Aaron Chen and Nora Shih [1]
After the Commercial Case Adjudication Law (hereinafter, the “Law”) was released on January 15, 2020, it is decided that the Law will go into effect on July 1 this year (2021). This Law Firm previously introduced the important provisions of the Law [2] in an article titled “Introduction of Major Changes to the Commercial MatterAdjudication Law.” Recently, relevant accommodating legislation for the Law has successively been promulgated, including the Regulations Governing the Use of Electronic Transmission of Briefs for Commercial Cases, the Enforcement Rules of the Commercial Case Adjudication Law, the Regulations Governing the Remote Hearing and Documentation Transmission of Commercial Cases, the Detailed Regulations for Commercial Case Adjudication, the Regulations Governing the Appointment of Attorneys as Process Agents for Commercial Cases, etc. Important contents of the relevant provisions are summarized in the following table.
| 1. Pending commercial cases before the effective date are governed by the original procedure. |
Pending commercial cases or cases not concluded by the superior trial court before July 1, 2021 are governed by the procedure before the effective date of the Law. #Articles 3 and 4 of the Enforcement Rules of the Law |
| 2. Commercial cases mediated by the court before the effective date of the Law with unsuccessful mediation after the effective date of the Law shall be handled by the Commercial Court. | Commercial cases mediated by the court before July 1, 2021 which become commercial cases filed in accordance with Article 419 of the Code of Civil Procedure because the mediation fails after July 1 shall be handled by the Commercial Court. #Article 5 of the Enforcement Rules of the Law |
| 3. The scope of relevant cases derived from commercial cases which should also be handled by the Commercial Court is specifically stipulated. |
Important examples of relevant cases derived from commercial cases which should also be handled by the Commercial Court include the following: － Cases without restriction on the value of the subject matter: 1. Cases such as the mediation, litigation, non-litigation, evidence preservation, preservation procedure, retrial and relevant adjudications of commercial cases. 2. Cases filed to declare the invalidity of mediation or cancellation of mediation with respect to mediation established by the Commercial Court. 3. Filing of a complaint to set aside, or an application to approve the enforcement of, an arbitration award which is made under Article 61, paragraph 2 of the Law. － Cases involving a subject matter valued above NT$100 million: 1. Filing of a complaint to set aside, or an application to approve the enforcement of, an arbitration award of a commercial case. 2. The filing of a complaint to approve the enforcement, or apply for the recognition of, a final decision of a commercial case handed down in a foreign country, Hong Kong or Macao. 3. The filing of a complaint to apply for the recognition of a final decision or an arbitration award of a commercial case that is made in Mainland China Area. #Article 2 of the Detailed Regulations for Commercial Case Adjudication |
| 4. The requirement that a commercial case involving any intellectual property matter or labor matter shall be handled by the Commercial Court and the handling principles are specifically provided. | Commercial cases involving any intellectual property matter or labor matter shall be handled by the Commercial Court, and the handling shall be governed by the Law and the Enforcement Rules of the Law. In the absence of relevant provisions, the laws and regulations for intellectual property cases and labor cases shall apply respectively. #Article 3 of the Detailed Regulations for Commercial Case Adjudication |
| 5. Further detailed provisions on the specific requirement for compulsory representation are made. |
For procedural acts engaged by a party/interested party without retaining a process agent, the court shall first set a period for rectification. If the rectification is not made within the period, the procedural act will not be valid until the rectification is made where such procedure act is engaged by a process agent. The court shall not consider any written statement or application made by a party/interested party that does not retain a process agent. The attorney’s fees shall be included in the court cost and shall also be set at the time of the final decision. #Article 8,9 and 11 of the Detailed Regulations for Commercial Case Adjudication |
| 6. It is specifically provided that the special professional knowledge or the opinions conveyed based on such knowledge in a report prepared by a commercial investigator should have been known to the parties or interested parties or the court has granted an opportunity to present arguments or state opinions before it may be adopted by the court as the basis of adjudication. |
A commercial court’s adoption of the special professional knowledge or opinions conveyed based on such knowledge in a report prepared by a commercial investigator shall meet one of the following criteria: 1. The parties or interested parties have already been aware of the special professional experience provided by the commercial investigator. (the parties or interested parties has known the special professional knowledge because the special professional knowledge were provided by themselves, or known from the opinion submitted by an expert witness or an examiner) 2. The Commercial Court has informed the parties/interested parties and has provided an opportunity for them to present arguments or state their opinions. #Article 15 of the Detailed Regulations for Commercial Case Adjudication |
| 7. Relevant detailed requirements for the mediation of a commercial case are specifically stipulated. | A commercial case incidental to a criminal case or a commercial case previously pending at an ordinary court which is transferred to the Commercial Court, commercial mediation shall still be pursued except for statutory matters. The judge may allow or order a third party who is an interested party to the subject matter of the commercial mediation to participate in the mediation. Except as otherwise specially agreed with submission to the court, the effect of a process agent retained for commercial mediation shall be extended to the subsequent proceedings of the same instance. #Articles 17-22 of the Detailed Regulations for Commercial Case Adjudication |
| 8. Formulation of the trial plan |
It is specifically stipulated that the court may order both parties to make submissions on the trial plan. If the court and both parties fail to agree on a trial plan, the judge or commissioned judge shall still formulate a plan based on the contents of the trial plan required under Article 39, Paragraphs 2 and 3 of the Law and inform the parties of such plan. #Articles 23 and 24 of the Detailed Regulations for Commercial Case Adjudication |
| 9. The scope of a party’s inquiry or request for explanation to the other party is specifically stipulated. |
A party may inquire of the other party about facts or evidence only if this is required for its assertion or substantiation and it is difficult for such party to investigate. Facts covered by the inquiry may include major facts, indirect facts and auxiliary facts, and the evidentiary items covered by such inquiry are limited to information related to evidence. #Article 25 of the Detailed Regulations for Commercial Case Adjudication |
| 10. Matters that shall be specified in an expert witness’s opinion are specifically stipulated. | The matters that shall be specified in an expert witness’ opinion include: (1) opinions or reasons based on professional knowledge; (2) the facts and evidence relied on; (3) the reference materials or personal expertise relied on; (4) the information stipulated under Article 49, Paragraph 2 of the Law; and (5) an oath. #Article 27 of the Detailed Regulations for Commercial Case Adjudication |
| 11. Relevant detailed requirements for protective orders are specifically stipulated. | A person subject to a protective order shall be a natural person. When a protective order is applied, the objects that record trade secrets shall be sealed and separately submitted to the court, and the electronic brief submission system does not apply. #Articles 31 and 32 of the Detailed Regulations for Commercial Case Adjudication |
| 12. Factors that may be considered in determining if a company’s legal representative has carried out business in good faith and has performed the duty of care as a good administrator are specifically stipulated. |
Factors that may be considered in determining if a company’s legal representative has carried out business in good faith and has performed the duty of care as a good administrator are specifically stipulated: 1. Whether the behavior is in good faith and sincere; 2. Whether there is sufficient information as determination basis; 3. Whether there is any conflict of interest, lack of independent determination or ground of recusal; 4. Whether there is any abuse of power of discretion. 5. Whether there is necessary supervision over the operation of a company. #Article 37 of the Detailed Regulations for Commercial Case Adjudication |
| 13. The documents that an interested party in a case in which the share purchase price is adjudicated may be ordered to produce are specifically stipulated. |
With respect to the determination of the share price in a case in which the share purchase price is adjudicated, the company is obligated to provide the financial reports, a fair value appraisal description, a public tender offer prospectus and legal opinions or documents or materials designated by the Commercial Court for production which may facilitate the calculation of the share price. #Article 40 of the Enforcement Rules of the Law |
The Law will go into effect on July 1 this year (2021). The Detailed Regulations for Commercial Case Adjudication promulgated by the Judicial Yuan this May indeed contribute to the relevant accommodating procedural requirements (such as the inquiry system between the parties, expert witness system, etc.) for the system in which the Law attracts public attention and to the handling by the court when no agreement on a trial plan can be reached. As to the sufficiency of the current accommodating measures, e.g., the responses of the other party in the inquiry system between the parties where the other party is inquired about the facts or evidence, and of the standard for approving or rejecting the inquiry by the court, it seems that the Law or the Detailed Regulations for Commercial Case Adjudication still do not provide sufficient guidance. This cannot be further clarified until court practices develop after the new law is implemented. In fact, in international litigation or international arbitration proceedings, similar trial plans, the use of expert witnesses, and the request lodged by a party to the other party for facts or evidentiary materials, or mechanisms such as electronic transmission of briefs and evidence and remote court hearing have been implemented for years. After a similar system is introduced in the litigation proceedings in Taiwan by the Law, what the system will actually look like after its actual operation requires is worthy of further attention.
In addition, the Detailed Regulations for Commercial Case Adjudication stipulate the factors that may be considered in determining if a company’s legal representative has carried out business in good faith and has performed the duty of care as a good administrator. It is worth contemplating if it is appropriate as a matter of jurisprudence to have the Judicial Yuan propose such factors rather than develop these factors by the legislative organ or through court practices. Anyway, a company’s legal representative should pay attention to these factors in carrying out his/her duties.
[1] The authors are lawyers of Lee, Tsai & Partners. However, the contents of this article merely reflect personal opinions and do not represent the position of the law firm.
[2] Introduction of Major Changes under the Commercial Case Adjudication Law (Taiwan), https://reurl.cc/3NvjNX