International arbitration is a widely used form of dispute resolution in Taiwan. In light of the impartiality, efficiency, flexibility and confidentiality of arbitration, an increasing number of parties are choosing arbitration to settle their disputes. This is particularly the case in matters that involve cross-border transactions, large amounts or specialised industries (eg, construction, energy, finance, shipping and maritime, pharmacy, government procurement and labour). In contrast, most domestic and traditional civil disputes tend to be settled by litigation.

Parties that choose arbitration as their dispute resolution mechanism typically include an arbitration clause in their agreement. This arbitration clause may include choices about which arbitration rules to use, the seat of the arbitration, the composition of the arbitral tribunal, the language of the proceedings, and the effect of any arbitral award. In practice, most parties agree in the arbitration clause that the arbitration shall be referred to the Chinese Arbitration Association (CAA) and that the CAA’s rules shall be used. Taiwan is usually chosen as the seat.

Historically, arbitration has been most frequently used by parties in the construction, energy and finance industries. Arbitration is also often used for government procurement cases and international transactions. The common threads running through these disputes are high levels of technical complexity and large sums at stake. Over the past 15 years, an average of 170 cases were arbitrated under the auspices of the CAA each year.

There are several arbitral institutions in Taiwan. Some arbitral institutions provide a comprehensive arbitration service across multiple industries (eg, the CAA and the Taiwan Arbitration Association), and others specialise in specific industries (eg, the Chinese Construction Industry Arbitration Association (CCIAA) for construction, the Chinese Real Estate Arbitration Association for real estate, and the Taiwan Assessment and Evaluation Association for sports).

Among these arbitral institutions, the CAA is the most frequently used for international arbitration in Taiwan. Established in 1955, the CAA was the first arbitral institution to have a quasi-judicial function in Taiwan. Known for its professionalism and integrity, the CAA is one of the most reliable arbitral institutions in Taiwan.

In 2018, the CAA opened its first offshore branch in Hong Kong. This was in part a response to the fact that Taiwan is not a contracting state to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (please refer to 12.1 New York Convention) and also in part an effort to serve the increasing need for international arbitration. The branch’s official name is the CAA International Arbitration Centre (CAAI). Through the dual-track system of the CAA and CAAI, parties can choose the CAA as the arbitral institution if the arbitration is seated in Taiwan; if the arbitration is seated outside of Taiwan, they can choose the CAAI as the arbitral institution.

No new arbitral institutions were established in Taiwan during 2022-2023.

While Taiwan has a special court with jurisdiction over intellectual property and significant commercial disputes, no specific courts are designated to hear disputes relating to international or domestic arbitrations. Any such disputes are heard by courts of general jurisdiction.

Taiwan Arbitration Act

Taiwan’s Arbitration Act is the national legislation that governs arbitration in Taiwan. Based on the UNCITRAL Model Law of 1985 and the Regulation Governing Organization, Mediation Procedures and Fees of Arbitration Institution of 1999, the Arbitration Act regulates arbitration agreements, the composition of arbitral tribunals, arbitration proceedings, the enforcement of arbitral awards, the revocation of arbitral awards, settlement and mediation, and foreign arbitral awards. The Arbitration Act governs international and domestic arbitrations as a unitary system rather than creating separate regimes distinguishing between them.

Divergence From the UNCITRAL Model Law of 2006

Since the Arbitration Act was enacted based on the UNCITRAL Model Law of 1985, and the UNCITRAL Model Law was materially amended in 2006, the Arbitration Act diverges from the UNCITRAL Model Law of 2006 in the following respects:

• Arbitration Procedure:If the parties do not expressly agree on the rules for the arbitration procedure, Article 19 of the Arbitration Act specifies that the arbitral tribunal shall apply the Arbitration Act, and where that Act is silent, the tribunal shall adopt the rules of the Taiwan Code of Civil Procedure mutatis mutandis, or other rules of procedure that the tribunal deems proper. Article 52 of the Arbitration Act provides that a court hearing an arbitration dispute shall apply the Taiwan Non-contentious Matters Law in addition to the Arbitration Act. If the Taiwan court does not find any relevant provisions in either of these two laws, it is required to apply the Code of Civil Procedure mutatis mutandis. The UNCITRAL Model Law of 2006 has no similar provisions regarding applicable arbitration procedures.
• Time Constraints on Notice and Arbitral Decision: Article 21 Paragraph 1 of the Arbitration Act requires the arbitral tribunal to decide the venue and date of hearing and to notify the parties within ten days of receipt of notice of the appointment. This Article further provides that the arbitral tribunal should render an award within six months of the commencement of such arbitration, although one three-month extension is permitted when necessary. The UNCITRAL Model Law of 2006 has no similar provisions controlling the time of notification and arbitral decision.
• Interim Measures: Article 39 Paragraph 1 of the Arbitration Act merely permits the parties to apply to the court for provisional remedies pursuant to the Code of Civil Procedure, but the Arbitration Act does not grant the arbitral tribunal the power to provide interim relief directly to the parties. Nonetheless, Article 28 Paragraph 1 of the Arbitration Act provides that the arbitral tribunal can request necessary assistance from a court or other agencies when it conducts arbitration. In contrast, Article 9 of the UNCITRAL Model Law of 2006 provides that an arbitral tribunal can grant interim measures or a preliminary order to the parties.

The Arbitration Act has not been amended since 2015. Concerned that the Arbitration Act has not been updated to reflect the changes to the UNCITRAL Model Law in 2006, in 2022, the CAA and some legislators proposed a bill to amend the Arbitration Act that would align Taiwan’s arbitration regime with international norms. The draft amendments mostly focus on arbitrability, confidentiality of arbitration, party autonomy (eg, composition of arbitral tribunal, applicable law, arbitration procedure and language), withdrawal of arbitrators, the competence-competence principle, the powers of the arbitral tribunal, and reasons for setting aside arbitral awards. The bill is pending a second reading (committee stage) in the Legislative Yuan but it cannot presently be foreseen when it might be debated or passed.

Pursuant to Article 1 Paragraphs 3 and 4 of the Arbitration Act, an arbitration agreement must be in writing to be enforceable. The writing requirement can be met by any written document, documentary instrument, correspondence, facsimile, telegram or other similar type of communication between the parties that is sufficient to show the existence of a prima facie arbitration agreement.

Pursuant to Article 1 Paragraphs 1 and 2 of the Arbitration Act, the subject matter of arbitration is limited to justiciable matters. For matters that are expressly excluded from arbitration, please refer to 5.1 Matters Excluded From Arbitration.

Taiwan’s courts respect agreements between parties, whether express or implicit, regarding the applicable law of the arbitration. This is consistent with Taiwan’s courts’ commitment to the principle of party autonomy. For the enforcement of an arbitration agreement, pursuant to Article 1 Paragraphs 3 and 4 of the Arbitration Act, the court may check first whether the arbitration agreement meets the requirement of being in writing. In the event that a party breaches the arbitration agreement or clause and files litigation to the court, pursuant to Article 4 Paragraph 1 of the Arbitration Act, the court shall, upon application by the adverse party, suspend the litigation and order the plaintiff to submit to arbitration within a specified time, unless the defendant proceeds to respond to the legal action. Pursuant to Paragraph 2 of the same Article, if the plaintiff does not submit to arbitration within the designated period, the court shall dismiss such litigation. Pursuant to Paragraph 3 of the same Article, if the arbitral award is rendered after the suspension of the litigation, such litigation shall be regarded as withdrawn when the arbitral award is rendered. In addition, if a party applies to the court for an interim measure but has not submitted to arbitration, pursuant to Article 39 Paragraph 1 of the Arbitration Act, the court shall, upon the adverse party’s request, order such party to submit to arbitration within a designated period. If the party fails to do so, the court may, upon the adverse party’s request, set aside such interim measure.

Article 3 of the Arbitration Act provides for the severability of an arbitration clause from a principal agreement. The validity of an arbitration clause that forms part of a principal agreement is determined separately from the rest of the principal agreement. The validity of the arbitration clause is not affected by the nullity, invalidity, revocation, rescission or termination of other parts of the principal agreement.

The Arbitration Act sets forth the qualifications of arbitrators (see below), but it does not further restrict the parties’ autonomy to select arbitrators. Parties can agree on the appointment of arbitrators, the method of appointment, and any special qualifications for the arbitrators. Pursuant to Article 16 Paragraph 1 of the Arbitration Act, any party may apply for recusal of an arbitrator if the arbitrator lacks any of the qualifications agreed upon by the parties or if one of the circumstances listed in Article 15 Paragraph 2 of the Arbitration Act (eg, lack of impartiality) applies to the arbitrator.

Qualifications of Arbitrators

The Arbitration Act sets forth the qualifications of arbitrators in Articles 5 to 8. Arbitrators must be individuals. Pursuant to Article 6 of the Arbitration Act, professionals who have legal and other knowledge or experience, a reputation for integrity and impartiality, and have one of the following qualifications can serve as arbitrators:

• Having served as a judge or public prosecutor;
• Having practised for more than five years as a lawyer, accountant, architect or engineer or in any other commerce-related profession;
• Having acted as an arbitrator of a domestic or foreign arbitration institution;
• Having taught as an assistant professor or higher in a domestic or foreign university or college accredited by the Ministry of Education; or
• Being a specialist in a particular field or profession and having practised for more than five years.

Registration for Arbitrators in Arbitration Institutions

In addition to the aforementioned qualifications, Article 8 of the Arbitration Act requires professionals to receive training and obtain a certificate before applying to an arbitration institution for registration as an arbitrator unless they have one of the following qualifications:

• Having served as a sitting judge or prosecutor;
• Having practised as a lawyer for more than three years;
• Having taught at the law school of a domestic or foreign university or college accredited by the Ministry of Education as a professor for two years, or as an associate professor for three years, as well as having taughtmajor legal courses for not less than three years; or
• Having been registered as an arbitrator in any arbitration institution prior to the effectiveness of the 2002 amendment of the Arbitration Act, and acted in practice as an arbitrator in a dispute.

The aforementioned requirements are not applied in ad hoc arbitrations.

Disqualification of Arbitrators

Article 7 of the Arbitration Act prescribes the conditions for disqualification of an arbitrator. A person cannot act as an arbitrator:

• Where the person has been convicted of a criminal offence for corruption or malfeasance;
• Where the person has been convicted of any offence other than those in the preceding category and sentenced to serve a prison term of one year or more;
• Where the person has been deprived of public rights, and the period of deprivation has not expired;
• Where the person has been announced bankrupt and has not recovered his or her property rights;
• Where the person has become subject to a guardianship order and the order has not been cancelled; or
• Where the person is a minor (ie, under the age of 18).

Articles 9 to 12 of the Arbitration Act prescribe the appointment of arbitrators and composition of the arbitral tribunal.

Silence on Appointment of Arbitrators

Pursuant to Article 9 Paragraph 1 of the Arbitration Act, if the parties do not agree on the appointment of an arbitrator or the method of such appointment in an arbitration agreement, each party shall appoint an arbitrator for itself. Then, the appointed arbitrators shall jointly designate a third arbitrator to be the presiding arbitrator of the arbitral tribunal, and the arbitral tribunal shall notify the parties of the final appointment in writing. Pursuant to Paragraph 2 of the same Article, if the presiding arbitrator cannot be decided after 30 days of appointment of arbitrators by the parties, the parties may apply to the court to appoint the presiding arbitrator.

Arbitration by Sole Arbitrator

In the event that the parties agree to arbitration by a sole arbitrator, one party may send a written request for the appointment of the arbitrator to the other party. Pursuant to Article 9 Paragraphs 3 and 4 of the Arbitration Act, if both parties cannot reach agreement regarding such appointment within 30 days from receipt of such request, one of the parties can apply to the court to appoint an arbitrator. Under the aforementioned circumstance, if both parties have agreed that the arbitration will be conducted by an arbitration institution, the chosen arbitration institution appoints the arbitrator.

Arbitration by an Arbitral Tribunal (Multiple Arbitrators)

In the event that the parties agree to arbitration by an arbitral tribunal (composed of multiple arbitrators), each party shall appoint an arbitrator. Then, the appointed arbitrators shall jointly designate a third arbitrator to be the presiding arbitrator of the arbitral tribunal, and the arbitral tribunal shall notify the parties of the final appointment in writing. Pursuant to Articles 11 and 12 of the Arbitration Act, if one party has already appointed an arbitrator, such party can notify the other party in writing to appoint its arbitrator within 14 days of receipt of such notification. If the receiving party fails to do so, the notifying party may apply to the court or the chosen arbitration institution to appoint the arbitrator.

Arbitration by Multi-Parties

Pursuant to Article 9 Paragraph 5 of the Arbitration Act, if there are numerous individuals in either party, and that party is unable to agree on the appointment of an arbitrator, the appointment shall be made by a majority vote. In the event of a tie, the appointment shall be made by drawing lots. For the arbitration of more than two parties, the Arbitration Act does not prescribe special regulations on the appointment of the arbitrator and the composition of the arbitral tribunal.

Generally speaking, the courts respect party autonomy and will not intervene in the selection of arbitrator(s). However, the court may appoint arbitrator(s) upon a party’s request in the following situations:

Inaction or Delay of the Parties or the Arbitration Institution

Pursuant to Article 12 of the Arbitration Act, if one party or the chosen arbitration institution does not appoint an arbitrator within the designated period, the other party can apply to the court to appoint the arbitrator.

Inability of Arbitrators to Duly Perform Arbitration

Pursuant to Article 13 of the Arbitration Act, in the event that the arbitrator agreed to by the parties cannot perform the arbitration as a result of death or any other cause, or because the arbitrator refuses to conduct the arbitration or unreasonably delays the arbitration, the parties may agree to replace the arbitrator. If the parties cannot reach an agreement on a replacement, the court may, upon a party’s request, appoint a new arbitrator. If the arbitrator appointed by one party cannot duly perform the arbitration for one of the aforementioned reasons, the other party may request such party to appoint another arbitrator within 14 days of receipt of such request. If the obliged party fails to do so, the requesting party may apply to the court to appoint a new arbitrator.

Court May Appoint the Arbitrator Upon the Parties’ Request or of Its Own Volition

If the arbitrator appointed by the arbitration institution or the presiding arbitrator cannot hear the arbitration pursuant to Article 13 Paragraph 1 of the Arbitration Act (death, refusal or undue delay), the court may, upon the parties’ request or of its own volition, appoint a new arbitrator or a new presiding arbitrator.

Pursuant to Articles 16 and 17 of the Arbitration Act, if an arbitrator does not possess the qualifications agreed by the parties, or if one of the statutory circumstances prescribed in Article 15 Paragraph 2 applies to the arbitrator (ie, a conflict of interest), the parties may file a request in writing to the arbitral tribunal for withdrawal of such arbitrator within 14 days of their knowledge of the basis for such withdrawal. The arbitral tribunal shall decide on the withdrawal within ten days. For the statutory circumstances prescribed in Article 15 Paragraph 2 of the Arbitration Act, please refer to 4.5 Arbitrator Requirements.

Article 15 Paragraph 1 of the Arbitration Act prescribes that arbitrators have obligations of independence, impartiality and confidentiality. Moreover, Paragraph 2 of the same Article lists the circumstances in which an arbitrator is required to immediately disclose the details thereof to the parties:

• the existence of any of the causes that, mutatis mutandis, would require a judge to withdraw from a judicial proceeding in accordance with Article 32 of the Code of Civil Procedure;
• the existence or history of an employment or agency relationship between the arbitrator and a party;
• the existence or history of an employment or agency relationship between the arbitrator and an agent of a party or between the arbitrator and a key witness; or
• the existence of any other circumstances which raise any justifiable doubts as to the impartiality or independence of the arbitrator.

These circumstances may create conflicts of interest or potential conflicts of interest between the arbitrator and the parties, or they may raise justifiable doubts as to the impartiality or independence of the arbitrator. Pursuant to Articles 16 and 17 of the Arbitration Act, if one of these situations applies to an arbitrator, the parties can request the arbitral tribunal to remove the arbitrator. Please refer to 4.4 Challenge and Removal of Arbitrators.

A matter may not be referred to arbitration if it relates to an exclusive power of the state, the public interest, or public policy such that it is not justiciable. To be more specific, criminal cases, family cases regarding marriage, family relations and inheritance, and disputes over the validity of patents and trademarks lack arbitrability.

Taiwan recognises the principle of competence-competence. Article 22 of the Arbitration Act prescribes that the arbitral tribunal shall decide an objection raised by a party as to the scope of such arbitral tribunal’s authority. That is to say, the arbitral tribunal can rule on the existence of the arbitration agreement, the validity of arbitration agreement, and whether the dispute is within the scope of the arbitration agreement. By deciding these issues, the arbitral tribunal decides competence issues itself.

In practice, the Supreme Court and the Taiwan High Court have mentioned this issue in the rationale of judgments on actions to set aside arbitral awards. It can be inferred from the rationale of these judgments that the courts recognise that the arbitral tribunal can determine itself whether it has competence with respect to the dispute.

Please note that Article 22 provides that a party may not object to the arbitral tribunal’s jurisdiction if it has submitted its statement of defence regarding the subject matter of the dispute. This is to protect the integrity of the proceedings and arises from parties’ duty to raise objections in a timely manner.

The courts may address the issue of jurisdiction of the arbitral tribunal when the parties file litigation to set aside an arbitral award. Pursuant to Article 40 Paragraph 1 Subparagraphs 2 and 4 of the Arbitration Act, one party may file litigation to set aside an arbitral award in the following circumstances: (1) the arbitration agreement is null, invalid or has yet to come into effect or has become invalid prior to the conclusion of the arbitral proceedings; or (2) the composition of the arbitral tribunal or the arbitral proceedings is contrary to the arbitration agreement or the law. In these cases, the courts examine whether the arbitral tribunal had competence for the arbitration and whether the rulings on jurisdiction by the arbitral tribunal were correct.

If the arbitral tribunal decides that it does not have competence for such arbitration and rejects the request for arbitration, the court can rule on whether the arbitral tribunal had competence or not. If the court decides that the arbitral tribunal is in fact competent but the arbitration is contrary to the arbitration agreement, the court can set aside the arbitral award based on Article 40 Paragraph 1 Subparagraph 4 of the Arbitration Act.

In the absence of the aforementioned circumstances, the courts tend not to intervene.

The parties to an arbitration can challenge the jurisdiction of the arbitral tribunal in the courts only by filing litigation to set aside the arbitral award. Please refer to 5.3 Circumstances for Court Intervention.

The subject matter of the litigation to set aside an arbitral award must be a final arbitral award. No action to set aside an interlocutory arbitral award will be heard. In practice, the Taiwan High Court has rendered a judgment holding that the parties can file litigation to set aside a final arbitral award but not an interlocutory arbitral award. Even if the arbitral tribunal renders an interlocutory arbitral award on the issue of jurisdiction, the parties cannot file litigation to set it aside. Thus, the time for the parties to challenge the jurisdiction of the arbitral tribunal through the court comes only after the final arbitral award has been rendered.

The courts can independently examine the existence, validity and scope of the arbitration agreement and the arbitrability of the subject matter de novo to address the admissibility and jurisdiction of arbitration regardless the rulings of the arbitral tribunal on these matters.

Pursuant to Article 4 Paragraph 1 of the Arbitration Act, if a party breaches the arbitration agreement or clause and directly files litigation to the court, the court shall, upon application by the adverse party, suspend the litigation and order the plaintiff to submit to arbitration within a specified time, unless the defendant proceeds to respond to the legal action. Pursuant to Paragraph 2 of the same Article, if the plaintiff does not submit to arbitration within the designated period, the court shall dismiss such litigation. Pursuant to Paragraph 3 of the same Article, if the arbitral award is rendered after the suspension of the litigation, such litigation shall be regarded as withdrawn as of the date on which the arbitral award was rendered.

It is not stipulated in the Arbitration Act that the arbitral tribunal can assume jurisdiction over a party other than the contracting parties of the arbitration agreement. The jurisdiction of arbitration in principle only covers the contracting parties to the arbitration agreement. However, there are exceptions that may extend the jurisdiction of arbitration and the effect of the arbitral award to a third party in practice.

A Third Party Succeeds to the Arbitration Agreement

Firstly, if a third party succeeds to the rights and obligations of the arbitration agreement (whether in the form of an arbitration clause within a principal agreement or a separate arbitration agreement) by assignment, inheritance, insolvency administration, subrogation or any other statutory means, the succeeding party shall bear the rights and obligations of such arbitration so that the jurisdiction of such arbitration and the effect of the arbitral awards may be extended to the succeeding party. Please note that, under this circumstance, the key issues in the jurisdiction of arbitration are whether the third party has succeeded to the arbitration agreement and whether the succeeded arbitration agreement covers the subject matter at issue.

Third-Party Intervention

Secondly, a third party may intervene in arbitration proceedings. Pursuant to Article 19 of the Arbitration Act, if the Arbitration Act is silent on a matter, the arbitral tribunal may apply the Code of Civil Procedure mutatis mutandis or other rules of procedure that it deems proper. The legal practice in Taiwan based on this provision is to adopt the rules for third-party intervention prescribed in Articles 58 to 67-1 of the Code of Civil Procedure mutatis mutandis to the arbitration. To be more specific, if the third party has a legal interest in the subject matter of the arbitration, it may request the arbitral tribunal to permit it to intervene in the arbitration as an intervener. If approved to intervene, the third party shall intervene in the procedure of the arbitration accordingly and shall be bound by the arbitral award. This practice has been recognised in actual cases by the Supreme Court.

Other Doctrines Are Not Applied in Taiwan

To respond to modern disputes of high complexity and with multiple parties, international arbitration has developed a number of doctrines and theories to deal with the legal standing of third parties in arbitration (eg, the “group of companies doctrine” developed from doctrine of “piercing the corporate veil”). Nonetheless, the Arbitration Act has not incorporated these doctrines and theories so far, and Taiwan’s courts and arbitrators have thus far not formed stable views on these issues.

The Arbitration Act does not expressly provide that an arbitral tribunal in Taiwan can grant interim or preliminary relief, but there are corresponding or similar provisions in the Arbitration Rules of the CAA, the CAAI and the CCIAA.

Arbitration Rules of the CAA and CCIAA

The Arbitration Rules of the CAA and CCIAA adopt a concise regime for this issue. Pursuant to Article 36 Paragraph 1 of the CAA Arbitration Rules and Article 43 of the CCIAA Arbitration Rules, the arbitral tribunal may, at the request of either party, take any interim measures as agreed by the parties in respect to the subject matter of the dispute for purposes of preserving perishable goods or providing immediate protection, such as ordering their sale, custody by third party, or other interim measures deemed necessary. Paragraph 2 of Article 36 of the CAA Arbitration Rules further prescribes that, in the aforementioned circumstances, the arbitral tribunal may record the terms of settlement pursuant to Article 44 of the Arbitration Act and order the claimant to make advance payment for carrying out the measures.

Arbitration Rules of the CAAI

Harmonised with the UNCITRAL Model Law of 2006, the Arbitration Rules of the CAAI regulate this issue with more comprehensive norms. Pursuant to Article 26 of the CAAI Arbitration Rules:

• The parties may apply to an emergency arbitrator for emergency measures before the arbitral tribunal’s constitution.
• The parties may apply to the arbitral tribunal for interim measures for the conduct prescribed in Paragraph 3 of the same Article (such as maintaining or restoring the status quo, taking action to prevent or refraining from taking action likely to cause harm or prejudice to the arbitral process, and so on) and the arbitral tribunal may grant interim measures in any form before the final arbitral award is rendered.
• The arbitral tribunal may require the requesting party to provide appropriate security in connection with the measures.
• The arbitral tribunal may modify, suspend or terminate any measure it has granted upon any party’s request, or on the arbitral tribunal’s own initiative with advance notice to the parties in exceptional circumstances.

Interim and Preliminary Measures by the Courts

Regarding the role of the courts for interim and preliminary measures in the arbitration, Article 39 Paragraph 1 of the Arbitration Act approves party applications to the court for interim relief pursuant to the Code of Civil Procedure. Moreover, Article 28 Paragraph 1 of the Arbitration Act prescribes that the arbitral tribunal can request necessary assistance from a court or other agencies in the course of arbitration. If the applicable arbitration rule does not regulate the preservation of evidence, the party may use Article 19 of the Arbitration Act and Article 368 of the Code of Civil Procedure to apply to the courts to grant interim and preliminary measures. Please refer to 2.1 Governing Legislation.

Emergency Arbitrators

The Arbitration Act and other national legislation does not set forth provisions for emergency arbitrators. However, the CAAI Arbitration Rules prescribe relevant provisions in Article 26 and Schedule 1 thereto.

Neither the Arbitration Act nor the Regulation Governing Organization, Mediation Procedures and Fees of Arbitration Institution (“Regulation”) sets forth rules on security for the cost of arbitration. Chapter 4 of the Regulation prescribes the costs of arbitration. Pursuant to Article 25 Paragraph 4 of the Regulation, in case an applicant fails to pay the arbitration cost prescribed in Paragraph 1 of the same Article, the arbitration institution shall order the applicant to make such payment within a specified time period. If the applicant fails to pay it in accordance with the order, the arbitration institution may dismiss the application.

The Arbitration Act provides for the fundamental procedural rules of arbitration seated in Taiwan. For example, Article 18 sets out the required steps to initiate arbitration. Article 19 permits party autonomy by allowing the parties to agree on which rules of procedure shall apply to the arbitration of their dispute. In cases without a mutual agreement on procedure, the Arbitration Act empowers the tribunal to proceed with the arbitration in accordance with the Code of Civil Procedure or any other procedures that the tribunal deems appropriate.

Chapter III of the Arbitration Act prescribes the basic procedural steps for arbitration in Taiwan including initiation of the arbitration by written notice (Paragraph 1 Article 18), objections to jurisdiction (Article 22) and appointment of counsel (Article 24).

In addition, the CAA Arbitration Rules set out further details of the procedural steps for arbitration. In our experience, the CAA Arbitration Rules are widely acknowledged as the prevailing set of rules utilised for arbitrations conducted in Taiwan.

A party wishing to request for arbitration administered by the CAA shall make an advance payment and submit the following documents:

• The Request for Arbitration and copies thereof for each of the arbitrators and the other parties.
• Copies of the arbitration agreement or the contract containing an arbitration clause.
• The Power of Attorney, if a representative is appointed.
• Arbitrator Statement by any appointed arbitrator, including their name and their domicile or residence and any circumstances to be disclosed by the appointed arbitrator.

The duties of arbitrators are defined in the Arbitration Act. Article 15 provides that the arbitrators have:

• the duty to act independently and impartially;
• the duty to uphold the principle of confidentiality; and
• the duty to disclose any matter relating to conflicts of interest and other matters.

Please refer to 4.1 Limits on Selection and 4.5 Arbitrator Requirements.

With respect to the powers of arbitrators, the Arbitration Act grants the arbitral tribunal the power to rule on its own jurisdiction (Article 22), summon witnesses or expert witnesses (Article 26), request assistance from the court (Article 28) and render an arbitral award (Article 33).

The Arbitration Act does not establish any requirements or restrictions for the parties’ legal representatives. The parties have the discretion to appoint foreign law firms or law practitioners to act as their legal representatives in an international arbitration seated in Taiwan. Nonetheless, Taiwan’s Attorney Act requires individuals to be licensed in Taiwan to act in domestic legal matters. Thus, a Taiwan-qualified lawyer may be required if the arbitration is wholly focused on domestic matters without the involvement of foreign parties.

As aforementioned, the parties to an arbitration have the discretion to agree upon procedural rules, including the rules for the collection and submission of evidence. In the absence of agreed rules of evidence, the tribunal will generally follow the rules of evidence stipulated in the Code of Civil Procedure. Under the Code of Civil Procedure, each party is generally responsible for collecting and submitting its evidence to the court/tribunal before the final oral hearing.

Due to Taiwan’s status as a civil law jurisdiction, its Code of Civil Procedure does not contain rules of discovery. Consequently, discovery procedures are rare in Taiwan arbitration proceedings administered by the CAA, particularly when the arbitral tribunal is made up of arbitrators with civil law backgrounds, as is typically the case.

As aforementioned, the Arbitration Act permits the parties to decide on their preferred arbitration procedures. Their agreement on procedure may govern what rules of evidence apply. In practice, the CAA Arbitration Rules are most commonly adopted. Article 24 of the CAA Arbitration Rules states that the parties shall make submissions on facts and laws, and present relevant evidence to the tribunal. The parties are also required to respond and answer to submissions and evidence presented by the other party. Pursuant to Article 27, a party can submit an application to allow witnesses or expert witnesses to testify at the hearings. It is also common in some of the arbitration proceedings to adopt the IBA Rules on the Taking of the Evidence in International Arbitration.

The Arbitration Act provides that an arbitral tribunal has the power to summon witnesses or expert witnesses to appear for questioning. However, the tribunal does not have the power to compel a witness to appear or a party to produce evidence. Nonetheless the tribunal may apply for a court order to compel a witness to appear and petition the court to authorise the tribunal to exercise the power of investigation under Article 28 of the Arbitration Act.

Pursuant to Article 23 of the Arbitration Act, arbitral proceedings are confidential. Each arbitrator has a duty to maintain confidentiality. The arbitral proceedings shall not be made public, unless the parties have agreed otherwise.

The requirements for an arbitral award are stipulated in Article 33 Paragraphs 2 and 3 of the Arbitration Act.

These requirements include: (1) identifying the parties, (2) identifying any interpreters involved, (3) setting out the main text of the award along with relevant facts and reasons unless the parties have agreed otherwise, (5) noting the date and place of the rendering of the award, and (6) having the original copy of the award signed by the arbitrator(s) who heard the dispute.

Pursuant to Article 33 Paragraph 1 of the Arbitration Act, an arbitral tribunal is required to issue an arbitral award within ten days after the conclusion of the hearings. This award should address the claims raised by the parties and the issues brought forward.

There are no limitations on the types of remedies that an arbitral tribunal may award. Nonetheless, the tribunal will take into account the governing law of the arbitration agreement and the laws of the jurisdiction where the recognition and enforcement of the award might take place (“Enforcement Laws”) to decide what kinds of remedies should be awarded. In particular, if the Enforcement Laws prohibit enforcing a certain remedy in the context of arbitration, the tribunal will generally not award such remedy.

Interest

Parties are entitled to recover interest in Taiwan. In general, the tribunal will apply the interest rate agreed to by the parties to the arbitration so long as the interest rate is not contradictory to the governing law of the arbitration agreement and the Enforcement Laws. If the governing law is Taiwanese law, the default interest rate is 5% per annum pursuant to Article 207 of the Civil Code.

Legal Costs

While the parties are free to agree on the rules governing the allocation of legal costs, in the absence of such rules, the arbitration fees are borne by the losing party (Article 78 of the Code of Civil Procedure). For attorney fees, Taiwan follows the US rule whereby each party pays its own attorney fees incurred for litigation unless stipulated otherwise in the contract between the parties.

Parties are not allowed to appeal an award seated in Taiwan since the award is final and binding upon the parties to the arbitration proceedings. Nonetheless, an arbitral award may be set aside pursuant to Article 40 Paragraph 1 of the Arbitration Act. The grounds for setting aside an award are as follows:

• The 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.
• The reasons for the arbitral award were not stated, as required, unless the omission has been corrected by the arbitral tribunal.
• The arbitral award directs a party to act contrary to the law.
• The arbitration agreement is null, invalid, or has yet to come into effect or became invalid prior to the conclusion of the arbitral proceedings.
• The arbitral tribunal fails to give any party an opportunity to present its case prior to the conclusion of the arbitral proceedings, or any party is not lawfully represented in the arbitral proceedings.
• The composition of the arbitral tribunal or the arbitral proceedings is contrary to the arbitration agreement or the law.
• An arbitrator fails to fulfil the duty of disclosure prescribed in Article 15 Paragraph 2 of the Arbitration Act and appears to be partial or has been requested to withdraw but continues to participate, provided that the request for withdrawal has not been dismissed by the court.
• An arbitrator violates any duty in the entrusted arbitration and such violation carries criminal liability.
• A party or any representative has committed a criminal offence in relation to the arbitration.
• Any evidence or the content of any translation upon which the arbitration award relies has been forged or fraudulently altered or contains any other misrepresentations.
• A judgment of a criminal or civil matter, or an administrative ruling upon which the arbitration award relies, has been reversed or materially altered by a subsequent judgment or administrative ruling.

Please note that the set-aside procedure is subject to appeal and therefore may go up to the court of the third instance. Nonetheless, the Taiwan courts tend to review the grounds for setting aside quite narrowly.

The Arbitration Act neither permits nor prohibits the parties from agreeing to exclude or expand the scope of appeal or challenge. There are no Taiwan judgments on this point though.

The Taiwan court does not review the merits or any other substantive elements of the award. It will only review the procedural matters stated in Article 40 of the Arbitration Act as grounds for setting aside an arbitral award.

Taiwan is currently not a contracting state to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”). Nevertheless, its Arbitration Act is designed to align with the Convention. This is to ensure that Taiwan has an arbitration system that meets international standards and produces arbitral awards that can be enforced domestically and internationally.

Order of Enforcement

Pursuant to Article 37 Paragraph 1 of the Arbitration Act, an arbitral award shall have the same effect as a final and irrevocable court judgment on the parties. In other words, an arbitral award can be compulsorily enforced by the court under the Arbitration Act.

To enforce an arbitral award, the winning party must apply for and obtain a court order for the award to be enforced under Article 37 Paragraph 2 of the Arbitration Act.

Enforcement of Foreign Arbitral Awards

For an award made or seated outside Taiwan (“Foreign Arbitral Award”), the winning party must file an application to the court for the recognition of such award pursuant to Article 47 Paragraph 2 of the Arbitration Act. After recognition by the court, the Foreign Arbitral Award shall have the same effect as a domestic arbitral award per Article 37 Paragraph 1 of the Arbitration Act mentioned previously and is subject to compulsory enforcement.

Please note that to apply for recognition of the Foreign Arbitral Award, the party must furnish the following documents:

• The original arbitral award or an authenticated copy thereof;
• The original arbitration agreement or an authenticated copy thereof; and
• The full text of the foreign arbitration law and regulation, the rules of the foreign arbitration institution or the rules of the international arbitration institution which applied to the Foreign Arbitral Award.

Grounds for Non-enforcement and Grounds for Non-recognition of Foreign Arbitral Awards

The losing party may challenge enforcement of an award based on the following grounds (Article 38 of the Arbitration Act):

• The 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.
• The reasons for the arbitral award were not stated, as required, unless the omission was corrected by the arbitral tribunal.
• The arbitral award directs a party to act contrary to the law.

The losing party may challenge recognition of a Foreign Arbitral Award based on the following grounds (Articles 49 and 50 of the Arbitration Act):

• The recognition or enforcement of the arbitral award would be contrary to the public order or good morals of Taiwan.
• The dispute is not arbitrable under the laws of Taiwan.
• The arbitration agreement is invalid as a result of the incapacity of a party according to the law chosen by the parties to govern the arbitration agreement.
• The arbitration agreement is null and void according to the law chosen to govern said agreement or, in the absence of choice of law, the law of the country where the arbitral award was made.
• A party was not given proper notice whether of the appointment of an arbitrator or of any other matter required in the arbitral proceedings, or any other situations which give rise to lack of due process.
• The arbitral award is not relevant to the subject matter of the dispute covered by the arbitral agreement or exceeds the scope of the arbitration agreement, unless the offending portion can be severed from and not affect the remainder of the arbitral award.
• The composition of the arbitral tribunal or the arbitration procedure contravened the arbitration agreement or, in the absence of an arbitration agreement, the law of the place of the arbitration.
• The arbitral award is not yet binding upon the parties or has been suspended or revoked by a competent court.
• The seat of the award does not recognise arbitral awards seated in Taiwan.

Please note that grounds for non-enforcement and grounds for non-recognition of Foreign Arbitral Awards are interpreted and reviewed quite narrowly by the court. In other words, the Taiwan court will generally recognise and enforce an award.

When a Foreign Arbitral Award is simultaneously subject to recognition proceedings in Taiwan and ongoing set-aside proceedings at the seat, the Taiwan court usually stays the recognition proceedings and waits until the completion of the set-aside proceedings in the foreign jurisdiction before resuming the recognition proceedings.

The Arbitration Act does not provide any stipulation with respect to state immunity as a ground for refusing recognition or enforcement of an arbitral award. There are also no cases shown in the publicly available record in which a party successfully challenged the recognition or enforcement of an award based on state immunity.

Nonetheless, pursuant to Article 5 Paragraph 4 of the Act Governing the Privileges and Immunities for Foreign Institutions and Their Staff Stationed in Taiwan, any official foreign institutions and their personnel approved to be stationed in Taiwan are generally immune from any civil, criminal and administrative proceedings, except when the subject matter of the dispute is commercial in nature. Hence, it is unlikely that any official foreign institutions or their personnel could successfully challenge the recognition or enforcement of an award based on state immunity in the case of international commercial arbitration.

Unless the Taiwan court has substantial concerns about the arbitral award as specified in Article 38 of the Arbitration Act, the Taiwan court would tend to recognise and enforce a domestically rendered award. In regard to Foreign Arbitral Awards, as stated in Article 49, the Taiwan court may refuse to recognise a Foreign Arbitral Award that is rendered in a country that does not recognise arbitral awards rendered in Taiwan or is contrary to the public order or good morals of Taiwan.

The Arbitration Act does not contain provisions that govern class-action arbitration or group arbitration. As at the time of writing, no class-action or group arbitration has been initiated at the CAA. This does not imply that class-action arbitration or group arbitration is prohibited.

Class-action arbitration is permitted for an arbitration initiated by investors against a company to protect those investors from financial distress as per the Rules Governing Class-Action Litigation or Arbitration Handled by the Securities and Futures Investors Protection Center.

The Arbitration Act provides basic requirements for arbitrator qualification addressing their character, finances, criminal records, conflicts of interest, and age. If the arbitrating parties adopt the CAA Arbitration Rules for their arbitration, party counsel and arbitrators are bound by the CAA Code of Ethics for Arbitrators.

Currently, there are no relevant provisions with respect to third-party funding in the Arbitration Act. However, the Taiwanese legislature and academics are aware of the widespread global acceptance of third-party funding, especially in commercial and investment treaty arbitration.

The Arbitration Act is silent on the consolidation of arbitration and there is no public record of Taiwan court granting consolidation of arbitration. However, the international branch of the CAA, the CAAI, has provided relevant rules. Those rules state that a tribunal can approve a proposed consolidation if it assesses that:

• the parties have agreed to the consolidation;
• the claims in the arbitrations are made under the same arbitration agreement; or
• the claims in the arbitrations are made under multiple but compatible arbitration agreements between the same or related parties, which involve common questions of law or fact, and the remedy or relief claimed arises out of the same transaction or series of transactions.

To assess whether a third party can be bound by an arbitration agreement or award, please refer to 5.7 Jurisdiction Over Third Parties.