- Recognition and Enforcement for Arbitral Awards and Judgments in Taiwan
- November 7, 2011
- Law Firm: Lee Tsai Partners - Taipei Office
When determining the venue in dispute resolution clauses for commercial transactions, companies generally give preference to the venue that is most convenient. However, in international commercial transactions, which has become common to most business in this global economy, an added consideration that is crucial to the selection of venue is whether the judgment or arbitral award rendered by the forum selected would be enforceable in the jurisdiction where enforcement may be sought.
This article will provide a brief overview of the recognition and enforcement procedures in Taiwan.
Taiwan courts have recognized and enforced final judgments rendered in foreign courts, such as those made by courts in the United Sates. Further, while Taiwan is not a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, arbitration awards made in countries outside of Taiwan have also been recognized by Taiwan under the principle of reciprocity.
I. Recognition of Foreign Judgments and Arbitral Awards in Taiwan
The difference between the enforcement of foreign judgments and foreign arbitral awards in Taiwan is in the recognition process. The recognition of foreign judgments is subject to court trial in Taiwan, which includes the following three instances: district court, high court, and the Supreme Court. It may take several years to obtain a final judgment for such recognition and, until a final judgment is rendered, neither party may proceed with any compulsory execution procedures. As such, the time required for obtaining the recognition of foreign arbitral awards is generally less time consuming than for obtaining the recognition of foreign judgments.
A. Foreign Judgments
For a foreign judgment to be recognized in Taiwan, it must be final and binding, i.e., not subject to further appeals. To obtain recognition of a foreign judgment, the foreign judgment must be translated into Chinese and submitted to a Taiwan court with the complaint. The Taiwan court will then schedule a hearing to consider whether the following four requirements are met:
(a) the foreign court rendering the judgment must have jurisdiction over the dispute in question according to the laws of Taiwan;
(b) if a default judgment is rendered against the defendant, the notice or summons of the initiation of action had been legally served in a reasonable time in the foreign country or had been served through judicial assistance provided under the R.O.C. laws;
(c) the contents or litigation proceeding of the foreign judgment is not contrary to the public order or good morals of Taiwan; and
(d) judgments given by Taiwan Courts are reciprocally recognized by the foreign country concerned.
According to Article 402 of the Taiwan Code of Civil Procedure, if the above requirements are met, the foreign judgment must be recognized.
B. Recognition of Foreign Arbitral Awards
According to Article 47 of the Arbitration law of the Republic of China, “A foreign arbitral award is an arbitral award which is issued outside the territory of the Republic of China or issued pursuant to foreign laws within the territory of the Republic of China.”
To obtain recognition of a foreign arbitral award, an application must be filed in the Taiwan court along with the original (or authenticated copies) of the arbitration agreement and award together with the full text of the foreign arbitration provisions pursuant to which the award was rendered. Such documents must be translated into Chinese and legalized by the embassy, consulate, representative office, liaison office, or any other organization authorized by the government of Taiwan. The Taiwan court may grant its ruling based on its review of the application; however, the judge is also entitled to, at its discretion, call a hearing if he/she determines that the issues in the case are overly complex.
The Taiwan court is required to dismiss an application for recognition of a foreign arbitral award if:
(a) the recognition or enforcement of the arbitral award will run counter to public order or good morals of Taiwan; or
(b) the dispute may not be arbitrated in accordance with the laws of Taiwan.
Further, if a party applies to the Court for recognition of a foreign arbitral award which concerns any of the following circumstances, the respondent may request the Court to dismiss the application within twenty days from the date of receipt of the notice of the application:
(a) 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.
(b) 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.
(c) A party is 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.
(d) 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.
(e) 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.
(f) The arbitral award is not yet binding upon the parties or has been suspended or revoked by a competent court.
For the enforcement of a foreign arbitral award, such arbitral award should first be final and binding and a Taiwan court’s ruling on recognition for such award must also be obtained.
II. Enforcement of Foreign Judgments and Arbitral Awards
Once the Taiwan court recognizes the final foreign judgment/arbitral award, enforcement proceedings are the same. An application for the enforcement of the recognized foreign judgment/arbitral award shall be submitted to the Civil Execution Department of the District Court to initiate an enforcement proceeding and the applicant shall pay an execution fee of 0.8% of the claim amount.