The Supreme Court rendered the 103-Tai-Shang-1565 Civil Decision of August 6, 2014 (hereinafter, the "Decision"), holding that when a complaint is filed to set aside an arbitral award on the ground that the arbitral award is not relevant to the disputes under the arbitration agreement or goes beyond the scope of the arbitration agreement pursuant to Article 40, Paragraph 1, Subparagraph 1 and Article 38, Subparagraph 1 of the Arbitration Law, this signifies that the matters set forth in the arbitral awarded rendered by the arbitrators are absolutely irrelevant to the arbitrable disputes under the arbitration agreement or that no award is rendered for the matters for which arbitration is sought.

According to the facts underlying the Decision, Hung Hua United Technology Corp. was a contractor under the Contract (hereinafter, the "Contract at Issue") on Detailed Design and Construction of the Vibration Reduction Project in the Tainan Science and Industrial Park (hereinafter, the "Project at Issue") executed with the Southern Taiwan Science Park Administration. Both parties had disputes because the materials used in the construction did not meet the construction requirements. As a result, the disputes were referred to an arbitration association for arbitration. An arbitral award was rendered to demand the Southern Taiwan Science Park Administration to make the project payment after the penalty was calculated based on discounted prices assessed according to the difference in labor and material costs. After the construction was completed, Hung Hua United Technology Corp. sought another arbitration to request payment which includes the final installment covered in the previous award and the difference in the payment for the flexible vibration material project as verified.

The Southern Taiwan Science Park Administration sought to have the award repealed on the ground that the second arbitral award involved repetitive examination of matters and ordered repetitive payment. It was first indicated in the Decision that an arbitral award is binding to the parties and the court may intervene and set aside the award only in the event of material flaws in the arbitral award. In addition, a complaint to set aside an arbitral award is basically not a review by a superior agency or retrial in the original arbitration procedure, and the court merely reviews grounds for repealing the award and respects the substantive judgment of the arbitrators.

Under Article 40, Paragraph 1, Subparagraph 1 and Article 38, Subparagraph 1 of the Arbitration Law, if an arbitral award has nothing to do with the disputes under the arbitration agreement or goes beyond the scope of the arbitration agreement, any party may file a complaint to set aside the arbitral award against the other party. According to the Decision, that an arbitral award has nothing to do with the disputes under the arbitration agreement or goes beyond the scope of the arbitration agreement means that the matters set forth in the award rendered by the arbitrators are absolutely irrelevant to the arbitrable disputes under the arbitration agreement or that no award is rendered for the matters for which arbitration is sought. When a party seeks another arbitration over the same disputes after an arbitral award has been rendered, if the arbitration tribunal renders a substantively reverse award, this only involves the issue of whether the arbitration procedure violates the legal requirements for res judicata rather than the issue of whether an arbitral award is irrelevant to the disputes under the arbitration agreement or goes beyond the scope of the arbitration agreement. In this matter, the decision of the original trial court which held that such subparagraphs applied on the ground of repetitive payment orders under the two arbitral awards is erroneous.

In addition, it was pointed out in the Decision that the price that a contractor requests the hirer to assess pursuant to the contract and the final construction installment that the hirer is requested to pay pursuant to the contract are two different legal relationships. Although the arbitral award on the assessed payment may have issue preclusion effect on the arbitration procedure for the final installment of the construction payment, still the objects of the two are different. Therefore, it is difficult to conclude that the requirements for res judicata are violated. In this matter, the decision in the original trial court that the original arbitral award violates res judicata requires further explanation. So the original trial court decision was reversed and remanded to the Tainan Branch of the Taiwan High Court.