Nine features of the Commercial Event Trial Law, the exclusive process for commercial litigation of 100 million yuan

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The Commercial Event Trial Law came into force on July 1, 2011, with the purpose of creating a special trial procedure to facilitate the prompt, appropriate and professional handling of major commercial disputes with a subject matter of more than 100 million yuan.

1. Why there is a Commercial Event Trial Law

Major commercial lawsuits in the past were difficult to resolve in a short period of time due to the complexity of the case, the high degree of professionalism, and the easy generation of extra-case cases. Hollowing case, SOGO management right competition case, etc.

If commercial disputes remain unresolved for a long time, it may limit the operation and governance of enterprises, affect the willingness to invest in the market, and even damage the competitiveness of the national economy in severe cases. In order to avoid this situation, the Commercial Event Trial Law attempts toSimplify litigation procedures and unify legal insights, and introduce expert witness opinions in order to stop the dispute as soon as possible and determine the legal relationship between the two parties.

2. Which cases are applicable to the Commercial Event Trial Law?

The Commercial Events Act is designed to deal with major commercial disputes and therefore applies theThe subject matter of the lawsuit must be more than 100 million yuan, and is one of the following properties:

  • Disputes between the company and its shareholders and persons in charge.
  • The company's shareholders meeting and the board of directors resolved disputes.
  • Dismissal of directors and supervisors of securities investors and futures traders protection institutions.
  • Appointment and dismissal of interim managers and inspectors of the company.
  • False fraud, insider trading or false documents involving securities, futures, and financial assets.

Details are specified in Article 2 of the Commercial Event Trial Law. The following commercial litigation and non-litigation events are applicable to this law.

(1) Commercial litigation events

1. The person in charge of the company has a civil right and obligation dispute with the company due to the execution of business, and the amount or value of the subject matter of the lawsuit is more than NT$100 million.

2. Disputes over civil rights and obligations arising from the following events, and the amount or value of the subject matter of the lawsuit is more than NT$100 million:

(1) Fraud in securities under the Securities and Exchange Act, false financial reports or financial business documents, undelivered prospectus, false prospectus, illegal public acquisition, market manipulation, short-term trading, insider trading, unconventional business transactions, and illegal loans or provide a guarantee.

(2) Market manipulation, insider trading, fraud in futures trading, false prospectus, and failure to deliver prospectus under the Futures Trading Law.

(3) Hypocrisy, fraud, other acts that are enough to mislead others, false prospectus, and failure to deliver prospectus under the Securities Investment Trust and Consultant Act.

(4) The prospectus or investment prospectus of the Real Estate Securitization Act is false, and the prospectus or investment prospectus is not provided as required.

(5) The prospectus or investment prospectus of the Financial Assets Securitization Act is false, and the prospectus or investment prospectus is not provided as required.

(6) Shareholders of companies that issue shares to the public exercise their rights as shareholders, disputes over civil rights and obligations arising from the company and the person in charge of the company, and securities investors and futures traders protection agencies in accordance with securities investors and futures traders The Protection Law stipulates that petitioning the court for the dismissal of a director or supervisor of a company.

(7) Disputes concerning the validity of the resolutions of the shareholders' meeting or the board of directors of the company that issues shares publicly.

(8) Disputes concerning the validity of the resolution of the shareholders' meeting or the board of directors of a non-public offering company with a controlling or affiliation relationship with a public offering company with a capital of more than NT$500 million.

(9) Due to Company Law, Securities Exchange Law, Futures Exchange Law, Banking Law, Mergers and Acquisitions Law, Financial Institution Merger Law, Financial Holding Company Law, Real Estate Securitization Regulations, Financial Assets Securitization Regulations, Trust Law, and Securities Finance Management For disputes arising from civil legal relations arising from the Law, the Securities Investment Trust and Consultancy Law, and the amount or value of the subject matter of the lawsuit is more than NT$100 million, it shall be a civil matter under the jurisdiction of the Commercial Court upon the written consent of both parties.

(10) Other commercial litigation matters under the jurisdiction of commercial courts in accordance with the law or as designated by the Judicial Yuan.

(2) Commercial non-litigation events

  • The company that issued the stock to the public decided to buy the share price event.
  • A company that publicly issues shares shall, in accordance with the Company Law, apply for the appointment of an interim manager, the appointment of an inspector, and the event of dismissal.
  • Other commercial non-litigation matters under the jurisdiction of commercial courts in accordance with the law or designated by the Judicial Yuan.

3. Features of the Commercial Event Trial Law

The Commercial Event Trial Law has 9 major features:
Second-level second instance, pre-mediation and encouragement of extra-litigation dispute resolution, mandatory attorney representation, trial planning, party inquiry system, expert witnesses, technology court, confidentiality order, and exclusive jurisdiction of commercial courts.

(1) Second-level second-instance trial

The trial level is reduced, and at the same time, the mandatory legal representation, expert witnesses, party inquiry system, and trial plan are combined to strengthen the rigor of the trial, so that disputes between the parties can be resolved as soon as possible, and legal relations can be stabilized as soon as possible.

Commercial event proceedings. Figure / FirstLaw

(2) Preliminary mediation and encouragement of extra-litigation dispute resolution

Compared with litigation, the time and economic cost of mediation procedures are quite low. Therefore, the "Commercial Event Trial Law" clearly stipulates that pre-mediation must be conducted before litigation. Experts serve as mediators.

The mediation here is mandatory, and the parties have the obligation to attend the mediation. Failure to attend without reason may be subject to a fine of less than NT$300,000. In addition, after the case enters the litigation process, the parties are also encouraged to settle or submit to arbitration, so as to promote the communication between the parties and reach a win-win consensus.

(3) Compulsory lawyer representation

In view of the complex facts of commercial litigation and the huge amount of the subject matter, in order to improve the efficiency of the trial, professionals who are familiar with legal procedures must be responsible for the procedural behavior.Mandatory requirement for a lawyer to act as a procedural agent. Written statements or petitions made by the parties who are not qualified as lawyers and have not appointed procedural representatives are "not at the discretion of the court."

Under the system of mandatory attorney representation, the attorney's remuneration is paid as part of the litigation or procedural costs, and the winning party has the opportunity to claim the attorney's remuneration from the losing party. If the parties are unable to appoint a lawyer, they can also apply to the court to appoint a lawyer as a procedural agent in accordance with the provisions of litigation relief.

(4) Trial plan

The trial plan must be agreed between the court and the parties and should include the following:

  • The period for sorting out factual and evidentiary issues.
  • During the interrogation of witnesses, expert witnesses, experts and the parties themselves.
  • The scheduled period for the conclusion of oral arguments and the declaration of judgment.

After the trial plan is drawn up, the court may reject the case if the party proposes an offensive and defensive method overdue without justifiable reasons, which would cause a major impediment to the proceedings.

(5) Party inquiry system

The "Commercial Event Trial Law" refers to the Anglo-American evidence discovery system, allowing parties to inquire about facts and evidence information from other parties before trial. or the matter to be proved is true.

In commercial litigation, it is often necessary to present the internal information of the manufacturer as evidence, but the information is not easily available to the outside world. In order to avoid the emphasis on one side of the evidence, and to sort out the disputes as soon as possible, so that the two parties can prepare offensive and defensive methods in advance, it is necessary to Adopt party inquiry system.

(6) Expert witnesses

An expert witness is a person whose knowledge, skills, experience, training or education in finance, accounting, corporate governance, science, technology or other areas of expertise can help a court to understand or determine facts, evidence and rules of thumb. With the permission of the court, the parties may declare that expert witnesses provide professional opinions.

Expert witnesses and appraisers are a system that can coexist, and expert witnesses basically apply the rules of appraisers, with only the following differences:

  • The parties may not reject expert witnesses.
  • The remuneration of expert witnesses shall be entirely borne by the parties to the declaration, and shall not be included in the litigation costs.
  • Appraisers or other expert witnesses may be questioned with the permission of the presiding judge.
  • If the two parties declare different expert witnesses, the court may also order the expert witnesses of the two parties to give joint professional opinions after discussion, explain the consensus reached, and provide reasons for the part that did not reach consensus.

Expert witnesses must disclose the following information:

  • Academic experience, areas of expertise and case studies.
  • Whether the preparation or presentation of professional opinions or relevant materials has division of labor or cooperation with the parties, related parties or their procedural agents.
  • Whether the preparation or presentation of professional advice or relevant information is financially rewarded or subsidized by the parties, related parties or their procedural agents, and the amount or value thereof.
  • The identity and amount or value of other providers of monetary rewards or sponsorships.

(7) Science and Technology Court

The technology court has actually been around for a long time. It is not a new creation of the Commercial Event Trial Law. However, in order to improve the convenience of the trial, the Commercial Event Trial Law specifically stipulates that the trial method of the technology court should be adopted.

  • Unless there are special restrictions, all submissions of pleadings should be sent using the electronic pleading delivery system.
  • If the equipment conditions permit and the court deems it appropriate, remote hearings may be conducted through technological equipment.

(8) Secret maintenance order

The evidentiary materials required for commercial litigation may involve the company's business secrets. In order not to damage the company's business secrets, and at the same time to allow the materials to be presented as evidence, the court may, at its discretion, allow the presentation of evidence in a non-empty manner, or the case against the disclosed evidence. The person issues a secrecy retention order.

Violation of the secrecy maintenance order is a crime and is punishable by imprisonment for not more than three years, short-term detention, or a fine of not more than NT$100,000.

(9) Exclusive jurisdiction of commercial courts

The commercial court is called the Intellectual Property and Commercial Court. It has jurisdiction over the Intellectual Property Court and the Commercial Court. Commercial matters are tried by the Commercial Court.

It is worth noting that intellectual property and labor issues are often involved in commercial incidents, and the rules for the trial of commercial incidents are particularly standardized. Trial norms for intellectual property and labor incidents.

Commercial Court. Photo / Yu Shuxing

4. Important influence of other relevant business events

If there is room for divergent interpretations of legal provisions, litigation cases will be prone to ramifications, and the original intention of quickly and effectively handling commercial disputes will be lost. Therefore, the "Commercial Event Trial Law" and the "Commercial Event Trial Rules" specifically refer to the judgment of "good managers' duty of care". The standard is clarified, and the burden of proof of claiming "temporary status sanction" is increased, and the legal norms are made specific and clear to protect the rights and interests of the parties.

(1) Clarify the standards for the duty of care of the person in charge of the company

According to Article 23 of the Company Law, the person in charge of the company shall faithfully perform the business and perform the duty of care of a good manager. However, there is no clear regulation on what is the "duty of care of a good manager" and the degree of attention to be paid. Past court opinions It is only abstractly explained as "the duty of care that should be possessed by persons with considerable knowledge and experience who are loyal to their duties", and there is still no specific benchmark as a basis for measurement.

In order to reduce the room for disputes, Article 37 of the "Detailed Rules for the Trial of Commercial Events" clearly defines the criteria for judging whether the person in charge of the company performs business faithfully and fulfills the duty of care of the good manager.

The judging criteria for the duty of care of the good manager of the responsible person are as follows:

  • Whether its conduct is in good faith and in good faith.
  • Is there sufficient information to base its judgment on.
  • Whether there is a conflict of interest, lack of independent judgment or reasons for avoidance.
  • Abuse of discretion.
  • Whether there is necessary supervision of the company's operations.

(2) Determining a temporary state sanction

Before the judgment is determined, the legal relationship is in an uncertain state. In order to prevent serious damage that is difficult to recover, or an imminent danger occurs when the legal relationship is not determined, the party concerned can apply to the court for a "temporary state sanction", which is temporarily maintained or realized. This legal relationship, such as: temporarily prohibiting directors from exercising their powers, temporarily protecting business secrets, etc. In a commercial event, any legal relationship status may greatly affect the rights and interests of the parties, and the temporary status sanction has therefore become a battleground in commercial litigation.

The biggest difference between the temporary status sanction of commercial incidents and general civil incidents is that the responsibility of the claimant to provide evidence and "explain" is increased.

The so-called explanation is to clearly explain the reasons why the state of a certain law must be tentatively determined, why it is urgent and necessary, what damage will be incurred, and whether the damage will be irreversible in the future.

In general civil lawsuits, although there are also temporary sanctions, the claimant is allowed to provide monetary security for the inadequacy of the explanation. In commercial litigation, "explanation" is the most basic threshold.If the explanation is insufficient, the court should reject the claim directly, and cannot substitute the guarantee for the explanation, and for cases with sufficient explanations, the court can also order a guaranty before setting a temporary state sanction, so as to improve the rigor of the sanction and protect the rights and interests of the parties.

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