TAIWAN Law and Practice Contributed by: Daniel T H Tsai, Lee and Li
try or served through judicial assistance provided under ROC laws in Taiwan); • where the performance ordered by such judgment or its litigation procedure is contrary to ROC public policy or morals; or • where there exists no mutual recognition between the foreign country and the ROC. According to Article 4-1 (1) of the Compulsory Enforce- ment Act, the holder of the judgment rendered by a foreign court must apply for the Taiwan court’s rec- ognition and enforcement order first. Once the holder obtains the final order, the foreign court judgment will be enforced by the Taiwan court. When decid- ing whether to grant the recognition and enforcement order, the Taiwan court will not review the merits of the case; rather, it will only examine whether there are limited statutory defects from a procedural viewpoint. 9.5 Enforcement of Arbitration Clauses The arbitration clause is based on the mutual consent of the parties and, according to the Arbitration Act, this must be in writing. Courts in Taiwan do not inter- vene in the arbitration, except in exceptional statutory circumstances (eg, the application of interim relief, an application for the withdrawal of a sole arbitrator, and the arbitral award revocation procedure). The validity of an arbitration clause forming part of a principal contract between the parties may be deter- mined separately from the rest of the principal con- tract. A decision that the contract is nullified, invalid, revoked, rescinded or terminated will not, in principle, affect the validity of the arbitration clause. The courts tend to enforce foreign arbitral awards – provided that they have none of the statutory defects listed in the Arbitration Act, which is modelled on the 1985 UNCITRAL Model Law. The aforementioned principles commonly apply, regardless of whether it is a com- mercial insurance contract or a reinsurance contract. 9.6 Enforcement of Awards An arbitral award made in Taiwan, based on the laws of Taiwan, will have the same effect as a final court judgment and can thus be enforced by the court. Although Taiwan cannot be a member of the Conven- tion on the Recognition and Enforcement of Foreign
Arbitral Awards 1958 (the “New York Convention”), owing to international political factors, many foreign arbitral awards have been successfully enforced in Taiwan in the past. The holder of arbitral awards rendered by a foreign arbitration tribunal must apply for the Taiwan court’s recognition and enforcement order first. Once the holder obtains the final order, the foreign arbitral award will be enforced by the Taiwan court. In the process of granting the recognition and enforcement order, the Taiwan court will not review the merits of the case. It will only examine whether there are limited statutory defects from a procedural viewpoint. 9.7 Alternative Dispute Resolution The parties may choose to initiate a court mediation before or after the case is pending in Taiwan. The court mediation is conducted by a judge (ie, as a mediator); therefore, if an agreement is successfully reached, such agreement has the same legal effect as a final judgment and the parties will be bound by it. On the other hand, if no agreement can be reached through court mediation, the application for court mediation will be deemed to constitute the initiation of a civil lawsuit. The Chinese Arbitration Association, Taipei (CAA) also provides a mediation mechanism. By law, a success- ful mediation agreement can have the same effect as a court judgment and can be enforced. The aforementioned principles apply to consumer contracts, reinsurance contracts and commercial contracts. 9.8 Penalties for Late Payment of Claims Under the Insurance Act, if insurers improperly delay settling claims for reasons attributable to themselves, they must pay default interest at a rate of 10% per annum. The Insurance Act does not provide for other punitive damages. 9.9 Insurers’ Rights of Subrogation The insurer has an automatic right of subrogation upon payment of its indemnification obligation, according to Article 53 of the Insurance Act. However, the amount of the subrogated claim that the insurer may claim
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