|
On 9 August 2012, Taiwan's Straits Exchange Foundation and the Mainland China's Association for Relations Across the Taiwan Straits signed the "Cross-Strait Investment Protection and Enhancement Agreement" (the "Investment Agreement") and "Cross-Strait Customs Cooperation Agreement" (the "Customs Cooperation Agreement"). Together, these two agreements will offer protection for Taiwan's investment in mainland China, encourage mainland Chinese corporations to invest in Taiwan, and to enhance the steady development of cross-strait economic and trade relations.
|
|
|
The Investment Agreement will boost investments and economic activities across the Taiwan Strait. In addition to corporations incorporated in mainland China and Taiwan, the Investment Agreement further extends to corporations incorporated in third countries but are substantially owned or controlled by Taiwan or mainland Chinese corporations/investors. This helps to protect early indirect investments in mainland China from Taiwan corporations. Furthermore, investments made before the signing of the Investment Agreement are protected retroactively – investors may utilize the dispute resolution mechanism established under the Investment Agreement for disputes arising from such investment. The Investment Agreement requires both parties to provide fair and just treatment to investors of the other party, as well as giving the investor of the other party the national treatment and the most-favored nation treatment on investment-related matters. Thus, the Investment Agreement ensures that investors from both party will be treated equally with nationals or investors from a third country.
|
|
|
Also, the Investment Agreement ensures an investor's right to petition and mediation for disputes arising from expropriation, nationalization or other measures of similar effects. The Investment Agreement offers multiple dispute resolution mechanism for Private to Government (P to G) and Private to Private (P to P) disputes. For P to G disputes, investors may petition the government agency which is in dispute, its superior authority, or cross-strait investment dispute resolution institutions; for P to P disputes, investors are allowed to arbitrate with qualified arbitration institutions in any location selected by the investors, not limited to cities in Taiwan or China – which is a major breakthrough.
|
|
|
To utilize the new arbitration mechanism under the Investment Agreement, it is advisable for those who have investments in China to include an "arbitration clause" in their contracts. It is also recommended to designate an experienced Taiwan arbitration institute as the arbitration institution. Should any dispute arise, we believe the arbitration mechanism will help our clients resolve such dispute in a timely, just, and convenient manner.
|
|
|
Along with the execution of the Investment Agreement, the parties also established the "Mediation Procedure of Investment Compensation Disputes" in the annex to the Investment Agreement. Investors may file a request for mediation with "cross-strait investment dispute resolution institutions" to resolve their dispute with government agencies. Such procedure aims to ensure that investment compensation disputes will be resolved in an objective, just and fair manner.
|
|
|
In addition, the parties have reached a consensus on "Personal Liberty and Safety Protection" of the investors. Both parties agreed that, if one party arrests, detains or deprives liberty of an investor of the other party, a notice will be given to the investor's local contacts (family members or corporation liaise) within 24 hours. Also, a notice will be given to the executive agency appointed by the other party via the communication mechanism established under the "Cross-Strait Joint Fight against Crime and Mutual Judicial Assistance Agreement." Such consensus improves the protection on Taiwan investors' personal liberty in mainland China.
|
|
|
The Customs Cooperation Agreement establishes a liaise between Taiwan and mainland Chinese customs authorities. The Parties promises to further uniform the customs regulations across the Strait, to work together to adopt the Authorized Economic Operator (AEO) system, and to enhance the transparency and efficiency of customs affairs, which will help to facilitate cross-strait trades.
|
|
|
It is anticipated that the parties will continue their negotiations on investment dispute resolution mechanism (the designation of qualified arbitration institutions and other mediation institutions), the establishment of cross-strait investment dispute resolution institution, the timeline and items that Taiwan will further open for mainland investors, and the simplification of investment procedure.
|
|
|
Our Corporate and Investment Practice Group, Dispute Resolution Practice Group, and China Practice Group and our strategic alliance firm in China (Leaven Attorneys-at-Law) have been diligently providing related services to our clients. We will continue monitoring and keep our clients informed of further development.
|
