1. Introduction
 
Parties doing business in Taiwan may choose to resolve disputes through arbitration rather than litigation. This choice, however, depends on a valid arbitration agreement, which serves as your entry point to the arbitral forum.[1] But what makes an arbitration agreement valid under the Arbitration Law (仲裁法; the “Act”) in Taiwan? What if the other party challenges the main contract or ignores an existing arbitration agreement by filing a lawsuit in court? The first four articles of the Act answer these questions. These articles work in concert to validate your decision to arbitrate. They uphold your freedom to choose arbitration, describe the essence of a valid arbitration agreement, safeguard that choice against contractual disputes, and clarify the court’s role in compelling the process. By examining these articles with practical examples, we can see how parties can confidently secure arbitration as their chosen forum.
 
2. Party Autonomy, Arbitrability, and the In-Writing Requirement
 
Articles 1 and 2 of the Act outline the principles of party autonomy and arbitrability and establish the requirement that arbitration agreements be in writing. Under Article 1, parties have the autonomy to agree to arbitrate any present or future dispute, as long as the dispute is one that they can settle between themselves under the law. This usually refers to private matters, such as contractual claims or business disputes, that you are free to resolve through private settlement. The principle of arbitrability hinges on whether the parties have the legal authority to resolve the matter in question privately. In contrast, disputes involving matters governed by public policy or issues subject to the state’s exclusive jurisdiction are non-arbitrable. For instance, you cannot resolve certain administrative law matters or criminal liability through private settlement. Article 2 sharpens this focus by requiring that the dispute must arise from a specific legal relationship. Thus, you cannot create an overly broad arbitration clause purporting to cover all conceivable future disputes, regardless of how unrelated those disputes may be to your current dealings. In short, a dispute is arbitrable if it concerns a present or future issue, can be settled between private parties under the law, and is linked to a specific legal relationship.
 
Article 1 also requires that an arbitration agreement be in writing. Recognizing the rapid development of electronic communication, the Act adopts a practical definition of “in writing.” In addition to traditional signed contracts, communications such as letters, faxes, telegrams, or other similar exchanges that clearly show both parties’ agreement to arbitrate can constitute a valid arbitration agreement. Consider a scenario where a manufacturer and a distributor are finalizing a distribution arrangement by fax. The distributor writes, “I propose that any dispute under this distribution arrangement be resolved by a single arbitrator in Taipei under the Arbitration Law.” The manufacturer replies, “I accept your proposal.” This exchange via fax is sufficient to form a valid arbitration agreement. However, under Article 2, the manufacturer and the distributor cannot just agree to arbitrate all their future disputes. Their arbitration agreement must be linked to a specific legal relationship, such as the distribution arrangement in this scenario.
 
3. Separability
 
Article 3 of the Act codifies the doctrine of separability, a fundamental concept in modern arbitration law.[2] Article 3 explicitly states that the validity of an arbitration clause within a broader contract must be determined separately from the validity of the main contract. As a result, even if the other party alleges that your main contract is invalid, void, or terminated, the arbitration clause remains in effect to confer jurisdiction upon the arbitral tribunal. This protects your choice to arbitrate by insulating the arbitration agreement (or clause) from attacks on the main contract.
 
The doctrines of separability and Competence-Competence (Kompetenz-Kompetenz) complement each other in arbitration.[3] Competence-Competence allows an arbitral tribunal to rule on its own jurisdiction, even when the arbitration agreement itself is challenged.[4] Separability supports this authority by ensuring that your arbitration agreement remains effective even if your main contract faces challenges.[5] Together, these two doctrines ensure that your chosen dispute resolution forum (the arbitral tribunal) retains the authority to decide all disputes, including challenges to the very existence or validity of your main contract.[6]
 
Here is an example. Imagine you sell specialized equipment to a purchaser under a purchase contract containing an arbitration clause. After delivery, the purchaser sues in court to rescind the entire contract, claiming you fraudulently misrepresented the equipment’s capabilities and specifications. Even though the purchaser is challenging the validity of the purchase contract, Article 3 ensures that the arbitration clause is treated as an independent agreement and remains valid. The question of fraudulent misrepresentation (and its effect on the main contract) is a dispute that the parties agreed to resolve through arbitration. The arbitral tribunal, not the court, is the proper forum to hear that claim.
 
4. Stay of Proceedings and Order to Compel Arbitration
 
If the other party ignores your arbitration agreement and sues you in court, Article 4 of the Act allows you to request the court to stay the proceedings and order the plaintiff to proceed with arbitration within a specified period. You must make this request before you engage in any arguments on the merits of the case in court. A party that takes any action signaling acceptance of the court’s jurisdiction over the dispute (such as filing an answer denying the plaintiff’s allegations) forfeits its opportunity to compel arbitration. The rule prevents a party from testing the waters in court and then switching to arbitration if litigation appears unfavorable. It ensures your agreement to arbitrate is a binding commitment.
 
For instance, imagine a licensor grants you exclusive rights to distribute software in Taiwan under a license agreement with an arbitration clause. The licensor later bypasses arbitration and sues you in a court in Taiwan, claiming that you exceeded the scope of the license and seeking damages. When you face litigation despite an existing arbitration agreement, you may invoke Article 4, present the arbitration agreement, and request the court to stay the proceedings and compel arbitration. If you instead file an answer arguing that your distribution activities fell within the license scope, you have forfeited your opportunity to compel arbitration. Article 4 holds parties to their promise to arbitrate, provided they invoke the arbitration agreement in a timely manner.
 
5. Conclusion
 
Arbitration offers you an alternative to litigation for resolving disputes arising from your business dealings in Taiwan. To take advantage of this option, you must have an arbitration agreement and follow the guidance of the Act. Articles 1 through 4 of the Act do more than just set rules. These articles transform your contractual promise into an enforceable mandate by respecting party autonomy, protecting your arbitration agreement from wider contract disputes, and empowering courts to compel arbitration. They ensure that your written arbitration agreement concerning an arbitrable matter grounded in a specific legal relationship will be upheld. A firm grasp of these articles ensures your arbitration agreement is enforceable and secures arbitration as your chosen dispute resolution forum in Taiwan.