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Cross-Strait Arbitration – The Future of Dispute Resolution between Taiwan and China

Arbitration is one of the many private dispute resolution mechanisms that parties may adopt to resolve their disputes. It is legally binding, enforceable, and final. With international commercial arbitration, parties can readily choose from a number of established institutions and rule-making bodies to administer and supervise the process. These include the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the Hong Kong International Arbitration Centre (HKIAC), the China International Economic and Trade Arbitration Commission (CIETAC) and more. Furthermore, parties can generally stipulate the desired number of arbitrators to preside over a dispute; the requisite qualifications and experiences; as well as setting out the applicable laws and rules. This essential feature of flexibility reflecting the parties’ needs has become a crucial factor when weighing up the advantages and disadvantages of inserting an arbitration agreement into a contract. While judgments rendered in domestic courts may be enforced through the powers of the state, arbitration awards are not automatically enforceable. Instead, they rely on voluntary compliance by the losing party. A party can generally seek enforcement under a national court where the state is a member of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). The New York Convention provides that an arbitral award made in one Convention state can be enforced in any of the other Convention states, which currently covers more than 145 jurisdictions. However, this may be subject to national laws that provide limited grounds for recourse and setting aside awards made in international proceedings, such as considerations of public policy and lack of arbitrability.

For businesses and individuals in Taiwan interested in considering the viability of an arbitration, it is particularly worth noting that Taiwan is not a party to the New York Convention as it is not a member of the United Nations. This means that arbitral awards rendered may not enforced in Taiwan, thus parties may be less inclined to choose arbitration as a means of dispute resolution.

However, a new and exciting possibility has risen for those engaging in Greater China recently. The Arbitration Centre Across the Straits situated in Pingtan County, Fuzhou, was established on December 29, 2015, to provide efficient, reliable and effective dispute resolution services for cross-strait enterprises. The Centre aims to enhance the business and economic ties across the straits, as well as assist with the stable development and cooperation between Taiwan and China. The idea is to serve businesses and investors who are unfamiliar with the municipal laws across the straits in a transparent and just manner. Like most international arbitration institutions, its rules also aim to ensure that all decisions will be final and enforceable by both parties. The Centre has appointed a panel of experienced arbitrators from China, Taiwan, the Hong Kong Special Administrative Region, and the Macau Special Administrative Region who are all specialists of their respective laws and systems. Their specialties include international trade law, contract law, maritime and aviation law, international investments, cross-strait investments, banking and finance, general corporate, intellectual property and more. As the trade volume between Taiwan and China stood at 37.5 billion US dollars in the first quarter of this year, it is hoped that these growing numbers would be better protected under the regional arbitration center. Furthermore, there is an anticipated cumulative investment of around $8 trillion US dollars under China’s One-Belt, One-Road (OBOR) initiative aiming to increase connectivity and cooperation amongst China and the rest of the world. Industry leaders across the straits must take a proactive stance in preparing for the vast opportunities, as well as potential legal impediments to adequately safeguard their interests. Currently, Liu & Partners’ founder, Mr. Jan-Wei (David) Liu, serves as an appointed arbitrator of Taiwan specializing in commercial and corporate law, civil procedure, and arbitration law. Mr. Liu also serves as an arbitrator of CIETAC (China International Economic and Trade Arbitration Commission) Beijing, and he has been invited to present on the future developments of cross-strait and OBOR arbitration to judges, lawyers, academics and government officials in China. Liu & Partners has a wealth of experiences in dealing with cross-border and cross-strait transactions and investments, and our cross-strait arbitration practice group is dedicated to assisting our clients with the efficient resolution of disputes involving people across the strait. Please contact us if you would like to find out more about cross-strait arbitration, or any related inquiries for our services.

Liu & Partners Attorneys-at-Law 華通國際法律事務所 Angel Liu (Advisor) 劉昂如 顧問 Room C, 6F, No. 261, Sec. 3, Nanjing E. Rd., Songshan Dist., Taipei 10550, Taiwan Tel: +886 (2) 2717 7878

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