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Arbitration

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 & Reinsurance

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 owner of a registered trademark is entitled to demand that a third party which infringes or is likely to infringe its trademark rights must cease or prevent such infringement. With respect to the right to claim damages, the Trademark Act explicitly restricts the time limit in which such legal proceedings may be brought. However, there is no time limit for injunctions against trademark infringement.

According to the Examination Guidelines on the Likelihood of Confusion, when evaluating whether two trademarks are likely to cause confusion the examiners in charge should, among other things, consider the strength of distinctiveness of the trademarks. With respect to circumstances of actual confusion, the party concerned may present a market survey as supporting evidence.

According to the Code of Criminal Procedure, if in criminal proceedings the court finds the defendant not guilty, then the court should transfer the civil action to the civil division of a court for trial. However, according to the IP Case Adjudication Act, when a defendant is found not guilty, the civil claim should be directly rejected without transferring it to the civil division of the court.

Awareness of IP rights protection has been rising in recent years. Rights holders and importers, exporters, manufacturers or sellers of various products should pay close attention to changes in customs border measures and institute appropriate internal guidelines for potential scenarios.

Although the IP Case Adjudication Act grants civil courts the power to judge patent validity of their own accord, it is silent on how to handle the application of claim amendment. The IP Court has been inconsistent in its dealings with the application of patent claim amendment. An examination of recent IP Court judgments highlights several different approaches that it has taken in this area.

The new Trademark Act involves changes to several systems, including expansion of the scope of protection for non-conventional trademarks. As non-conventional trademarks may now be entitled to protection under the Trademark Act, rights holders should evaluate whether their trademarks would qualify for such protection and, if so, file applications accordingly.

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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.

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Telecommunications

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

China Mobile and FarEasTone recently announced that the share transfer agreement executed between them in 2009 will expire in June 2013. In addition, the two companies will not discuss equity investment again until the Taiwanese authorities lift the ban prohibiting Chinese citizens and legal entities from investing in the Taiwanese telecommunications industry.

The National Communications Commission had planned to resolve existing disputes regarding network interconnections between major telecommunications operators by amending the existing Regulations Governing Network Interconnections between Telecommunications Enterprises by the end of 2012. However, this objective was not achieved and a hearing is due to be conducted on April 25 2013.

Further to its efforts to introduce functional separation in Chunghwa Telecom in the latest amendments to the Telecommunications Act, the National Communications Commission (NCC) has again submitted a legislative proposal to the Executive Yuan for approval. The NCC has proposed that Chunghwa Telecom should always offer equal prices for the provision of access, if functional separation is not approved.

The National Communications Commission recently announced that mobile access tariffs will be adjusted. The commission believes that easing retail price control in the mobile communications market will help to reduce the burden on smaller operators and guide market competitors to further reduce retail prices.

The National Communications Commission plans to deregulate spectrum trading in 2013. However, major telecommunications operators are sceptical about the fast-changing policy and have questioned whether it is realistic to implement a spectrum trading system in less than a year when a draft regulation has not yet been made available for public consultation.

The National Communications Commission has announced that the Regulations Governing Network Interconnections Among Telecommunications Operators will be amended, and network interconnections between three major operators will soon be required to be free of charge. The newly amended regulations will also require other operators to invest in infrastructure in order to enjoy free interconnections.

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