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Arbitration & ADR

Overview
Including: Promulgation of the Arbitration Law; Arbitrable Disputes; Parties' Autonomy to Define Procedure; Court Intervention; Court Interim Relief; Language; Application of Equity Principle; Decision-Making by Arbitral Tribunal; Confidentiality; Enforcement of an Arbitral Award; Recognition and Execution of Foreign Awards.

The Taiwan courts have confirmed that they will not allow a party unilaterally to thwart the progress of an arbitration by abusing the 'unable-to-elect' provision in an arbitration clause. This provision should be interpreted as applicable only where both parties are unable or unwilling to elect their own respective arbitrator and jointly to elect the presiding arbitrator.

A recent Supreme Court decision suggests that an arbitral award cannot be challenged merely on the grounds of improper application of substantive law or failure to make reference to the specific provisions of substantive law on which the award is based.

As the statutory period for court actions to vacate an arbitral award is brief and non-extendable, a losing party who wishes to have the award vacated and its attorney must consider all possible grounds for vacation and spell them out in the petition from the outset. Any missed grounds cannot be invoked once the 30-day statutory period has elapsed.

The losing party in an arbitration recently challenged the award on the grounds that insufficient reasons were given and the arbitrators had decided the dispute ex aequo et bono (ie, according to what is right and good). The Supreme Court ruled that an award may be challenged only if no reasons at all are given, and found that the arbitrators had applied general principles of law.

Pre-arbitration provisions are often found in government procurement contracts for construction. Non-compliance with these provisions is frequently invoked by government employers who lose the arbitration and seek to have the arbitral award set aside. A recent ruling is one of several Supreme Court judgments to address this issue.

Capital Markets

The Financial Supervisory Commission of the Executive Yuan has announced new Rules on the Establishment of a Remuneration Committee by a Company whose Stocks are Listed on the Stock Exchange or Traded Over-the-Counter and a Remuneration Committee's Functions and Duties. According to the new rules, a listed company must establish a remuneration committee which will conduct regular reviews to determine the remuneration of its directors, supervisors and managers.

The Taiwan Securities Association (TSA) has promulgated a new regulation under Paragraph 4, Article 24 of the Regulations Governing Underwriting or Re-Sale of Securities by Underwriters, which requires a lead underwriter to provide the TSA with an evaluation report detailing any irregularities in the stock prices of the underlying shares of Taiwan depositary receipts.

Recently, the market price of certain Taiwan depositary receipts (TDRs) dropped and stayed below their listing prices for an extended period. In response to an appeal from the TDR issuers, the Taiwan Stock Exchange Corporation promulgated the Taiwan Stock Exchange Corporation Rules Governing the Secondary Listed Company's Repurchase of TDRs. The new rules permit TDR issuers to repurchase their outstanding TDRs.

The Executive Yuan has passed amendments to the Securities and Exchange Act. This update highlights the most significant of these amendments, including the introduction of a new chapter on foreign companies, amendments regarding elements of intent and a new insider trading exemption.

Company & Commercial

In a recent case, the Taipei District Court held that once a commodity barcode has been read through a computer, it is equivalent to a trade name. Further, given that commodity barcodes are symbols which are applied to articles and can serve as proof in business practice or a contract, they are deemed to be quasi-private documents.

Corporate Finance/M&A

Japan's Interchange Association and Taiwan's Association of East Asian Relations has executed the Agreement between the Interchange Association and Association of East Asian Relations for the Mutual Cooperation on the Liberalisation, Promotion and Protection of Investment. The agreement includes a number of provisions that will facilitate mutual investment between the countries.

Cross-strait trade relations have steadily improved since the signing of the Economic Cooperation Framework Agreement. Taking the next step in Taiwan's continuing efforts to promote cross-strait industry partnerships and to attract more mainland investors, the Ministry of Economic Affairs recently announced that several new industry categories will be opened to Chinese investment.

In order to further liberalise the regulatory framework for M&A activities, the Ministry of Economic Affairs plans to propose certain amendments to the Mergers and Acquisitions Act. The proposed amendments cover consideration in spin-offs, amortisation of intangible assets and tax exemption.

E-commerce

The Taiwan government is considering enacting legislation in response to the problems associated with spam. The Legislative Yuan has scheduled a series of public hearings on the subject and the Executive Yuan's Council of Economic Planning and Development has commissioned a report on international responses to spam, with a focus on legislation. This update summarizes the issues.

Taiwan's government has passed amendments to the Criminal Code in response to the problems of computer hackers, viruses and spam. The amendments are modest in that the fines are far less than the amount of potential damages, and the spam provision barely qualifies as a spam law as it does not prohibit false headers, subject lines or routing information, nor require an opt-out provision.

Insurance

Taiwan and China have signed the Cross-Strait Economic Cooperation Framework Agreement and the Cross-Strait Intellectual Property Right Protection Cooperation Agreement. In connection with the early harvest lists and the liberalisation of trade rules under the new trade pact, China will allow Taiwanese insurance groups to enter the Chinese market by way of merger or strategic alliance if they satisfy certain conditions.

Intellectual Property

The National Health Insurance Act stipulates whether a drug has a patent and, if so, how long since that patent has expired as criteria for adjusting the drug's reimbursement price. Typically, a drug's reimbursement price is reduced after its patent has expired. Regardless of whether or for how long a drug's patent has expired, the reimbursement price should be reasonably adjusted based on prevailing market conditions.

The Intellectual Property Case Adjudication Act stipulates that if a litigant (usually a defendant) claims patent invalidity during a litigation, the court can ask the Taiwan Intellectual Property Office to act as an intervention party to the litigation, in order for the latter to express its views on the validity of the patent.

In a 2013 administrative litigation judgment concerning trademark distinctiveness for a trademark registration application, the IP Court held that whether a trademark is descriptive of the designated goods is not immutable, but will vary with changes in social environment, consumer perception and status of actual use in the market.

Whether using a third party's registered trademark in keyword advertising constitutes trademark infringement remains a controversial issue around the world. In a recent case, the IP Court held that unauthorised use of a trademark in keyword advertising might violate the Fair Trade Act if the website operator has no connection with that particular mark but tries to use it to increase traffic to its own website.

The new Patent Act took effect last year. To cope with the implementation of the amended act, its enforcement rules were also amended. The structure of the enforcement rules has been rearranged to include six chapters, including general provisions, patent rights and supplementary provisions.

The new Patent Act is regarded as the largest and most complicated amendment of the past decade – particularly regarding changes in patent prosecution procedures. The time periods for submitting the two supporting documents have been changed to "within 16 months after the earliest priority date", starting from "the earliest priority date". However, the claim of priority is not necessarily fixed.

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Media & Entertainment

The National Communications Commission (NCC) intends to introduce more competition into the converging television service market through the rezoning of digital cable television franchises and the introduction of tiered service packages. Existing operators have cautiously welcomed these policy-driven measures, but have requested further deregulation on price capping and on limitations on business expansion.

Three new commissioners have been inaugurated into the National Communications Commission. Among other things, the new commissoners are charged with setting policy regarding the digitalisation of cable broadband services and legislative barriers to governmental bodies investing in telecommunications companies.

The National Communications Commission has decided to amend the Regulations Governing the Third Generation (3G) Mobile Telecommunications Services, adding a requirement for those who supply channel programming over 3G networks to obtain approval or licences pursuant to the same regulatory requirements as other broadcasting services.

For some time government agencies and industry players have debated whether emerging mobile television services are subject to ex ante regulation. The National Communications Commission (NCC) has now carried out two consultations to solicit public opinion and the results should help the NCC to finalize its convergence policy for such emerging services.

The National Communications Commission recently announced a plan to select candidates for a handheld television trial, with four six-month trial licences to be issued. However, a number of potential participants are concerned that the plan fails to give a clear picture of the future of handheld television in Taiwan.

The Government Information Office and the Ministry of Transportation and Communications are implementing an ambitious broadcasting policy which aims to restructure the chaotic airwave environment, promote the sustainable development of the radio broadcast industry and provide for a smooth transition from analogue to digital technology.

More updates >

Telecoms

Overview
Including: Groundwork Laid for Unified Regulator; Interconnection, Numbers, Equal Access and MVNOs; Telecommunications Act Amendments; Future Initiatives.

The National Communications Commission (NCC) has released the draft Recommendations and Strategies Concerning Legal Amendments Relating to Communications Convergence, planning to solicit public opinion in the upcoming months. The NCC has stressed that when regulations are amended in future, deregulation will be pursued and the regulatory framework will be geared towards flexible layering.

Huwei's 4G dilemma

11/06/2014

The Transportation Committee of the Legislative Yuan has requested that the National Communications Commission (NCC) impose a comprehensive ban on all China-made network equipment proposed by 4G operators for system construction. The NCC has stated that not using Chinese brands will not affect the construction schedule of operators.

NCC abandons WiMAX

30/04/2014

The National Communications Commission has announced that 190MHz from the 2600MHz bands used by wireless broadband access operators will be available by the end of 2014. It stated that it will no longer approve mergers or grant licence renewals among worldwide interoperability for microwave access (WiMAX) operators, as it now believes that all WiMAX operators have inefficient spectrum use on the 2600MHz bands.

Following completion of the competitive bidding process for licensing mobile broadband services, the National Communications Commission (NCC) issued establishment permits to six operators. It publicly announced that it urges all six 4G operators to launch 4G services during the third quarter of 2014. However, the operators have expressed their discontent about the NCC's cumbersome review procedure.

The National Communications Commission (NCC) recently gathered public opinion on issues such as fixed-line bandwidth competition and last-mile equal access and held a hearing to which all relevant telecommunications operators were invited to convey their opinions. The NCC has yet to confirm whether it will submit a complete draft convergence act to the Executive Yuan.

National securities authorities have warned the National Communications Commission and requested that telecommunications operators stop the procurement of network communications equipment manufactured by suppliers in China, such as Huawei. Huawei is reportedly upset about the governmental control measures.

More updates >