Taiwan decisions

A contribution from Kelly Yu-Ju Huang and Kevin Tun-I Hou, Chinese Arbitration Association(CAA), Taiwan.

Taiwan is not a Contracting State to the New York Convention. Its Arbitration Act, however, is modeled on the Convention.

In 2016, the Taiwan High Court (Civil Judgment No. 2015 Zhong-Shang-Zi 966) rejected the argument that foreign awards did not have the same legal effect as domestic awards, specifically res judicata. The argument stemmed from a literal reading of the different wording in Taiwan’s Arbitration Act: Art. 37(1) stipulates that domestic awards shall “be binding on the parties and have the same force as a final judgment of a court”, whereas the pre-amended Art. 47(2) merely provided that foreign awards which have been recognized by a Taiwan court “shall be enforceable”. The High Court reiterated that the legislative intent of the Act was to create a pro-arbitration environment in line with the New York Convention. Article III of the Convention explicitly requires its Contracting States to “recognize arbitral awards as binding”. Accordingly, foreign awards which are recognized by a Taiwan court would have the same res judicata effect, notwithstanding any omission or ambiguity of the pre-amended Art. 47(2) of the Act. Furthermore, the current Art. 47(2) (amended in November 2015) explicitly states that such foreign awards “shall be binding on the parties and have the same force as a final judgment of a court”.

            In a 2011 decision, the Hsinchu District Court (Civil Ruling No. 2010 Kang-Zi 29) declined to refuse recognition of a foreign award on the basis that “the country where the arbitral award is made or whose laws govern the arbitral award does not recognize arbitral awards of [Taiwan]” (Art. 49(2) of Taiwan’s Arbitration Act). The Finnish applicant sought enforcement of an award rendered in Finland. The Taiwanese respondent argued that enforcement should be denied because Finland would not recognize Taiwanese awards as Taiwan is not a New York Convention State. The Court reasoned that while Art. I(3) of the Convention allows its Contracting States to make the reciprocity reservation, it does not limit the recognition and enforcement of awards to those made in the territory of another Contracting State. The fact that Finland made no reciprocity reservation, and that the Taiwanese party failed to prove that Finnish courts systematically refused to enforce Taiwanese awards, was sufficient ground to reject this objection.

            Finally, in 2004, the Tainan District Court (Civil Ruling No. 2004 Zhong-Zhi- Geng-Zi 1) dealt with a case in which the claimant sought recognition and enforcement of an Arbitral Award on Costs, an Arbitral Award on Taxation, and an Interim Final Award, all made in London. The respondent invoked Art. 50(6) of Taiwan’s Arbitration Act, arguing that the Award on Costs and the Award on Taxation had expired, and thus were no longer binding on the parties. The Court held that issues of limitation periods did not pertain to Art. 50(6) (which was modelled on Art. V(1)(e) of the New York Convention). Instead, the phrase “[t]he award has not yet become binding on the parties” refers to situations where the award is subject to appeal before the competent authority. Since the English High Court had dismissed the respondent’s application for leave to appeal, the Awards were final and binding. (Note: The Court then refused recognition and enforcement of the Awards on due process ground, finding that respondent was not given proper notice of the arbitral proceedings (Art. 50(3) of the Act, modelled on Art. V(1)(b) of the New York Convention).)