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Commercial Arbitration

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Korea

David Kim , Doo-Sik Kim , Jiwon Kang and Jae Min Jeon
Shin & Kim

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  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
  2. Korea signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the ‘NY Convention’) on 8 February 1973, and it entered into force on 9 May 1973.  Korea made two declarations, namely, that it will apply the NY Convention to the recognition and enforcement of awards made only in the territory of another contracting state, and that it will apply the NY Convention only to differences arising out of legal relationships, whether contractual or not, which are considered commercial under Korean law. 

  3. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
  4. Korea has also ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other 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.

  5. 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?
  6. The Korean Arbitration Act (the Act) was first enacted in 1966, but was entirely revised as of 31 December 1999 to substantially adopt the UNCITRAL Model Law (the 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 that apply to the challenge of an arbitrator.

    Neither of these provisions is 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.

    In early 2013, the Ministry of Justice established a working group to consider the adoption of the 2006 UNCITRAL Model Law (the 2006 Model Law). After extensive deliberation and research, the Government submitted a draft amendment to the Act to the Korean National Assembly in late 2015. The draft bill, which is expected to be passed at some point in 2016, incorporates many key features of the 2006 Model Law.

  7. 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?
  8. 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
    Main Office (Seoul)
    43rd Floor, Trade Tower (World Trade Centre)
    511, Yeongdong-daero, Gangnam-gu
    Seoul 06164, Korea
    Tel: +82 2 551 2000
    Fax: +82 2 551 2020
    www.kcab.or.kr

    Busan Office
    Choryang-don, Korea Express Bldg.
    Room 906, 176
    Jungang-daero, Dong-gu,
    Busan 48822, Korea

    The KCAB administers arbitrations under the Domestic Arbitration Rules and the International Arbitration Rules, both of which were revised and came into effect on 1 September 2011. When parties agree to arbitration under the auspices of the KCAB, the International Arbitration Rules apply by default to all arbitration agreements entered into after 1 September 2011 where one of the parties is not Korean or the venue of the arbitration is designated outside Korea, unless the parties agree otherwise.

    There is no prohibition against the KCAB (or any other institution) acting as the appointing authority in non-KCAB arbitrations.

  9. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
  10. Yes. There is no restriction on the matter, and foreign arbitral institutions are welcome to operate in Korea. Several institutions provide services at Seoul’s state-of-the-art hearing facility named the Seoul International Dispute Resolution Centre (the SIDRC). The SIDRC, which opened its doors in 2013, aims to provide a “one-stop shop” for international dispute resolution services. Liaison offices of AAA/ICDR, HKIAC, ICC, LCIA and SIAC can be found at the SIDRC.

  11. 6.Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?
  12. 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.

    Agreement to arbitrate

  13. 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?
  14. 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.

    The draft amendments to the Act adopt Option 1 of article 7 of the 2006 Model Law, making acceptable an arbitration agreement “recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, or by conduct or by other means”. The draft amendments also make acceptable an arbitration agreement made by any means of electronic communications, such as emails.

  15. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
  16. 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.

  17. 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?
  18. 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. The Act is silent as to whether third parties can participate in the arbitration process through joinder or a third-party notice.

  19. 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?
  20. There is no provision in the Act that specifically precludes or permits the consolidation of separate arbitral proceedings. Thus, consolidation of separate arbitration proceedings by an arbitral tribunal seated in Korea would require the consent of all the parties to such arbitral proceedings.

  21. 11.

    Groups of companies
    Is the 'group of companies doctrine' (or any other basis for piercing the corporate veil) recognised in your jurisdiction?

  22. 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.

  23. 12.Separability
    Are arbitration clauses considered separable from the main contract?
  24. 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. Article 17 of the Act provides that validity of the arbitration clause is not affected by the invalidity of the other provisions of the underlying contract containing that arbitration clause. Thus, the tribunal has the authority to rule on its own jurisdiction based on the arbitration agreement, as distinct from the underlying contract. 

  25. 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?
  26. 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.

  27. 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?
  28. 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.

  29. 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?
  30. Institutional arbitrations are much more common than ad hoc arbitrations in Korea. However, ad hoc arbitrations are not uncommon. Generally ad hoc arbitrations use the UNCITRAL Rules.

  31. 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.
  32. The Act is silent on the issue of multi-party arbitration, and thus great care should be given when drafting an arbitration clause for multi-party agreements. 

    Commencing the arbitration

  33. 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?
  34. 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 identify the parties, subject matter of the dispute and contents of the arbitration agreement.

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

    Choice of law

  35. 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?
  36. Article 29 of the 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.

    Appointing the tribunal

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

  39. 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?
  40. Article 12 of the 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. Indeed, non-nationals can and frequently sit as arbitrators in arbitrations seated in Korea.

  41. 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?
  42. Article 12 of the 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.

  43. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
  44. There are no specific provisions under the Act that provide for the immunity of the arbitrators from suit in Korea. 

  45. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
  46. There is no restriction under the Act against arbitrators securing the payment of their fees. Securing payment pursuant to institutional international arbitration is subject to the relevant arbitral institution’s rules. 

    Challenges to arbitrators

  47. 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?
  48. Article 13 of the Act provides that an arbitrator may be challenged 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.

    Interim relief

  49. 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?

  50. Interim relief is available from both courts and arbitral tribunals. Article 10 of the Act provides that any party to an arbitration agreement may, before or during the arbitral proceedings, request interim relief from a court. Types of interim relief available from the courts, however, are limited to provisional attachment of respondents’ assets and preliminary injunction. 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.

    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 pursuant to article 9 of the Act 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 objection no later than when submitting its first pleading.

  51. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
  52. Korea law does not allow a court or tribunal to order a party to provide security for costs of arbitration. While the Act contains no specific provision allowing the court to make such an order, the courts are empowered to do so under articles 280 and 301 of the Civil Execution Act.

    Procedure

  53. 27.

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

  54. The provisions of the Act are generally default provisions that 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 shall be given a full opportunity to present its case. In addition 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.

  55. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
  56. 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.

  57. 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?
  58. Article 20 of the Act confers upon the arbitral tribunal the power to determine the admissibility, relevance and weight of any evidence. Evidence normally includes written documents and statements by witnesses and/or experts, and may also include inspections of sites or property that 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 seated in Korea.

  59. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
  60. 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.

  61. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
  62. There is no specific provision in the Act regarding the production of documents. The Korean Civil Procedure Act, consistent with the civil law tradition, provides for a rather limited scope of document production in court litigation. In practice, however, the IBA Rules on the Taking of Evidence in International Arbitration, while not binding, are generally taken into account in international arbitrations seated in Korea.

  63. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
  64. 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 documentary submissions before the tribunal. Unless otherwise agreed by the parties, however, the tribunal must hold a hearing if requested by either party. 

  65. 33.Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?
  66. 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 tribunal may decide to conduct the hearings and procedural elsewhere, unless the parties agree otherwise. 

    Award

  67. 34.Majority decisions
    Can the tribunal decide by majority?
  68. 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. 

  69. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
  70. The Act contains no restrictions upon an arbitral tribunal in terms of the types of remedies or relief that may be granted. However, if the tribunal grants remedies or relief that cannot be recognised or enforced under the Korean law, recognition and enforcement of the arbitral award may be denied on the ground of public policy or impossibility to enforce. Further, 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. 

  71. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
  72. There is no provision of the Act specifically permitting or prohibiting the issuance of dissenting opinions. In practice, there have been cases where dissenting opinions were issued, but it is not a common practice. 

  73. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
  74. 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.

  75. 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?
  76. 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 a request for correction of computation, clerical, or typographical errors, for interpretation of any specific point or part of the award, or for 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.   

    Pursuant to article 36(3) of the Act, 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. 

    Costs and interest

  77. 39.

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

  78. The Act does not contain a provision with respect to the recovery of fees paid and costs incurred. The “loser pays” rule generally applies, although  the arbitral tribunal may decide otherwise in light of the nature of the claims and the manner and circumstances in which the arbitration proceeded.

  79. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
  80. The Act does not provide for interest on the principal claim and costs. However, it is customary for the claimant to seek payment or reimbursement of interest on the principal claims and related costs from the respondent, and the arbitral tribunal must decide on such claims. Where the parties have not agreed to an interest rate, the interest rate is determined by the substantive law that governs the underlying contract or legal relations wherefrom the claim arose. If Korean law is the governing law, the statutory interest rates under the Korean Civil Code (5 per cent) for non-commercial claims or under the Korean Commercial Code (6 per cent),  for commercial claims will apply. There is also some discussion as to whether a much higher rate of default interest of 15 per cent per annum might apply to claims from the date on which the arbitration request has been served on the respondent; this higher interest rate applies in domestic court litigation uder the Special Act on Expedition of Litigation.

    Challenging awards

  81. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
  82. 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. Article 36 of the Act provides that an award can be set aside if (i) there was no valid arbitration agreement, (ii) there was no appropriately served notice of the selection of arbitrators or the arbitration process or, for any other reason, a party was not able to present its argument on the merits, (iii) the award dealt with a matter that was not covered by the arbitration agreement, (iv) the composition of the arbitral tribunal or the conduct of the arbitration process was inconsistent with the compulsory provisions of the Act or the parties’ agreement, (v) the subject matter of the award was a non-arbitrable matter under Korean law, or (vi) the award, if recognised or enforced in Korea, will contravene the public policy or social order of Korea.

  83. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
  84. 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.

  85. 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?
  86. The parties may not contractually exclude the right to appeal any court decision or decision of the tribunal. However, a party may agree not to exercise such rights when and as such rights arise, unless (i) the subject matter of the award is a non-arbitrable matter under Korean law, or (ii) the award, if recognized or enforced in Korea, will contravene the public policy or social order of Korea.

    Enforcement in your jurisdiction

  87. 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?
  88. Pursuant to article 39 of the Act, the recognition or enforcement of foreign arbitral awards in Korea is determined in accordance with the NY Convention. Article V(1)(e) of the NY 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 competent court in the seat of arbitration as long as the state that is the seat of arbitration is a party to the NY Convention. On the other hand, if the seat of arbitration is not a signatory of the NY Convention, it is likely that the Korean court will apply the criteria set out in the applicable Korean law (i.e., the Korean Civil Procedure Act and the Civil Execution Act) for setting aside foreign arbitral awards, notwithstanding the judgment of the foreign court that set aside such award.

  89. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
  90. The Korean courts is reluctant to refuse enforcement of foreign arbitral awards. In a noteworthy case, 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 stated that in assessing the public policy challenge, it must take into account not only domestic perception of public policy but also the stability of international commercial transactions. This continues a trend of previous court precedents that are very supportive of international arbitral awards. In a 2015 case, the Supreme Court upheld an award that had been refused enforcement by a lower court on grounds that there was no valid arbitration agreement.

  91. 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?
  92. As state immunity is not a ground for resisting enforcement of arbitral awards under the NY Convention and under Korean law, it would be difficult to successfully raise such a defence to prevent the enforcement of a foreign arbitral award in Korea.

    Further considerations

  93. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
  94. The 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 is not legally presumed. Nonetheless, in practice, arbitral proceedings in Korea have been treated in strict confidence.

  95. 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)?
  96. The Act is silent on the issue of confidentiality. Thus, in practice, parties usually address this issue to the extent they can through their confidentiality agreement or the tribunal addresses the issue through an order.

  97. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
  98. Counsel in arbitrations in Korea may be members of the Korean bar or qualified as attorneys in their home jurisdiction. There are no established professional standards or qualifications that apply to arbitrators in Korea.

    As noted above, arbitrators conducting proceedings in Korea must disclose in advance if there are any circumstances that 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. 

  99. 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?
  100. Korean court proceedings and domestic arbitrations tend to be scheduled with staggered short hearings spaced out over several weeks or months. This domestic litigation or arbitration practice may be inconsistent with international arbitration practice. Furthermore, rules on taking evidence generally accepted in Korean court litigation or arbitration are not necessarily identical to those prevailing in international arbitrations conducted outside of Korea. Therefore, if foreign counsel or arbitrators are participating in international arbitrations seated in Korea, it would be wise to discuss ad agree on hearing dates and other procedural rules at the outset of the arbitration, especially where there are one or more Korean arbitrators on the tribunal. 

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GAR know-how provides reliable cross-jurisdictional insight to help cement the building blocks of international practice. In this section, select experienced practitioners answer commonly-asked questions for key jurisdictions so allowing readers to be better-placed to solve the challenges of their working days.

Questions

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
  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?
  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?
  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
  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?
  7. Agreement to arbitrate

  8. 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?
  9. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
  10. 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?
  11. 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?
  12. 11.

    Groups of companies
    Is the 'group of companies doctrine' (or any other basis for piercing the corporate veil) recognised in your jurisdiction?


  13. 12.Separability
    Are arbitration clauses considered separable from the main contract?
  14. 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?
  15. 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?
  16. 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?
  17. 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.
  18. Commencing the arbitration

  19. 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?
  20. Choice of law

  21. 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?
  22. Appointing the tribunal

  23. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
  24. 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?
  25. 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?
  26. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
  27. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
  28. Challenges to arbitrators

  29. 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?
  30. Interim relief

  31. 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?


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

  34. 27.

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


  35. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
  36. 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?
  37. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
  38. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
  39. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
  40. 33.Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?
  41. Award

  42. 34.Majority decisions
    Can the tribunal decide by majority?
  43. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
  44. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
  45. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
  46. 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?
  47. Costs and interest

  48. 39.

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


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

  51. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
  52. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
  53. 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?
  54. Enforcement in your jurisdiction

  55. 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?
  56. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
  57. 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?
  58. Further considerations

  59. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
  60. 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)?
  61. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
  62. 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?