Taiwan’s Legislative Yuan[1] is now reviewing the draft of the Commercial Case Adjudication Act (“Act”) proposed by Taiwan’s Judicial Yuan. The Act aims to establish a Commercial Court to speed up the litigation process for select commercial disputes in Taiwan.

Recent experiences have shown that several major commercial disputes in Taiwan endured lengthy litigation for years, including the infamous SOGO department store management fight, which began in 2002 and lasted well over 10 years.  In 2017, the Taiwan Judicial Reform Conference resolved to propose the establishment of a Commercial Court to help achieve the goal of rendering expedient, professional, consistent, and predictable commercial court judgements to better meet the expectation of the broader public.

A committee consisting of academic scholars and lawyers who specialize in commercial, financial, and civil procedural law, judges at various trial levels, and representatives from competent administrative agencies was set up under the Judicial Yuan, in order to establish the rules and procedures for the Commercial Court.

The salient points of the draft Act are:

1.   Establishment of a professional Commercial Court

A Commercial Court at the level of the High Court, equivalent of an appeals court, will be established to adopt a two-tier system.  Trial will be before a three-judge panel.  A Commercial Court judgment can only be appealed to the Supreme Court on the grounds of error(s) in law.

2.   Counsel representation required in trial

The parties must be represented by lawyers or persons qualified as lawyers during trials to improve the effectiveness of the trial.

3.   Use of technology

Parties will be able to transmit pleadings through an online system. When the court deems it appropriate, it can, in accordance with the law, use sound and video transmission technology to conduct trials in order to facilitate responses from the parties.

4.   Pre-trial mediation procedure

A pre-trial mediation procedure will be available by way of a mediation committee comprised of persons with relevant expertise to enhance the professionalism of the mediation plan proposed by the committee.

5.   Inquiry from the parties

In order to streamline claims preparation and/or provide evidence, the parties can list items deemed necessary in order to make inquiries to or request explanations from the opposing party to assess the litigation strategy and speed up the process.

6.   Introduction of expert witnesses

The parties can seek expert witnesses to provide professional opinion and can further cross-examine the expert witnesses provided by the opposing party.  Witness statements can also be utilized to enhance the professionalism of the trial.

7.   Trade secret protection order

If business secrets are contained in any documents or in items being examined during the litigation procedure, the holder of the business secrets can request the court to issue a trade secret protection order to balance the interests of discovery and protection of business secrets.

The draft Act provides two categories of cases that can be heard in the Commercial Court: commercial litigation exceeding a certain value and certain non-litigious commercial matters.

· Commercial litigation exceeding certain value

–     “Civil commercial disputes” with a claimed amount that exceeds TWD 100 million (around US $3.3 million). The types of “civil commercial disputes” are further defined in the Act.

–      Civil disputes between a shareholder in a public company while exercising his shareholder’s rights and a representative and/or the company, or an event where the Securities Investor and Futures Trader Protection Institution asks the court to dismiss the director or supervisor of a company.

–      Civil disputes regarding the validity of board/shareholders resolutions of a public company.

· Non-litigious commercial matters

–     Applications by a public company to determine an appropriate purchase price for shares.

–        Applications to select/dismiss a temporary administrator or the inspector of a public company in accordance with the Company Law.

Lastly, the draft Act provides that the jurisdiction of the Commercial Court does not extend to criminal cases.

The final version of the Act will come into effect only after it is passed and published by the Taiwan Legislative Yuan.  Our Taipei office will continue to monitor the progress of subsequent developments.

[1]     According to Taiwan’s constitution, the Government of Taiwan consists of five branches (Yuan) for the separation of five powers: the Executive Yuan, the Legislative Yuan, the Judicial Yuan, the Control Yuan and the Examination Yuan.

H. Henry Chang

As a leading authority on cross-border investments and dispute resolution, including corporate compliance work, H. Henry Chang has over 20 years' experience advising leading global multinational as well as domestic clients. He has an unrivaled depth and scope of experience handling a diverse spectrum of complex multi-jurisdictional matters.

Chien-Hung Lai

Chien-Hung Lai is a partner in the Baker McKenzie Dispute Resolution team based in Taipei. Mr. Lai concentrates his practice on dispute resolution involving civil, criminal and administrative law, as well as on labor and employment law, in addition to general commercial and corporate matters.