When one of the parties gives in during a negotiation, the other party shall not elect to allege that the compromise is tantamount to admittance of the obligation(Taiwan)

Jenny Chen

The Kaohsiung Branch of the Taiwan High Court rendered the 104-Bao-Xian-Shang-1 Civil Decision of January 13, 2016 (hereinafter, the “Decision”), holding that when one of the parties compromises during a negotiation, the other party shall not jump to the conclusion that such move is tantamount to recognizing the obligation.

According to the facts underlying this Decision, the parents of the Appellant obtained the insurance at issue from the Appellee with the Appellant as the beneficiary and subsequently were deceased in a fire accident (hereinafter, the “Accident at Issue”). The Appellant’s legal representative claimed insurance indemnification from the Appellee, which has not paid the indemnification ever since. According to the Appellant, since the Appellee’s employees had promised to indemnify to the Appellant’s legal representative after the period in which the indemnification at issue may be claimed expired, the Appellee had admitted to the obligation and the benefit from such period was waived and thus indemnification should not be refused. Therefore, this lawsuit was filed to request indemnification.

According to the Decision, although the admission of an obligation is not limited to explicit admission, the so-called “implicit admission” should still be generally determined by the disputes, if any, about the existence of the claim as well as the process and objectives of dialogues. The dialogues between Appellant’s legal representative and the Appellee’s employee indicate that the parties disputed whether the indemnification could be claimed from the very beginning with no indemnification over five years. It was not sufficient to conclude that the parties no longer disputed the claim at issue during subsequent negotiation. Article 422 of the Code of Civil Procedure specifically provides that the admonitions by mediators or judges and statements of the parties in mediation proceedings shall not be cited as the basis of adjudication in a lawsuit filed after the mediation fails. In addition, since the statement made by a party in a settlement attempt after it fails during oral argument is not a waiver or admission of the object of litigation, a decision should not be rendered against the defendant based on such admission. Based on the same legal theory, a party shall not cite the compromise of another party in a negotiation as admission of the claim. Otherwise, the objective of a legal system which encourages litigation parties to end their disputes by way of negotiation will be affected.

It was further held in this Decision that the parties were aware that they had disputed the existence of the insurance claim at issue from the very beginning, and that the Appellee’s employees had made the above inquiries to prepare all kinds of dispute resolution proposals for submission to their superiors to facilitate dispute resolution. This was not consistent with the obligee’s explicit or implicit admission of the existence the claim asserted against the obligor. Since it should not be asserted that the obligation was implicitly admitted, the Appellant’s appeal was rejected.