or the arbitration procedure contravenes the arbitration agreement or, in the absence of an arbitration agreement, the law of the place of arbitration; or
• the arbitral award is not yet binding upon the parties or has been suspended or revoked by a competent court. 

In addition, the court has discretion to dismiss an application for recognition under the principle of reciprocity, ie, the country where the arbitral award is made or whose laws govern the arbitral award does not recognise domestic arbitral awards decided in Taiwan (Article 49(2) of the Arbitration Law). However, Taiwan's courts may recognise and enforce foreign arbitral awards even in the absence of reciprocity (see Taiwan High Court No 106-Fei-Kang-Zi-79). In practice, unless clear evidence is submitted to demonstrate that Taiwan arbitral awards have not been, and will continue not to be, recognised by the applicable foreign jurisdiction, Taiwan's courts usually refrain from using reciprocity as a ground not to recognise a foreign arbitral award.

Impact on the Recognition Proceeding by Action to Set Aside an Arbitral Award

If a party applies to the court to set aside an arbitral award before the closure of the recognition proceeding or the completion of compulsory enforcement, the court may order to stay the recognition proceeding or the enforcement proceeding upon the party’s application, provided that the party provides proper security. In addition, if an arbitral award has been set aside by a final decision by a competent court, the court in Taiwan will dismiss the application for recognition or revoke its recognition order if it has already been granted (Article 51 of the Arbitration Law).

State Immunity

The Arbitration Law is silent on whether foreign states are immune from the Taiwanese court’s jurisdiction over the enforcement of arbitration, and there is no court decision on this issue. 

Taiwan's courts take a pro-arbitration attitude towards the recognition and enforcement of arbitral awards.

As stated in 12.2 Enforcement Procedure, only under exceptional circumstances may a court reject the recognition and enforcement of an arbitral award. According to current practices, the court is very cautious in applying local public policy as a ground to refuse to enforce an arbitral award, regardless of whether it is rendered domestically or offshore. As a result, most arbitral awards are recognised and enforced in Taiwan. 

The Arbitration Law is silent on class action arbitration and group arbitration. However, Regulations Governing the Class-Action Arbitration or Litigation Handled by the Securities and Futures Investors Protection Center permits class action disputes to be handled via arbitration. To date, the Securities and Futures Investors Protection Center has not initiated any class action arbitrations, nor has the CAA administered such arbitrations.

Counsels

The Attorney Ethics Rules still apply to counsel representing clients in arbitration. As an example, Article 14 of the Attorney Ethics Rules prohibits an attorney from improperly using relationships with arbitrators, lobbying arbitrators or otherwise expressly or implicitly causing the parties to believe that the attorney has a relationship or the power to exert improper influence over judges or arbitrators.

Arbitrators

The Regulation Governing Organisation, Mediation Procedures and Fees of Arbitration provides that arbitral institutions established pursuant to the Arbitration Law must establish arbitrators’ ethical rules. Accordingly, these arbitrators’ ethical rules must include the following:

• an arbitrator must conduct arbitration cases fairly and responsibly and keep the information confidential; 
• an arbitrator must avoid acting in a manner that will raise suspicion that the arbitrator is acting for a specific party;
• an arbitrator must not accept a party’s request for help or receive illicit benefit;
• an arbitrator’s duties must be exercised in person and may not be delegated to others;
• an arbitrator must remain neutral and may not engage in unjustified entertainment activities with any party, agent, witness, expert witness or other interested parties;
• an arbitrator, after an agreement to conduct an arbitration case, may not excuse themselves from the duties without justified reasons; and
• other necessary matters that are consistent with the arbitrator's self-discipline and autonomy.

The CAA has, accordingly, promulgated a Code of Ethics for Arbitrators that arbitrators must follow.

There are currently no laws regarding third-party funding of arbitration proceedings, despite some scholars advocating to amend the law to include this mechanism.

The Arbitration Law is silent on consolidation. The arbitration rules of the major domestic arbitral institutions (eg, the CAA) governing arbitrations seated in Taiwan lack rules on this issue as well. 

Third Parties Bound by the Arbitration Agreement

See 5.7 Jurisdiction Over Third Parties.

Third Parties Bound by the Award

Article 37(3) of the Arbitration Law provides that under the compulsory enforcement rules, an award may bind the following:

• anyone who has become the successor of a party after the arbitration proceeding has commenced;
• any entity which has a party participate in the arbitration proceeding on such entity’s behalf, or anyone who has become the successor of such entity after the arbitration proceeding has commenced; and
• any entity which has taken possession of the property subject to enforcement for the aforementioned person or entity or the successor after the arbitration proceeding has commenced.