Originally from Arbitration in Asia - 2nd Edition

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As the Republic of China on Taiwan (“Taiwan”) experiences sustained economic growth, a concomitant reform of its legal system has become a pressing issue for the government.  To address the complex problems associated with a modern society, Taiwan’s legislature has in recent years passed a series of statutes which promise to fundamentally change its legal landscape.  Liberalization and internationalization are two guiding principles in this wave of legal reform. The government seeks to establish a predictable and transparent legal framework to facilitate cross-border economic activities, with minimal interference to the parties’ freedom in structuring their business relationships.  Although isolated from the formal legal framework of the international community, Taiwan being a member of the World Trade Organization (“WTO”) as an independent customs territory,  stands ready to adhere to the international disciplines enforced by the WTO.

To be sure, respect for a free market and party autonomy would not be adequate in itself; effective mechanisms must be in place to deal with the situation where a business relationship, however ideally structured at its inception, goes awry. Dispute resolution is one of the priorities on the government’s reform agenda  The Chinese have a reputation for preferring out-of-court settlement of civil disputes,  and, among the various alternatives to civil litigation, arbitration is one of the most conventional, yet modern, means for resolving civil and commercial disputes in Taiwan. In 1998, a new ROC Arbitration Act (the “Arbitration Act”) was passed by the legislature, replacing its predecessor enacted in 1961.  Many provisions in the new Arbitration Act are influenced by the Model Law promulgated by the United Nations Commission on International Trade Law (“UNCITRAL Model Law”).   The drafters of the Arbitration Act proposed to make Taiwan’s arbitration regime more in line with international standards. Although the Arbitration Act is not without its own uncertainties,  it should have a positive influence on the development of arbitration in Taiwan.