Recently there are many high value supply contracts entered between Taiwanese and Indian parties, relating mainly to import of machinery. But unfortunately many of the parties have incorporated unenforceable arbitration clauses without understanding the basics of Taiwanese arbitration law and some of them initiate legal proceedings without understanding the fact that the limitation period as per Taiwan law is two years and not three years like Indian law and lose their claims. Hence the endeavour of the author is to high light the main points while entering into the contract and while initiating arbitration against Taiwanese parties.

Arbitration law of Taiwan is Republic of China Arbitration Act, 1998 which is similar to UNCITRAL model law of 1985. As per the said Act, an arbitration has to be in writing and communications like letters, emails, facsimiles, telegrams etc., can be a proof to demonstrate the intention of parties to go for an arbitration, in case of disputes between relating to a particular contract. Article 6 of the Act provides certain qualifications to be an arbitrator which include service as a judge or a Public prosecutor or Practice of more than five years as a lawyer, accountant, architect, mechanic or any other commerce-related professional teaching as Assistant professor or an Arbitrator of a domestic or foreign arbitration Institution. In addition to that except the arbitrators who are empaneled by the arbitral institutions prior to 1998 and persons from legal back ground, others have to get training from an arbitral institution and get certified by an Institution.

The appointment of Arbitrators have to be as per the terms of the arbitration agreement or by the court in case of ad-hoc arbitration and by the arbitral institution in case of an arbitral institution. Normally UNCITRAL Rules of International arbitration are followed by ad hoc arbitrators in Taiwan. Earlier there were conflicting judgments relating to the enforceability of ad hoc arbitration awards, which came to an end by a Judgment of Supreme Court in the year 2014 recognizing ad hoc arbitration award. Even though there are four arbitral institutions Taiwan Construction Arbitration Association, the Labour dispute arbitration Association, Chinese Engineering Arbitration Association and the Chinese Arbitration Association (CAA). But CAA is the major and the most popular Arbitration Centre of Taiwan. CAA has its own arbitration Rules namely “Chinese Arbitration Association Arbitration Rules”. Arbitral tribunal is competent to make interim or partial awards. There are strict time lines prescribed in CAA Arbitration Rules. The arbitration has to be concluded within 6 months. Arbitral tribunal has to make the award within 10 days from the date of closure of arguments. Similarly time lines are prescribed in CAA Rules for each and every stage of arbitration proceeding including appointment of arbitrator, filing of claim, defence etc., which are strictly followed.

The foreign parties should be very careful in two aspects while handling an international arbitration seated in Taiwan. They should incorporate the language of arbitration if they are not comfortable with Chinese language otherwise Chinese will be the default language if arbitration is seated in Taiwan. It is important to note that CAA offers arbitration services in bilingual English & Chinese. More over limitation to initiate any legal proceedings including an arbitration should be made within 2 years from the date of breach, as per the Taiwan law. In addition to that it is important to note that Taiwan is not a signatory to the New York Convention for recognition and enforcement of foreign awards and hence many countries do not recognize and enforce the arbitration awards arising out of a seat in Taiwan. But the foreign award holder has to get a Taiwan court approval to enforce it against a Taiwan company. On 13th November 2015, Legislative assembly of Taiwan Yuan passed a bill of the amendment of Article 47(2) of the Arbitration law of Taiwan, by which foreign awards are statutorily recognized and binding in Taiwan. More over Taiwanese law does not prohibit foreign lawyers from appearing for parties in the arbitration proceedings conducted in Taiwan. The grounds of challenge is also same as grounds specified in UNCITRAL Model law and hence court interference in arbitration awards are very limited.

The other important aspects of CAA Arbitration Rules include Expedited procedure for small claims. The arbitral tribunal will have only one oral hearing in expedited matters and they need to render the final arbitration award within three months from the date of appointment. Both the parties are allowed to produce the proof and evidence to the tribunal. Normally language of the award will be Chinese unless and otherwise parties have mutually agreed for a different language. CAA administers arbitrations outside Taiwan also but if parties have not agreed on a place of arbitration, arbitrators can finalize the place of arbitration, taking into consideration the nature of the case and related aspects. Arbitration is confidential in Taiwan and even party appointed arbitrators are expected to be neutral. The arbitration fees of CAA is determined based on the amounts in dispute. Hence in the opinion of the author, the best option for the parties entering into contract with Taiwan parties should choose Taiwan arbitration clause with CAA as the administering arbitration Institution, which will provide an effective dispute resolution process culminating in an enforceable arbitration award.