PLC - Arbitration_ South Korea

02/11/2012 PLC - Arbitration: South Korea

1/20uk.practicallaw.com/8-381-2907

Arbitration: South Korea

Resource type: Articles: know-how

Status: Law stated as at 01-Aug-2012

Jurisdiction: South Korea

A Q&A guide to arbitration law and practice in South Korea.

The country-specific Q&A guide provides a structured overview of the key practical issues concerning

arbitration in this jurisdiction, including any mandatory provisions and default rules applicable under local

law, confidentiality, local courts' willingness to assist arbitration, enforcement of awards and the available

remedies, both final and interim.

For a full list of law firms and lawyers, recommended for their arbitration expertise in South Korea, please

visit PLC Which lawyer?

To compare answers across multiple jurisdictions visit the Arbitration Country Q&A tool.

This Q&A is part of the PLC multi-jurisdictional guide to arbitration. For a full list of jurisdictional Q&As

visit www.practicallaw.com/arbitration-mjg.

Matthew J Christensen and Yunsoo Shin, Bae Kim & Lee LLC, South Korea

Contents

Use of arbitration and recent trends

Arbitration organisations

Legislative framework

Applicable legislation

Mandatory legislative provisions

The law of limitation

Arbitration agreements

Validity requirements

Separability

Joinder of third parties

Arbitrators

Number and qualifications/characteristics

Independence/impartiality

Appointment/removal

Procedure

Commencement of arbitral proceedings

Applicable rules

Arbitrator's powers

Evidence

Confidentiality

http://whichlawyer.practicallaw.com/which/firmRecommendationsByJurisdictionSpecialisation.do?specialisationId=:60432136&jurisdictionId=:22503

http://uk.practicallaw.com/8-501-7553

http://uk.practicallaw.com/crossborderhandbook6-500-0011

http://whichlawyer.practicallaw.com/which/reference.do?ref=2-423-0015

http://whichlawyer.practicallaw.com/which/firmListing.do?poid=:20266086&jurisdictionId=:22503

http://uk.practicallaw.com/8-381-2907#a816345






















Courts and arbitration

Remedies

Appeals

Costs

Enforcement of an award

Reform

Main arbitration organisation

The Korean Commercial Arbitration Board (KCAB)

Contributor details

Matthew J Christensen

Yunsoo Shin

Use of arbitration and recent trends

1. How is commercial arbitration used in your jurisdiction? What proportion of large

commercial disputes is settled through arbitration? What are the recent trends?

What are the general advantages and disadvantages of arbitration compared to

court litigation in your jurisdiction?

Use of commercial arbitration

In the past two decades, South Korean companies have become frequent users of commercial

arbitration, particularly for construction, real property and international commercial disputes. In 2011 for

example, the Korean Commercial Arbitration Board (KCAB) (www.kcab.or.k r) (For more information, see

box, Main arbitration organisation) administered a total of 315 arbitration cases of which 59 were

international arbitrations. South Korean parties have also been well represented in International Chamber

of Commerce (ICC) arbitrations. According to the latest available statistics for 2010, a total of 23 parties

to ICC arbitrations were from South Korea, making it the third most active jurisdiction in Asia in this

regard behind India (71 parties) and China (51 parties, of which 27 were from Mainland China and 24 were

from Hong Kong).

Construction, shipbuilding and advanced technology are just a few of the industries in which South

Korean companies are significant global players, and in which South Korean parties regularly enter into

arbitration agreements. Cross-border joint venture and M&A transaction agreements involving South

Korean parties also regularly feature arbitration clauses.

International commercial arbitrations seated in South Korea or involving South Korean parties cover a

wide spectrum of subject matters and amounts in dispute, ranging from routine commercial disputes to

complex, high-value, and multi-party disputes.

Recent trends

Commercial arbitration is now well established in South Korea as an alternative to civil litigation for

international commercial disputes, and the KCAB's caseload in recent years suggests that arbitration is

also becoming an accepted alternative for settling domestic commercial disputes. Recent amendments

to the KCAB's International Arbitration Rules (International Rules) are expected to substantially increase

the number of arbitrations heard under those rules (see Question 2).

















The arbitral process in South Korea is supported by strong and independent courts which rarely set

aside domestic arbitral awards and have only once refused to recognise or enforce a foreign arbitral

award under the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958

(New York Convention).

Advantages/disadvantages

The principal advantages of commercial arbitration in South Korea include:

Neutrality.

Confidentiality.

Party autonomy.

Finality.

Ease of enforcement.

Lower administrative fees of the KCAB than those of arbitral institutions in other jurisdictions.

Speed of KCAB arbitration proceedings:

domestic arbitration awards are typically rendered within 30 days of the closing of hearings;

international arbitration awards are typically rendered within 45 to 60 days of the closing of

hearings.

While not a disadvantage of arbitration, it should be noted that South Korean courts are generally

perceived to be swift and efficient, dispensing justice fairly and at a low cost, including where foreign

parties are concerned. Therefore, commercial arbitration in South Korea faces stiff competition from civil

litigation.

Arbitration organisations

2. Which arbitration organisations are commonly used to resolve large commercial

disputes in your jurisdiction?

While the KCAB is the only arbitral institution specifically authorised under the Arbitration Act (see

Question 3) to administer commercial arbitrations in South Korea; other arbitral institutions are not

restricted from administering arbitrations seated in South Korea or involving South Korean parties. ICC

arbitration is especially popular for large commercial disputes, although arbitrations before other

institutions are also common.

The KCAB administers arbitrations under two separate sets of rules, the Domestic Arbitration Rules

(Domestic Rules) and the International Rules. The latter were first issued in 2007 for use in growing

numbers of international arbitration cases filed with the KCAB. As originally promulgated the International

Rules were not automatically applicable to all international arbitration cases, but only to those in which


the parties had agreed in writing to refer their disputes to the International Rules. As a consequence of

this opt-in requirement, the International Rules saw very little use during the first four years of their

existence. However, under amendments effective as of 1 September 2011, with respect to arbitration

agreements entered into after that date, the International Rules apply by default to all international

arbitrations (that is, all KCAB arbitrations in which any party is from a jurisdiction outside South Korea or

where the place of arbitration is situated outside South Korea (in the absence of contrary party

agreement)) (Articles 2(d) and 3(1) , International Rules). It is widely expected that this move to default

application will result in a significant increase in cases under the International Rules. (References to the

Domestic Rules or International Rules of the KCAB are to the 2011 versions.)

Legislative framework

Applicable legislation

3. What legislation applies to arbitration in your jurisdiction? To what extent has

your jurisdiction adopted the UNCITRAL Model Law on International Commercial

Arbitration 1985 (UNCITRAL Model Law)?

The Arbitration Act is the principal statute governing arbitration in South Korea. Originally enacted in

1966, the Act was fully amended in 1999 to adopt the UNCITRAL Model Law. The Arbitration Act is a

unitary regime, applicable to both international and domestic arbitrations. Consistent with the Model

Law's territorial criterion, most provisions of the Act apply only if the place of arbitration is located in

South Korea. However the following provisions apply, irrespective of the place of arbitration (Arbitration

Act):

Arbitration agreement and substantive claim before court (Article 9).

Arbitration agreement and interim measures by court (Article 10).

Recognition and enforcement of arbitral awards (Article 37).

Foreign arbitral awards (Article 39).

While the Arbitration Act adopts the UNCITRAL Model Law to a significant degree, the following

deviations are worthy of note (Arbitration Act):

Scope of the Act is not limited to commercial disputes but extends to all disputes under private law

(Article 3(1)).

An arbitration agreement is deemed to be in writing if one party alleges that the contents of a

document exchanged between the parties (that is, not only statements of claim and defence)

contains an arbitration agreement and the other party does not deny it (Article 8(3)(c)).

A party can challenge the appointment of an expert by the tribunal (Article 27(3)). In the absence of

a contrary party agreement, this challenge should be presented to the tribunal initially and, if

unsuccessful, can be presented to a court.

The original copy of the award must be sent to and deposited with the competent court,



accompanied by a document verifying the delivery, with an authentic copy delivered to each party

(Article 32(4)). While this requirement can prove inconvenient in practice, its legislative purpose is to

enhance the enforceability of awards, particularly awards issued in ad hoc arbitrations, by providing a

mandatory record-keeping function.

Article 34(4) of the UNCITRAL Model Law, which permits a court to suspend proceedings in an

action to set aside an award to give the arbitral tribunal an opportunity to eliminate the grounds for

setting aside, is not incorporated into the Act.

Mandatory legislative provisions

4. Are there any mandatory legislative provisions? What is their effect?

The Arbitration Act embraces the principle of party autonomy and, accordingly, recognises the right of

parties to adopt arbitration rules and procedures that deviate from its default provisions, subject only to

any mandatory provisions (Article 20(1)). While these are not expressly identified in the Act, they are

generally understood to include provisions that directly implicate due process, such as the following

(Arbitration Act):

Obligation of arbitrators to disclose circumstances giving rise to justifiable doubts concerning their

independence and impartiality (Article 13).

Equal treatment of parties (Article 19).

Advance notice requirement for hearings (Article 25(2)).

As the scope of arbitrability under the Arbitration Act is restricted to disputes under private law, disputes

pertaining to criminal, constitutional, or administrative law matters are generally viewed as incapable of

settlement by arbitration.

While the Supreme Court has confirmed that tort claims and intellectual property disputes can be

resolved by arbitration, it has not resolved questions concerning the arbitrability of disputes arising under

civil or commercial laws with important public interest objectives, such as competition laws, bankruptcy

laws, and environmental laws. However, it is widely assumed that the private law consequences of these

laws would be arbitrable in South Korea as long as public policy is not otherwise violated.

The law of limitation

5. Does the law of limitation apply to arbitration proceedings?

While the Arbitration Act does not prescribe any limitation period for the commencement of arbitral

proceedings, the expiration of the limitation period that would apply in court proceedings may be raised

as a defence to a claim in an arbitration. Under South Korean law, claims for breach of a contract

between corporate entities generally must be raised within five years of the date of the alleged breach,

while tort claims generally must be asserted within three years of discovery of the claim or within ten

years from the date of the alleged wrongful act. (As there are exceptions to the general rules, it is

advisable to consult an attorney licensed to practice South Korean law in regard to any particular claim).



Arbitration agreements

Validity requirements

6. What are the requirements for an arbitration agreement to be enforceable?

Substantive/formal requirements

The Arbitration Act requires an arbitration agreement to be in writing. An arbitration agreement is deemed

to be in writing where it is contained in (Article 8(3), Arbitration Act):

A document signed by the parties.

An exchange of letters, telegrams, telex or other means of telecommunication which provide a

record of the agreement.

An exchange of documents in which the existence of an agreement is alleged by one party and not

contested by the other.

Furthermore, a reference in a contract to a document containing an arbitration clause is deemed to

constitute an arbitration agreement, if the contract is in writing and the reference has the effect of making

the arbitration clause part of the contract.

The Arbitration Act has not yet adopted the 2006 amendments to the UNCITRAL Model Law concerning

the definition and form of an arbitration agreement, but these amendments are expected to be considered

for adoption in the near future.

Apart from the requirement that an arbitration agreement be in writing, there are no other formal

requirements to which an arbitration agreement must adhere as a condition of validity under South

Korean law.

Separate arbitration agreement

An arbitration agreement may be in the form of a separate agreement or an arbitration clause in a

contract (Article 8(1), Arbitration Act).

Separability

7. Does the applicable legislation recognise the separability of arbitration

agreements?

The doctrine of separability is expressly recognised under the Arbitration Act (Article 17(1)). Therefore,

even where a contract has been terminated or is alleged to be invalid, an arbitration clause within it can

still be binding.

Joinder of third parties

8. In what circumstances can a third party be joined to an arbitration, or otherwise

be bound by an arbitration award?



A third party can be bound by an arbitration agreement through implied consent, by participating in

arbitral proceedings filed against it without raising a jurisdictional objection before or at the filing of its first

statement on the substance of the dispute (Article 17(2), Arbitration Act).

The Arbitration Act is otherwise silent on this point and South Korean courts have yet to set out the

circumstances under which a third party can be joined to an arbitration or otherwise bound by an arbitral

award. While the Supreme Court held in a recent case that an arbitration clause explicitly allowing a ship

owner to invoke an arbitration clause would be binding even between the ship owner and a third party

holder of the bill of lading, it did so applying Japanese law. It remains to be seen whether South Korean

courts will do likewise in similar cases applying South Korean law.

Arbitrators

Number and qualifications/characteristics

9. Are there any default provisions in the legislation relating to the number and

qualifications/characteristics of arbitrators?

Parties are free to agree on any number of arbitrators (Article 11(1), Arbitration Act). In the absence of

agreement, the default position is that three arbitrators must be appointed (Article 11(2), Arbitration Act).

The Arbitration Act is silent regarding the qualifications or characteristics of arbitrators except to state

that no one may be excluded from service as an arbitrator solely by reason of his nationality, unless

otherwise agreed by the parties (Article 12(1)).

Independence/impartiality

10. Are there any requirements relating to independence and/or impartiality of

arbitrators?

A person appointed or asked to serve as an arbitrator must promptly disclose to the parties any

circumstance likely to give rise to justifiable doubts as to his impartiality or independence (Article 13(1),

Arbitration Act).

Appointment/removal

11. Does the applicable legislation contain default provisions relating to the

appointment and/or removal of arbitrators?

Appointment of arbitrators

Parties are free to agree on a process for choosing arbitrators (Article 12(2), Arbitration Act). In the

absence of party agreement, the Arbitration Act provides for the following default procedures, which

largely follow those of the UNCITRAL Model Law.

Where there is to be a sole arbitrator and the parties are unable to agree on a candidate within 30 days

after a party has received a request from the other party to initiate the procedure for the arbitrator's

appointment, the arbitrator can be appointed by a court on request by either party.

Where there are to be three arbitrators, the claimant and respondent party can each appoint one



arbitrator, and the two arbitrators must agree on the third. If a party fails to appoint its arbitrator within 30

days of receiving a request to do so from the other party, or if the two party-appointed arbitrators fail to

agree on the third arbitrator within 30 days of their appointment, the third arbitrator can be appointed by a

court, on request by either party.

Failing to appoint arbitrators in accordance with party agreement can give rise to grounds for setting

aside the final award. However, parties can request courts to intervene and make appointments where

there is an agreed method for appointing arbitrators, but:

A party fails to appoint an arbitrator according to the agreed procedure.

The parties or the two appointed arbitrators fail to appoint the third arbitrator according to the agreed

procedure.

The institution or other third party to whom appointment of an arbitrator has been delegated fails to

make an appointment.

Where an arbitrator is appointed by a court, the court's decision in the matter is not subject to appeal.

Removal of arbitrators

An arbitrator may be challenged only where circumstances exist that give rise to justifiable doubts

concerning his impartiality or independence, or where an arbitrator does not possess the qualifications

agreed by the parties (Article 13(2), Arbitration Act).

Parties are free to agree on procedures for challenging an arbitrator (Article 14(1), Arbitration Act). In the

absence of party agreement, the following default procedures apply (Arbitration Act):

The challenging party must submit an application in writing to the tribunal within 15 days of the date

on which the tribunal was constituted or the party became aware of circumstances meriting a

challenge under Article 13(2), as applicable. Unless the challenged arbitrator withdraws from office or

the other party agrees to the challenge, the tribunal must decide on the challenge (Article 14(2)).

If the challenge is rejected by the tribunal, the challenging party can submit an application

challenging the relevant arbitrator to court within 30 days after having received notice of the tribunal's

decision. In these cases, the tribunal can, even while the challenge is pending in court, continue the

arbitral proceedings or render an award (Article 14(3)).

The court's decision in these cases is not subject to appeal (Article 14(4)).

Where an arbitrator becomes incapable of performing his duties without undue delay, the arbitrator's

mandate will terminate if he withdraws from office or if the parties agree to terminate it (Article 15(1),

Arbitration Act). In the event of a dispute regarding the termination of an arbitrator's mandate, any party

can request a court to decide the matter (Article 15(2), Arbitration Act), in which case the court's

decision is not subject to appeal (Article 15(3), Arbitration Act).

Procedure


uk.practicallaw.com/8-381-2907

Commencement of arbitral proceedings

12. Does the applicable legislation provide default rules governing the

commencement of arbitral proceedings?

Unless otherwise agreed by the parties, arbitral proceedings are deemed to commence on the date when

a request for a dispute to be referred to arbitration is received by the respondent (Article 22, Arbitration

Act). The request must describe the parties, the subject matter of the dispute and details of the operative

arbitration agreement.

Applicable rules

13. What procedural rules are arbitrators likely to follow? Can the parties

determine the procedural rules that apply? Does the legislation provide any

default rules governing procedure?

Applicable procedural rules

The parties are free to agree on procedural matters subject only to any mandatory provisions of the Act

(Article 20(1), Arbitration Act) (see Question 4).

In the absence of party agreement, the tribunal has extensive discretion to conduct the arbitration in the

manner it considers appropriate, subject to the provisions of the Act (Article 20(2), Arbitration Act).

Default rules

Rules governing arbitral procedure are set out in Chapter IV of the Arbitration Act. The rules require equal

treatment of the parties in arbitral proceedings and that each party be given "sufficient opportunity" to

present its case. Default rules are also provided for determining the following (Arbitration Act):

Place of arbitration (Article 21).

Language of arbitral proceedings (Article 23).

Commencement of arbitral proceedings (Article 22).

Submission of statements of claim and defence (Article 24).

Organising hearings (Article 25).

Party default (Article 26).

Expert witnesses (Article 27).

Court assistance in the taking of evidence (Article 28).

Arbitrator's powers



10/20

14. What procedural powers does the arbitrator have? If there is no express

agreement, can the arbitrator order disclosure of documents and attendance of

witnesses (factual or expert)?

Arbitrators have the power to conduct the arbitration in the manner they consider appropriate subject to

any relevant party agreement and the provisions of the Act. In these cases, arbitrators have the power to

determine the admissibility, relevance, materiality and weight of any evidence (Article 20(2), Arbitration

Act).

Arbitrators are authorised to request court assistance in the taking of evidence, including the

examination of witnesses (Article 28, Arbitration Act).

Evidence

15. What documents must the parties disclose to the other parties and/or the

arbitrator(s)? How, in practice, does the scope of disclosure compare with

disclosure in litigation? Can the parties determine the rules on disclosure?

Scope of disclosure

As the Arbitration Act is silent on the issue of disclosure, the parties must determine its scope and any

applicable rules. In the absence of contrary party agreement, arbitrators retain broad discretion to order

disclosure of documents if deemed appropriate.

Domestic arbitrations. A formal document production process is not ordinarily encountered in domestic

arbitrations, where expectations are often dictated by the norms and practices of South Korean civil

procedure. Documents disclosed voluntarily by a party in its request for arbitration, answer, or other

written submissions are ordinarily limited to evidence on which the disclosing party relies. Requests to

produce are relatively rare and are typically limited to a small number of specifically identified

documents.

International arbitrations. However, in international arbitrations, document production is commonly

conducted on a broader scale than is typical for South Korean civil litigation, although without ever

approaching the scale of US-style discovery. It is now common to see fundamental principles of

international arbitration practice, including the International Bar Association (IBA) Rules on the Taking of

Evidence in International Arbitration and Redfern Schedules, being used in international arbitrations

seated in South Korea or involving South Korean parties.

Parties' choice

There are no particular limitations under South Korean law on the freedom of parties to determine the

rules on disclosure.

Confidentiality

16. Is arbitration confidential?

The Arbitration Act is silent on the matter of confidentiality and is not interpreted by South Korean courts

as imposing any implied duty of confidentiality. Therefore, there is no presumption of confidentiality under



the Arbitration Act in the absence of a separate party agreement.

However, the Domestic Rules (Article 9) and the International Rules (Article 52) of the KCAB both provide

for the confidentiality of arbitration proceedings.

Courts and arbitration

17. Will the local courts intervene to assist arbitration proceedings?

The ability of South Korean courts to intervene in the arbitral process is limited to circumstances

specified in the Act (Article 6, Arbitration Act).

Parties can request a court grant interim measures of protection before, or during the arbitration (Article

10, Arbitration Act). This provision applies irrespective of the place of arbitration.

Courts must provide assistance in the taking of evidence on written request from an arbitral tribunal

(Article 28(3)-(4), Arbitration Act).

Courts are also authorised to intervene to assist arbitration proceedings in the following circumstances

(Arbitration Act):

To appoint arbitrators on request of either party in circumstances where the parties, a designated

appointing authority, or the party-appointed arbitrators, as applicable, have failed to do so (Article

12(3)-(5)).

To decide challenges to arbitrators on appeal from the tribunal (Article 14).

To decide requests for termination of an arbitrator's mandate (Article 15).

To review the jurisdiction of an arbitral tribunal on request of the objecting party in circumstances

where the tribunal has ruled as a preliminary question that it has jurisdiction (Article 17).

To decide challenges to experts appointed by the arbitral tribunal (Article 27(3)).

South Korean courts can decide applications for setting aside an arbitral award issued in South Korea

(Article 36, Arbitration Act) as well as applications for recognition or enforcement of domestic or foreign

arbitral awards (Article 37, Arbitration Act).

18. What is the risk of a local court intervening to frustrate the arbitration? Can a

party delay proceedings by frequent court applications?

Risk of court intervention

Court intervention in the arbitral process is restricted to a narrow group of circumstances specified in the

Arbitration Act (Article 6). Consequently, there is little risk of a South Korean court intervening to

frustrate an arbitration.

Delaying proceedings



There is narrow scope for court intervention in the arbitral process under the Arbitration Act, and it is

therefore unlikely that a party would be able to delay arbitral proceedings through frequent court

applications. Furthermore, South Korean courts will not issue anti-arbitration injunctions and must

dismiss actions brought in breach of a presumptively valid arbitration agreement (see Question 19).

19. What remedies are available where a party starts court proceedings in breach

of an arbitration agreement, or initiates arbitration in breach of a valid jurisdiction

clause?

Court proceedings in breach of an arbitration agreement

Where a defendant in court proceedings pleads the existence of an arbitration agreement (which it must

do before or concurrently with submission of its first statement on the merits of the dispute), and the

court is satisfied that the alleged arbitration agreement is not null and void, inoperative, or incapable of

being performed, the court must dismiss the court proceedings without reviewing the merits of the

dispute (Article 9, Arbitration Act). There is no provision under South Korean law for staying the court

proceedings in these circumstances.

Arbitration in breach of a valid jurisdiction clause

The tribunal is authorised to rule on its own jurisdiction, including any objections with respect to the

existence or validity of the arbitration agreement, provided that the objection(s) are raised no later than at

the submission of the statement of defence on the merits (Article 17(1), Arbitration Act).

South Korean courts will not issue anti-arbitration injunctions. The Supreme Court has held that a party

cannot seek a preliminary injunction restraining an arbitration from proceeding based on its alleged

wrongfulness.

20. Will the local courts grant an injunction to restrain proceedings started

overseas in breach of an arbitration agreement?

South Korean courts will not grant an injunction to restrain court proceedings commenced overseas in

breach of an arbitration agreement. These injunctions are not expressly authorised under South Korean

law and are otherwise regarded as an impermissible interference with the jurisdiction of foreign courts.

21. What remedies are available where one party denies that the tribunal has

jurisdiction to determine the dispute(s)? Does your jurisdiction recognise the

concept of kompetenz-kompetenz? Does the tribunal or the local court determine

issues of jurisdiction?

The concept of kompetenz-kompetenz is recognised under South Korean law (Article 17(1), Arbitration

Act) (see also Question 19, Arbitration in breach of a valid jurisdiction clause). Where a party raises a

timely objection to the tribunal's jurisdiction, the tribunal can decide the issue as a preliminary matter or

in an award on the merits. If the tribunal rules as a preliminary matter that it has jurisdiction, the party

raising the objection can, within 30 days of receiving notice of the tribunal's decision, request a review of

the tribunal's jurisdiction from the competent court. This review is not subject to appeal. The granting of

this right to the objecting party represents a departure from the UNCITRAL Model Law.





Remedies

22. What interim remedies are available from the tribunal?

Security

See below, Security or other interim measures.

Other interim measures

Unless otherwise agreed by the parties, the tribunal can, at the request of a party, issue a decision

granting the interim measures of protection that it considers necessary in respect of the subject matter

of the dispute (Article 18, Arbitration Act). In principle, these can include security for costs as well as

other interim, preservative or conservatory measures, provided they pertain to the subject matter of the

dispute. In these cases, the tribunal can determine the amount of security to be provided by the

respondent in lieu of the interim measure and can also order the party requesting the interim measure to

provide appropriate security.

Article 18 of the Arbitration Act only authorises the granting of interim measures in the form of a decision

(that is, not in the form of an award). Since recognition and enforcement under the Arbitration Act is

limited to arbitral awards, it is generally understood that interim measures issued under Article 18 are not

enforceable by South Korean courts.

The 2006 amendments to the UNCITRAL Model Law concerning interim measures and preliminary orders

have not yet been adopted in South Korea but may be considered for adoption in the near future.

Other

23. What final remedies are available from the tribunal?

Under the Arbitration Act, there is no express provision specifying the remedies that can be granted by

way of an arbitral award, and so, at least in principle, there is no legal restriction on the remedies on

which the parties can agree. As a result, the parties can even agree on remedies that are not available in

South Korean civil court proceedings.

In the absence of specific party agreement, it is generally accepted that the tribunal can order various

remedies in its arbitral award within the limits of the applicable law, including:

Monetary compensation.

Mandatory action or inaction.

Declaratory relief.

Payment of interest.

Payment of costs.

However, punitive damages, have been held by the Supreme Court to be in violation of public policy.




A tribunal is not permitted to decide a case ex aequo et bono (basing its decision on what is just and

fair) or act as amiable compositeur (deciding the dispute according to the legal principles they believe to

be just, without being limited to any particular national law) unless the parties have expressly authorised

it to do so (Article 29, Arbitration Act).

Appeals

24. Can arbitration proceedings and awards be appealed or challenged in the local

courts? What are the grounds and procedure? Can the parties effectively exclude

any rights of appeal?

Rights of appeal/challenge

Arbitral awards have the same effect as a final and conclusive judgment of the court (Article 35,

Arbitration Act). An arbitral award is therefore not subject to appeal. An award can however, be

challenged through an application for setting aside the award filed with the competent court (Article 36(1),

Arbitration Act).

Grounds and procedure

An application for setting aside an award can be brought under any of the grounds set out as follows

(Article 36(2), Arbitration Act):

A party to the arbitration agreement was without legal capacity under the relevant governing law at

the time of the agreement.

The arbitration agreement is not valid under the law to which the parties have subjected it, or failing

any choice of law, under South Korean law.

The party seeking to set aside the award was:

not given proper notice of the appointment of an arbitrator or of the arbitral proceedings; or

otherwise unable to present its case.

The award deals with a dispute not subject to the arbitration agreement or a matter outside the

scope of the arbitration agreement; provided that if the award can be separated into portions dealing

with and not dealing with subjects of the arbitration agreement, only that portion of the award which

is not a subject of the arbitration agreement can be set aside.

The composition of the arbitral tribunal or the arbitral proceedings was not in accordance with the

agreement of the parties, (unless the agreement was in conflict with any mandatory provision) or

failing an agreement was not in accordance with the Arbitration Act.

In addition, the competent court can set aside an award if it finds on its own initiative that the subject

matter of the dispute is not arbitrable under South Korean law or is in conflict with the "good morals or

other forms of social order" of South Korea. In practice, arbitral awards issued in South Korea are rarely

set aside under the Arbitration Act.

A party intending to challenge an award under the Act must file an application for setting aside with the

competent court within three months of the date on which it received a duly authenticated copy of the

award or a duly authenticated copy of any correction, interpretation or additional award, as applicable

(Article 36(3), Arbitration Act). Where a final and conclusive judgment for recognition or enforcement of

the relevant award has been issued by a South Korean court, no action for setting aside the award may

be raised (Article 36(4), Arbitration Act).

Excluding rights of appeal

The extent to which parties can agree to exclude or limit the right to appeal any decision of a tribunal

under the setting aside grounds of the Arbitration Act is unclear under South Korean law. Where an

agreement is entered into before the issuance of the award, it is possible that a court would view it as

contrary to public policy and refuse to enforce it. If, on the other hand, an agreement to exclude or limit

the right to apply for setting aside is entered into after the award has been issued (for example, as part of

a post-award settlement), it is more likely to be enforceable.

Costs

25. What legal fee structures can be used? Are fees fixed by law?

There are no particular restrictions on permissible legal fee structures. Hourly rate, task-based, and

success fee arrangements of various types are all frequently encountered.

26. Does the unsuccessful party have to pay the successful party's costs? How

does the tribunal usually calculate any costs award and what factors does it

consider?

Cost allocation

The Arbitration Act is silent on issues of cost allocation and recovery. In practice, arbitrators in

international arbitrations seated in South Korea tend to be open to awarding all or a significant portion of

a successful party's costs provided they are reasonable.

Enforcement of an award

27. To what extent is an arbitration award made in your jurisdiction enforceable in

the local courts?

Recognition or enforcement of an arbitral award is made by a recognition or enforcement judgment by a

court (Article 37(1), Arbitration Act). An application for the judgment is made by way of a complaint filed

with the competent court according to Article 249 of the Korean Civil Procedure Act (KCPA).

An application for recognition or enforcement must be accompanied by (Article 37(2), Arbitration Act):

A duly authenticated award (or a duly certified copy).



The original arbitration agreement (or a duly certified copy).

A duly certified translation of the agreement into the Korean language, if either the award or

arbitration agreement is not written in the Korean language.

The Supreme Court has held that a diplomatic or consular translation or verification is not necessary. In

practice, the accuracy of the translation will only be investigated if an objection is raised by the other

party.

Domestic awards must be recognised and enforced unless any of the grounds for setting aside found

under Article 36(2) exist (Article 38, Arbitration Act) (see Question 24, Grounds and procedure).

28. To what extent is an arbitration award made in your jurisdiction enforceable in

other jurisdictions? Is your jurisdiction party to international treaties relating to

this issue such as the UN Convention on the Recognition and Enforcement of

Foreign Arbitral Awards 1958 (New York Convention)?

South Korea acceded to the New York Convention on 8 February 1973 as the 43rd contracting state with

effect from 9 May 1973. As was the case with many other jurisdictions, South Korea's accession was

subject to the reciprocity and commercial reservations.

South Korea is also party to the Convention on the Settlement of Investment Disputes between States

and Nationals of Other States 1965 (ICSID Convention) since 1967, having signed without reservation.

29. To what extent is a foreign arbitration award enforceable in your jurisdiction?

Article 39 of the Arbitration Act, which provides for recognition and enforcement of foreign arbitral awards,

distinguishes between foreign awards rendered in jurisdictions that are party to the New York Convention

and foreign awards rendered in jurisdictions that are not party to the New York Convention.

Foreign awards governed by the New York Convention, are awards:

Rendered in a country outside of South Korea that is a signatory to the New York Convention.

Not considered domestic in South Korea.

Which dispose of differences arising out of legal relationships, whether contractual or not, that are

considered commercial under South Korean law.

These awards can be refused recognition or enforcement only on the grounds listed in Article V of the

New York Convention (Article 39(1), Arbitration Act).

Awards from jurisdictions not party to the New York Convention are recognised and enforced according

to the rules and procedures applicable to the recognition and enforcement of foreign court judgments in

South Korea (Article 39(2), Arbitration Act).

30. How long do enforcement proceedings in the local court take? Is there any

expedited procedure?

Assuming that the defendant party is resident in South Korea, it ordinarily takes approximately three to




six months to obtain an enforcement judgment from the first instance court. If the defendant does not

respond, a default judgment can be obtained in approximately two months. In case of a vigorous defence,

it may take about six months to a year to obtain an enforcement judgment from the first instance court.

An enforcement judgment issued by a South Korean court is typically accompanied by a provisional

enforcement order which permits the judgment to be enforced in practice without regard to any pending

appeal.

There is no expedited procedure for recognising or enforcing arbitral awards under South Korean law.

Reform

31. Is the legal framework in relation to the above likely to change in the next

decade?

The legal framework of commercial arbitration in South Korea, which is firmly grounded in the New York

Convention and the UNCITRAL Model Law, is unlikely to change significantly in the next decade. To the

extent that changes are implemented, these will inevitably be intended only to enhance the already

strong level of support in South Korea for commercial arbitration and to expand its adoption of

international best practice. For example, the 2006 amendments to the UNCITRAL Model Law are

expected to be considered for adoption in the near future along with certain other provisions that have

recently been adopted in other leading UNCITRAL Model Law jurisdictions in Asia.

Main arbitration organisation

The Korean Commercial Arbitration Board (KCAB)

Main activities. The KCAB is the only arbitral institution expressly authorised under South Korean

law to administer commercial arbitrations in South Korea. The KCAB administers arbitrations under

two separate sets of rules, the Domestic Rules and the International Rules. The KCAB also provides

mediation, conciliation and other alternative dispute resolution services.

W www.kcab.or.k r

Contributor details

Matthew J Christensen

Bae, Kim & Lee LLC




T +82 2 3404 0227

F +82 2 3404 7306

E [email protected]

W www.bk l.co.kr

Qualified. New York, 2006

Areas of practice. International arbitration; international litigation.

Recent transactions

Represented a Korean company engaged in the welding products industry in an ICC arbitration

seated in Zurich brought by a Dutch affiliate of a multi-national welding products conglomerate in

a dispute over control of a Chinese joint venture company.

Acted for a US-based private equity firm against a major Korean bank and its US-based majority

shareholders in an ICC arbitration seated in Singapore involving claims of fraud, duress and other

tortious conduct.

Defended a Korean automobile maker in liquidation in an ICC arbitration seated in Paris brought

by a US automobile maker and its Korean subsidiary, seeking indemnification for automobile

recall costs and various third party claims. This was the second of two related arbitrations

involving the same large-scale M&A transaction.

For more details of recent transactions, publications, and so on, see full PLC Which lawyer? profile

here.

Yunsoo Shin

Bae, Kim & Lee LLC

T +82 2 3404 6533

F +82 2 3404 7306

E [email protected]

W www.bk l.co.kr

Qualified. Korea, 2008

mailto:[email protected]

http://www.bkl.co.kr/

http://whichlawyer.practicallaw.com/which/reference.do?ref=2-423-0015

mailto:[email protected]

http://www.bkl.co.kr/



Areas of practice. International arbitration; international litigation.

Recent transactions

Acted for a Korean welding products supplier in an ICC arbitration seated in Zurich against a

Dutch affiliate of a multi-national welding products conglomerate in relation to the termination of

the parties' Chinese joint venture for an alleged failure to pay agreed capital contributions.

Represented the leading consortium member in the relocation of a major US military base from

downtown Seoul to a nearby city, in an ad hoc proceeding before a Dispute Resolution Board

against a Korean government agency in relation to reimbursement claims and significant future

payments under the US Federal Acquisition Regulation (FAR). This is believed to be one of the

very few cases in which a dispute was referred to a Dispute Resolution Board in Korea.

Represented one of Korea's largest heavy construction companies in related ICC arbitrations

seated in London and Zurich under English and Swiss law, respectively, against a major French

contractor in relation to delays and defects in power plant and water treatment projects in the

Middle East.

Resource information

Resource ID: 8-381-2907

Law stated date: 01-Aug-2012

Products: Arbitration multi-jurisdictional guide, PLC Arbitration - England and Wales, PLC Arbitration -International, PLC Cross-border, PLC EU, PLC UK Corporate, PLC UK Dispute Resolution, PLC UK LawDepartment, PLC US Law Department

Series: Country Q&A

Related content

Topics

Arbitral Awards and Challenges (http://arbitration.practicallaw.com/topic0-203-6785)

Arbitration (http://arbitration.practicallaw.com/topic7-203-6782)

Arbitration Agreements (http://arbitration.practicallaw.com/topic5-203-6783)

Arbitrators and Appointments (http://arbitration.practicallaw.com/topic0-203-6790)

Commencing an Arbitration (http://arbitration.practicallaw.com/topic8-203-6791)

Costs and Funding: Arbitration (http://arbitration.practicallaw.com/topic8-203-6786)

Enforcement: Arbitration (http://arbitration.practicallaw.com/topic6-521-5771)

Interim Measures: Arbitration (http://arbitration.practicallaw.com/topic5-381-2961)

Jurisdiction and Cross-border (http://arbitration.practicallaw.com/topic3-103-1202)

Procedure and Evidence: Arbitration (http://arbitration.practicallaw.com/topic1-381-2958)

Articles: know-how

Arbitration: Australia (http://uk.practicallaw.com/topic9-519-4324)

Arbitration: Austria (http://uk.practicallaw.com/topic0-502-1525)

Arbitration: Brazil (http://uk.practicallaw.com/topic3-520-5274)

Arbitration: Canada (http://uk.practicallaw.com/topic0-502-1672)

Arbitration: China (http://uk.practicallaw.com/topic3-520-0163)




Arbitration: Egypt (http://uk.practicallaw.com/topic3-501-7485)

Arbitration: France (http://uk.practicallaw.com/topic7-501-9500)

Arbitration: Germany (http://uk.practicallaw.com/topic3-502-0949)

Arbitration: Hong Kong (http://uk.practicallaw.com/topic9-381-2657)

Arbitration: Hungary (http://uk.practicallaw.com/topic1-502-1327)

Arbitration: India (http://uk.practicallaw.com/topic9-502-0625)

Arbitration: Indonesia (http://uk.practicallaw.com/topic9-520-8397)

Arbitration: Italy (http://uk.practicallaw.com/topic1-503-1784)

Arbitration: Japan (http://uk.practicallaw.com/topic7-501-9114)

Arbitration: Liechtenstein (http://uk.practicallaw.com/topic1-501-9292)

Arbitration: Lithuania (http://uk.practicallaw.com/topic6-519-0643)

Arbitration: Malaysia (http://uk.practicallaw.com/topic9-507-1479)

Arbitration: Malta (http://uk.practicallaw.com/topic8-520-7911)

Arbitration: Mexico (http://uk.practicallaw.com/topic9-381-2898)

Arbitration: Poland (http://uk.practicallaw.com/topic5-502-2607)

Arbitration: Russian Federation (http://uk.practicallaw.com/topic7-502-1895)

Arbitration: Singapore (http://uk.practicallaw.com/topic3-381-2028)

Arbitration: South Africa (http://uk.practicallaw.com/topic4-502-0878)

Arbitration: Sweden (http://uk.practicallaw.com/topic9-385-8297)

Arbitration: Switzerland (http://uk.practicallaw.com/topic5-502-1047)

Arbitration: Turkey (http://uk.practicallaw.com/topic0-505-8217)

Arbitration: UK (England and Wales) (http://uk.practicallaw.com/topic4-502-1378)

Arbitration: United Arab Emirates (http://uk.practicallaw.com/topic6-502-3220)

Arbitration: United States (http://uk.practicallaw.com/topic0-502-1714)

Article: professional

Arbitration: PLC Which lawyer? (http://uk.practicallaw.com/topic7-502-1715)