Overhauled Conflict of Laws Rules Effective in Late May
Chun-yih Cheng

After more than 50 years' application, the conflict of laws rules were overhauled last May. The new rules were adopted to adapt to the social and economic changes and to be in line with international practices and trends. In order for the community to be familiar with the considerable changes, there is a one-year transition period, and the new rules will become effective on 26 May.

In addition to traditional civil matters, the new rules cover a broad range of commercial matters such as corporate, negotiable instruments, bills of lading, insurance, manufacturer's liabilities, competition and IP rights, etc. However, the most distinct feature is the adoption of the theory of most closely connected factors and the doctrine of characteristic performance.

In the past, for contractual obligations, the parties may agree on the applicable law of their contract. If the parties' intention is ambiguous, the law of their mutual home country, or the law of the place of the contracting, or the law of the place of performance will in turn apply. The new rules also admit the parties' autonomy to allow them to choose the applicable law. However, if there is no express intention of the parties, then the law with which the contract is most closely connected will apply. To determine the most closely connected law, the new rules set forth that if there is characteristic performance of the contact, the law of the place where the party who bears such characteristic performance has his domicile will be the most closely connected law. Provided that if the contract is related to an immovable property, the law of the place where the immovable property locates is the most closely connected law for the contract.

Since the new rules are more or less in line with international practices, foreign players may find themselves more comfortable than ever when doing business in or with Taiwan.