Commercial Arbitration

Korea

Benjamin Hughes, Beomsu Kim and Sunkyung Shin

Shin & Kim

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

    Korea signed the New York Convention on 8 February 1973, and it entered into force on 9 May 1973. Korea declared that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another contracting state, and that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under Korean law.

    Switzerland originally made use of the reciprocity reservation of article I(3) of the Convention, until April 23, 1993, when the reservation was withdrawn following the enactment of chapter 12 of the Swiss Private International Law Act (PIL Act). Since then, all foreign awards, regardless of the country where they have been made, are recognised and enforced in Switzerland pursuant to the provisions of the NYC (article 194 PIL Act).

  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

    Korea is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention). Korea signed the Washington Convention on 21 February 1967, and it entered into force on 23 March 1967.

    In addition, as of the date of this writing, Korea is a party to approximately 100 bilateral investment treaties and several fair trade agreements which contain provisions permitting disputes between the contracting parties or between a contracting party and an investor of the other contracting party to be resolved by binding arbitration, usually by reference to the International Centre for the Settlement of Investment Disputes (ICSID).

  3. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

    The Arbitration Act of Korea (the Act) was first enacted in 1966 but was entirely revised as of 31 December 1999 to substantially adopt the UCITRAL Model Law. The Act differs from the Model Law in a few significant respects, however. For example, article 17(6) of the Act permits a party to appeal an arbitral tribunal’s decision that it has jurisdiction to the Korean court. Article 27(3) of the Act permits a party to challenge an expert appointed by the tribunal on the same grounds and using the same procedures which apply to the challenge of an arbitrator. Neither of these provisions are found in the Model Law. In addition, the Act does not include article 34(4) of the Model Law, which provides that a court may, where appropriate and so requested by a party, suspend its proceedings in an action to set aside an arbitral award in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take other action which may eliminate the grounds for setting aside the award.

    The Act applies to all arbitral proceedings seated in Korea.

  4. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

    The Korean Commercial Arbitration Board (the KCAB) is the only officially recognised arbitral institution in Korea. The KCAB may be contacted as follows:

    The Korean Commercial Arbitration Board

    43rd Floor, Trade Tower (World Trade Centre)
    159-1 Samsung-dong, Gangnam-gu
    Seoul 135-729, Korea
    Tel: +82 2 551 2000
    Fax: +82 2 551 2020
    http://www.kcab.or.kr

    The KCAB administers arbitrations under its Domestic Arbitration Rules (the Domestic Rules) and under its International Arbitration Rules, which were first introduced in January 2007 (the International Rules, and collectively with the Domestic Rules, the KCAB Rules).Prior to January 2007, the KCAB only had one set of arbitration rules, which applied to all arbitrations administered by the KCAB.The International Rules were promulgated in order to encourage foreign parties to arbitrate disputes in Korea under the auspices of the KCAB.However, this effort largely failed, and to date no arbitration has been conducted under the International Rules; the primary reason for this has been that the Domestic Rules remained the default rules for all arbitrations under the KCAB, regardless of whether the underlying disputes involved domestic or international parties.Specifically, the International Rules could only apply where the parties had specifically designated the KCAB’s International Rules in the arbitration agreement or by agreement in writing between the parties.Otherwise, a reference to arbitration under the rules of the KCAB was deemed to refer to the Domestic Rules.As a result, the KCAB Rules were revised as of 1 September 2011 and the Domestic Rules now apply by default to domestic arbitrations referred to the KCAB, and the International Rules to international arbitrations.The International Rules define an international arbitration as an arbitration where: (i) at least one of the parties to an arbitration agreement, at the time of such agreement, has its place of business in any state other than Korea, or (ii) the place of arbitration set out under an arbitration agreement is in any state other than Korea.

    The revised International Rules and Domestic Rules that came into effect as of 1 September 2011 apply to arbitration agreements made after that date.Where the arbitration proceeding has commenced prior to 1 September 2011, the previous International Rules and Domestic Rules will apply.However, the parties may agree to apply the International Rules and Domestic Rules after 1 September 2011 without affecting the validity of the arbitration proceedings held prior to this date.The KCAB Secretariat may appoint arbitrators in arbitrations under both sets of rules.

    There is no prohibition against the KCAB (or any other institution) acting as the appointing authority in non-KCAB arbitrations. Under article 12 of the Act, the parties are free to agree on any procedure for appointing the arbitrator(s). Where no such agreement exists, and where the parties cannot agree on a sole arbitrator, or the two party-appointed arbitrators cannot agree on the appointment of the third arbitrator, the appointment shall be made, upon the request of a party, by the Korean court. If there is an agreement as to the appointing procedure, but a party fails to act, the parties are unable to agree on the arbitrator(s) as expected under such procedure, or the appointing authority fails to appoint the arbitrator(s), again the court will be called upon to do so.

  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?

    Yes. The Act does not prohibit arbitrations administered by foreign arbitral institutions, and Korea is frequently the seat of arbitrations under the rules of the ICC and other arbitral providers.

  6. 6.Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?

    There is no specialist arbitration court in Korea. However, the courts are familiar with the law and practice of international arbitration. The judiciary has taken an active interest in international arbitration and has proven extremely supportive of both arbitral proceedings and the recognition and enforcement of arbitral awards.

    7. Agreement to arbitrate

  7. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

    Like the Model Law, article 8 of the Act requires that an arbitration agreement be in writing. The arbitration agreement may be included as an arbitration clause in a contract or in the form of a separate agreement. An agreement to arbitrate is deemed to be in writing if it is contained in a document signed by the parties, an exchange of written communications which provide a record of the agreement, or an exchange of statements of claim and defence if the existence of an arbitration agreement is alleged by one party and not denied by the other. In addition, a reference in a contract to a document containing an arbitration clause constitutes a binding arbitration agreement, provided that the contract is in writing and the reference is such as to make that clause a part of the contract. An agreement to arbitrate will cover all future disputes between the parties to the agreement, to the extent that such disputes fall within the scope of the written agreement to arbitrate.

    It should be noted that the New York Convention does not permit the finding of a written agreement to arbitrate based upon an exchange of statements of claim and defence in which the existence of an arbitration agreement is alleged by one party and not denied by the other. The Supreme Court of Korea has therefore ruled that where the New York Convention applies, such an exchange may not suffice on its own be the basis for finding an agreement to arbitrate, notwithstanding article 8 of the Act.

  8. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?

    As in most jurisdictions, matters relating to criminal law, family law and administrative law are not arbitrable in Korea. It is not clear whether certain claims related to regulatory laws (such as securities, antitrust, competition, corporate governance, environmental or intellectual property regulations) may be subject to arbitration. Legal commentaries support the arbitrability of certain claims, such as intellectual property disputes and private actions based on allegations of fair trade violations, and Korean courts have enforced foreign arbitral awards which were alleged to violate Korean regulatory laws, on the grounds that the result of enforcement of the award did not violate Korean public policy. While the arbitrability of disputes under these areas of the law has not yet been tested in an arbitration seated in Korea, the trend would seem to be in favour of allowing arbitration to the extent it does not violate fundamental public policy considerations.

  9. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

    A third party may be bound by an arbitration clause as a successor (heir, assignee or trustee) to a party bound by the clause. In addition, a third party may consent in writing or give implied consent to arbitrate, such as by failure to object to the jurisdiction of the arbitral tribunal. Article 17 of the Act provides that a plea that the arbitral tribunal does not have jurisdiction must be raised no later than the submission of a statement of defence.

    Neither the Act nor the KCAB Rules specifically preclude or permit participation by a third party through joinder or by third-party notice, and to date there has been no Korean court precedent addressing this issue.

  10. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

    There are no provisions in the Act or in the Domestic Rules of the KCAB which specifically preclude or permit the consolidation of separate arbitral proceedings.However, we are aware of one KCAB case in which the arbitral tribunal, with the consent of the parties, consolidated separate arbitral proceedings under related contracts between the same parties.

    Article 8 of the International Rules of the KCAB provides that when a party submits a request for arbitration in connection with a legal relationship in respect of which an arbitration proceeding between the same parties are already pending under such Rules, the arbitral tribunal may, at the request of a party, by taking into account the nature of such new claims, the stage of the arbitration and other relevant circumstances, decide to include the claims contained in such request for arbitration in the arbitration proceeding already pending .

  11. 11.Groups of companies
    Is the “group of companies doctrine” (or any other method of piercing the corporate veil) recognised in your jurisdiction?

    Korean courts recognise “piercing the corporate veil” in very limited instances, such as when a corporate entity is used by a company or individual in bad faith for the purpose of circumventing the law or to avoid liability in a grossly unfair or unjust manner. To date the Korean courts have not employed the “group of companies doctrine” or “piercing the corporate veil” to extend an agreement to arbitrate to related non-signatory companies or individuals.

  12. 12.Separability
    Are arbitration clauses considered separable from the main contract?

    Article 8 of the Act treats the agreement to arbitrate as a separate agreement which may be contained in the contract in the form of an arbitration clause, in a separate written agreement, or in any other document signed or exchanged by the parties. Under article 17 of the Act, the tribunal has the authority to rule on its own jurisdiction, including any objections as to the existence or the validity of the arbitration agreement, as distinct from the underlying contract. Likewise, the Korean courts treat the agreement to arbitrate as separate from the contract in which the arbitration clause is found.

  13. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?

    Article 17 of the Act provides that the tribunal may rule on its own jurisdiction. Unlike the Model Law, however, the Act provides that if the arbitral tribunal rules as a preliminary matter that it does have jurisdiction, a party may, within 30 days of receiving notice of the tribunal’s decision, request the competent court to rule on the tribunal’s jurisdiction. The court’s decision is binding and is not subject to appeal.

  14. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

    For arbitrations seated in Korea, parties should be aware that the Act provides the parties with the right to appeal decisions of the tribunal to the court of competent jurisdiction with respect to challenges to an arbitrator (article 14), the jurisdiction of the arbitral tribunal (article 17) and challenges to an expert appointed by the tribunal (article 27).

    With respect to the recognition and enforcement of foreign arbitral awards, Korean courts have proven very friendly to arbitral awards. However, enforcement actions are subject to appeal all the way to the Korean Supreme Court, and costs are generally recoverable in Korean litigation only to a limited extent. Thus, a party wishing to resist enforcement of an award can cause considerable delay and expense through repeated appeals.

  15. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

    Institutional arbitrations are much more common than ad-hoc arbitrations in Korea. The KCAB, for example, administered almost 80 international arbitration cases in 2009 under the KCAB Rules. Korea has also recently hosted an increasing number of arbitrations administered by the ICC and other international arbitral institutions. However, ad-hoc arbitrations are not uncommon. Generally ad-hoc arbitrations use the UNCITRAL Rules.

  16. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

    Article 19 of the Act is a mandatory provision which requires that the parties to an arbitration shall be equally treated in the arbitral proceedings and each party shall be given an opportunity to present its case. While there are no provisions in the Act or the Domestic Rules of the KCAB which specifically address the question of multiparty arbitration agreements, and the Korean courts have not yet been confronted with this issue, it could of course become a problem if a party among multiple claimants or respondents feels it has been denied equal treatment with respect to the appointment of its side’s party-appointed arbitrator.

    Fortunately, the International Rules of the KCAB do address this issue. Article 12(3) of the International Rules provides that where there are multiple respondents and/or multiple claimants, and the multiple claimants or multiple respondents are unable to agree upon a party-appointed arbitrator, the KCAB Secretariat shall appoint all three arbitrators. This avoids the situation in which one side has been able to appoint its own arbitrator, while the other side has not. For this reason, when drafting a multi-party agreement to arbitrate under the auspices of the KCAB, the parties are encouraged to designate the International Rules of the KCAB.

    17. Commencing the arbitration

  17. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

    Article 22 of the Act provides that unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute shall commence on the date when the request for arbitration is received by the respondent. The request for arbitration shall include the parties, the subject matter of the dispute and the contents of the arbitration agreement.

    A party intending to commence an arbitration under the International Rules of the KCAB should submit a request for arbitration to the KCAB Secretariat with sufficient copies of such request for arbitration to be distributed to each party, each arbitrator and the KCAB Secretariat, along with the relevant agreements and, in particular, the written arbitration clause or separate written arbitration agreement invoked and shall pay the filing feesprovided under Appendix I of the International Rules.The request for arbitration should include the following: (i) the full names and addresses and contact details of the parties;(ii) description of the claimant; (iii) a statement describing the nature and circumstances of the dispute giving rise to the claims; (iv) a statement of the relief sought, including, to the extent possible, an indication of any amount(s) claimed; (v) a statement of any matters (such as the place or languages of the arbitration, applicable laws or the number of arbitrators, or their qualifications or identities) on which the parties have already agreed in writing in relation to the arbitration proceedings or in respect of which the claimant wishes to make a proposal; (vi) if the arbitration agreement for party nomination of arbitrators, the name, address and contact details of the claimant’s nominee; and (vii) full name and address and contact details of the claimant’s legal representative.

    The Act contains no provisions relating to a limitation period for the filing of a request for arbitration. However, for any given cause of action, the expiration of the applicable limitation period may be raised as a defence in the arbitration.

    18. Choice of Law

  18. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

    Article 29 of the Arbitration Act provides that the arbitral tribunal shall decide the dispute in accordance with the substantive law chosen by the parties. If there is no agreement by the parties as to substantive law, the arbitral tribunal shall apply the law of the state which it considers to have the closest connection with the subject matter of the dispute.

    19. Appointing the tribunal

  19. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?

    The Act places no restrictions on who may serve as an arbitrator. Sitting Korean judges are not permitted to serve as arbitrators due to judicial regulations which prohibit them from engaging in any profit-making activities. Otherwise, there are no qualifications required under the Act, and the parties are free to agree on a procedure of appointing the arbitrator(s).

    The KCAB maintains a roster of arbitrators, but the parties are free to appoint arbitrators who are not on the roster. Article 19 of the Domestic Rules of the KCAB provides that no person shall serve as an arbitrator if he or she has any legal or financial interest in the outcome of the arbitration, but even this restriction may be waived by written agreement of the parties.

  20. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

    Article 12 of the Arbitration Act provides that no person shall be precluded by reason of his or her nationality from acting as an arbitrator, unless otherwise agreed by the parties. There are no special immigration or other requirements applicable to foreign arbitrators.

  21. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

    Article 12 of the Arbitration Act provides the procedures for the default appointment of the arbitrators under these circumstances. In an arbitration with a sole arbitrator, where the parties have not agreed to an appointment procedure and are unable to agree on an arbitrator within 30 days after a party has received a request for initiating the appointment process from the other party, the court shall appoint the arbitrator upon either party’s request. In an arbitration with three arbitrators, where the parties have not agreed on an appointment procedure, each party shall appoint one arbitrator and the two arbitrators thus appointed shall agree on the third arbitrator. If a party fails to appoint its arbitrator within 30 days of a request to do so by the other party, or if the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment, the court shall appoint the arbitrator upon either party’s request.

    Under the Domestic Rules of the KCAB, if the agreement between the parties specifies a period of time within which the arbitrator(s) shall be appointed, and any party fails to make the appointment within such period, the KCAB Secretariat will appoint the arbitrator(s). The default method of appointment by the Secretariat under the Domestic Rules is for the Secretariat to provide the parties with a list of several candidates from the KCAB’s roster of arbitrators, and the parties rank the candidates in order of preference. The Secretariat then appoints the arbitrator(s) based upon the combined ranking of the parties.

    Under the International Rules of the KCAB, where the parties fail to agree upon a sole arbitrator, or in disputes heard by three arbitrators, where either party fails to appoint its arbitrator or where the two appointed arbitrators fail to agree upon the third arbitrator, the KCAB Secretariat shall appoint the arbitrator(s) without using the list method used under the Domestic Rules.

  22. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

    There are no specific provisions under the Act which provide for the immunity of the arbitrators from suit in Korea. However, we are aware of no court proceeding which has ever been brought against an arbitrator in connection with the performance of his or her duties as an arbitrator.

  23. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

    There is no restriction under the Act against arbitrators securing the payment of their fees. For domestic arbitrations administered by the KCAB, the Domestic Rules provide that the claimant shall make an advance payment to the KCAB Secretariat for the arbitration fees, expenses and allowances for the arbitrators at the time of requesting arbitration, in such currency as the KCAB Secretariat designates. The KCAB thus acts as the fundholder for arbitrator fees and expenses. If the claimant fails to make an advance payment, or the respondent does not pay in lieu of the claimant, the arbitral tribunal may decide to terminate the proceedings.

    For international arbitrations administered by the KCAB, the International Rules provide that the parties (and not just the claimant) shall make an advance payment to the KCAB Secretariat to cover the filing fees, administrative fees, and the fees and expenses of the arbitrators incurred during the proceedings.The Secretariat shall request each party to deposit a certain amount as an advance for such costs, which shall be payable in equal shares by the claimant and respondent unless parties agree otherwise.

    24. Challenges to arbitrators

  24. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

    Article 13 of the Arbitration Act provides that an arbitrator may be challenged only if circumstances exist that are likely to give rise to justifiable doubts as to the arbitrator’s impartiality or independence, or if the arbitrator does not possess qualifications agreed to by the parties. Under article 14, the parties are free to agree on a procedure for challenging an arbitrator. Failing such an agreement, the party challenging an arbitrator shall send a written statement of the grounds for challenge to the arbitral tribunal within 15 days of becoming aware of (i) the constitution of the arbitral tribunal or (ii) the grounds for challenge. Unless the challenged arbitrator withdraws, or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. If the arbitral tribunal rejects the challenge, the challenging party may, within 30 days of being notified of the decision, request the court to decide on the challenge. The court’s decision is final and not subject to appeal.

    Under the Domestic Rules of the KCAB, a party wishing to challenge the appointment of an arbitrator must file an objection with the KCAB Secretariat within 15 days of (i) the constitution of the tribunal or (ii) the date when the party was informed of the circumstances which might cause reasonable doubt as to the arbitrator’s impartiality or independence. A similar procedure is followed under article 13 of the International Rules, with the added requirement that the objection filed to the Secretariat must be copied to the other party and the arbitrators, who may comment on the challenge within 15 days of receipt. If the other party does not agree to the challenge, or the challenged arbitrator does not withdraw, the KCAB Secretariat shall make a decision on the challenge.

    The IBA Guidelines on Conflicts of Interest in International Arbitration will generally be taken into account by the Secretariat in making its decision on a challenge to an arbitrator.

    25. Interim relief

  25. 25.Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

    Interim relief is available both from the courts and from the tribunal. Article 10 of the Act provides that a party to an arbitration agreement may, before or during the arbitral proceedings, request interim relief from a court. Article 18 provides that, unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as it may consider necessary in respect of the subject matter of the dispute. The tribunal may also determine an amount of security to be provided by the respondent in lieu of such measure, and may order the party requesting interim relief to provide appropriate security. Article 41 of the Domestic Rules of the KCAB contains similar provisions. Article 28 of the International Rules provides in addition that the parties may apply to any competent judicial authority for interim or conservatory measures, and that this shall not be deemed to be an infringement or waiver of the arbitration agreement, nor shall it affect the powers reserved to the arbitral tribunal.

    Korean courts are supportive of arbitration and regularly grant interim relief such as injunctions or attachments in support of arbitral proceedings.

    Pre-emptive anti-suit injunctions have not yet been tested in Korea. However, if a suit is brought in court in breach of an agreement to arbitrate, and the respondent objects on the grounds of the arbitration agreement, the court will dismiss the case unless it finds that the arbitration agreement does not exist, is null and void, no longer in effect or incapable of being performed. The respondent must raise such an objection no later than when submitting its first pleading.

  26. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

    As noted above, pursuant to article 18 of the Act, a tribunal ordering interim relief may order the party requesting such relief to provide appropriate security. While the Act contains no specific provision allowing the court to make such an order, the courts are empowered to do so under the Korean Code of Civil Procedure.

    27. Procedure

  27. 27.Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (e.g. general duties of the tribunal and/or the parties)?

    The provisions of the Act are generally default provisions which apply in the absence of agreement between the parties. Subject to only a few mandatory provisions of the Act, the parties are free to agree on the procedures for arbitration. For example, article 19 is a mandatory provision of the Act which provides that the parties shall be equally treated in the arbitral proceedings and that each party shall be given a full opportunity to present its case. In addition, the parties may not waive article 13 of the Act, which provides that potential arbitrators must disclose any circumstance which may give rise to justifiable doubts as to his or her impartiality or independence.

  28. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

    The default provisions of article 26 of the Act provide that if a respondent fails to submit a statement of defence, the arbitral tribunal shall continue the proceedings without treating such failure as an admission of the claimant’s allegations. If any party fails to appear at a hearing or to produce documentary evidence within a fixed period of time, the tribunal may continue the proceedings and make the award based upon the evidence before it.

    Similarly, article 37 of the Domestic Rules of the KCAB provide that an arbitration may proceed in the absence of any party who, after being duly notified, fails to attend or participate in the hearing.In addition, if the parties have been duly notified of the hearing but fail to attend two or more times, or fail to participate in the hearing even in attendance, the tribunal may decide to close the proceedings.

    The International Rules of the KCAB have no particular provision on such matters, therefore the default provision of the Act should apply.

  29. 29.Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Commercial Arbitration generally be taken into account?

    Article 20 of the Act confers upon the arbitral tribunal the power to determine the admissibility, relevance, materiality and weight of any evidence. Evidence normally includes written documents, statements by witnesses and/or experts, and may also include inspections of sites or property which are relevant to the subject matter of the dispute. The IBA Rules on the Taking of Evidence in International Commercial Arbitration, while not binding, are generally taken into account in international arbitrations in Korea.

  30. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?

    Article 28 of the Act provides that the tribunal, or a party with the approval of the tribunal, may seek assistance in the taking of evidence from a competent court. The courts in Korea are very supportive of arbitration and are generally willing to provide such assistance.

  31. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

    There is no specific provision in the Act regarding the compulsory production of documents. However, article 22 of the KCAB Rules provides that, unless otherwise agreed by the parties, the tribunal may order the parties to produce documents or other evidence it deems necessary or appropriate, or to make a property, site or thing under the party’s control available for inspection.

    In practice Korean parties tend to be less forthcoming with the production of documents than parties from common law jurisdictions. The IBA Rules on the Taking of Evidence in International Commercial Arbitration are therefore particularly useful in international arbitrations involving parties from civil and common law jurisdictions.

  32. 32.Hearings
    Is it mandatory to have a final hearing on the merits?

    No. Article 25 of the Act provides that, subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings or whether the proceedings shall be conducted on the basis of the documents or evidence and submissions before the tribunal. Unless otherwise agreed by the parties, however, the tribunal must hold a hearing if requested by either party.

  33. 33.Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

    Yes. Under article 21 of the Act, the parties are free to agree on the place of arbitration. If Korea is selected as the seat of the arbitration, the hearings and procedural meetings may be conducted elsewhere.Similarly, article 18 of the International Rules of the KCAB provides that the arbitral tribunal may, after consultation with the parties, conduct hearings and meetings at any location it considers appropriate.Although the Domestic Rules do not contain the same explicit wording, article 27 states that the Tribunal shall determine the time, date, place and manner of each arbitration hearing.

    34. Award

  34. 34.Majority decisions
    Can the tribunal decide by majority?

    Yes. Article 30 of the Act provides that, unless otherwise agreed by the parties, any decision of the arbitral tribunal shall be made by a majority of all of its members. Matters of procedure may be decided by the presiding arbitrator, if so agreed by the parties or authorised by all members of the tribunal.

    Article 30 of the International Rules also provides that where there is more than one arbitrator and they fail to agree, any award or decision shall be made by a majority of the arbitrators, and failing a majority decision, shall be decided by the presiding arbitrator. Article 48 of the Domestic Rules similarly provides that where the Tribunal is composed of more than one arbitrator and a minority of arbitrators refuse to take part in the arbitration decision, or do not participate in the deliberation process for the arbitral award without justifiable cause, the award shall be made by the remaining majority of arbitrators.However, unlike the International Rules, the Domestic Rules are silent as to whether the presiding arbitrator may decide failing a majority decision.

  35. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

    The Act contains no restrictions upon an arbitral tribunal in terms of the remedies or relief which may be granted. However, article 29 of the Act provides that the arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it to do so.

  36. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

    There is no provision of the Act specifically permitting or prohibiting the issuance of dissenting opinions. In practice, dissenting opinions have been issued on occasion but are not common.

  37. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?

    Article 32 of the Act provides that the award shall be made in writing and signed by all arbitrators. Where a minority of the tribunal has any reason not to sign the award, the award shall be effective with the signature of a majority of the arbitrators, with the reason for the failure or refusal to sign stated in the award. The award shall state the reason upon which it is based, unless the parties have agreed otherwise or the award is an award on agreed terms of a settlement between the parties. The award shall state its date and place of arbitration, and the original award shall be deposited with the competent court, with authenticated copies delivered to each party.

  38. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

    Pursuant to article 34 of the Act, a party may request the arbitral tribunal to make a correction, interpretation or additional award within 30 days of receipt of the award, unless another period of time has been agreed by the parties. This includes the correction of computation, clerical, or typographical errors, the interpretation of any specific point or part of the award, or an additional award as to claims presented in the arbitral proceedings but not addressed in the award. The tribunal shall decide on correction or interpretation within 30 days, and on additional awards within 60 days, but may extend these periods if necessary.These time limits are reiterated in the KCAB Rules.

    An application for the setting aside of an award may not be made after three months have elapsed from the date on which the party making the application received the duly authenticated copy of the final award.

    39. Costs and interest

  39. 39.Costs
    Are parties able to recover fees paid and costs incurred? Does the “loser pays” rule generally apply in your jurisdiction?

    The Act does not contain a provision with respect to the recovery of fees paid and costs incurred.

    Under article 61 of the Domestic Rules of the KCAB, the costs of the arbitration shall be allocated in the award. Unless otherwise specified in the award, the costs of arbitration shall be borne equally by the parties. In addition, unless otherwise agreed by the parties, attorney fees are not considered to be part of the arbitration costs, and are generally not recoverable under the Domestic Rules.

    The International Rules provide at article 48 that the costs incurred by a party in the arbitration, including attorney fees and costs for experts, interpreters and witnesses, shall be borne by such party subject to the allocation of costs set forth in the award. Thus, while there is a presumption that each party will bear its own such costs, the tribunal has the discretion to allocate these costs taking into account the circumstances of the case.The International Rules explicitly state the “loser pays” rule at article 47 that the arbitration costs, including administrative fees, shall in principle be borne by the losing party.However, article 47 also provides that the arbitral tribunal, taking into account the circumstances of the case, may, at its discretion, apportion each such costs between the parties.

  40. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

    The Arbitration Act does not provide for interest on the principal claim and costs. However, article 52 of the Domestic Rules of the KCAB provides that the arbitral tribunal may, to the extent reasonable, order the losing party to pay interest and make compensation for any loss from delay of performance. Where the parties have not agreed to an interest rate, arbitrators seated in Korea typically refer to the statutory interest rates under the Korean Civil Code (5 per cent) or the Korean Commercial Code (6 per cent), depending on the nature of the case or the parties.

    The International Rules are silent on this matter.

    41. Challenging awards

  41. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

    Pursuant to article 36 of the Act, recourse against an arbitral award may be made only by an application for setting aside the award to a court. An arbitral award may be set aside by the court only if the party making the application furnishes proof that:

    (i) a party to the arbitration agreement was under some incapacity under the law applicable to him; or the said agreement is not valid under the law to which the parties have subjected it (or absent any such indication, Korean law);

    (ii) a party making the application was not given proper notice of the appointment of the arbitrator(s) or of the arbitral proceedings, or was otherwise unable to present its case;

    (iii) the award has dealt with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration; provided that, if the decisions on matters submitted to arbitration can be separated from those not submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or

    (iv) the composition of the arbitral tribunal or the arbitral proceedings were not in accordance with the agreement of the parties, unless such agreement was in conflict with any mandatory provision of the Act, or failing such agreement, were not in accordance with the Act.

    The court may also set aside the award if it finds on its own initiative that the subject matter of the dispute is not capable of settlement by arbitration under the laws of Korea, or that the award is in conflict with Korean public policy (stated as the “good morals and social order of Korea”).

  42. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?

    No. The Act provides that recourse against an arbitral award may be made only by an application for setting aside the award on the grounds described above.

  43. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

    The parties may not contractually exclude the right to appeal any court decision or decision of the tribunal. However, a party may by agreement determine not to exercise such rights when and as such rights arise.

    44. Enforcement in your jurisdiction

  44. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

    Article 38 of the Act provides that an arbitral award made in Korea shall be recognised or enforced, unless any grounds for setting aside the award pursuant to the Act can be found. Therefore, an arbitral award made in Korea that has been set aside by a Korean court pursuant to the Act will not be enforced.

    The recognition or enforcement of foreign arbitral awards in Korea is determined in accordance with the New York Convention. Article V(1)(e) of the New York Convention states that the recognition and enforcement of an arbitral award may be refused, at the request of the party against whom it was invoked, if that party furnishes proof that the award has been set aside or suspended by a competent authority of the country in which, or under the law in which, that award was made. Therefore, it is unlikely that a Korean court would recognise or enforce a foreign arbitration award that has been set aside by a court at the place of arbitration in a state that is party to the New York Convention.

  45. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

    The Korean courts have been extremely strict in their application of the New York Convention to the recognition and enforcement of foreign arbitral awards. Last year the Supreme Court upheld an award challenged on the basis of public policy, in which the challenging party alleged fraud upon the tribunal and violations of Korean criminal law. The court held that in determining whether enforcement of the award would violate public policy, it would only review the effect of the enforcement of the award, without looking behind the award to determine whether it was correctly determined in fact or law. The court also defined public policy as taking into account not only domestic considerations but also the stability of international commercial transactions. This continues a trend of previous court precedents which are very supportive of international arbitral awards.

  46. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    As state immunity is not a ground for resisting enforcement under the New York Convention, it would be difficult to successfully raise such a defence to prevent the enforcement of a foreign arbitral award against assets located in Korea on this basis.

    47. Further considerations

  47. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?

    The Arbitration Act does not contain any provision relating to the confidentiality of arbitral proceedings. Thus, absent agreement of the parties or applicable arbitral rules, confidentiality of arbitral proceedings in Korea cannot be presumed.

    Article 9 of the Domestic Rules of the KCAB, however, provides that arbitration proceedings shall be kept confidential. The International Rules also provide at article 52 that the arbitral proceedings, and records thereof, shall be closed to the public, and that the tribunal, the Secretariat and the parties shall not disclose facts related to or learned through arbitration cases, except by consent of the parties or as required by law or by court proceedings.

  48. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

    As noted above, the Domestic Rules of the KCAB merely provide that the arbitral proceedings shall be kept confidential. There is no specific provision regarding evidence or the pleadings, but presumably these are also meant to be kept confidential unless agreed by the parties or required by law.

    The International Rules, on the other hand, explicitly provide that the tribunal, the Secretariat and the parties and their representatives must not disclose facts related to or learned through arbitration cases, except by consent of the parties or as required by law or the courts. Thus, evidence, pleadings and other information obtained in the course of the arbitration would remain subject to confidentiality requirements absent consent of the parties or a legal requirement to produce or disclose such documents.

  49. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

    Counsel in arbitrations in Korea may be members of the Korean bar or qualified as attorneys in their home jurisdiction. There are no professional standards or qualifications which apply to arbitrators in Korea, as the parties are free to appoint arbitrators of their choosing.

    As noted above, arbitrators conducting proceedings in Korea must disclose in advance if there are any circumstances which are likely to give rise to justifiable doubt as to his or her impartiality or independence, and are subject to challenge if any such circumstances exist.

  50. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

    Korean court proceedings and domestic arbitrations tend to be scheduled with staggered short hearings spaced out over several weeks or months. This can be quite inconvenient and impractical for foreign parties in international arbitrations, so it is wise to discuss hearing dates and other matters of timing at the outset of the arbitration, especially if there are one or more Korean arbitrators on the tribunal.

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