Can Foreign Judgments Be Recognized and Enforced in Taiwan? Procedural Thresholds Businesses Should Understand Before Pursuing Cross-Border Recovery

In cross-border commercial transactions, businesses may encounter unpaid debts from overseas customers, breaches by international agents, refusal of payment by foreign business partners, unpaid technology licensing royalties, or disputes over damages arising from offshore transactions. After obtaining a favorable judgment from a foreign court, the next question is often: if the debtor has assets in Taiwan, can the foreign judgment be taken directly to a Taiwanese court to apply for compulsory enforcement?

The answer is no. Before a final and binding foreign court judgment can serve as the basis for compulsory enforcement in Taiwan, it must first pass through proceedings before a Taiwanese court for permission to enforce. In other words, a business cannot use a foreign judgment alone to directly attach the immovable property, bank deposits, or other assets of the opposing party in Taiwan. It must first bring an "action for permission to enforce" before a Taiwanese court with jurisdiction.

Core Issue for Foreign Judgments in Taiwan: Recognition and Enforcement Are Different

Foreign judgments involve two levels in Taiwan: the first is "recognition," and the second is "enforcement."

Recognition refers to whether Taiwanese law recognizes a final and binding foreign judgment as having legal effect. Under Article 402 of the Code of Civil Procedure, a final and binding foreign court judgment will not be recognized if any of the circumstances listed in that article apply. In other words, whether a foreign judgment can be recognized in Taiwan depends primarily on whether it falls within any of the statutory grounds for nonrecognition.

However, even if no ground for nonrecognition applies, a business seeking to attach, seize, auction, or otherwise compulsorily enforce against the assets of the debtor in Taiwan must still obtain a Taiwanese court judgment declaring the foreign judgment enforceable under Article 4-1 of the Compulsory Enforcement Act before it can serve as the basis for compulsory enforcement.

What Recognition Thresholds Will Taiwanese Courts Review?

Under the current Article 402 of the Code of Civil Procedure, a Taiwanese court will not recognize a final and binding foreign court judgment if a statutory ground for nonrecognition applies. Before deciding to pursue recovery in Taiwan based on a foreign judgment, businesses should first examine the following matters.

First, the foreign court must have jurisdiction. If the foreign court did not have jurisdiction over the case when assessed under the laws of the Republic of China, the foreign judgment may not be recognized in Taiwan. Therefore, advance provisions concerning court jurisdiction, arbitration, or dispute-resolution methods in cross-border contracts can significantly affect whether a future judgment can be successfully recognized and enforced.

Second, the unsuccessful defendant must have received lawful notice or had an opportunity to appear and respond. If the unsuccessful defendant did not appear in the foreign proceedings and the notice or order initiating the action was not lawfully served within a reasonable period or through judicial assistance under the laws of the Republic of China, the foreign judgment may not be recognized. When the defendant is located in Taiwan, the method used to serve foreign litigation documents is particularly important. Whether the foreign court alone considered the service lawful cannot serve as the sole basis for this determination.

Third, neither the content of the foreign judgment nor the litigation procedure may violate Taiwan's public order or good morals. Public order and good morals do not merely refer to differences between foreign and Taiwanese law. The question is whether the legal effect produced by the judgment or the procedure through which the judgment was rendered conflicts with fundamental principles, legislative policies, or generally accepted social values within the Taiwanese legal order.

Fourth, a reciprocal recognition relationship must exist between the foreign country and Taiwan. In practice, reciprocity is not necessarily determined solely by formal diplomatic relations or treaties. The court may further examine whether courts in that foreign country recognize Taiwanese judgments or at least whether they have not expressly refused to recognize Taiwanese judgments.

An Action for Permission to Enforce Must Be Filed Before Compulsory Enforcement in Taiwan

Under Article 4-1 of the Compulsory Enforcement Act, an application for compulsory enforcement based on a final and binding foreign court judgment may proceed only if none of the circumstances specified in Article 402 of the Code of Civil Procedure applies and a court of the Republic of China has rendered a judgment declaring that enforcement is permitted.

Therefore, if a business obtains a foreign monetary judgment ordering the debtor to pay amounts such as purchase payments, contractual penalties, royalties, or damages, it must first obtain a judgment granting "permission to enforce" in Taiwan. Only after that judgment becomes final may the business apply to the Taiwanese enforcement court for compulsory enforcement.

Regarding court jurisdiction, Article 4-1 of the Compulsory Enforcement Act also provides that an action seeking permission to enforce shall be under the jurisdiction of the court where the debtor is domiciled. If the debtor has no domicile in Taiwan, jurisdiction lies with the court where the property subject to enforcement is located or where the act of enforcement is to be performed.

Judicial Practice: Service Procedures and the Operative Part of the Judgment Will Be Reviewed

Supreme Court Civil Judgment No. 42, Tai-Shang, 2011, indicated that a final and binding foreign judgment must be combined with a Taiwanese court judgment granting permission to enforce before it can become an enforceable title. When reviewing an action for permission to enforce, a Taiwanese court must examine not only whether the foreign judgment is a final judgment ordering performance, whether it is final and binding, and whether any ground for nonrecognition under Article 402 of the Code of Civil Procedure applies, but also whether the content of the foreign judgment is clear, definite, specific, possible, and suitable for compulsory enforcement.

The case involved a judgment rendered by a California court in the United States. The Supreme Court determined that questions remained unresolved concerning whether notice initiating the foreign proceedings had been lawfully served on the Taiwanese company and whether the scope of the defendants and their payment obligations under the foreign judgment were sufficiently clear. It therefore vacated the original judgment and remanded the case. This decision reminds businesses that even a final and binding foreign judgment may encounter procedural obstacles when permission to enforce is sought in Taiwan because of service procedures, uncertainty regarding the parties, or ambiguity in the operative part of the judgment.

Judicial Practice: Judgments Meeting the Requirements May Still Be Permitted for Enforcement

Conversely, Taiwanese courts have also permitted foreign judgments to be enforced in Taiwan. For example, Taiwan Taoyuan District Court Civil Judgment No. 122, Su, 2014, permitted certain parts of a final civil judgment rendered by the Ontario Superior Court of Justice in Canada to be compulsorily enforced in the Republic of China.

In that case, the court determined after review that the foreign court had a proper jurisdictional basis, the defendant had appeared and responded in the foreign proceedings, and the judgment concerned the distribution of remaining property, spousal support, and litigation expenses without violating Taiwan's public order or good morals. The court also considered the approach of Canadian courts toward recognizing foreign judgments and determined that the reciprocity requirement had not been violated. This case demonstrates that a foreign judgment meeting the current statutory requirements may still obtain permission for enforcement from a Taiwanese court.

Punitive Damages Do Not Necessarily Violate Public Order or Good Morals

When a foreign judgment includes punitive damages, whether it will be denied recognition for violating Taiwan's public order or good morals is often an important issue in cross-border disputes. Judicial opinions do not simply conclude that every foreign judgment containing punitive damages is incapable of recognition or enforcement in Taiwan.

A summary relating to Supreme Court Civil Judgment No. 835, Tai-Shang, 2008, indicates that a violation of public order refers to a situation in which the legal effect declared by the foreign court, or the grounds on which that legal effect was declared, violates Taiwan's fundamental legislative policies, legal principles, generally accepted social values, or fundamental principles. This view also indicates that if punitive damages in a foreign judgment are comparable to punitive-damages mechanisms recognized under special Taiwanese laws, the court may conduct further review rather than categorically reject the judgment solely because it includes "punitive damages."

If a business obtains a foreign judgment involving punitive damages, multiplied damages, or substantial compensatory damages and seeks recognition or permission to enforce in Taiwan, it should be prepared to explain the relationship between the damages regime and the facts of the case, the proportionality of the amount, the basis of the foreign court's determination, and whether it conflicts with fundamental principles of the Taiwanese legal order.

What Documents Should Businesses Prepare Before Pursuing Cross-Border Recovery?

If a business plans to seek permission to enforce a foreign judgment in Taiwan, it should prepare the original foreign court judgment or an official certified copy in advance. This will provide the basis for the Taiwanese court to review the operative part of the judgment, the party obligated to perform, the amount, interest, expenses, and scope of enforcement.

The business should also prepare proof that the judgment is final and binding, demonstrating that the foreign judgment is final and no longer subject to appeal. If the appeal period has not expired or proof of finality has not been obtained, procedural obstacles may arise when permission to enforce is sought in Taiwan.

If the judgment, service documents, or foreign court materials are in a foreign language, a complete Chinese translation should be prepared. Depending on the case, authentication or certification may also be required. The translation should clearly present the operative part of the judgment, reasoning, method for calculating interest commencement, allocation of expenses, and names of the parties.

Proof of service or materials demonstrating an appearance in the foreign proceedings are also important. If the unsuccessful defendant appeared before the foreign court, retained counsel, filed a response, or participated in the proceedings, this will generally help demonstrate that its procedural rights were protected. If the defendant did not appear, it becomes even more important to prove that the notice or order initiating the action was lawfully served.

Businesses should also prepare information concerning reciprocity or foreign law to explain whether courts in that foreign country recognize or may recognize Taiwanese court judgments. If the debtor has no domicile in Taiwan, the business should simultaneously identify assets of the debtor in Taiwan, such as immovable property, bank accounts, accounts receivable, shares, goods, or other assets available for enforcement, to help determine the appropriate court and the likely effectiveness of subsequent enforcement.

Cross-Border Legal Practice Recommendations

AIPT Group recommends that businesses not wait until a foreign judgment has been rendered before considering enforcement in Taiwan. In cross-border transactions, international licensing, overseas agency arrangements, technology cooperation, or supply-chain transactions, the recovery route should be planned before the contract is signed and before litigation begins.

• Plan dispute-resolution provisions when signing the contract: Court jurisdiction, governing law, arbitration clauses, methods of service, and payment terms will affect whether a future judgment can be successfully recognized and enforced.
• Confirm the location of debtor assets: Enforcement of a foreign judgment in Taiwan has practical value only if the debtor has immovable property, bank accounts, accounts receivable, or other assets in Taiwan.
• Consider the method of serving foreign litigation documents: If the defendant is located in Taiwan, particular attention should be given to whether service through judicial assistance is required to prevent subsequent claims in Taiwan that lawful notice was not provided.
• The operative part of the foreign judgment should be as clear as possible: The amount, interest, parties obligated to perform, joint and several liability, allocation of expenses, and currency should be stated as specifically and clearly as possible to prevent a Taiwanese court from determining that the judgment is unsuitable for compulsory enforcement.
• Prepare translations and authenticated documents in advance: Foreign judgments, proof of finality, proof of service, and foreign-law materials generally require Chinese translations and, when necessary, authentication or certification.
• Assess provisional measures in Taiwan at the same time: If the debtor has assets in Taiwan, a business may assess, according to the circumstances of the case, whether to apply separately for provisional attachment before or after the principal action or proceedings for permission to enforce to prevent the transfer of assets.

Conclusion

Foreign judgments are not entirely unusable in Taiwan, but obtaining a favorable foreign judgment does not allow a business to immediately attach assets located in Taiwan. To pursue recovery in Taiwan based on a final and binding foreign court judgment, a business must first confirm that the judgment satisfies the recognition requirements under Article 402 of the Code of Civil Procedure and bring an action for permission to enforce under Article 4-1 of the Compulsory Enforcement Act.

For businesses, the key to cross-border recovery is not only "the country in which the litigation is won" but also "whether the judgment can be enforced where assets are located." Before signing a cross-border contract, initiating overseas litigation, or seeking enforcement of a foreign judgment in Taiwan, businesses should assess jurisdiction, service, reciprocity, clarity of the judgment, and information regarding assets in Taiwan to improve the likelihood of actual debt recovery.

Sources: National Laws and Regulations Database｜Article 402 of the Code of Civil Procedure
National Laws and Regulations Database｜Article 4-1 of the Compulsory Enforcement Act
Supreme Court Civil Judgment No. 42, Tai-Shang, 2011｜Permission to Enforce a Foreign Court Judgment
Taiwan Taoyuan District Court Civil Judgment No. 122, Su, 2014｜Permission to Enforce
Summary of Supreme Court Civil Judgment No. 835, Tai-Shang, 2008｜Recognition and Enforcement of Foreign Judgments