Alternatives to litigationi Overview of alternatives to litigation
Alternative dispute resolution in Taiwan comes mainly in two forms: arbitration and mediation. Both, if successful, have the same effect as a court's final and binding judgment.ii Arbitration
The Arbitration Law governs arbitration. Only if the parties to a dispute come to an agreement on arbitration shall such dispute be submitted to arbitration.
Established under the Arbitration Law, there are five arbitration institutions: the Chinese Arbitration Association, Taipei; the Taiwan Construction Arbitration Association; the Labour Dispute Arbitration Association; the Chinese Construction Industry Arbitration Association; and the Chinese Real Estate Arbitration Association. The Chinese Arbitration Association, Taipei is the most used arbitration association.
Arbitration is becoming more and more common in Taiwan, in particular in construction contracts.
Once an arbitral award is rendered, it becomes final, irrevocable and unappealable. However, in the event of limited procedural irregularities it can be set aside by the court.18 Furthermore, an award may be enforceable after an application for enforcement has been granted by the court. Again, only with very limited irregularities shall such an application be dismissed.19
A foreign arbitral award is an arbitral award rendered outside Taiwan or rendered pursuant to foreign laws within Taiwan. A foreign arbitral award, after an application for recognition has been granted by the court, shall be enforceable.
The court shall dismiss the application for recognition of a foreign arbitral award if such award contains one of the following elements:20
- where the recognition or enforcement of the arbitral award is contrary to the public order or good morals of Taiwan;
- where the dispute is not arbitrable under the laws of Taiwan; or
- where the country where the arbitral award is made or whose laws govern the arbitral award does not recognise the arbitral awards of Taiwan.
In addition, if a foreign arbitral award concerns any of the following circumstances, the respondent may request the court to dismiss an application for recognition within 20 days from the date of receipt of the notice of such application:21
- 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 is not given proper notice of the appointment of an arbitrator or of any other matter required in the arbitral proceedings, or any other situations that 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 contravenes the arbitration agreement or, in the absence of an arbitration agreement, the law of the place of the arbitration; or
- the arbitral award is not yet binding upon the parties or has been suspended or revoked by a competent court.
Taiwan is not a signatory to the New York Convention; therefore, the Convention does not apply to arbitrations in Taiwan.iii Mediation
Mediation is provided in the CCP to be held by the court and in other laws to be held by other institutions.Mediation in the court
Under the CCAA, the mediation procedure is mandatory before an action for a commercial case is initiated.
Under the CCP, mediation may be compulsory or optional.
Except in cases where the court shall dismiss an application for mediation forthwith,22 the following matters shall be subject to mediation by the court before the relevant action is initiated:23
- disputes arising from a relationship of adjacency between real property owners or superficiaries, or other persons using the real property;
- disputes arising from the determination of boundaries or demarcation of real property;
- disputes among co-owners of real property arising from the management, disposition or partition of real property held in undivided condition;
- disputes arising from the management of a building or of a common part thereof among the owners of the shared, divided title or persons using the building;
- disputes arising from an increment or reduction or exemption of the rental of real property;
- disputes arising from the determination of the term, scope and rental of a superficies;
- disputes arising from a traffic accident or medical treatment;
- disputes arising from an employment contract between an employer and an employee;
- disputes arising from a partnership between the partners, or between the undisclosed partners and the nominal business operator;
- disputes arising from proprietary rights between spouses, lineal relatives by blood, collateral relatives by blood within the fourth degree of relationship, collateral relatives by marriage within the third degree of relationship, or head of the house or members of the house; and
- other disputes arising from proprietary rights where the price or value of the object in dispute is less than NT$500,000.
Nevertheless, in practice a regular lawsuit may be filed with the court even if the matter at issue is one of the above compulsory mediation matters. Receiving the complaint, the court would conduct the mediation proceedings first. Should the mediation fail, regular litigation proceedings will commence.
If the matter at issue is not subject to compulsory mediation, any party may also apply for mediation before initiating the relevant action.
The court would seek mediation at any time irrespective of the phase of the proceedings and irrespective of compulsory or optional mediation.
The settlement in the mediation is at will. A successful mediation is reached upon the agreement of the parties. A successful mediation shall take the same effect as a settlement in litigation, meaning that a mediation transcript made based on the parties' settlement agreement may be enforceable. When an action has been filed and the mediation succeeds during the litigation proceedings, the plaintiff may move for the return of two-thirds of the court costs already paid when the action was filed.Mediation outside the court
Some other laws provide for mediation:
- the Family Act, for family matters;
- the Township and County-Administered City Mediation Act, for general civil disputes. This is the most commonly used mediation because townships and county-administered cities all over Taiwan establish their own mediation committees, which are convenient for people for settling disputes, and such mediation covers all civil cases and the type of criminal cases instituted only upon complaint;
- the Regulations for Consumer Dispute Mediation, for consumer disputes;
- the Act for Settlement of Labour Management Disputes and the Regulations for the Mediation of Labour Management Disputes, for labour disputes;
- the Regulations for Mediation on Disputes of Contract Performance of Government Procurement, for government procurement;
- the Regulations for Copyright Dispute Mediation, for copyright disputes;
- the 37.5% Arable Rent Reduction Act, for disputes involving farm land leasing; and
- the Public Nuisance Dispute Mediation Act, for public nuisance disputes.
Besides arbitration and mediation, there are no other formal alternative dispute resolution procedures. The parties may resolve a dispute by voluntary agreement. Such settlement agreement is not enforceable unless a party files a regular lawsuit with the court and obtains a final and irrevocable judgment based on such settlement agreement. However, if the parties have reached a settlement agreement, the dispute would have been settled and the court would not look into the original dispute but plainly make a decision on the settlement agreement itself.
No expert determination is available in Taiwan.