Arbitration by consent would form the basis for resolving business disputes between Taiwanese and Chinese companies in the soon-to-be-signed investment protection agreement between Taiwan and China, the Ministry of Economic Affairs (MOEA) said yesterday.
The ministry said in a statement that Taiwan and China had agreed to include the agenda of arbitrations into the planned investment protection agreement.
In future, businesses across the Taiwan Strait could resolve their disputes according to the arbitration clause in their contracts. In the absence of such a clause, they could negotiate to refer to arbitration after disputes break out, the ministry said.
The ministry said the stipulation of arbitrations to resolve disputes in the proposed agreement was an important breakthrough in the negotiations between Taiwan and China.
Moreover, the ministry said the arbitration stipulation would open up enterprises across the Strait to seek settlement of disputes in Taiwan, China or even a third nation, Chiu Yi-cheh (邱一徹), director-general of the ministry’s investment services department, said by telephone yesterday.
Chiu agreed that seeking arbitration at another nation would “internationalize” the disputes, but he declined to elaborate how the Chinese side would respond.
However, it is still unclear about “obligatory arbitrations,” which Taiwanese businesses with operation in China have strongly asked to be included in the agreement to ensure investment protection.
Local media have criticized the possibility that the agreement might lack obligatory arbitration, calling it a lame duck.
However, the ministry said obligatory arbitration would be against the legal principle of mutual consent for arbitration.
The ministry said it had summoned legal scholars, lawyers, experts and government authorities to discuss the issue, and they concluded that obligatory arbitration would not only be against ,Taiwan’s legal system, but would also infringe on the enforcement of people’s right to lawsuits, which would raise the concern of being unconstitutional.
Even though obligatory arbitration are stipulated in the planned investment protection agreement, it would be difficult to enforce because it is against the legal principle, the ministry said.
For instance, the ministry said if Chinese businesses with operations in Taiwan requested obligatory arbitration to resolve a business dispute, the Taiwanese government and local companies would not likely accept the demand.