A. LEGISLATION AND RULES

A.1       Legislation

A.1.1    Background of the Arbitration Law

The development of legislation for arbitration in Taiwan can trace its roots back to 1961, when the Commercial Arbitration Act in Taiwan was first promulgated on 20 January 1961. It was amended in 1982 and 1986. Then in 1998, the Commercial Arbitration Act was made over with reference to the UNCITRAL Model Law on International Commercial Arbitration (1985) and renamed the “Arbitration Law”. Thereafter, the law was further amended in 2002, 2009, and 2015.

The Arbitration Law, which embodies the fundamental principles of international arbitration, contains eight chapters:

  • Arbitration Agreement
  • Constitution of Arbitral Tribunal
  • Arbitral Proceedings
  • Enforcement of Arbitral Awards
  • Revocation of Arbitral Awards
  • Settlement and Mediation
  • Foreign Awards
  • Additional Provisions

International arbitration in Taiwan continues to be governed by the Arbitration Law. On 29 October 2021, the Legislative Yuan passed the first reading of a draft amendment to the Arbitration Law, and it is currently under review by the Judiciary and Organic Laws and Statutes Committee of the Legislative Yuan.

A.1.2    The 2021 draft amendment to the Arbitration Law

In order to mitigate the gaps between the local Arbitration Law and the international rules, the draft amendment aims to achieve consistency with the UNCITRAL Model Law on International Commercial Arbitration (2006) and increase the likelihood of arbitral awards in Taiwan to be recognized in other countries. We outline key revisions of the draft amendment as follows:

A.1.2.1 Re-structured by the UNCITRAL Model Law on International Commercial Arbitration (2006)

The draft amendment is structured by the UNCITRAL Model Law on International Commercial Arbitration (2006), the most updated version of the UNCITRAL Model Law, to be in line with the international arbitration trends.

A.1.2.2 Admitting ad hoc arbitration

It has been a concern that the Taiwanese courts do not admit ad hoc arbitration, and as a result, an arbitral award arising from an ad hoc arbitration is not enforceable in Taiwan under article 37 of the Arbitration Law. In this regard, the draft amendment admits that the parties may choose ad hoc arbitration to resolve their disputes. According to article 2 of the draft amendment, institutional arbitration prevails where the parties had not specified ad hoc arbitration as the only mechanism in the arbitration agreement and provided that either of the parties had filed the dispute to the arbitral institution.

A.1.2.3 Extending arbitral matters to investment disputes

The draft amendment expands the scope of matters that may be resolved by arbitration. According to article 7 of the draft amendment, parties may enter into an arbitration agreement for the subject concerning:

  • Commercial disputes
  • General disputes
  • Investment disputes that may be resolved by settlements to be resolved by arbitration.

A.1.2.4 Offering the parties with more flexibility in arbitral proceedings

The draft amendment offers parties flexibility in arbitral proceedings. For example, parties are free to determine how documents are to be delivered, the numbering of arbitrators, the specific qualifications of arbitrators, and multiple languages in use during the proceeding.

A.1.2.5 Granting the tribunal the authority to order interim measures and preliminary orders

The Arbitration Law does not stipulate the mechanism of interim measures and preliminary orders, and the parties may only rely on the court orders for civil security procedures before the arbitral award is concluded or enforced in the civil court. In tandem with the UNCITRAL Model Law, the draft amendment grants the tribunal the authority to order interim measures and preliminary orders per application of either of the parties.

A.1.2.6 Altering the definition of foreign arbitral awards

According to article 47 of the Arbitration Law, the foreign arbitral award is not enforceable until the court grants recognition of enforceability. Article 47 of the Arbitration Law currently defines a foreign arbitral award as either of the following:

  • An arbitral award that was issued outside the territory of Taiwan.
  • An arbitral award that was issued in Taiwan under foreign arbitration rules.

The draft amendment adopted the concept of anational arbitration, altering the definition of foreign arbitral awards into “arbitral awards issued out of the territory of Taiwan” only, and using the language emphasizing the exterritorial aspect.

A.2       Institutions, rules and infrastructure

To achieve the self-governance of an arbitration institution, the Chinese Arbitration Association, Taipei  (CAA), the most prestigious arbitration institution in Taiwan, had a significant change in institutional structure in 2021. The “CAA Court of Arbitration” was established by CAA in October 2021 as an independent internal organization to improve case administration, provide the parties with just, professional and efficient services and assist the arbitral tribunals in reaching enforceable arbitral awards.

As an independent internal organization of the CAA, the CAA Court of Arbitration aims to administer arbitration cases without violating the Arbitration Law and overstepping arbitral tribunals’ authority. According to the Rules Governing the Composition and Procedure of the CAA Court of Arbitration, the responsibilities of the CAA Court of Arbitration include the following:

  • To make a preliminary decision on procedural matters such as CAA’s competence to administer the arbitration case, the applicable arbitration rules and the language and seat of arbitration.
  • To appoint arbitrators or decide on challenges to arbitrators.
  • To review the amount in dispute or disputes over arbitrator fees.
  • To provide advice on scrutiny of draft awards upon the request from the CAA Secretariat.
  • To issue authoritative interpretations of the CAA Arbitration Rules.

B. CASES

B.1       Supreme Court illustrates the circumstances where 30-day peremptory period will apply

In the 2021 Supreme Court Tai-Kang-Tzu No. 1042 Civil Ruling, the plaintiff claimed different facts satisfying other grounds for revoking the arbitral award outlined in article 40, paragraph 1 of the Arbitration Law after it has filed the action to revoke the arbitral award against it based on one of the grounds outlined in the abovementioned provision. The Supreme Court indicated that the statutory 30-day peremptory period starting from receipt of the written arbitral award for revoking the arbitral award was applicable when the plaintiff had claimed certain grounds in the complaints but claimed different facts afterward. Although the plaintiff regarded such acts nearly as “the means of attack or defense”, the Supreme Court stated that the different grounds for revoking arbitral awards outlined in article 40, paragraph 1 of the Arbitration Law constituted independent rights of formation de jure, namely, independent claims, and where the plaintiff claimed multiple facts satisfying multiple statutory grounds, multiple facts sufficient to satisfy the same ground respectively, or single fact satisfying multiple statutory grounds concurrently, these circumstances would create the concurrence of rights of formation and thus would be joinder of claims. Therefore, the 30-day peremptory period would apply.

B.2       Supreme Court holds that an arbitral award ultra vires can be revoked

In the 2020 Supreme Court Tai-Shang-Tzu No. 2383 Civil Judgment dated 7 October 2021, the Supreme Court reversed and remanded the Taiwan High Court Taichung Branch Court judgment. In its reasoning, the Supreme Court indicated that arbitral awards shall be given within the scope that the parties in dispute had claimed and may not exceed such scope to make arbitral awards. If the arbitral tribunal, beyond such scope, made arbitral awards ultra vires, such acts would constitute the statutory circumstance of “arbitral award concerns a dispute not contemplated by the terms of the arbitration agreement, or exceeds the scope of the arbitration agreement, unless the offending portion of the award may be severed and the severance will not affect the remainder of the award” outlined in article 28, subparagraph 1 of the Arbitration Law and thus would constitute the ground for revoking arbitration awards set out in the article 40 of the Arbitration Law.