A. LEGISLATION AND RULES
A.1 Legislation
International arbitration proceedings in Taiwan, including its definition, effect and recognition, continue to be governed by the Arbitration Law, to which there have been no legislative amendments in the last 12 months.
A.2 Institutions, rules and infrastructure
The Chinese Arbitration Association, Taipei (CAA), remains the leading arbitration institution in Taiwan. There has been no amendment to the CAA Arbitration Rules in the last 12 months.
B. CASES
B.1 Recognition of a foreign arbitral award is a procedure of non-litigious matters, in which the court will not review the legal opinions and factual findings of the foreign arbitral award
In this case (Taiwan High Court 112-Fei-Kang-Tzu No. 62 Civil Ruling, which was announced on 22 March 2024), the re-appellant (“X“) and the counterparty (“Y“) had a contractual dispute. The Hong Kong International Arbitration Centre (HKIAC) rendered an arbitral award and a correction of the arbitral award respectively on 26 May 2022 and 15 June 2022, ordering X to pay Y approximately TWD 0.5 billion and relevant legal costs incurred in the arbitration proceedings. Y filed an application for recognition of the arbitral award rendered by the HKIAC with the Taiwan Taipei District Court, and the Taiwan Taipei District Court granted Y’s application with a civil ruling. X was dissatisfied with this civil ruling and filed an appeal with the Taiwan Taipei District Court, but the appeal was dismissed. X then further re-appealed to the Taiwan High Court.
The Taiwan High Court reiterated that the Non-litigious Matters Act is applicable to the recognition of foreign arbitral awards; thus, the re-appeal against the ruling which grants the recognition of foreign arbitral award is limited to the circumstance where the ruling is “clearly erroneous in the application of law”, not including the circumstances where the ruling does not provide reasons and where the findings of facts and the selection of evidence in the ruling are inappropriate. In addition, in a non-litigious matter such as the recognition of a foreign arbitral award, according to the Supreme Court’s view, the court should only review whether the foreign arbitral award in question has been made legally and effectively, and whether the circumstance provided in article 49 and article 50 of the Arbitration Law exists where the foreign arbitral award in question shall not be recognized; the court may not review the substance of the foreign arbitral award in question.
Regarding X’s assertion that the arbitral award in question did not apply the principle of change of circumstances and thus constituted the circumstance of article 49, paragraph 1 of the Arbitration Law: “1. Where the recognition or enforcement of the arbitral award is contrary to the public order or good morals of the Republic of China…,” the Taiwan High Court also reiterated that the legality and appropriateness of the legal opinions and factual findings held in the arbitral award fall within the arbitral tribunal’s discretion, which the court should respect. The merits of the dispute should not be reviewed in this “application for recognition of a foreign arbitral award” procedure.
B.2 Before a ruling allowing recognition of a foreign arbitral award is made, as there is no writ of execution, the court may consider it still necessary to grant a provisional attachment
In this case (Supreme Court 103-Tai-Kang-Tzu No. 608 Civil Ruling, which was announced on 5 November 2024), the re-appellant (“X“) and the counterparty (“Y“) had a dispute over a Share Subscription and Purchase Agreement. The Hong Kong International Arbitration Centre rendered an arbitral award on 15 March 2023, ordering X to pay Y approximately TWD 2.7 billion. However, X not only failed to comply with the arbitral award to make the payment but also continued to transfer assets, creating a potential risk of future unenforceability. Therefore, Y applied for and was granted a provisional attachment against X’s assets by the Taiwan Taoyuan District Court. X first objected to the Taiwan Taoyuan District Court’s ruling granting the provisional attachment, but the objection was dismissed by the Taiwan Taoyuan District Court. Dissatisfied, X appealed to the Taiwan High Court, which held that Y had demonstrated that “X had concealed or disposed of assets, creating a risk of future unenforceability or difficulty in enforcement,” and thus upheld the original ruling of the Taiwan Taoyuan District Court, dismissing X’s appeal. X then further re-appealed to the Supreme Court.
The Supreme Court held that the Taiwan High Court’s ruling was not “clearly erroneous in the application of law.” Additionally, the Supreme Court cited article 47 of the Arbitration Law, which states: “[paragraph 1] A foreign arbitral award is an arbitral award which is issued outside the territory of the Republic of China or issued pursuant to foreign laws within the territory of the Republic of China. [paragraph 2] A foreign arbitral award, after an application for recognition has been granted by the court, shall be binding on the parties and have the same force as a final judgment of a court, and is enforceable.” Therefore, the Supreme Court held that although Y had obtained a favorable arbitral award and applied for recognition with the Taiwan Taoyuan District Court, Y’s application for provisional attachment was still necessary before the Taiwan Taoyuan District Court’s ruling recognizing the arbitral award is made.
