Commercial Courts and Commercial Case Adjudication Act: Establishment of Commercial Courts and Enactment of the Commercial Case Adjudication Act for the Trial of Major Commercial Disputes

[2020/01/07]

In order to resolve major commercial disputes by adopting a special procedure through a professional court, the Legislative Yuan amended the Intellectual Property and Commercial Court Organization Act and enacted the Commercial Case Adjudication Act on 17 December 2019, transforming the existing Intellectual Property Court into the Intellectual Property and Commercial Court, with commercial tribunals (hereinafter the “Commercial Court”) for the trial and adjudication of commercial cases. The implementation date for the above laws will be further determined by the Judicial Yuan.

The enactment and amendment are summarized as below:

I. Nature and Scope of Commercial Cases
Under the said laws, commercial cases are civil matters and include commercial litigation and commercial non-litigation matters:
(I) Commercial litigation can be generally divided into “commercial or investment disputes with litigation targets over NT$100 million” and “commercial
    disputes related to publicly listed companies.”
(II) Commercial non-litigation matters include:
    1. Matters relating to application to court for a determination and ruling on share buyback price of a publicly listed company (i.e. the matters where shareholders requesting a company to buy back the shares held due to their objection to the company’s engagement in major business assignment transactions under Article 187 of the Company Act, or to the company’s engagement in mergers and acquisitions under Article 12 of the Business Mergers and Acquisitions Act).
    2. Matters relating to the selection/appointment or dismissal of temporary managers or auditors of a publicly listed company.

II. Two-level Court and Trial System for Commercial Cases
    Under the said laws, commercial cases are subject to the exclusive jurisdiction of the Commercial Court by adopting the two-level court and trial system, which consisting of the first instance for fact finding (collegiate bench of 3 judges) and the second instance for legal scrutiny (collegiate bench of 5 judges).
    The Commercial Case Adjudication Act is a special law (ius singulare). Anything not stipulated in this Act shall be governed by the Code of Civil Procedure or the Non-Litigation Matters Act, depending on whether the subject matter is a commercial litigation or a commercial non-litigation matter.

III. Mandatory Representation by Attorneys
    Considering the expertise in dealing with commercial cases, a mechanism of mandatory representation by attorneys is adopted for both commercial litigation and non-litigation proceedings. Parties must engage attorneys to act as their procedural representative to conduct acts in the proceedings under the Commercial Case Adjudication Act.

IV. Pre-trial Mediation for Commercial Litigation
    Considering the economic efficiency, confidentiality and case-by-case flexibility of mediation, it is compulsory to undergo the mediation procedure for commercial litigation before the proceeding of a trial in order to procure voluntary resolution of the disputes between the parties. The commercial mediation procedure shall be conducted by a single judge, but the judge has the discretion to appoint 1 to 3 commercial mediation commissioners with professional knowledge and experiences on a case-by-case basis. To reach a resolution in the mediation, the parties, their legal representatives and procedural representatives shall present themselves and participate in the mediation procedure personally, unless otherwise approved by the judge or commercial mediation commissioners.

V. Establishment of Commercial Investigation Officers
    The Commercial Court shall have commercial investigation officers, who are to assist the judges in judgment on issues of commercial cases through such personnel’s professional knowledge and experience. The reports prepared by commercial investigation officers shall only be internal reference documents in an advisory nature for the Commercial Court and shall not be published or disclosed.

VI. Clarification Request Mechanism
    The Code of Civil Procedure stipulates that the party shall bear the burden of proof for the facts in favor of such party. However, there may be a scenario where the evidence or materials in favor of one party bearing the burden of proof are in the possession of the other party, resulting in unfairness due to inequality of litigation positions and hindrance to swift and effective proceeding of litigation. For instance, in a commercial or investment dispute between shareholders and a company, the evidence favorable to the shareholders is generally in the company’s possession.
    To provide the parties with an opportunity to collect relevant information at the initial stage of litigation for them to determine the subsequent submission of facts or evidence accordingly, a “clarification request mechanism” is put in place for commercial litigation. Under the mechanism, a party is entitled to directly request the other party to clarify relevant facts or evidence in relation to necessary issues without filing a petition with the court.
    If the requested party refuses to clarify as requested, the requesting party who deems the refusal groundless may petition the court for a clarification order to that party. The court, if determining the refusal groundless, may also issue such order on its initiative. In case the requested party refuses to clarify as requested without justification, the court may determine the claims made by the requesting party as the truth.

VII. Evidence Disclosure Process involving Trade Secrets
    According to the Code of Civil Procedure, a party may petition the court to order the other party or a third party (hereinafter the “Holder”) to provide relevant documents, objects for inspection or materials for expert testimony. If the court deems that the fact to be proven is important and the petition is justified, it shall order the Holder to provide such documents, objects or materials, which will be publicly disclosed in the litigation proceeding.
    In a commercial litigation, the evidentiary materials that the court orders the Holder to submit pursuant to the petition of a party may involve trade secrets. To cope with such circumstance, a special process for evidence disclosure is stipulated under the Commercial Case Adjudication Act. In case the Holder subject to the submission order refuses to provide the materials as ordered by claiming trade secrets, it shall clarify the type, nature and scope of such trade secrets and specify the result and extent of the prejudice of disclosure.
    Where the court deems that the submission of the ordered materials is still required despite the Holder’s refusal, it may request the Holder to provide in a non-public manner. The court shall not disclose the materials so provided in the litigation proceeding. In case the court deems it necessary to further disclose the evidentiary materials to the petitioning party for the purpose to listen to such party’s opinion thereon, the disclosure should only be made to the party’s procedural representative, unless such purpose may not be achieved without directly disclosing to the petitioning party itself.

VIII. Confidentiality Order
    A confidentiality order is to prevent trade secrets containing in the materials in the litigation procedure from disclosing or being used for any purpose other than litigation. Those who hold such trade secrets may petition the court to issue a confidentiality order to related persons to prohibit any use or disclosure of the secrets.
    Under the Commercial Case Adjudication Act, in case the litigation documents or evidentiary materials involve a trade secret of one party or a third party, the secret holder may petition the court to issue a confidentiality order to related persons.

IX. Expert Witness
    Under the expert testimony mechanism of the Code of Civil Procedure, where a disputed issue involves expertise other than jurisprudence, the court may appoint a professional to provide expert testimony as evidence for the court’s judgment and adjudication. However, under such mechanism, an expert to provide testimony must be appointed by the court and may be replaced by the same at its discretion from time to time. Furthermore, the parties are not entitled to question the appointed expert in a hearing, where the parties are not sufficiently protected in the existing mechanism.
    For the purposes to mitigate the said weakness and to enhance the dispute resolution function of the first instance for fact finding, the Commercial Case Adjudication Act introduces the mechanism of “expert witness.” Upon the court’s approval, a party may seek an expert witness as approved to provide a professional opinion on specific disputed issues. The other party is entitled question the expert witness about his/her opinion. The court may, at its discretion or upon a party’s petition, to subpoena the expert witness to state his/her opinions in the hearing. For the purpose to make clear the concurrent and different parts between the professional opinions respectively provided by both parties’ expert witnesses, the court may order both expert witnesses to have a discussion on the disputed issues or other necessary matters and mutually submit a professional opinion in writing to point out on which issue is settled and which is not.