Channels for Resolving Investment Disputes

Despite the fact that Taiwanese investors are under the protection of P.R.C. laws and regulation,⁷³ disputes arising from Taiwanese investors’ investment are not totally avoidable. Therefore, there is no key to the question of “how to resolve disputes of all kinds.” When looking at how such disputes are resolved, two provisions worth our attention. The author directs the individual provisions and also provides some information of the law and rule.

The first one would be Article 14 of “Law of the People’s Republic of China on the

72 Study by NTPU, supra note 70, 58-123. See also MOEA, 2010 Diagnosis on Management of Taiwanese Investors in China and Investment Disputes Cases [99 Nian Du Da Lu Tai Shang Jing Guan Jhen Duan Yu Tou Zih Jiou Fen An Li], at 96-181, available at

http://twbusiness.nat.gov.tw/files/201110/20111013-99.pdf (last visited Feb. 6, 2013).

73 Study by NTPU, supra note 70, at 24-48. How the current legal protections run is discussed in detail in Chapter Three.

25

Protection of Investment of Taiwan Compatriots.”⁷⁴ By announcing and implementing

“Law of the People’s Republic of China on the Protection of Investment of Taiwan Compatriots,” China has level up the protection on Taiwanese Investors from order or regulation to the standard of law. However, this set of law has its deficiency on that protection on Taiwanese investors is not well-rounded and that the uncertainty in it resulted in local governments’ implementing their own laws.⁷⁵ Dispute resolving channels mentioned under Art. 14 are consultation, mediation and arbitration, if provided in the contracts.

Second one is Article 28 of “Rules for Implementation of The Protection of Investments by Taiwan Compatriots.”⁷⁶ This set of Rules contains more protections on

74 Law of the People’s Republic of China On the Protection of Investment of Taiwan Compatriots (adopted at the Sixth Meeting of the Standing Committee of the Eighth National People's Congress on Mar. 5, 1994, promulgated by Order No.20 of the President of the People's Republic of China the same date), full text available at http://www.pkykwong.com/eng/pdf/law_protection.pdf (last visited Dec. 8, 2012). Art. 14 states that

1. With respect to disputes over investment arising between investors who are Taiwan compatriots and companies, enterprises, other economic organizations or individuals in other provinces, autonomous regions or municipalities directly under the Central Government, the parties concerned may settle them through consultation or mediation.

2. Where the parties concerned are not willing to resort to consultation or mediation, or where consultation or mediation proves unsuccessful, they may, in accordance with the arbitration clause in the contract or the written arbitration agreement reached subsequently, submit the matter to an arbitration organ for arbitration.

3. Where there is no arbitration clause in the contract, and no written arbitration

agreement reached subsequently, the parties concerned may bring a suit to the people’s court.

75 Analysis on Cross-Strait BIA and Recommendations to Taiwanese Investors [Hai Xia Liang An Tou Zi Bao Zhang He Cu Jin Xie Yi Ping Xi Yu Dui Tai Shang De Jian Yi], http://www.npf.org.tw/post/2/11355 (last visited Feb. 5, 2013).

76 Rules for Implementation of The Protection of Investments by Taiwan Compatriots (promulgated on Dec. 5, 1999), full text available at http://www.asianlii.org/cn/legis/cen/laws/rfiotpoibtc825/ (last visited Dec. 8, 2012). Art. 28 sets out as followed,

Investors who are Taiwan compatriots, enterprises with investment by Taiwan compatriots, or associations of enterprises with investment by Taiwan compatriots, if believing that any specific administrative behavior of an administrative agency or work staff of an

administrative agency has infringed upon their lawful rights and interests, may apply for administrative reconsideration or institute administrative procedure in accordance with the

26

Taiwanese investors, such as broadening the scope of protection to indirect investment.

Though “Rules for Implementation of The Protection of Investments by Taiwan Compatriots” is meant to solve the problems in applying “Law of the People’s Republic of China on the Protection of Investment of Taiwan Compatriots,” provisions provide in this set of rules remain vague or unclear due to the absence of regulations concerning procedural matters.⁷⁷ In regard to disputes arising concerning administrative behaviors, Art. 28 provides that investors may resort to administrative reconsideration or institute administrative procedure.

Options provided to Taiwanese investors, in accordance with the two foresaid provisions, are consultation, mediation, arbitration and civil litigation when it is disputes over investment between Taiwanese investors and other private sectors involved; when the dispute is between Taiwanese investors and administrative agencies, that’s when administrative reconsideration or institute administrative procedure apply.

provisions of relevant laws and administrative regulations of the State.

77 Analysis on Cross-Strait BIA and Recommendations to Taiwanese Investors, supra note 75.

27

Figure 1: Ways of resolving dispute in P.R.C. as provided under Chinese Law Source: Study on Disputes Concerning Taiwanese Investors and Their Way Out⁷⁸

Through negation, which may take place either before or after parties’ resorting to judicial remedies or arbitration, parties to the dispute can exchange opinions directly. In practice, Taiwan affairs offices play the role as brokers.⁷⁹ Similar with negotiation, the purpose of mediation is not seeking for absolute justice, but a resolution that is acceptable to both parties. To facilitate both negotiation and administrative mediation,⁸⁰ China established the “Department of Complaints and Coordination” to deal with

crucial cases of Taiwanese investors’ complaints⁸¹ in July 2005.⁸² According to Article

78 Study by NTPU, supra note 70.

79 Id. at 50

80 Mediation, in the context of China, can be divided into five categories: mediation in court, mediation in arbitration, joint mediation, administrative mediation and civil mediation.

81 Office’s Structure of Taiwan Affairs Office of the State Council P.R.C.,

http://www.gwytb.gov.cn/en/Introduction/OfficesStructure/201103/t20110316_1789195.htm (last visited Feb. 6,2013).

28

14 of “Law of the People’s Republic of China on the Protection of Investment of Taiwan Compatriots,” arbitration and either consultation or mediation can applied solely or interchangeably. As to which arbitration institution to turn to, Taiwanese investors shall have the option to submit disputes to institutions outside China and Taiwan.⁸³

As for judicial remedies,⁸⁴ Taiwanese investors rarely resort to local courts in practice. And when it comes to circumstances that Taiwanese investors deem behaviors of administrative organs inappropriate and expropriation, Taiwanese investors often turn to local Taiwan affairs offices.⁸⁵