Taiwan Focus: Resolving cross-strait investment disputes

Economic and trade activities between Taiwan and China were once a one-way affair, with investment going exclusively from Taiwan to China. But in recent years, Chinese capital has infused Taiwan, exploiting local investment opportunities. Investment between the two is expected to become even more frequent and the dollar amounts even higher. While the geographic proximity of Taiwan and China, and the shared heritage and spoken language, are conducive to cross-strait commerce, the differences in the legal regimes and political ideologies continue to hinder growth. Therefore, choosing a dispute resolution mechanism that is acceptable to both sides, with results recognised on the other side of the Taiwan Strait, is a major concern when investors evaluate the investment and legal risks.

On June 29 2010, the Economic Cooperation Framework Agreement (ECFA) was signed by the governments of China and Taiwan. The ECFA was conceived to reduce tariffs and the commercial barriers between the two sides, which also opened the door to negotiation mechanisms to resolve disputes between Chinese and Taiwanese parties.