Academic journal article Asia Pacific Law Review

A Review of the Taiwanese Court's Ruling on Ad Hoc Arbitral Awards

Academic journal article Asia Pacific Law Review

A Review of the Taiwanese Court's Ruling on Ad Hoc Arbitral Awards

Article excerpt

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I. Introduction

Of all the recent judgments and rulings issued by Taiwanese courts regarding arbitral awards, Jin Cheng Feng Construction Co Ltd v National Taiwan University Hospital Bei-Hu Branch1 (the 'Jin Cheng Feng case') has drawn the most widespread concern. It is the first case in which a party has moved for compulsory execution in a Taiwanese court of a domestic ad hoc award. The Taiwan Taipei District Court ('Taipei District Court') overruled the motion on the grounds that an arbitral award made in ad hoc arbitration does not command the same enforceability as a final court judgment and therefore cannot serve as the basis for compulsory execution. The Taipei District Court reasoned that because the ad hoc arbitral tribunal, which was established under ad hoc arbitration, did not satisfy the definition of an arbitration institution under Art 54 of the Taiwan Arbitration Act, the arbitral award rendered by the ad hoc arbitral tribunal did not have the same validity as a final court judgment. Therefore, the award could not serve as a proper legal basis for Jin Cheng Feng Construction Co Ltd's ('Jin Cheng Feng') motion for compulsory execution.2 Jin Cheng Feng appealed. A tribunal of three judges at the Taipei District Court heard the case3 and upheld the court's first ruling. Jin Cheng Feng further appealed to the Taiwan High Court, which also upheld the Taipei District Court's ruling and dismissed the appeal.4

In the Jin Cheng Feng case, the Taiwanese courts made a distinction between arbitral awards made in ad hoc arbitration and those made in institutional arbitration by denying the enforceability of arbitral awards made in ad hoc arbitration. This distinction clearly contradicts the generally accepted international practice. Ad hoc and institutional are the two basic forms of arbitration.5 Most countries permit both forms and do not draw any distinction between the validity of arbitral awards made in ad hoc arbitration and those made in institutional arbitration, with the exception of Taiwan. The Taiwanese court's decision in the Jin Cheng Feng case is unique in that the court permitted ad hoc arbitration while denying the enforceability of arbitral awards made in ad hoc arbitration. This decision deviates from generally accepted international practice and casts doubt on whether Taiwanese courts have a proper understanding of ad hoc arbitration. Moreover, such decision could negatively affect Taiwan's request that PRC courts offer the same treatment for awards made in Taiwan as they do for those made in Hong Kong and foreign countries. Part II of this article explains the concept of ad hoc arbitration. Part III argues that the court's decision in the Jin Cheng Feng case does not conform to Taiwanese arbitration-related laws, regulations and legislative intent, by analyzing related laws and distinguishing the Jin Cheng Feng case from the precedents cited by the Taiwanese courts. Part IV discusses the possible effects of the Jin Cheng Feng case.

II. The Concept of Ad Hoc Arbitration

The origins of the arbitration mechanism can be traced back through historical records of early human society. For example, between 2500 BC and 2300 BC, there were records indicating that ancient Egyptians utilized arbitration agreements as a dispute resolution mechanism for potential disputes.6 Similar records that demonstrate the use of the arbitration mechanism in ancient Greece around 800 BC also exist. In ancient Greece, the arbitral procedures appear to have been largely subject to the parties' control without the involvement of arbitration institutions.7 The establishment of arbitration institutions is considered a modern development because most of the world's major arbitration institutions were established from the late 18th to early 19th centuries. These include: the London Court of International Arbitration in 1892; the Arbitration Institution of the Stockholm Chamber of Commerce in 1917; the International Chamber of Commerce's International Court of Arbitration in 1923; and the American Arbitration Association in 1926. …

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