How to enforce mainland civil judgments – Taiwan Focus

One of the most momentous breaking points in Taiwan's political history came when the Taiwan government first lifted its ban on visiting relatives in China in 1987. Since that time it has been inevitable that Taiwan and China would become more closely-connected in all aspects. In recent years, cross-strait commerce has played an important role for businesses both from Taiwan and China. To nobody's surprise, the deeper the connection becomes, the more disputes arise; especially when the parties involved come from different jurisdictions, which can cause a dispute to be much more complicated.

Dispute resolution mechanisms have been heavily discussed in law reviews and journals; however, this alone does not help remove businessmen's common concern: after the parties have their dispute resolved by a court, what comes next and how can they get their money back? This enquiry leads to the critical question: how to enforce a judgment? Enforcing a judgment in the jurisdiction where it was made regularly does not cause many legal problems, but businessmen in the region need to know how a China (including Hong Kong and Macau) final civil judgment can be enforced in Taiwan.

Recognition

It is common practice around the world, and also in Taiwan, that to enforce a foreign final civil judgment that judgment would need to be recognised by a local court first before filing for enforcement. However, due to the special political circumstances in Taiwan, with respect to the recognition and enforcement of judgments made in China, Hong Kong and Macau, there are different sets of procedures, separated from ordinary foreign final civil judgments. Nevertheless, once the judgment is recognised, in general, it can be enforced in Taiwan.

The key piece of legislation here is Article 74, Paragraph 2 of Act Governing Relations between the People of the Taiwan Area and the Mainland Area: “where any ruling or judgment, or award recognised by a court's ruling as referred to in the preceding paragraph requires performance, it may serve as a writ of Enforcement”.

China

According to Article 74, Paragraph 1 of Act Governing Relations between the People of the Taiwan Area and the Mainland Area (Cross-Strait Act), the primary substantial criterion for a Taiwan court to decide whether to recognise a China final civil judgment is: such judgment must never be contrary to the public order or good morals of the Taiwan Area. Based on the principal of reciprocity, Taiwanese courts tend to recognise a China final civil judgment unless there is a fundamental violation of Taiwan imperative law, public order or good morals. Apart from the above, Article 68 of Enforcement Rules for the Act Governing Relations between Peoples of the Taiwan Area and the Mainland Area further provides some procedural requirements. A China final civil judgment shall be notarised in China first and be authenticated later by Straits Exchange Foundation before it can be recognised by a Taiwan court.

The prerequisite for the application of Article 74 of the Cross-Strait Act was fulfilled when China enacted laws including Provisions of Supreme People's Court on the People's Courts' Recognition of Civil Judgments of the Relevant Courts of the Taiwan Region in 1998 and its Supplement Provisions in 2009, providing Taiwan final judgment can be recognised and enforced in China.

Although it is not abnormal for Taiwan courts to recognise China final civil judgments, controversy still arises because Article 74, Paragraph 2 of the Cross-Strait Act did not clearly stipulate to what extent a China final civil judgment can be recognised – is it only enforceable or does it have the same effect as a Taiwan final judgment? The Taiwan Supreme Court had ruled in its 96-Tai-Shang-Zi-2531 civil judgment that a China final civil judgment can be enforced after recognition but does not have the same effect as a Taiwan final civil judgment. This will cause problems for creditors seeking enforcement in Taiwan as their Taiwanese debtors can file a lawsuit in Taiwan challenging the subject matter again. This Supreme Court civil judgment has been intensively criticised in Taiwan by scholars, but until Article 74 of the Cross-Strait Act is amended or the Taiwan Supreme Court changes its opinion, there is a risk for creditors enforcing a China final civil judgment in Taiwan. To ease this uncertainty, for a transaction between a China company and a Taiwan company, choosing Taiwan as the venue for dispute resolution may be a practical approach in the event that the Taiwanese company is expected to be named as defendant, for a Taiwan judgment can be enforced in Taiwan, without doubt, once it is final.