1. Introduction
 
Doing business in Taiwan, as in any jurisdiction, exposes a business to legal risks and potential disputes. We encourage you to familiarize yourself with Taiwan’s legal landscape when you are conducting business in Taiwan. Gaining this knowledge enables you to manage challenges and risks, strengthen your position, and leverage legal awareness into a strategic advantage.[1] This essay provides a concise overview of Taiwan’s legal system and court structure to help foreign businesses navigate the local legal environment.
 
2. Legal System
 
Taiwan operates under a unified legal system without federal divisions. As a civil law jurisdiction, Taiwan relies on comprehensive, codified statutes as the foundation of legal authority. Primary sources of law include the Constitution (憲法), statutes enacted by the Legislative Yuan (立法院), and administrative regulations.[2] In civil matters, custom and general legal principles may serve as supplementary sources when statutes leave gaps in the law[3]
 
Taiwan’s civil law tradition prioritizes statutory interpretation over analogical reasoning from prior decisions.[4] Prior court decisions from higher courts have practical and persuasive value, but do not carry the same weight as judge-made case laws in common law jurisdictions.[5] Higher court decisions exert a de facto influence on lower courts, promoting predictability in judicial outcomes.[6] However, a favorable prior ruling is persuasive rather than dispositive because statutory interpretation remains paramount.[7] This distinction separates Taiwan’s approach from that of common law jurisdictions.
 
3. Courts
 
Courts in Taiwan include ordinary courts, administrative courts, specialized courts (for instance, the Intellectual Property and Commercial Court (智慧財產及商業法院; the “IPCC”), the Disciplinary Court (懲戒法院), and the Juvenile and Family Court (少年及家事法院)),[8] as well as the Constitutional Court (憲法法院)[9]. Most litigation generally occurs in ordinary courts, administrative courts, or the IPCC, depending on the nature of the dispute. The following paragraphs discuss these three judicial bodies.
 
3.1 Ordinary Courts
 
Ordinary courts consist of the Supreme Court (最高法院), the high courts (高等法院), and the district courts (地方法院).[10] The ordinary court system operates on a three-level, three-instance structure.[11] For most criminal cases and civil disputes, the district courts are typically the court of first instance, while the high courts serve as the court of second instance, hearing appeals from judgments rendered at the first instance.[12] Both the district courts and the high courts are courts of fact-finding. They not only apply the law but also investigate evidence and make factual determinations.
 
The Supreme Court is the court of third instance, reviewing appeals from lower court judgments for errors of law.[13] The Supreme Court does not re-evaluate facts or consider new evidence.[14] An appeal to the Supreme Court is limited to cases that meet particular criteria.[15] To bring an appeal to the Supreme Court, the appellants must establish valid legal grounds demonstrating that the lower court’s judgment is contrary to law.[16] For disputes over proprietary rights, the value of the interest in the appeal must exceed the statutory threshold (currently NT$1.5 million).[17]
 
3.2 Administrative Courts
 
Administrative courts adjudicate public law disputes and hold jurisdiction over administrative litigation and appeals.[18] This system adopts a three-level, two-instance structure comprising the Supreme Administrative Court (最高行政法院), the High Administrative Court (高等行政法院; i.e., the High Administrative Litigation Divisions of High Administrative Court (高等行政法院高等行政訴訟庭)), and the District Administrative Court (地方行政法院; i.e., the District Administrative Litigation Division of High Administrative Court (高等行政法院地方行政訴訟庭)).Administrative Court (高等行政法院地方行政訴訟庭)) The latter two are divisions within the High Administrative Courts.[20]
 
The District Administrative Court exercises first-instance jurisdiction over simplified proceedings (e.g., small claims up to NT$500,000, challenges to administrative fines or minor administrative sanctions, immigration administrative detentions), ordinary proceedings for specific matters (e.g., tax assessments, administrative penalties, other monetary or property claims against the government up to NT$1,500,000), traffic violation appeals, detention sanction cases, and other matters prescribed by law.[21] The High Administrative Court holds first-instance jurisdiction for ordinary proceedings involving disputes over NT$1.5 million and exercises exclusive jurisdiction over urban planning review cases.[22] The High Administrative Court also hears appeals from the judgments of the District Administrative Court.[23] The Supreme Administrative Court serves as the second-instance and final appellate court, reviewing judgments from the High Administrative Court for errors of law.[24] An appeal to the Supreme Administrative Court requires the appellants to demonstrate a valid legal ground showing that the lower administrative court’s judgment is contrary to law.[25]
 
3.3 The IPCC
 
The IPCC exercises jurisdiction over specified intellectual property cases and major commercial disputes.[26] This specialized court combines both the Intellectual Property Court (智慧財產法院) and the Commercial Court (商業法院).[27] The Intellectual Property Court hears cases such as (1) the first and second instances of certain civil actions for intellectual property rights protection, (2) the first and second instances of certain intellectual property related criminal offenses, (3) the first instance of certain administrative actions or compulsory enforcement matters concerning intellectual property rights, and (4) other cases prescribed by law or determined by the Judicial Yuan.[28] On the other hand, the Commercial Court adjudicates major commercial disputes (e.g., civil claims exceeding NT$100 million or involving corporate governance or securities law issues) and other commercial non-contentious matters.[29]
 
Proceedings in the Commercial Court, governed by the Commercial Case Adjudication Act (商業事件審理法), have several distinct features, including, without limitation, mandatory attorney representation,[30] compulsory pre-trial mediation,[31] the use of expert witnesses[32] and commercial investigators,[33] and scheduled trial planning[34].[35] The Commercial Court functions as a high court-level first-instance court in a two-level, two-instance system.[36] Unless otherwise prescribed by law, appeals from Commercial Court judgments proceed directly to the Supreme Court, bypassing the ordinary high courts.[37] This streamlined structure expedites litigation, making the IPCC an attractive venue for complex, time-sensitive, and high-stakes commercial disputes.[38]
 
4. Conclusion
 
Understanding Taiwan’s legal system enables businesses to manage challenges and risks.[39] Taiwan’s unitary, civil law system relies primarily on codified statutes and emphasizes statutory interpretation over case law analogy.[40] While this approach differs from common law approaches, prior decisions from higher courts still provide useful guidance and enhance judicial predictability.[41]
 
Taiwan’s courts offer multiple avenues for dispute resolution.[42] Ordinary courts hear most cases through a three-level, three-instance system.[43] Administrative courts adjudicate public law disputes.[44] The establishment of specialized courts, such as the IPCC, demonstrates Taiwan’s effort to provide expert and efficient resolution for complex disputes.[45] The IPCC provides specialized resolution for designated intellectual property cases and major commercial disputes.[46] The IPCC’s two-instance, fast-track system for major commercial disputes presents an appealing option for resolving high-stakes, time-critical business matters.[47]
 
In summary, Taiwan has a well-developed civil law system with distinct characteristics.[48] Familiarity with Taiwan’s legal system enables business owners to manage challenges and risks, strengthen their position, and convert legal knowledge into a competitive advantage when conducting business in Taiwan.[49]