Litigation 2023 Comparisons

Taiwan is a civil law-based jurisdiction in which many of the legal doctrines and practices can be traced to those of western European countries (especially Germany) around the turn of the 20th century. Statutes are the main source of law, which are further interpreted by administrative agencies and court judgments. Stare decisis, although important, is not compulsory for the courts.

Legal disputes are resolved primarily via the adversarial model, as the parties are responsible for presenting their own arguments and their own supporting evidence. However, some characteristics of the inquisitorial model derived from civil law-based court procedures are still present.

Legal proceedings in Taiwan make use of both written submissions and oral argument hearings. For example, a civil proceeding is initiated with a written complaint, and once the case is set on the docket, a judge will conduct a series of preparatory hearings in which the parties will be asked to submit briefs and present their arguments in person.

For civil and criminal matters, Taiwan has a three-tier, three-instance court system. The first instance, or trial court, is known as the District Court, the first appellate court instance is the High Court and the final instance is the Supreme Court. There is generally a district court for each administrative region of Taiwan, with a total of 20 district courts. The High Court has four branches, with a total of five high courts and a single Supreme Court.

For administrative litigation proceedings, there are also three tiers of courts, but only two instances for any single case. A typical administrative litigation proceeding is commenced at the High Administrative Court, and the case may be appealed to the Supreme Administrative Court. There are three high administrative courts in Taiwan and a single Supreme Administrative Court.

In addition to the aforementioned courts, Taiwan also has several specialised courts for certain subject matters:

• the Intellectual Property and Commercial Court, which has jurisdiction over both civil and administrative cases involving intellectual property, as well as commercial civil litigation and non-litigious matters;
• the Juvenile and Family Court, which has jurisdiction over first-instance cases involving the Juvenile Justice Act and the Family Act;
• the Constitutional Court, which has jurisdiction over petitions for constitutional review of laws and court decisions; and
• the Summary Courts, which are part of district courts and handle summary proceedings, including civil and criminal summary proceedings, cases stipulated by the Social Order Maintenance Act, civil mediations other than family mediation and cases involving property rights of less than TWD500,000.

In general, civil proceedings are public unless they fall within certain exceptions in which opening up the proceedings to the public would be undesirable. These exceptions include instances where:

• the case involves national security, public order or societal values concerns;
• the part(ies) petition to keep the proceedings private due to arguments or evidence involving their privacy or trade secrets, or those of third parties;
• there is a risk of bodily harm to witness(es) involved in the case;
• cases fall within the Juvenile Justice Act and Family Act; and
• cases involve sexual assault.

It is also possible for a party to petition the court to review in camera confidential information, such as trade secrets.

With respect to public access of court documents, except for cases involving juveniles, sexual assault, domestic violence, civil enforcement and other matters that must be adjudicated in private, the decisions of the court or the public prosecutor’s indictments are accessible by the public, but the personal information of the parties will be redacted. However, save for cases before the new Constitutional Court, there is no public access to the written statements and evidence filed by the parties in a case.

For civil litigation, pro se representation is allowed in the first and second instances. If a party decides to appoint an advocate, the advocate should be an attorney licensed in Taiwan unless the judge grants permission for a non-attorney to represent the party. A party in a third instance proceeding must be represented by an attorney if the party is not already an attorney. Attorneys qualified to practice in a jurisdiction other than Taiwan (foreign attorneys) may not represent a party in a Taiwan court without the prior approval of the judge.

In Taiwan, there is no express prohibition on third-party litigation funding in law, and an agreement can be made in which the litigation costs or attorneys’ fees of a party are paid by another. However, pursuant to Article 157 of the Criminal Code, it is a criminal offense for a third party who, for its own financial gain, instigates another to file suit by promising to provide financial support for the action, despite the other person having no intention to initiate litigation in the first place.

There is no law on what kinds of lawsuits may receive third-party funding.

There is no law restricting a litigating party’s eligibility to receive third-party funding.

There is no law setting limitations on the amount of third-party funding provided to a litigating party.

There is no limitation on the scope of expenses that the third-party funding may cover. It may include litigation fees, legal service fees, evidence investigation fees and other costs associated with the litigation process.

Pursuant to the attorney ethics rules in Taiwan, a contingency fee arrangement is permitted except for cases involving certain subject matter, such as criminal cases and cases that involve the Juvenile Justice Act and the Family Act. In addition, an attorney may not arrange for compensation to be in the form of a share of the object of the lawsuit upon prevailing in the lawsuit.

There is no limitation on the timeframe in which a party to the litigation may obtain third-party funding.

While there is no formal “pre-action” requirement in the Code of Civil Procedure, there are a few exceptions in which the parties must proceed with a certain procedure before litigation can officially commence.

• Compulsory mediation – the court will require the parties to participate in a mediation session for real estate-related disputes, disputes arising from traffic accidents and medical treatment, employment disputes, intra-family disputes, or property disputes with a value of less than TWD500,000. Failure to participate in the court-mandated mediation will result in a fine. 
• State compensation cases – the plaintiff must contact the liable government agency to arrange for negotiations in reaching an agreement on damages. If the plaintiff files suit before such agreement is reached, the court will dismiss the complaint. 
• Shareholder derivative actions – please see 3.7 Representative or Collective Actions for details.

The statute of limitations period varies significantly depending on the cause of action presented. While there is a general statute of limitations period of 15 years for a civil claim, for many common civil causes of action, such as payment of unpaid rent or interest, the statute of limitations period is much shorter at one or two years. Unless the law provides otherwise, the limitations period generally starts running from the time the plaintiff becomes aware of the facts giving rise to the cause of action.

Articles 1–21 of the Code of Civil Procedure provide several grounds on which a Taiwan court may exert jurisdiction over the defendant in a civil action. These include the location of the defendant’s domicile, location of the real property at issue, location where the tort occurred, or any other basis the court may apply. When several courts have jurisdiction based on the above rules, the plaintiff may file the action at any one of those courts.

Unless exclusive jurisdiction rules apply, a court may gain jurisdiction over a case that it would not have otherwise had, if the parties had agreed to designate that court to resolve their disputes, or if the opposing party did not object to the court having jurisdiction by participating in oral arguments.

Article 244 of the Code of Civil Procedure stipulates the mandatory contents of a complaint. The complaint must name the parties and their legal representatives, the cause of action and the relevant facts, and a declaration of relief sought. In practice, the complaint also typically includes a jurisdiction statement and the applicable procedures for the dispute, as well as arguments in preparation for oral arguments. 

The scope for amending the complaint is relatively narrow. After service to the defendant, the plaintiff is only generally allowed to amend the facts section or the relevant applicable law. It may only add or amend claims with the consent of the defendant or if certain conditions are met, as specified in Article 255 of the Code of Civil Procedure, such as:

• a new claim is introduced, based on the same facts;
• a new claim is needed to replace the original claim as a result of a change of circumstances;
• an additional declaratory decision is needed due to a new dispute arising over the course of litigation regarding a legal relationship that is key to the decision; or
• the amendment will not materially obstruct the defendant’s defence or the conclusion of the proceedings.

Per Article 123 of the Code of Civil Procedure, service is conducted by the court clerk rather than the parties. The court clerk will send the relevant document to the addressee’s domicile, place of business or office. If service is unsuccessful, the document will be sent to the autonomous or police authority of the location of the address. Documents to be served by the court clerk include the written statements (and attachments) of the parties, court hearing notices and the court decision.

For service to a foreign defendant, the court clerk will generally request the local jurisdictional authority, the Taiwan embassy or another entity or organisation to conduct the service in that foreign jurisdiction. In a case where the service address is unclear or the aforementioned method cannot be used for service to a foreign defendant, the court may, upon petition, conduct service through publication (ie, provide access to the document via the court’s website).

If the defendant does not submit a response brief or attend the oral arguments hearing, the proceeding continues as normal, but given the primarily adversarial model of litigation in Taiwan, without the defendant’s arguments and evidence, the court will generally have no basis to find for the defendant. In addition, a passive refusal to participate may cause the court to infer that the defendant is attempting to delay the proceedings, which may give cause for the court to reject any subsequent attempts by the defendant to reply.

The general rule in the Code of Civil Procedure (Article 41) is that if there are several parties with a common interest but they do not belong to an organisation that has a representative or a manager, they may nominate a representative among themselves to initiate or respond to litigation on their behalf. Article 44–2, Paragraph 1 of the same Code further provides that the court may, either with the consent of the representative or upon motion, make a public notice notifying other parties with the same common interest that they may opt in to the representative action. 

Certain types of group actions have special rules.

Consumer protection/product liability suits – a consumer protection group may file suit for monetary compensation under its own name on behalf of a group of 20 or more consumers who have been injured in the same event.

Shareholder derivative suits – pursuant to Article 214 of the Taiwan Company Act, a shareholder who has continuously held at least 1% of a company’s outstanding stock for at least six months consecutively may request a company’s supervisor to file suit on behalf of a company against the company’s director(s). If the supervisor fails to file suit within 30 days of the request, the shareholder may initiate a derivative suit on its own against the company’s director(s).

Article 39 of the Code of Legal Ethics requires an attorney to disclose to the client at the time the attorney-client relationship is formed the attorney’s fee rate or fee calculation method. The provision further recommends the disclosure to be made in writing.

For civil matters in Taiwan, almost all pretrial procedural petitions are for some form of injunctive relief. The Code of Civil Procedure provides for three types of injunctive relief petitions, namely provisional attachment, provisional injunction and an order to temporarily maintain the status quo, which are more appropriately detailed in 6. Injunctive Relief. Although similar in nature, a petition to preserve evidence is stipulated separately in the Code of Civil Procedure from the above injunctive measures, thus it will be discussed as an “interim application/motion” in this section.

Pursuant to Articles 368–371 of the Code of Civil Procedure, a petition to preserve evidence may be made immediately after the complaint if it is likely that evidence may be destroyed before the substantial proceedings commence or if it is foreseeable that there will be significant difficulty in using such evidence in court. The petition should clearly name the other party (and if not possible, should explain why it is not possible), describe the evidence to be preserved, explain what facts the evidence would be supporting and the reason evidence preservation is necessary. The petitioning party may appeal the court’s decision to reject the petition.

There is no summary judgment mechanism in Taiwan civil procedure. However, pursuant to Article 382 of the Code of Civil Procedure, if the court finds that the parties have sufficiently argued part of a single claim, or any one of several claims, for rendering a final decision, the court may directly proceed to render a partial final decision on such claims. In addition, per Article 383 of the Code, the court may also render an interlocutory decision if any independent argument has been sufficiently presented for the court to render a decision. While a party may also petition a court to render a partial final decision or an interlocutory decision, the court has full discretion on deciding whether to grant such a petition.

As described more fully in 4.3 Dispositive Motions, under certain circumstances, the court can dismiss a portion or the entirety of the claims from the complaint before the preparatory hearings commence.

The court may, either on its own or upon petition by the defendant, dismiss, typically without prejudice, a portion or the entirety of the claims from the complaint for the following defects pursuant to Article 249 of the Code of Civil Procedure:

• the court lacks jurisdiction and the case cannot be transferred;
• the plaintiff or the defendant lacks capacity as a party;
• the plaintiff or the defendant lacks capacity to engage in litigation and is not properly represented;
• there is invalid attorney representation;
• the complaint lacks key required elements;
• there is duplicate litigation; or
• the complaint was submitted with malice and lacks reasonable basis in fact or law.

If the complaint is not amended in time, or if amendment is not possible, the court shall dismiss those claims with prejudice.

Pursuant to Articles 58 and 59 of the Code of Civil Procedure, an interested third party may apply to join in a civil action as an intervener in support of one party. The third party must submit a written brief explaining the legal interest and its reasoning to intervene. The original parties may petition the court to reject the third-party intervention unless they have not done so prior to oral arguments. 

Under Article 65 of the Code of Civil Procedure, a party may also petition a court to notify a third party that their legal interest may be impacted if the party loses in the action, to give them an opportunity to apply to join as an intervener. Regardless of whether the notified party actually applies to intervene, it is deemed to have intervened in the action at the earliest time it is possible to do so.

Per Article 96 of the Code of Civil Procedure, a defendant may petition the court to order the plaintiff to provide security for the litigation costs of the proceeding if the plaintiff has no domicile, office or place of business in Taiwan, or if security already lodged with the court turns out to be insufficient or not sufficiently certain in law, unless any of the following conditions apply:

• the defendant does not dispute portions of the litigation costs regarding any part of the plaintiff’s claims;
• the plaintiff has sufficient assets in Taiwan to cover the litigation costs; or
• the defendant has already made oral arguments.

The procedural costs of injunctive relief petitions, as well as a petition to preserve evidence, are all set at TWD1,000 in Article 77-19 of the Code of Civil Procedure. The court has discretion to require the petitioner to lodge security to offset any insufficiencies in the reasoning of the petition, which is typically set at one third of the total amount claimed. Meanwhile, the respondent can prevent the enforcement of the petition against it by lodging security, but the respondent’s security is typically set at the total value of the claim.

There is no statutory provision or interpretation regarding the timeframe for a court to render a decision regarding a petition for injunctive relief or preservation of evidence. Assuming the written brief and supporting evidence are all in order, Taiwan courts can, in principle, issue a decision within three days, but there is no mechanism to further fast-track the petition.

Taiwan does not have a discovery mechanism in civil cases as used in Anglo-American practice to obtain evidence directly from the other party. Instead, as further detailed in 5.2 Discovery and Third Parties and 5.4 Alternatives to Discovery Mechanisms, a party may petition the court to, or the court may on its own accord, investigate evidence.

The only way to obtain evidence from a third party is for a party to petition the court to call upon such third party to testify or produce documents. If the court agrees with the petitioning party that such evidence is necessary, a court subpoena will be served on the third party. Save for certain circumstances specified in the Code of Civil Procedure (eg, confidentiality obligation, testimony will incriminate the third party in a criminal offense, relation to one or more of the parties), the third party may not refuse to comply with the court subpoena to testify or produce documentary evidence.

As set out in 5.1 Discovery and Civil Cases, discovery is not available in Taiwan. There is no provision dealing with a party’s duty to disclose in the Code of Civil Procedure.

The parties to a court proceeding are responsible to produce their own evidence to support their respective positions to the extent that the judge is convinced of the truthfulness of a party’s position (Supreme Court 104-Tai-Kang-Zi-712 Civil Decision). In practice, a party enters evidence into the record by submitting it alongside a written brief, but as mentioned, for supporting evidence that the party does not possess, the party needs to petition the court to investigate such evidence. 

The Code of Civil Procedure expressly provides for five types of evidence that may be investigated: (i) witness testimony, (ii) expert opinion, (iii) party statements/admissions, (iv) the contents of documents, and (v) inspection of objects. The petitioning party must name the evidence with a high level of specificity as well as the facts to be proven with such evidence. Investigation of evidence is conducted during the preparatory oral argument hearings unless there is a risk that the evidence may be altered or destroyed before a court hearing may be held, in which case a party may apply for a court order to preserve and investigate such evidence. After the court completes the investigation, the results will be disclosed, and the judge will direct the party or parties to submit arguments on the issue.

Taiwan does not expressly recognise privilege as a statutory basis for refusal to disclose. However, the Code of Legal Ethics prohibits an attorney from using evidence in a way that is unfavourable to their client without the client’s consent, and an attorney is obliged to keep in strict confidence matters relating to representation of the client. As a result, an attorney has the right to refuse to disclose, submit evidence or testify in a civil proceeding regarding any confidential matter that they come into contact with, in the course of representation.

In principle, a party has the right to refuse the disclosure of any of its own confidential information or trade secrets, or those of a third party, if the disclosure would cause material harm to itself or the third party. Notwithstanding the above, pursuant to Article 344 of the Civil Code, the court may still order the party to make such disclosure in camera to determine whether the confidentiality argument is justified. If the party cannot properly justify its refusal to disclose, pursuant to Article 345 of the Civil Code, the court may make a negative inference on that particular issue against the non-disclosing party.

As alluded to in 4.1 Interim Applications/Motions, petitions to enjoin the activities of another generally fall into two types under the Code of Civil Procedure.

• A provisional attachment (Article 522), which is made alongside claim(s) based on monetary damages, freezes the bank accounts or assets of the respondent if the petitioner can show a likelihood that a future court favourable decision will be difficult or impossible to enforce against the respondent.
• A provisional injunction (Article 532) for claim(s) not based on monetary damages, typically in the form of enjoining the respondent’s activities in order to temporarily maintain the status quo (Article 538). An order to temporarily maintain the status quo is granted if the petitioner can show that such an order is necessary to prevent “serious harm or imminent danger” or other similar circumstances from occurring in relation to the legal relationship at dispute. Some of the factors examined by the court include:
1. the petitioner’s chances of prevailing in the action;
2. whether irreparable harm will occur if petition is denied;
3. balance of interests between the petitioner and respondent; and
4. the impact on public interest.

While the petitioner is expected to substantiate the grounds for granting the injunction, the court may, at its discretion, require the petitioner to provide security to offset any insufficiencies in the petitioner’s reasoning at this point in the proceedings.

The Code of Civil Procedure does not expressly stipulate a time limit on the court for deciding a petition for injunctive relief. The general timeframe for a court to issue a decision is about one to two weeks and in the best case scenario, a party may be able to receive a court decision on the third day.

While court filings may be made after business hours, they are generally processed on the next day. Only certain matters requiring urgent relief, such as an emergency temporary protective order in relation to domestic violence matters, will be reviewed by a judge during nights and holidays and granted within four hours of the court’s receipt of the petition.

For provisional attachments and provisional injunctions, unless the petition involves the restraint of an individual’s physical freedom, the court is not required to notify the respondent of such a petition or provide the respondent an opportunity to respond, given the risk that enforcement of the subsequent court decision may be rendered impossible if the respondent is apprised of the development beforehand. 

However, for a petition to temporarily maintain the status quo, the courts will tend to notify the respondent and provide the respondent with an opportunity to respond, since ordering the respondent to maintain the status quo may, in effect, represent an “advance enforcement” of the final court decision. As such, due process must be properly provided to the respondent.

Any security that the court asks the petitioner to lodge in consideration for the injunction petition will go to the respondent for compensation of damages incurred if the injunction is later vacated, such as by a court decision, withdrawn by the petitioner, or if the petitioner fails to initiate the substantive action relating to the injunction in a timely manner. Whether or not the injunctive relief was granted ex parte is irrelevant.

Article 523 of the Code of Civil Procedure provides that provisional attachment should only be allowed if there is a concern that compulsory enforcement will be impossible or extremely difficult to carry out in the future. It also defines “compulsory enforcement performed overseas” as a form of “extreme difficulty” in future compulsory enforcement. There are also precedents that recognise that a court’s jurisdiction over a case extends to provisional attachment petitions in relation to that case, even if the object of the provisional attachment petition is located outside of Taiwan. Therefore, Taiwan courts can and have granted a petitioner’s provisional attachment application against a respondent’s overseas assets.

Notwithstanding the above, a recent Supreme Court order (109-Tai-Sheng-Zi-804 Order) has limited provisional attachment against assets located overseas to cases where “the respondent’s assets located in Taiwan cannot satisfy compulsory enforcement”. In other words, as long as the respondent has sufficient assets in Taiwan, the petitioner should not be allowed to apply for provisional attachment against the respondent’s overseas assets.

The Code of Civil Procedure does not allow a petitioner to directly apply for injunctive relief against a third party.

Generally, a respondent’s intentional failure to comply with the terms of an injunction order will be treated in the same way as a failure to comply with a compulsory enforcement action. The court will order the respondent to provide security and/or comply within a certain time period. In particularly serious noncompliance cases, the respondent may be arrested and detained.

As briefly introduced in 1.1 General Characteristics of the Legal System, trials are conducted via the adversarial model with both written submissions and oral argument hearings. The first instance involves the trial proceeding dealing with the facts. Although the second instance is the first appeal instance, it is still considered a factual proceeding as the reason(s) for appeal are not limited to errors in the application of law. The third and final instance is only available for resolving any alleged errors in the application of law in the previous instances and thus typically does not require the parties to engage in oral arguments unless the court believes it to be necessary.

Once the complaint is submitted, the court selects a judge to adjudicate the matter through convening a series of preparatory hearings where the parties submit written briefs and present their arguments and evidence, and the court conducts its investigations of evidence, if required. After the preparatory hearings, a single oral arguments hearing will be convened for the parties to argue on all disputed issues. Afterwards, the judge will declare the proceedings as concluded and schedule the next hearing to announce the decision.

Neither the Code of Civil Procedure nor actual practice provides for a “case management” hearing in which the parties and the judge agree on a trial schedule. As mentioned in 1.1 General Characteristics of the Legal System, the preparatory hearings are conducted until the judge, in their role to guide the parties on organising the factual contours of the case, is satisfied that the parties have reasonably presented all the relevant facts needed to reach a decision. Therefore, subject to the regulatory timeframe limits detailed in 7.8 General Timeframes for Proceedings, there is no set rule on how many preparatory hearings will need to be held in any one case. Procedural issues and motions are handled within the series of preparatory hearings convened and are thus not conducted any differently from the other preparatory hearings dealing with the substantive issues of the case.

Also as mentioned in 1.1 General Characteristics of the Legal System, Taiwan currently has no formal jury system in place. All questions of fact and law are determined by the judge.

For the most part, the Code of Civil Procedure and actual practice do not place any bright-line rules on the admissibility or admission of evidence. For evidence obtained through investigation of evidence, it is up to the judge to evaluate the probative value of each piece of evidence to a party’s position and explain the reasoning to the parties in the court decision. Nevertheless, one admissibility rule can be found in the Code of Civil Procedure with respect to documentary evidence: if the form and tenor of a document are not consistent with those commonly found in public documents, or if it does not bear the signature of the person in whose name the document is issued, of their representative, or a stamp of a court or a public notary, it is not considered an authentic public or private document and thus not acceptable as qualified evidence.

Expert opinion is considered a distinct category of evidence in Taiwan. However, when specialised knowledge is necessary, it is the court that appoints the expert for providing the opinion on the subject; while the parties may jointly designate an expert to provide the opinion to the court, the court is not bound by the parties’ choice of expert.

Unless privacy and/or confidentiality is a concern (eg, in trade secrets cases, national security issues, risk of harm to witnesses or sexual assault cases), civil proceedings and the court decisions are accessible to the public.

The Taiwan court system currently does not provide for public access to court transcripts.

As mentioned, the Taiwan court system still retains certain inquisitorial model features. The preparatory hearings are all led by the judge and the judge decides the issue(s) on which the parties should make their arguments at any particular preparatory hearing. The parties and their attorneys must obtain the consent of the judge before making any statements or engaging in any act in relation to the litigation proceedings. 

Although judges are required in principle to announce all their decisions after the proceedings have concluded, the Code of Civil Procedure authorises a judge to render an interlocutory decision if the judge believes a certain issue or argument is sufficiently ripe for a decision.

According to the Key Points For Implementation of Time Limits for Handling Cases in Courts at all Levels, a general first instance civil proceeding should be concluded in 16 months from the date the case is docketed, and certain cases, such as those involving bankruptcy, maritime commerce, company reorganisation, international trade, etc, should be concluded in two years. The second instance of civil cases should be concluded in two years, and the third instance should generally be concluded in one year unless oral arguments are called for, in which case the third instance proceeding should be concluded in 16 months. A civil case that goes through the full three instances can last for up to four to five years.

The court may extend the time limits if the aforementioned cases meet certain statutory requirements.

No court approval is required for the parties to settle a lawsuit. The court may proactively assist the parties in reaching a settlement.

Out-of-court settlements are considered contracts between private parties and there is no obligation to disclose them to the public. For settlements mediated by the court, electronic searches regarding the case will only show that the case was settled without disclosing the contents of the settlement.

Article 380 of the Code of Civil Procedure provides that a court-led settlement has the same effect as a court decision and a party may apply for compulsory enforcement if necessary. On the other hand, the contractual nature of out-of-court settlements means that a party’s failure to comply would merely be a breach of contract, and the non-breaching party would have to initiate and prevail in a contract breach action against the breaching party before compulsory enforcement would be available.

Settlements may be deemed invalid and thus set aside for many of the same reasons that would invalidate a contract, such as if the terms are against public order and morals, if prestation is impossible, or if a party agreed to the settlement under fraud or duress. For in-court settlements so set aside, the parties may request the court to resume litigation.

The types of remedies available to a successful litigant in a civil proceeding in Taiwan fall into the following three categories:

• performance rendered to the successful litigant, including the payment of money, movable assets or real estate, or the rendering of specific performance;
• declarative decisions regarding the existence of a legal relationship (eg, employer-employee, parent-child); and
• decisions that create, alter or extinguish a legal relationship (eg, division of jointly owned property).

Litigation expenses (eg, court fees and witness travel expenses) will also be awarded to the prevailing party in a civil decision, typically based on the proportion of claims won by the prevailing party.

The Taiwan Civil Code and the Code of Civil Procedure both provide that unless the law or contract provides otherwise, compensation awarded should be limited to the full recovery of the damages and lost interests of the injured party. Some of the examples in Taiwan law in which punitive damages beyond the aforementioned full recovery of injuries may be requested by the plaintiff and imposed by the court include consumer protection (Consumer Protection Act), copyright (Copyright Act), patents (Patent Act), antitrust (Fair Trade Act), securities (Securities and Exchange Act) and trade secrets (Trade Secrets Act). Except for the Consumer Protection Act, which allows a court to impose punitive damages for negligent as well as intentional acts of the defendant company, punitive damages are only awarded, in respect of the other violations, for the intentional acts of the tortfeasor. 

In a contract law context, Article 250 of the Civil Code provides that contractual parties can stipulate a liquidated damages clause for a punitive purpose in addition to (rather than in place of) ordinary damages as a result of a material breach. The typical legal issue before the court regarding a punitive liquidated damages clause is whether the amount is excessive based on the circumstances of the case and should thus be adjusted by the court. Some of the circumstances include the facts of the case, the socioeconomic status, and the actual extent of injury incurred by the non-breaching party.

Based on the Civil Code provisions regarding interest assessment on late payments, interest claimed by the prevailing party on a delayed payment is awarded by the court starting from the date the payment is due, or from the date the debtor is first notified of the late payment if no due date had been specified, until the date the amount is fully repaid. As such, the prevailing party may collect both pre-judgment interest and post-judgment interest.

If the parties did not stipulate an interest rate or stipulated an interest rate below the statutory 5% per annum, the prevailing party may claim interest based on a 5% per annum rate. If the parties stipulated a higher rate, such rate shall be applied unless it exceeds the maximum statutory rate of 16% per annum, in which case the interest rate will be capped at 16%.

According to the Compulsory Enforcement Act, a domestic decision may be compulsorily enforced before an enforcement court if the decision is final and the losing party has yet to perform its obligations stated therein. The enforcement methods depend on the performance requested.

• Monetary payment – the enforcement court may seize, foreclose and auction the movable or real properties of the other party.
• Transfer of assets – the enforcement court may directly transfer such asset to the prevailing party or cause the other party to be dispossessed of real property it is occupying.
• Specific performance – the enforcement court may cause a third party to perform in the losing party’s stead, but if such performance can only be rendered by the losing party, the enforcement court may impose a delay fine on the losing party. Continued noncompliance may result in the enforcement court taking custody of the losing party.

If the decision may still be appealed, but the court has already issued an order for the injunctive relief described in 6. Injunctive Relief, such injunctive relief order may still be compulsorily enforced, but if the appeal later reverses the decision, the party that sought to enforce the injunctive relief order would be liable to the other party for all damages incurred as a result of such compulsory enforcement.

Foreign court decisions may also be compulsorily enforced against the losing party via a court order issued by a domestic court granting permission for enforcement, unless certain disqualifying conditions exist:

• the foreign court had no jurisdiction in the matter under Taiwan law;
• the losing defendant never responded to the lawsuit, unless service was made in a timely manner in the foreign country and done through judicial assistance under Taiwan law;
• the performance ordered or the foreign court proceeding is contrary to public order and morals in Taiwan; or
• no reciprocity exists between the foreign country and Taiwan on the enforcement of foreign court decisions.

As mentioned in 1.2 Court System and 7.1 Trial Proceedings, for most civil proceedings, after the first instance trial proceeding before a district court, the losing party may appeal to the second instance before a High Court, and the losing party in the second instance may appeal to the third and final instance before the Supreme Court, but only for alleged errors in the High Court’s application of law. Exceptions include no further appeals being permitted for a small claims case after the second instance, and the fact that the parties may mutually agree to directly appeal to the third instance from a final first-instance decision if there are no disputes in the fact finding by the first-instance court.

In addition, if certain conditions are met, a party may petition the original court for a re-hearing proceeding for a review of a final court decision.

The Code of Civil Procedure has very few express rules regarding how a party can appeal a first-instance decision. As long as the law does not prohibit an appeal to the second instance and the appeal brief is submitted in a timely manner and contains the relevant information, the second-instance court will allow the appeal to proceed. 

A third-instance appeal must be based on an error in the application of law. There are several peripheral circumstances in the Code of Civil Procedure that are considered within the scope of “error in the application of law”, such as:

• the judge failed to comply with recusal requirements;
• the court below failed to establish whether it has authority to adjudicate the matter or has violated provisions regarding exclusive jurisdiction;
• a party was improperly represented; and
• there was a failure to state the reasoning for the decision or the reasoning was internally inconsistent.

A re-hearing will only be granted under certain limited conditions, such as manifest error in the application of law, or key evidence being discovered as forged or altered.

A party wishing to file a second-instance appeal must submit the appeal brief within a fixed 20 days after the service of the first-instance decision. The appeal brief is sent to the first-instance court and should clearly describe the appellant party’s issue with the first-instance decision and the reason(s) the first-instance decision should be reversed or changed. The first-instance court will verify whether the appeal was made in a timely manner and whether it was compliant with the above requirements. In the event of any noncompliance issues with the appeal brief, the first-instance court will request the appellant party to amend the issues within a certain deadline. Once everything is in order, the first-instance court will send the appeal brief and the file volume to the second-instance court.

For the third-instance appeal, the appellant will need to retain an attorney and present an appeal brief to the second-instance court within 20 days after the service of the second-instance decision. This appeal brief must describe the relevant facts and how there had been an error in the application of law in the second-instance decision. The second-instance court will verify the appeal brief in the same way as the first-instance court. Once everything is in order, and the time for the appellee to submit a response brief has passed, the appeal brief and relevant file volume will be sent to the third-instance court.

The petition for a re-hearing must be submitted within 30 days of the decision becoming final or the party becoming aware of the circumstances giving rise to the re-hearing petition. The re-hearing petition shall clearly detail the reason(s) for the re-hearing and how the decision should have been rendered.

As the court of second instance will have to handle questions of fact as well as questions of law, the hearing is considered more or less a de novo review, without any particular deference given to the lower court’s fact findings. The parties may engage in oral arguments within the scope of issues being appealed, and if the parties agree, and the specific requirements are met, they may revise or add to their claims before the court below. While the parties are not supposed to make new arguments, certain circumstances, such as new developments since the conclusion of the first proceeding, may prompt a second-instance court to allow new arguments.

In respect of appeals to a court of third instance, the appellant may not alter or expand on matters that are being requested for consideration on appeal. As the third-instance proceeding is only with respect to questions of law, all facts will be as they had been determined at the second instance. The review on whether there was an error in the application of law in the court below will be conducted based on the parties’ briefs and the transcripts of the oral arguments hearing in the second instance.   

Since a re-hearing is handled by the same instance court, the procedure is essentially identical to the instance, save for limiting the scope of oral arguments to the parts of the decision in issue.

Unless there is a procedural defect with the appeal, such as appealing a decision that is not appealable, the court may not refuse to adjudicate the appeal or impose conditions on granting an adjudication of the appeal.

If the appeal to the court of second instance is persuasive, the court may reverse and alter the parts of the first-instance decision being appealed. On the other hand, the court of second instance will issue a decision rejecting the appeal. If there are serious procedural deficiencies in the first instance, the court of second instance will reverse the decision and remand it back to the first-instance court.

If the appeal to the court of third instance is persuasive, the court may reverse the decision and remand it back to the lower court or transfer it to another court of the same level. The third-instance court may reverse the lower court’s decision and issue a new decision on its own only under certain statutory circumstances. If the appeal is not persuasive, there will again be a decision rejecting the appeal.

Even if the reasons are persuasive, as long as the court believes the original decision was properly rendered, a re-hearing action will be rejected. Otherwise, the re-hearing proceedings will be conducted pursuant to the relevant procedures of the level of court in question.

Litigation costs, which include court fees and witness travel expenses, are generally borne by the losing party, but the court may split the amount between the parties depending on the claims won and lost. Attorneys' fees are considered separate from litigation costs until the third instance in which attorney representation is mandatory; nevertheless, there have been a few unique cases in which attorneys' fees have been included in litigation costs outside of the third instance when the case is considered too complex for the parties to have litigated without having retained attorneys – which made the cost of retaining attorneys a “necessary part of protecting one’s rights” and thus considered part of the litigation costs.

A party may claim that the court’s calculation of litigation costs was not compliant with the Code of Civil Procedure if the party has been harmed by the court’s decision on litigation costs.

In addition to splitting the litigation costs between the parties based on the proportion of claims won and lost as mentioned in 11.1 Responsibility for Paying the Costs of Litigation, there are certain other considerations that may affect the allocation of costs.

• Fairness concerns – if the circumstances of the case would cause clear unfairness for the losing party to bear the litigation expenses, or if a portion of the costs can be attributed to the unnecessary conduct of the prevailing party.
• When the proceeding did not end with a court decision – if the plaintiff withdrew the complaint, the plaintiff bears the costs; if the parties settled, each party bears its own litigation costs, unless agreed otherwise.
• Co-plaintiff/defendants – generally shared among all members of one side, but differences in the respective legal interests involved may result in different intra-party cost allocations by the court.
• Interveners – litigation costs attributable to the intervener shall be assumed by the intervener.

Article 91 of the Code of Civil Procedure provides that interest on litigation costs is accrued at the statutory rate, which is 5% per annum from the date the decision is served on the parties.

ADR in Taiwan covers arbitration, mediation and a process called conciliation. While the legitimacy of arbitration has been recognised for decades in Taiwan, ADR in Taiwan has seen a substantial surge in popularity and perception in recent years due to a strong push by the government, such as the Judicial Yuan, for using ADR to resolve disputes without going to court. According to the Ministry of the Interior, statistically, the most popular ADR method in Taiwan is mediation, with a record high of over 150,000 resolved cases in 2020.

For certain subject matter, there is a court-mandated mediation phase as an attempt to resolve the dispute early, before proceeding with litigation. These include real estate disputes, disputes arising from traffic accidents and medical treatment, employment disputes and intra-family disputes. Exceptions also exist – eg, if it is clear that mediation will not be successful due to the factual circumstances of the case, the parties may proceed directly to litigation. Refusal to participate in court-mandated mediation without proper cause is in principle punishable by a small fine under the Code of Civil Procedure, but there are very few instances of a court imposing this fine on a party for refusing to attend mediation.

There are several long-standing and highly reputable arbitration institutions in Taiwan such as the Chinese Arbitration Association. Mediation is conducted by the court or by specialist mediation personnel in government agencies, and conciliation is also conducted by specialist personnel in government agencies. From an overall perspective, the ADR systems in Taiwan are now sufficiently organised with a definite standard operating procedure and/or internal rules in place to effectively handle the various aspects of a dispute.

The Arbitration Law of the Republic of China is the sole statute governing arbitrations in Taiwan. Previously named the Commercial Arbitration Ordinance, the statute received its current name during a major update in 1998, which brought the provisions more in line with international practices. The statute contains rules on arbitration tribunals, the conduct of arbitration proceedings, the enforcement of awards, grounds for setting awards aside, as well as a separate section regarding the recognition and enforcement of foreign awards.

Article 1 of the Arbitration Law provides that any dispute that can be settled between the parties may be referred to arbitration. As such, certain subject matter in which settlement is inappropriate, such as family law issues, criminal offenses or issues that are required to be resolved through a specific law, such as antitrust disputes, may not be referred to arbitration.

Article 40 of the Arbitration Law enumerates the specific circumstances in which a domestic award may be set aside:

• no, or invalid arbitration agreement between the parties;
• the tribunal failed to provide proper due process to the parties;
• improper constitution of the tribunal;
• tribunal failed to comply with the disclosure requirements in the Arbitration Law or continued to preside over the arbitration despite being required to recuse itself under law;
• one or more arbitrators, or a party or their representative, have been convicted of a criminal offense in relation to the arbitration;
• if the criminal case cannot start or continue for reasons other than insufficient evidence;
• alteration, forgery or other falsities in relation to the evidence, or translations thereof, that was relied upon by the award;
• the civil, criminal or administrative decision relied upon by the award has been reversed; or
• any ground by which an enforcement court may refuse the enforcement of the domestic award under Article 38 of the Arbitration Law.

Foreign awards cannot be directly set aside under Article 40; the other party may instead challenge whether the foreign award should be recognised by a Taiwan court before enforcement (please see 13.4 Procedure for Enforcing Domestic and Foreign Arbitration for details).

The Arbitration Law has separate procedures for enforcing domestic awards and enforcing foreign awards.

For domestic awards, save for a few exceptions, a party is generally required to petition an enforcement court for compulsory enforcement of the award. However, if any of the following circumstances is present, the court will reject the petition for compulsory enforcement under Article 38 of the Arbitration Law:

• any part of the award is irrelevant to, or exceeds the scope of the arbitration agreement (unless severable);
• failure to provide reasoning unless later amended by the tribunal; or
• the award requires a party to act contrary to the law.

A foreign award must be recognised by a Taiwan court before it may be compulsorily enforced. A foreign award is defined as an award rendered under foreign law, regardless of location, which in turn has been interpreted to include foreign arbitration law and the rules of a foreign or international arbitration institution. A party initiating a recognition proceeding shall submit to the court an official or authenticated copy of the award and the arbitration agreement, as well as the full text of the foreign law/arbitration institution rules governing the award. A petition to recognise a foreign award will be rejected if any of the following circumstances is present:

• the recognition or enforcement of the award is contrary to the public order and morals;
• the subject matter of the award is not arbitrable in Taiwan; or
• for reciprocity-related reasons.

A party may raise the following grounds to object to the recognition of the foreign award within 20 days after receiving notice of the recognition proceeding:

• the arbitration agreement is not binding due to a party’s lack of legal capacity;
• the arbitration agreement is invalid under the agreed governing law, or the law where the award was rendered;
• lack of adequate notice, or other due process issues;
• the award is unrelated or goes beyond the scope of the arbitration agreement;
• the tribunal was constituted in a fashion contrary to the parties’ agreement, or the law where the award was rendered; or
• the award has been revoked or suspended by an authority with the jurisdiction to do so.

Once a foreign award is recognised, it may be enforced without another proceeding before the enforcement court.

There are currently several ongoing litigation reform initiatives in Taiwan.

• The citizen/lay judge system – in hopes of introducing the values and experiences of the general public in law so as to improve the public’s trust in the judiciary, starting from 1 January 2023, eligible citizens of Taiwan over 23 years of age may be appointed to serve as a “lay judge” on a panel with five other lay judges and three professional judges to adjudicate a subset of homicide cases that do not involve juvenile or drug-related offenses. There is currently no plan to expand the system to civil cases.
• Constitutional law litigation – effective on 4 January 2022, the Constitutional Court Procedure Act enables parties to submit constitutional law-related matters before the Grand Justices of the Constitutional Court for resolution in a litigation-style setting, whereas previously constitutional law interpretations were periodically issued by the Grand Justices after private deliberations.
• “Pyramid”-style resource management – this refers to an overall shift in judicial resource allocation philosophy in favour of first-instance proceedings (ie, the bottom of the “pyramid”) through amending the relevant code of procedure. The Judicial Yuan has submitted a proposal that includes expanding the participation of experts for better fact finding and limiting the scope of questions of law that may be appealed to a third-instance proceeding, among others. This is currently in the early stages of the legislation process and no timetable is set for its implementation.

The COVID-19 pandemic caused the courts to implement certain measures to ensure their smooth operation. Named the “Special Provisions for Judicial Procedures During Serious Infectious Disease Pandemics”, the measures were enacted on 25 June 2021, and were in place until 24 November 2022. They included physical arrangements at the court such as limited audience to court hearings, separators between persons, isolated seating, expanded use of digital documents, as well as the use of videoconferencing to conduct certain litigation procedures where appropriate. However, no action has been taken by the government to suspend the running of statute of limitation periods for pandemic-related reasons.