LEE AND LI 關懷．服務．卓越 we care ． we serve ． we excel Arbitrating Dispute in Taiwan- Users ’ Perspective on Practice and Procedures Angela Y. Lin Partner Lee and Li, Attorneys-at-Law May 16, 2011

I. Dispute Resolution Mechanisms Commonly Used in Taiwan Mediation Arbitration Litigation = 》 Listed in descending order by how much the parties may control the proceedings

I. Dispute Resolution Mechanisms Commonly Used in Taiwan (continued) Arbitration v. Mediation ＊ Parties ’ Communication and Negotiation ＊ Procedural Flexibility ＊ Binding Force of Result

I. Dispute Resolution Mechanisms Commonly Used in Taiwan (continued) Arbitration v. Litigation ＊ Party Autonomy ＊ Arbitrator v. Judge ＊ Procedural Flexibility ＊ Confidentiality ＊ Cost and Time Efficient ＊ Binding Force of Result

II. Arbitration Associations in Taiwan Arbitration Association of the Republic of China (the ‘ ROCAA ’ ; formerly known as the Commercial Arbitration Association of the Republic of China, ‘ CAA ’ ) = 》 a non-profit organization established as the sole arbitration institution of Taiwan and approved by the Ministry of Interior in 1955 = 》 a well-established arbitration centre capable of handling international cases

II. Arbitration Associations in Taiwan (continued) Taiwan Construction Arbitration Association Chinese Construction Industry Arbitration Association Association of Labor Dispute Arbitration, ROC = 》 ROCAA retains its leading role for its history, reputation, caseload, and value of the claims

II. Arbitration Associations in Taiwan (continued) ---Statistics of ROCAA Arbitration Cases

Sources: the ROCAA, February 2011

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act Taiwan Arbitration Act ‧ Promulgated on June 24, 1998 and effective from December 24, 1998 ‧ With amendment effective from July 10, 2002 ‧ Modeled on the 1985 UNCITRAL Model Law

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Subject Matter for Arbitration ＝＞ D isputes that may be settled in accordance with the law

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Form of Arbitration Agreement ‧ In writing ‧ Written documents, documentary instruments, correspondence, facsimiles, telegrams or any other similar types of communications between the parties evincing prima facie arbitration agreement shall be deemed to establish an arbitration agreement

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Form of Arbitration Agreement (continued ) ‧ An arbitration agreement must be for a certain legal relationship or disputes arising therefrom

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Main stages of a typical arbitration: 1. Commencement of Arbitration ‧ Submission of Notice of Arbitration and Request for Arbitration ‧ Submission of Answer and Counterclaim (if any) 2. Constitution of Tribunal ‧ Appointment of arbitrators by parties ‧ Appointment of presiding arbitrator

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Main stages of a typical arbitration (continued): 3. Hearings, Investigation of Evidence and Detailed Submissions 4. Rendering Award

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Constitution of Arbitral Tribunal ‧ Parties can agree with the number of arbitrators and the appointment method. ‧ Where in the absence of an appointment of an arbitrator or a method of appointment in an arbitration agreement, each party shall appoint an arbitrator for itself.

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Constitution of Arbitral Tribunal (continued) ‧ The appointed arbitrators shall then jointly designate a third arbitrator to be the chair. ‧ The ROCAA keeps a roster of qualified arbitrators, but the parties are free to appoint an arbitrator who is not on the ROCAA roster, even from overseas. Top-notch international arbitrators may and do preside over ROCAA arbitration cases.

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Interim Measures ‧ A party may apply to the court for a provisional seizure or disposition in accordance with the Code of Civil Procedure prior to filing arbitration ‧ The court at the request of the respondent shall order the applicant to submit to arbitration by a certain time period.

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Interim Measures (continued) ‧ If the applicant seeking provisional relief fails to submit to arbitration by the time period, the court may, pursuant to a petition by the respondent, invalidate the order for provisional seizure or disposition.

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Determination of Rules of Procedure ‧ Parties’ agreement ‧ Arbitration Act ‧ Other rules of procedure which the tribunal deems proper, including applying the Code of Civil Procedure mutatis mutandis

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Hearing ‧ A hearing usually takes around three to four hours and the interval between each hearing is from three to four weeks. ‧ For a simple case, the proceeding may be concluded within two to three hearings. ‧ For cases involving complicated issues, more hearings will be held.

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Hearing (continued) ‧ A pre-hearing conference is not common; in practice, the tribunal usually schedules the actual hearing directly. ‧ In practice, local arbitration follows the inquisitorial approach while international arbitration follows the adversarial approach.

III. Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Competence-competence ‧ Article 22 of the Arbitration Act adopts the principle of competence-competence by providing that any dispute about the jurisdiction of the tribunal shall be decided by the tribunal. ‧ A party may not object to jurisdiction if it has submitted the statement of defense on the merits of the dispute. ‧ A party that knows or may know that the arbitral proceedings have derogated from the Arbitration Act or have not complied with the requirements under the arbitration agreement and proceeds with the arbitration without objecting to such non-compliance shall be deemed to have waived the right to object.

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Exchange of Submissions ‧ In international arbitration where the adversarial system is commonly adopted, parties are allowed several rounds of exchange of submissions before the first hearing and the hearings will be scheduled within a certain time period. ‧ In local arbitration, exchange of submissions is usually made as the hearing progresses. ‧ More and more arbitrators tend to adopt the adversarial system approach in conducting arbitration proceeding.

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Exchange of Submissions (continued) ‧ There are no specific rules on electronic disclosure under the Arbitration Act. ‧ Hard copies of documents are usually submitted. ‧ Article 13 of the CAA Arbitration Rules provides that after the tribunal or the parties have reached an agreement, written documents may be sent via electronic means pursuant to the rules established by the CAA.

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Evidence ‧ Strict rules of evidence do not apply to arbitration proceedings. ‧ An arbitral tribunal may admit any evidence that it deems relevant to the arbitration, unless the evidence is protected by privilege. ‧ Presentation of evidence at a late stage of the arbitration proceeding usually is met with disfavor by the arbitral tribunal.

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Evidence (continued) ‧ Witnesses commonly submit evidence orally, but written witness statements are admissible. ‧ For international arbitration, witnesses are usually required to provide written witness statements and the statements are exchanged before the hearing. ‧

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Evidence (continued) ‧ More than one round of witness statement exchange is common for large-scale cases; statements can be filed concurrently or sequentially, subject to the tribunal's direction. ‧ The parties usually bring the witnesses to the hearing for cross examination at the request of the tribunal. ‧

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Settlement ‧ If the parties reach a settlement prior to the conclusion of the arbitration proceeding, the arbitrator shall record the terms of settlement in a settlement agreement. ‧ The settlement agreement has the same force and effect as those of an arbitral award. ‧

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Time Limit on Rendering An Award Unless otherwise agreed to by the parties, the arbitral tribunal shall render an arbitral award within six months of commencement of the arbitration. The arbitral tribunal may extend the proceeding for an additional three months if the circumstances so require.

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Legal Effect of An Award ‧ B inding upon the parties and with the same force as a final judgment of a court. ‧ An award may not be enforceable unless a court has granted an enforcement order.

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Setting Aside an Award ‧ Strictly limited to the grounds listed under Articles 38 and 40 of the Arbitration Act. ‧ An action to set aside an award shall be filed with the court within thirty day after the award has been served on the party. ‧ The court may grant an application by the party filing the action to set aside an award to stay enforcement of the award once the applicant has paid a suitable security determined by the court.

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Recognition and Enforcement of a Foreign Arbitral Award ‧ The Arbitration Act does not divide arbitration into ‘ international ’ and ‘ domestic ’ as UNCITRAL model law does, but ‘ foreign ’ and ‘ domestic ’, like the New York Convention. ‧ A foreign arbitral award is: ＊ an arbitral award issued outside the territory of Taiwan; or ＊ issued pursuant to foreign laws within the territory of Taiwan

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Recognition and Enforcement of a Foreign Arbitral Award (continued) ‧ Taiwan is not a signatory to the New York Convention. ‧ Nonetheless, the grounds for refusing recognition of a foreign award under the Arbitration Act are identical to those under Article V of the New York Convention. ‧ Taiwan courts generally follow international standards and practice in determining an application for recognition of a foreign award.

III.Introduction of Taiwan Arbitration Proceeding/Taiwan Arbitration Act (continued) Recognition and Enforcement of a Foreign Arbitral Award (continued) ‧ Supreme Court in 1986 indicated that the reciprocity requirement should not become a barrier for the enforcement of foreign arbitral awards in Taiwan. ‧ Major jurisdictions whose awards have been recognized by Taiwan courts include PRC, HK, USA, UK, Korea, France, Switzerland, Japan, Malaysia and Vietnam.

Thank you!