Litigation 2024 Comparisons

The legal system in Taiwan is based on civil law. The legislature enacts laws through statutory procedures, while courts make judgments pursuant to codified statutes. In practice, lower courts frequently follow the legal opinions issued by higher courts. The Supreme Court’s decisions have a high degree of persuasive authority among courts.

The adversarial model is adopted in civil and criminal cases, where the initiation of proceedings and the presentation of evidence are left to the parties, and the judge acts as an impartial third party when adjudicating the cases. The court may launch ex officio investigations only if it is necessary to discover the truth.

In contrast, the inquisitorial model is used in administrative cases. In order to ascertain the facts, administrative courts may decide to independently investigate the evidence and determine the facts without being bound by the requests of the parties.

In practice, legal process in the lower courts is usually conducted through both written submissions and oral arguments, while the Supreme Court and the Supreme Administrative Court rarely hold oral arguments, and make their decisions primarily by reviewing written submissions from the parties.

Taiwan’s civil and criminal judicial systems consist of three levels of courts: the District Court, the High Court, and the Supreme Court. Both the District Court and the High Court engage in fact-finding, whereas the Supreme Court’s scope of review is limited to correcting errors of law in the judgments made by lower courts.

For administrative cases, there are two levels of courts: the High Administrative Court (which includes the High Administrative Litigation Division and the District Administrative Litigation Division), and the Supreme Administrative Court. Subject to the complexity and amount claimed in a particular matter, the court of first instance in an administrative case may be the District Administrative Litigation Division or the High Administrative Litigation Division. Appeals are to the High Administrative Litigation Division or the Supreme Administrative Court.

There are also specialised courts and divisions for cases related to intellectual property rights, major commercial disputes, juvenile or family issues, and labour disputes. These specialised courts/divisions are designed to enhance judicial expertise. They have special procedural rules tailored for their subject matter jurisdiction.

Generally, court proceedings for most cases are open to the public, with exceptions where it is necessary to conduct proceedings in private to protect the interests of the parties. The exceptions include:

• cases involving national security, public order, or social values;
• sexual assault crime cases;
• family cases and juvenile cases; and
• legal debates in which there is a risk of harm to the life, body, or freedom of witnesses.

Additionally, the court may also, upon the request of the parties, conduct a non-public trial, when:

• litigation materials involve trade secrets; or
• the claims or defences presented by the parties involve the privacy or business secrets of the parties or third parties.

In Taiwan, legal representatives are required to be qualified as Taiwanese lawyers. However, with the permission of a judge, non-lawyers can be appointed as legal representatives. Unlike legal jurisdictions that differentiate between solicitors and barristers, the Taiwan judicial system does not make such a distinction. Any qualified Taiwanese lawyer may represent their clients in all levels of courts.

Third-party litigation funding is permitted when the following requirements are met:

• a lawyer has obtained the consent of a client; and
• accepting funding from a third party will not prejudice a lawyer’s independent professional judgment.

There is no restriction on the types of litigation that a third party can fund in Taiwan.

Third-party funding is available for both the plaintiff and defendant. There are no restrictions specific to the plaintiff or defendant.

There is no restriction on the amount that a third party can fund.

Third-party funding is not limited to specific types of expenses, and may cover court fees, examination fees, and other litigation-related expenses.

There are certain kinds of cases where a lawyer is prohibited from entering into a contingency agreement with a client. These include:

• criminal cases;
• cases under the Juvenile Justice Act; and
• family cases other than family cases involving property, such as division of marital property, and inheritance.

For other cases, attorneys and clients may agree on contingency fees.

There are no specific time limits or regulations in Taiwan governing when a party to litigation should obtain third-party funding.

Under Taiwan law, other than requirements enacted by the legislature, the courts have no authority to impose rules on the parties in relation to pre-action conduct.

For most cases, there are no statutory requirements for pre-action procedures, and the parties may initiate lawsuits directly. However, there are some notable exceptions, including the following.

• Mandatory mediation – the parties to certain types of cases must have their dispute mediated before they can litigate it. The cases include family matters, labour disputes, major commercial disputes, and medical disputes.
• Written request for compensation – a plaintiff is required to make a written request for compensation to the relevant authority and negotiate with that agency before litigation of claims against the state under the State Compensation Law.
• Where individuals challenge administrative decisions made by government agencies, they must file administrative appeals/make objections to and seek review by the government agency. If the government agency denies the appeals/objection, the plaintiff can challenge the government agency’s decision in the courts.

The statute of limitations varies greatly based on the type of claim. The regular statute of limitations for a civil claim is 15 years and runs from the date when the claimant may exercise their rights. However, there are many exceptions with shorter periods. For example, claims arising from tortious acts have a statute of limitations of two years from the date when the claimant becomes aware of the harm. The claims for construction work payment are time-barred after two years. Claims for payment of interest are extinguished by prescription if not exercised within five years.

In civil cases, the court with jurisdiction is the one located where the defendant resides. However, other courts may also have jurisdiction depending on the nature of the case. For example, in contract disputes, the court in the place of performance of the contract also has jurisdiction; in matters relating to tort claims, an action may be initiated at the court for the location where the tortious act occurred.

If multiple courts have jurisdiction over a case, the plaintiff may, in principle, choose to file a lawsuit in any one of these courts. Exceptions to this rule include when the case is subject to exclusive jurisdiction, such as in real property disputes. In real property disputes, the court for the place where the real property is located has exclusive jurisdiction.

The initial complaint must:

• identify the parties;
• specify the subject matter of the lawsuit and its cause of action; and
• include a statement of the relief sought.

After service of the complaint, amendments to the parties, the subject matter of the lawsuit, and the statement of claim are prohibited, except with the consent of the defendant, or under other exceptional circumstances. These circumstances include:

• where the amendment or addition to the claim is based on the same facts;
• when there is an expansion or reduction of the claims made regarding the relief sought. For example, a claim for USD500,000 is reduced to USD100,000;
• where the change of circumstances necessitates the replacement of the original claim with another claim; and
• where it would neither severely obstruct the defendant’s defence nor delay the litigation.

The rules of service are generally as follows:

• service authority – service is typically performed by court clerks;
• party to be served – service is usually directed to the parties involved themselves. However, there are exceptions, such as serving their legal representatives or attorneys;
• place of service – service is made to the recipient’s residence or place of business; and
• method of service – the court clerk will, in principle, send the documents to the parties through postal service.

The plaintiff must submit an initial complaint along with identical copies to the court. The court will serve the same on the defendants. For documents other than the initial complaint, judges may request that both parties send them directly to the other party without the court’s assistance.

To serve a foreign defendant, the plaintiff must provide the defendant’s foreign address to the court. The court will then request service through competent authorities in the foreign jurisdiction or through Taiwan’s embassies, or other official organisations or agencies abroad. If the foreign address is unknown or the service at the provided address fails, the plaintiff may petition for service by public notice.

If the defendant has been lawfully served with a subpoena and fails to appear before the court without proper reasons, the court may, upon the plaintiff’s request, or ex officio after successive failures to respond, enter a default judgment based on the appearing party’s arguments.

In Taiwan, collective or representative actions are permitted in various scenarios, including the following.

• A specific group may bring a class action on behalf of an unspecified number of individuals in the case of harm arising from public nuisance, product defects, or environmental pollution where the victim or consumer may not be aware of or is unable to exclude the infringement on their own.
• The statutory Securities and Futures Investors Protection Centre may initiate a lawsuit in its own name with respect to a securities or futures matter arising from a single cause that is injurious to multiple securities investors or futures traders, after having been so empowered by not less than 20 securities investors or futures traders.

In the first scenario, an individual who opts in becomes the plaintiff and thus becomes bound by the judgment.

In the latter scenario, the law allows a specific entity to act as a plaintiff on behalf of the entire group with the judgment’s effect extending to all members within the group. In these cases, there is no requirement for a group member to opt in, nor may group members opt out.

According to the Code of Ethics for Lawyers, the amount or calculation of attorney fees must be clearly communicated to the client at the time of appointment, preferably in writing.

In Taiwan, interim applications in civil cases usually involve applications for certain forms of injunctive relief such as a provisional seizure, a provisional injunction, or a provisional injunction to maintain the temporary status quo (for more details of these protective measures, please refer to 6. Injunctive Relief).

Additionally, a party may file a request for preservation of evidence to the court before filing its lawsuit, if it is necessary to preserve critical evidence in advance.

Taiwan law provides two scenarios where the court may make interim decisions in a civil case:

• where part of a claim or one of several claims raised in the action is mature for decision, the court may enter an interlocutory judgment; and
• the court may make an interim decision on an issue that is a prerequisite to the final judgment.

For example, if the plaintiff claims USD100,000 in damages for the defendant’s wrongful conduct, and the court determines that the defendant did indeed commit a wrongful act but has not yet confirmed the exact amount of damages, the court may issue an interim decision confirming the plaintiff has the right to claim against the defendant.

These interim decisions are made to streamline the proceedings and prepare for the final judgment. Whether an interim decision may be issued is at the discretion of the court. However, in practice, courts rarely issue such decisions.

In Taiwan, if a case falls under any of the circumstances listed below, the court may dismiss the plaintiff’s lawsuit ex officio.

• The lawsuit is procedurally improper or lacks other requirements.
• Multiple lawsuits are filed for the same case.
• The lawsuit is initiated in bad faith, for improper purpose or with gross negligence, and the claim lacks a reasonable basis in fact or law.
• The plaintiff’s claim, given the facts alleged, is manifestly without legal ground.

However, if the above circumstances can be remedied, the court should provide a specified period for correction before dismissing the lawsuit.

The parties may not file such dispositive motions because there is no statutory basis permitting them to do so.

A third party may join a lawsuit if the following requirements are met:

• the action is still pending at (any level of) the court;
• the purpose for a joinder is to assist one of the parties; and
• the third party has a legal interest in the action between two parties.

A joinder must file an intervention pleading to the court where the action is then pending. An intervention pleading shall indicate the following matters:

• identify the action intervened and its parties;
• the legal interests of the joinder in the action; and
• request to join the action.

The court shall serve the intervention pleading on the parties, and may (but is not required to) consult the parties before deciding whether to permit a third party to intervene.

If the plaintiff does not have a domicile, residence, or place of business in Taiwan, the court, upon the defendant’s application, shall order the plaintiff to provide security for litigation costs. However, this does not apply under the following circumstances:

• when the plaintiff’s claim includes parts that the defendant does not dispute;
• when the plaintiff has sufficient assets in Taiwan to cover the litigation costs; and
• after the defendant has already engaged in oral argument.

The court fees for interim applications, including petitions for evidence preservation, provisional seizure, and provisional injunction are all set at TWD1,000 (about USD31).

Further, to compensate the defendants’ damages arising from the (wrongly claimed) provisional seizure or provisional injunction procedures, the courts may order the claimant to provide a security deposit for such petitions.

• For the security deposit provided by a claimant for provisional seizure, the courts generally set the amount of deposit at one-third of the claimed amount.
• In exceptional situations like the division of property of spouses or labour disputes related to wage claims, to protect the economically disadvantaged individuals, the amount of security deposit must not be higher than one-tenth of the claimed amount.
• As for provisional injunction, the security deposit is typically set at the full amount of the subject matter value.

There are no fixed legal deadlines for courts to issue rulings on applications or motions, and Taiwan law does not provide the parties the right to request an issuance of an application/motion within a set timeframe from the court. However, in family law cases, when the victim is in imminent danger due to domestic violence, the court is required to issue an emergency protection order within four hours to provide immediate protection.

In civil cases, there is no discovery process that requires parties to exchange evidence and legal information before trial; however, there is a somewhat similar mechanism that enables the parties to obtain information related to the disputes in certain cases.

If a party requires documents held by the other party (eg, medical records held by a hospital) to support their arguments, the party may request the court to order the other party to submit relevant documents. The requesting party must specify:

• the document to be produced;
• the disputed fact to be clarified by such document;
• the content of such document;
• why such document is in the possession of the opposing party; and
• why the opposing party is obligated to produce such document.

If a party requires a document held by a third party as evidence, they may apply to the court to order the third party to produce the document. The requesting party must specify each of the matters listed in the second paragraph of 5.1 Discovery and Civil Cases. The applying party must also clearly demonstrate why the document is in the possession of the third party, and the basis upon which the third party is obligated to produce it.

As mentioned in 5.1 Discovery and Civil Cases, Taiwan does not have a discovery system similar to that of the United States. However, a party has the duty to produce the following documents in a civil lawsuit:

• documents to which such party has referred in the proceedings;
• documents that the requesting party is entitled to request or inspect under the law;
• documents which are created in the interests of the requesting party;
• commercial accounting books; and
• documents which are created regarding matters relating to the lawsuit.

Where a party disobeys a court’s order to produce documents without good cause, the court may, at its discretion, presume the truth of the requesting party’s allegation with regard to such document, or the fact to be proved by such document.

In civil proceedings, the burden of proof lies with the party making a claim in that party’s interest. The party with the burden of proof is responsible for producing evidence to support its claims. The following are common approaches used when offering evidence (please also see 7.4 Rules That Govern Admission of Evidence).

• Documentary evidence – parties typically explain and cite the content of relevant documents in their complaint as documentary evidence. These documents are attached to pleadings or briefs and submitted to the court.
• Witnesses – the parties may apply to the court to summon witnesses. Witnesses will testify before court, and their statements are documented in court transcripts.
• Court-appointed expert – parties may request the court to appoint an expert to carry out the evaluation or examination of disputed facts. The expert can be an individual or an institution.

The concept of legal privilege is not a widely recognised principle in civil cases. A client may be ordered to submit information on matters relevant to the litigation, including the attorney’s work product received by the client. However, Taiwan’s Code of Civil Procedure allows a witness to decline to testify when questioned about matters that fall under their professional duty of secrecy. As lawyers are obliged to keep the secrets of their clients, attorneys may refuse to testify.

It is worth noting that in June 2023, the Constitutional Court issued a judgment affirming that the right to confidential communication between lawyers and clients is protected under the Constitution. Also, the communications and work product created by lawyers within the scope of the attorney-client relationship should not be used as evidence in criminal cases. This decision strengthens the protection of attorney-client privilege and preserves the core of trust and confidentiality within this relationship.

When a document pertains to privacy or trade secrets, the party involved may refuse to disclose it. Nevertheless, if the court deems it necessary, production may be ordered although the court may take steps to ensure that this is accomplished in a non-public or confidential manner.

For cases related to intellectual property or major commercial disputes, the procedures stipulated under the Intellectual Property Case Adjudication Act or the Commercial Case Adjudication Act apply. The court may, at the request of the party, issue a confidentiality preservation order to the party, its agents, or other individuals involved in the litigation. A person subject to a confidentiality preservation order shall not use the trade secret for purposes other than the litigation in question, nor may any such person disclose it to a person who is not subject to such an order.

There are three types of injunctive relief that may be awarded to a creditor before a final and binding judgment is made.

• Provisional seizure – if a creditor can clearly demonstrate that: (i) they have a monetary claim (or a demand exchangeable to a monetary claim) against a debtor; and (ii) due to the debtor’s actions or financial status, it is expected to be difficult to satisfy a creditor’s claim after they obtain a favourable judgment against the debtor in the future, the court may grant provisional temporary seizure of the debtor’s assets.
• Provisional injunction – for non-monetary claims, similar to provisional seizure, if a creditor can clearly demonstrate the existence of such claims, and the future difficulty of fulfilling the claims, the court may temporarily order a debtor to conduct or prohibit a debtor from conducting specific acts. For example, the court may prohibit a debtor from transferring ownership of land.
• Provisional injunction maintaining a temporary status quo – a claimant may request an injunction maintaining a temporary status quo to prevent significant harm or imminent danger arising from a disputed legal relationship.

While there is no prescribed timeframe for a court to decide on an application for injunctive relief in civil cases, for provisional seizures and provisional injunctions, the court usually renders a decision within one to two weeks.

The mechanisms of provisional seizures and provisional injunctions are intended to prevent the debtor from transferring their assets or conducting certain acts before the final judgment is made. Therefore, the court will not notify a debtor of such applications from a creditor before the decision is made. However, the court will serve the injunctive relief to a debtor after, or simultaneously with, the enforcement of the injunctive relief, and a debtor may appeal to the decision henceforth.

In contrast, when it comes to the issuance of a provisional injunction maintaining a temporary status quo, the court shall allow the parties to express their opinions before a decision is made.

In the event that a provisional seizure, provisional injunction, or provisional injunction maintaining a temporary status quo is revoked for specific reasons, such as the creditor fails to initiate a lawsuit within the prescribed period, the creditor will be held liable for any damages to the debtor caused by the injunctive relief. Therefore, the court usually requires the creditor to provide a security deposit before granting any form of injunctive relief, as described in 4.6 Costs of Interim Applications/Motions.

If the legal requirements for a provisional seizure order are met, a court will grant injunctive relief against the debtor’s assets (Refer to 6.1 Circumstances of Injunctive Relief). Such injunctive relief will merely state the total amount of money/value of the debtor’s assets to be seized, but will not specify which of the debtor’s properties are to be seized.

In contrast, if a provisional injunction order is granted, such injunction relief will identify the subject matter it pertains to.

Whether provisional seizure orders or provisional injunction orders issued by Taiwan courts will be recognised and enforced against the debtor’s assets in a foreign country depends on the civil procedure laws of that foreign jurisdiction.

As a general rule, injunctive relief is effective against the parties directly involved in a legal dispute. However, during the process of enforcing injunctive relief, its effects may extend to a third party.

For example, if the creditor obtained a provisional seizure against the debtor, and the debtor has an account receivable against a third party, the enforcement court might prohibit that third party from making payments directly to the debtor.

If a third party fails to follow the enforcement court’s order and continues to make payments to the debtor, the enforcement court may, at the request of the creditor, directly enforce against the third party’s property.

If a provisional injunction is violated, the enforcement court has the authority to impose penalties ranging from TWD30,000 (approximately USD925) to TWD300,000 (approximately USD9,250). If the debtor continues to disobey, the court may impose further fines or place the debtor into custody. However, in practice, it is extremely rare for the court to put the debtor into custody.

Civil actions are usually conducted as follows.

• The plaintiff initiates a lawsuit by filing a complaint with the court and prepaying the required court fee.
• The court then arranges trial dates (known as “preparatory sessions”) to prepare for the final oral argument, during which the parties will exchange pleadings and present evidence (including witness/expert examination) and their assertions. Typically, there are two to three preparatory sessions, where the judge clarifies the matters in dispute and those not contested between the parties.
• Subsequently, a date is set for final oral argument (known as “oral argument session”), which usually occurs only once. During final oral argument, the parties present their points of view thoroughly and completely. After the oral argument session, the parties may not present any new evidence or assertions to the court, and the court will deliver its judgment based on information presented to that point.
• Upon the judgment’s delivery to both parties, they retain the option to file an appeal with a higher court if dissatisfied. In the absence of any appeal, the judgment becomes final.

In most civil cases, there are no case management hearings, and no statutory provisions dictate the number of hearings or the duration it takes for a court to reach its decision. Judges possess immense discretionary power over how a case proceeds.

Nevertheless, the Judicial Yuan has established regulations governing case processing time frames. In general, the time limits for civil cases are 16 months for the first instance, two years for the second instance, and one year for the third instance. If a judge exceeds these time limits, it may affect their performance evaluation.

For major commercial cases to which the procedures stipulated under the Commercial Case Adjudication Act are applicable, the court must discuss and formulate a trial plan with the parties, to facilitate and expedite the proceedings.

There are no jury trials for civil cases in Taiwan.

In civil cases, there are five types of evidence admissible in court:

• examination of witnesses;
• expert testimony;
• documentary evidence;
• inspection by judge – eg, the judge may investigate the scene where the alleged tortious acts took place; and
• interrogation of parties.

Once evidence is admitted to the court, there are no specific standards governing the assessment of its weight and probative value. Judges employ the principle of free evaluation of evidence.

For evidence illegally gathered by private individuals, the court will weigh several factors, including the intrusion on privacy, principles of good faith, protection of constitutional rights, the necessity to establish the truth through such approaches, and balance all the interests on a case-by-case basis to determine if such evidence is admissible.

As explained in 5.4 Alternatives to Discovery Mechanisms, in most civil cases, the parties may apply for a court-appointed expert to investigate relevant facts. If the parties can mutually agree on the selection of an expert, the court will usually honour such agreement. However, the parties cannot introduce privately obtained expert testimony to the court.

For major commercial cases to which the procedures stipulated under the Commercial Case Adjudication Act are applicable, apart from the court-appointed experts, the parties may choose to introduce expert witnesses to provide professional opinions with court permission.

In principle, trials are generally open to the public, but transcripts of the proceedings are not available to third parties. Please also refer to 1.3 Court Filings and Proceedings.

As explained in 1.1 General Characteristics of the Legal System, Taiwan uses an adversarial system in civil cases. The parties involved primarily shoulder the responsibility for advancing or defending their positions and presenting evidence while the court takes the lead in managing the litigation process.

During the final oral argument session, the court will set a date for the announcement of its decision. The operative part of the judgment is read out in the court and published online on that date. The full judgment, which includes the operative part of the judgment and the court’s reasoning, is delivered in writing to the parties within one to two weeks after the announcement.

Commercial disputes in Taiwan can be categorised into general commercial cases, which are subject to the Code of Civil Procedure, and major commercial cases, which are subject to the Commercial Case Adjudication Act. Examples of major commercial cases include the following.

• Civil disputes between a responsible person of a company and the company arising out of conduct of the company’s business with a claim amount exceeding TWD30 million (approximately USD925,000).
• Civil disputes arising from violations of securities laws, such as securities fraud, false financial reporting, failure to provide a prospectus, short-term trading and insider trading, with a claim amount exceeding TWD30 million (approximately USD925,000).
• Petitions to select a temporary administrator, appoint an inspector, and dismiss the said personnel pursuant to the Company Act for publicly traded companies.

To facilitate a speedy, appropriate and professionally handled resolution of major commercial disputes, major commercial cases have only two levels of courts with jurisdiction. And as mentioned in 7.2 Case Management Hearings, such cases have a more rigorous trial plan, so the trial time is usually shorter than that in general commercial cases. According to statistics published by Taiwan’s judicial branch in 2022, the average duration of proceedings in major commercial cases is about four months.

Court approval is not required to settle a lawsuit. The parties may opt for “settlement in litigation” or “out-of-court settlement”. Settlement in litigation refers to settlement reached by the parties with the assistance of the court during the litigation process, while out-of-court settlement is reached by the parties in private without court’s intervention. Neither type of settlement requires court approval regarding the terms of the settlement.

While the court keeps records of settlements reached in litigation, the content of these records is confidential. In the case of settlement in litigation, there is a public record accessible on the Judicial Yuan’s Legal Information Retrieval System stating that the matter was “settled”. No other details are disclosed to the public.

Where a settlement in litigation is reached, the settlement agreement (as recorded in court transcripts) has the same effect as a final judgment, and constitutes a writ of execution. Parties may apply to the enforcement courts to enforce the settlement agreement.

Out-of-court settlements are not writs of execution. In other words, if a debtor fails to perform this type of settlement agreement, the creditor cannot directly apply to the court for enforcement of the agreement; instead, the creditor must first file a lawsuit and obtain a favourable judgment against the debtor. However, if the settlement agreement was notarised and meets other requirements under the Notary Act, the settlement agreement may constitute a writ of execution. If so, it may be enforced directly.

Out-of-court settlement agreements may be deemed null and void for reasons including:

• incapacity of a party;
• lack of intent to enter into the agreement between parties; or
• violation of public order and good morals (public policy).

Also, a party may revoke an out-of-court settlement agreement if:

• the party was acting under a mistake; or
• the party agreed to the settlement under fraud or duress.

Settlement in litigation may also be deemed null and void, or be revoked by a party for the same reasons. Also, a settlement in litigation will be deemed null and void if such settlement violates procedural requirements, such as:

• either party’s lack of standing;
• either party’s lack of capacity to litigate; or
• the agent ad litem was not authorised to represent the parties in the settlement.

If a settlement in litigation is nullified or revoked, a party may request the court to resume the litigation proceedings.

In civil litigation, the forms of award available to a successful litigant include:

• an order that the losing party perform their obligation, such as payment of money or to perform or refrain from performing specific acts;
• declaring the existence and status of a legal relationship, such as confirming the existence or non-existence of an employment relationship, a marriage relation or a parent-child relation; and
• creating, altering, or extinguishing a legal relationship, such as partition of land owned by co-owners or an annulment of adoption of a child.

In Taiwan, the basic rule regarding damages is that “the compensation shall be limited to the actual damages incurred”. Unless otherwise provided by law or by contract, the measure of damages is limited to the injury actually suffered and the (reasonably) expected interests that are lost by the claimant.

If the measure (such as a calculation formula) or amount of damages are stipulated in a contract, Taiwan courts will regard such calculation or amount as the total amount of the damages a party may claim from the defaulting party. No further compensatory damages can be claimed from the defaulting party, unless the parties expressly agreed in advance that such calculation or amount are “penalty”. 

The concept of punitive damages is not widely adopted in Taiwan’s legal system. Still, a few special laws allow a litigant to claim for punitive damages when their legal requirements are met. These include the Consumer Protection Law, Copyright Act, Patent Act, Trademark Act, Trade Secrets Act, and the Fair Trade Act. The maximum amount of punitive damages is generally treble damages.

Pursuant to the Civil Code, interest starts to accrue from the moment that a debtor is in default. Therefore, the time point when an action is initiated does not affect the calculation of interest. The claim for the payment of interest is extinguished by prescription if it is not exercised within five years. Please also refer to 3.2 Statutes of Limitations.

After a judgment is made, interest will continue to accrue until the debtor discharges the debt. The five-year prescriptive period on accrued interest restarts from the moment the judgment becomes final and binding, and a creditor may use that window of time to apply for enforcement of the judgment.

The mechanisms available for the enforcement of domestic judgments include monetary enforcement and non-monetary enforcement.

Monetary Claims

If the asset to be enforced is property, compulsory enforcement is carried out by means of attachment, auction, sale, or compulsory administration.

If the asset to be enforced is a receivable claim against a third party, the court will render a seizure order to prohibit the debtor from collecting or disposing of such claim and to prohibit that third party from paying the debtor directly.

Non-monetary Claims

Non-monetary claims include claims for the delivery of things and claims for action and no action.

With respect to claims for the delivery of things, if the asset to be enforced is movable property, the enforcement court may seize the property and deliver it directly to a creditor. If the asset to be enforced is immovable property that is currently in the debtor or a third party’s possession, then the court’s enforcement division may remove the property from the debtor’s or third party’s possession, and allow the creditor to take possession thereof.

With respect to claims for action and no-action, the court may impose a default surcharge (ie, a sum of money as penalty for non-compliance) on debtors or even place the debtors into custody, if such claims are unable to be carried out by a third party instead.

For foreign judgments that are not rendered in China, the Compulsory Enforcement Act applies. A creditor must first file a lawsuit to the court for permission to enforce the foreign judgment, before initiating the compulsory enforcement proceedings for foreign judgment. The court will recognise a foreign judgment, unless any of the following circumstances apply:

• the foreign court rendering the judgment had no jurisdiction over the case pursuant to Taiwan law;
• the foreign judgment was rendered by default and the summons or court orders necessary for commencement of the action had not been duly served on the defaulting party in the foreign country or through judicial assistance under Taiwan’s laws;
• the foreign judgment is contrary to Taiwan’s public policy or good morals; or
• judgments rendered in Taiwan are not recognised by the country that made the foreign judgment.

In the case of foreign judgments that are rendered in China, the Act Governing Relations between the People of the Taiwan Area and the Mainland Area (the “Cross-Strait Relations Act”) applies. Pursuant to the Cross-Strait Relations Act, a creditor must first petition the court for recognition of such judgment, before initiating the compulsory enforcement proceedings. Requirements for such recognition include that:

• it is a final and irrevocable civil ruling or judgment;
• the judgment is not contrary to the public order or good morals of Taiwan; and
• a binding civil judgment made in Taiwan may obtain a recognition order or may be an enforceable title in China (ie, reciprocity requirement).

As indicated in 1.2 Court System, Taiwan’s civil judicial system consists of three levels of courts: the District Court, the High Court, and the Supreme Court. Both the District Court and the High Court may participate in fact-finding, whereas the Supreme Court’s scope of review is limited to correcting errors of law in judgments made by inferior courts.

Most civil cases go through all three levels of courts, provided that the losing party chooses to appeal to the higher courts. However, given the nature of certain civil cases, where the disputed amount is relatively low, or where the need for a speedy trial is prioritised, only one appeal is permitted. In other words, these cases involve proceedings at two levels of courts at most. Such civil cases include:

• cases where the disputed amount is lower than TWD1,500,000;
• cases to which summary proceedings or small-claim proceedings are applicable; and
• major commercial cases to which the Commercial Case Adjudication Act is applicable.

For civil cases, the rules concerning appeals of judgments are as follows.

When Appealing to the High Court

The losing party may appeal against judgments made by the District Court without obtaining the High Court’s permission.

When appealing to the Supreme Court

Appeals to the Supreme Court must be based on the ground that there are errors of law in the judgments made by lower courts. A judgment is deemed to have an error in law in the following situations:

• where the court that made the judgment is not lawfully organised;
• where a judge who should have been recused from the case has participated in making the decision;
• where the judgment was made by a court without jurisdiction for the case;
• where the parties are not lawfully represented in the action;
• where the court violates the provision that the oral argument should be open to the public; or
• where the judgment provides no reason for its decision, or the reasons provided are contradictory.

If an appeal is made on grounds other than those listed in the preceding paragraph, permission from the Supreme Court is required. Such permission will be granted only if the appeal is necessary to advance the law, promote consistency in legal opinions held by the courts, or when the legal opinions involved are significant in principle.

In civil cases, the procedures for taking an appeal are as follows.

When Appealing to the High Court

The appeal pleading must be filed to the District Court within 20 days after receipt of the judgment. The District Court will review the appeal pleading before forwarding the case to the High Court. If the appeal does not meet the required formalities or other legal requirements, and the appellant fails to correct such deficiencies within the time period ordered by the judge, the District Court will dismiss the appeal by a ruling.

When Appealing to the Supreme Court

The appeal pleading must be filed to the High Court within 20 days after the receipt of the judgment. Also, the appellant must appoint an attorney to represent them for the appeal before the Supreme Court.

The High Court will review the appeal before forwarding the case to the Supreme Court. If the appeal does not meet the required formalities or other legal requirements and the appellant fails to correct such deficiencies within the time period ordered by the judge, the High Court will dismiss the appeal by a ruling. One common ground for dismissal is the appellant’s failure to appoint a lawyer to represent the appellant in the Supreme Court proceedings.

In civil cases, issues considered by the appeal court vary, depending on if the case is appealed to the High Court or to the Supreme Court.

When Appealing to the High Court

Other than reviewing the arguments and evidence presented by the parties in the District Court, the High Court may (re-)investigate the facts.

The parties are limited to arguing within the scope of the arguments and evidence presented in the District Court, and are, in principle, prohibited from introducing new means of attack or defence, except in circumstances including:

• the failure to present evidence or arguments is due to a violation of the law by the District Court;
• the facts occurred after the conclusion of the oral argument in the District Court; or
• the party was unable to present such evidence or arguments due to reasons not imputable to the party.

However, in practice, the courts tend to interpret these exceptions broadly with the result that most arguments and evidence newly introduced to the High Court are allowed.

When Appealing to the Supreme Court

The Supreme Court bases its decision on the facts established at the High Court. The parties are not permitted to introduce new evidence or means of attack or defence beyond the scope of those already submitted or argued in the lower courts.

The court cannot impose any conditions on granting an appeal.

In civil cases, powers that the appellate courts have after hearing an appeal are as follows.

When Appealing to the High Court

If the High Court finds that the appeal is not justified, it will enter a judgment denying it.

If the High Court finds that the appeal is justified, it will, within the scope of the demand made by appeal, enter a judgment to reverse or amend the judgment from the District Court.

In the case that there is a material procedural defect in the District Court’s judgment, the High Court may reverse the judgment and remand the case back to the District Court. This is an extraordinary situation for the purpose to maintain the system of court instances.

When Appealing to the Supreme Court

If the Supreme Court finds that the appeal is justified, and the facts of the case are unclear, it will reverse the judgment and remand the case back to the High Court with directions on matters to be further investigated, and the legal opinions that the High Court shall obey. Remands are fairly common.

In exceptional cases where further fact-finding by a lower court is not required, the Supreme Court may also enter a judgment on its own.

Costs of litigation consist of numerous items, including court costs, fees for photocopies, video recording, transcripts, translation of litigation documents, daily fees and travel expenses for witnesses and court-appointed experts, and other necessary fees. Also, attorney fees incurred during an appeal to the Supreme Court (where the mandatory legal representation applies) are considered to be costs of litigation. However, the Supreme Court will determine an “appropriate amount” of attorney fees to be included in the costs of litigation. This usually ranges between TWD20,000 (approximately USD623) to TWD50,000 (approximately USD1,558). In practice, court awards of reasonable attorney fees are usually much lower than actual attorney fees.

Court costs must be paid in advance by the plaintiff when the lawsuit is filed, and are calculated based on the amount or value of the subject matter of the litigation. If the court wrongfully determines the value of the subject matter of the litigation, the parties may file an interlocutory appeal to challenge such determination.

In principle, the court will determine the costs of litigation in proportion to the parts that each party loses. For example, where the plaintiff claims for TWD100 from the defendant, and the court awards the plaintiff TWD80, the court will likely decide that the plaintiff shall be responsible for 20% of the costs of litigation incurred, while the defendant is responsible for 80%.

However, where the successful party’s act is not necessary to assert their rights, such as excessively requesting examination from court-appointed experts and hence incurring related fees, the court may order the prevailing party to pay all or a portion of the costs of litigation.

Interest on the costs of litigation will accrue at the statutory rate of 5% per annum, starting from the date the decision is served on the parties.

There are multiple ADR options available in Taiwan, including settlement, mediation, conciliation and arbitration. Because ADR can effectively reduce judicial burdens, and help the parties to devise an acceptable solution to their disagreements, the Taiwanese government actively promotes the use of ADR. ADR has been identified as a priority for judicial reform. The Judicial Yuan even established the ADR Mechanism Search Platform in 2017 to connect parties seeking ADR options with relevant institutions.

Among the ADR options mentioned above, settlement in litigation and mediation are the most popular ADR methods in practice. That is because a settlement agreement reached in litigation, or a mediation agreement, has the same legal effect as a final and binding judgment, and may serve as a writ of execution.

As ADR mechanisms have become more established, the mediation utilisation rate has increased significantly in recent years. According to Judicial Yuan statistics, the number of successful mediation cases in civil cases has shown significant growth. Cases handled by the District Courts increased rapidly from over 40,000 cases in 2017 to over 60,000 cases in 2020.

In principle, ADR is not compulsory and does not form part of court procedures. However, some cases are subject to mediation before an action is initiated, including:

• cases with a subject matter value of less than TWD500,000 (approximately USD16,667);
• labour cases;
• major commercial cases to which the Commercial Case Adjudication Act is applicable; and
• cases related to family matters.

If a party fails to appear at the mediation session without a good reason, the court may impose a fine up to TWD3,000 (approximately USD100) for civil cases and family matters, and up to TWD300,000 (approximately USD10,000) for major commercial cases, on the defaulting party. In some cases that applies to small-claim proceedings and labour cases, if a party fails to appear at the mediation session without a good reason after being duly notified to do so five days prior to the session, the court may, on a motion by the party appearing, order oral arguments to be conducted immediately and enter a judgment based on the appearing party’s statements.

The Taiwan government has been promoting ADR for many years, and the courts themselves have established a list of mediators. There are also many ADR organisations in Taiwan offering and promoting ADR. Some examples follow.

Chinese Arbitration Association

This association is experienced in handling mediation and arbitration cases. It has a register of arbitrators and mediators and provides various training for arbitrators and mediators. It also organises seminars and symposiums on mediation, arbitration, and other related topics, such as the annual Arbitration Week to promote the arbitration system.

Township and County-Administered City Mediation Committee

This committee offers mediation of civil matters (eg, matters involving property, marriage, damage compensation, etc) and criminal matters (eg, public insults, injuries, etc). The Township and County-Administered City Mediation Act regulates such mediation processes.

The Arbitration Law regulates the conduct of arbitration and the recognition or enforcement of arbitral awards in Taiwan.

Subject matters for arbitration are limited to matters that the parties may reach a settlement in accordance with law, such as most civil disputes. Some matters including family relationships or criminal offenses cannot be referred to arbitration.

A party may apply to the court to revoke the arbitral award on grounds including:

• the arbitral award concerns a dispute not relevant to the subject matter of the arbitration agreement or exceeds the agreement’s scope;
• the grounds for the arbitral award are not provided despite being required by law, unless such absence of grounds was corrected by the arbitral tribunal;
• the arbitration agreement is nullified, invalid or has yet to come into effect;
• the arbitral tribunal fails to provide a party with an opportunity to present its case or a party is not lawfully represented during the arbitral proceedings; or
• an arbitrator fails to disclose their conflict of interests and is clearly prejudiced or has been requested to withdraw but continues to participate in the proceedings.

Procedure for Enforcing Domestic Arbitration Awards

To enforce a domestic arbitration award, a party shall obtain an enforcement order rendered by the court beforehand. However, the arbitration award may be enforced without such enforcement order, provided that the parties agree in writing and the subject matter of the arbitration award concerns any of the following:

• payment of a specified sum of money or certain amount of fungible goods or securities; or
• delivery of a specified movable property.

The enforcement of domestic arbitration awards shall be refused if the court finds that:

• the arbitration award concerns a dispute not relevant to the subject matter of the arbitration agreement or exceeds the agreement’s scope, unless the offending portion can be severed from and not affect the remainder of the arbitration award;
• the grounds for the arbitration award are not provided despite being required by law, unless such absence of grounds was corrected by the arbitral tribunal; or
• the arbitration award requests a party to act contrary to the law.

Procedure for Enforcing Foreign Arbitration Awards

To enforce a foreign arbitration award, a party must obtain a recognition decision rendered by a Taiwan court first.

An application for recognition of a foreign arbitration award shall be dismissed, if:

• such award is contrary to public order and good morals in Taiwan or concerns a dispute that cannot be solved through an arbitration approach under the laws of Taiwan (ie, lack of arbitrability); or
• if the country where the arbitration award was made or whose laws govern the arbitral award does not recognise arbitral awards from Taiwan.

Proposals for dispute resolution reform in Taiwan in recent years include the following.

Establishing a Pyramid Litigation System

To find truth in a timely manner and appropriately allocate judicial resources, the Judicial Yuan has already established several committees to research and propose dispute resolutions reforms. It is anticipated that the Code of Civil Procedure and Administrative Litigation Act will be amended, and measures supporting the first-instance trial, which is at the bottom of the “litigation pyramid”, will be strengthened. Through these efforts, the aim is to reduce unnecessary appeals and thereby establish a pyramid litigation system.

Proposed amendments include:

• in addition to the existing court-appointed expert system, other types of experts such as professional advisors will be introduced into civil litigation to enhance the correctness of judgments. The Legislative Yuan completed its initial review of the relevant provisions in 2021; and
• several provisions were introduced to the Administrative Litigation Act and came into effect in August 2023. For example, a mediation mechanism has been established to reduce litigation at the source. Furthermore, the range of mandatory representation has been extended to protect the litigation rights of the parties. In cases such as environmental and land dispute cases, parties are required to be represented by a lawyer.

Promoting Alternative Dispute Resolution (ADR) System

To reduce the number of civil actions, the Judicial Yuan actively promotes the use of mediation as a means of dispute resolution and is currently drafting the “Basic Law on Mediation” to improve the mediation process.

Promoting Judicial Openness and Transparency

To enhance public trust and confidence in the judiciary and allow public access to the court proceedings, a system for live broadcasting of court proceedings is currently under consideration.