South Korea

Applicable requirements as to the form of arbitral awards

Applicable legislation as to the form of awards

1     Must an award take any particular form?

Article 32 of the Korean Arbitration Act (KAA) governs the form of arbitral awards made in Korea. An arbitral award shall be in writing and signed by all arbitrators. An arbitral award shall state the reasons on which it is based, unless the parties have agreed otherwise or it is a consent award under Article 31 of the KAA. An arbitral award shall also state the date and place of the arbitration. An authentic copy of the award rendered and signed in accordance with the foregoing shall be delivered to each party involved.

Applicable procedural law for recourse against an award

Applicable legislation governing recourse against an award

2     Are there provisions governing modification, clarification or correction of an award? Are there provisions governing retractation or revision of an award? Under what circumstances may an award be retracted or revised (for fraud or other reasons)?

The correction, interpretation or additional decision of an award is governed by Article 34 of the KAA.

An arbitral award may be corrected upon parties’ request. Within 30 days of receipt of the authentic copy of an arbitral award, each party may request that the arbitral tribunal (1) correct any errors in computation, any clerical or typographical errors or any errors of a similar nature, (2) give an interpretation of a specific issue or part of the award, if so agreed by the parties, or (3) make an additional award as to claims that were presented in arbitral proceedings but omitted from the award. The arbitral tribunal should decide within 30 days (as regards points (1) and (2), above) or 60 days (as regards point (3), above) upon receipt of such request. These periods can be extended by the arbitral tribunal if it finds such an extension is necessary.

Furthermore, an arbitral award may be also corrected at the discretion of the arbitral tribunal. The arbitral tribunal may, ex officio, correct any errors in computation, any clerical or typographical errors or any errors of a similar nature within 30 days of the date of the award.

However, other than correction, interpretation or additional decision of an award under Article 34, retractation or revision of an award is not permitted under the KAA.

Appeals from an award

3     May an award be appealed to or set aside by the courts? What are the differences between appeals and applications to set aside awards?

An award, whether domestic or foreign, cannot be appealed to the national courts for substantive reasons since an arbitral award has the same legal effect as the court’s finalised judgement between the parties pursuant to Article 35 of the KAA. The KAA does not allow an appeal against an arbitral award on a point of law.

The only way for a party to challenge an arbitral award is to file a lawsuit with the Korean court for setting aside the award within three months of the date on which the party received an authentic copy of the award in accordance with Article 36 of the KAA.

Article 36(2), Subsection 1 of the KAA stipulates that a domestic award can be set aside by the court when the party seeking the setting aside (the challenging party) proves that:

• the underlying arbitration agreement is invalid or any party to the arbitration agreement was under some incapacity under the law applicable to it;
• the challenging party was not given proper notice of the appointment of arbitrators, or other arbitral proceeding;
• the subject matter of the award dealt with matters outside the scope of the arbitration agreement; or
• the composition of the arbitral tribunal or arbitral proceedings were not in accordance with the agreement between the parties or the KAA.

Article 36(2), Subsection 2 of the KAA provides that the court may also set aside an award when it finds on its own initiative that the subject matter of the dispute is not arbitrable under the laws of Korea, or the award is in conflict with the good morals and other forms of public policy of Korea.

A foreign award can be set aside according to the laws of the place of the arbitration and by the court thereof.

Applicable procedural law for setting aside of arbitral awards

Time limit

4     Is there a time limit for applying for the setting aside of an arbitral award?

In accordance with Article 36 of the KAA, an application to the court for setting aside the award must be filed within three months of the date on which the party making the application received an authentic copy of the award.

According to Article 36(4) of the KAA, if a court’s order recognising and enforcing an arbitral award is rendered and finalised within the three-month time limit, a party cannot bring a lawsuit for setting aside the award.

Award

5     What kind of arbitral decision can be set aside in your jurisdiction? Can courts set aside partial or interim awards?

The KAA does not specify the type of arbitral decision that can be set aside.

However, the Korean Supreme Court has ruled that a lawsuit for setting aside an arbitral award can only be brought against an arbitral award that satisfies all the formal requirements under the KAA and renders a final decision on the substantive matter of the dispute (Korean Supreme Court, Judgment 2003Da70249, 70256). In light of this judgment, the award should be final in order to be subject to setting-aside proceedings, and thus partial or interim awards that are not final cannot be set aside.

The Korean Supreme Court further held in the above case that an arbitral award in which the arbitral tribunal dismissed the claimant’s request for arbitration on the ground that it does not have jurisdiction over the dispute cannot be set aside as it does not satisfy the requirements under Article 36(2) of the KAA.

Competent court

6     Which court has jurisdiction over an application for the setting aside of an arbitral award?

Under Article 7(3)(i), Subsection 2 of the KAA, a lawsuit for setting aside an arbitral award shall be filed with either a court designated by the arbitration agreement, or a court that has jurisdiction over the place of arbitration if there is no such designation in the arbitration agreement.

Form of application and required documentation

7     What documentation is required when applying for the setting aside of an arbitral award?

There is no provision under the KAA on the specific documentation required when applying for the setting aside of an arbitral award. A party making an application shall file a complaint for setting aside an arbitral award to the court of jurisdiction pursuant to the Korean Civil Procedure Act (KCPA), usually accompanied by a copy of the arbitral award the party wishes to set aside as an evidentiary document.

Translation of required documentation

8     If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with the application for the setting aside of an arbitral award? If yes, in what form must the translation be?

There is no provision under the KAA regarding the required documentation for the setting aside of an arbitral award. However, when a party files a lawsuit for the setting aside of an arbitral award, a copy of the arbitral award the party wishes to set aside also needs to be submitted before the Korean court.

That said, if an arbitral award or any other evidentiary documents the party intends to submit in the lawsuit are drafted in a language other than Korean, the party shall submit a Korean translation of that documentation pursuant to Article 277 of the KCPA.

The translation does not have to be a certified translation by a sworn translator and sometimes it is even permitted to submit a translation of the particular portion of the document that is quoted in the submission or oral pleading (Rules for Civil Proceedings, Article 106(2)).

Other practical requirements

9     What are the other practical requirements relating to the setting aside of an arbitral award? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

A plaintiff, when filing a lawsuit, must pay stamp fees and service of process fees, which are set by the court based on a statutory fee schedule that is linked to the amount in dispute. Litigation costs, including the stamp fees, services of process fees and a portion of the attorney fees are recoverable by the prevailing party after the decision is rendered.

All written submissions should be in Korean. If any evidentiary documents are written in a foreign language, they should be submitted with Korean translations (KCPA, Article 277; Rules for Civil Proceedings, Article 106).

There is no limitation on the length of a complaint or an answer. However, in respect of pleadings, pursuant to Article 69-4 of the Rules for Civil Proceedings, absent exceptional circumstances, submissions by the parties must not exceed 30 pages, unless the parties and the court have agreed otherwise.

Form of the setting-aside proceedings

10     What are the different steps of the proceedings?

Proceedings for the setting aside of an arbitral award are no different from any other civil lawsuit.

After the plaintiff files a complaint and the defendant files a response, the court sets a date for the first hearing. Thereafter, there are exchanges of submissions, multiple hearings, and possibly evidence gathering, including witness examinations. If the court finds no further hearing is necessary, it closes the hearing and renders a judgment, which will be for the first instance. Once the judgment is rendered, the losing party may appeal the judgment, and the case is moved to the appellate court. If the losing party appeals the appellate court’s judgment, the case eventually becomes subject to the final review of the Supreme Court. At any stage, if the losing party does not appeal with the time limit prescribed by the law, the judgment becomes final.

Suspensive effect

11     Do setting-aside proceedings have suspensive effect? May an arbitral award be recognised or enforced pending the setting-aside proceedings in your jurisdiction?

Setting-aside proceedings do not automatically suspend the recognition or enforcement of an arbitral award. The KAA does not incorporate Article 34(4) of the UNCITRAL Model Law on International Commercial Arbitration of 1985 (the UNCITRAL Model Law).

Furthermore, pursuant to Article 37(6) of the KAA, a challenge against the court’s decision recognising or enforcing an arbitral award does not suspend the enforcement of the award, provided that the appellate court (or the first instance court if the litigation record is remaining in the first instance court) may suspend all or part of the enforcement of the arbitral award with or without ordering the provision of security until the appellate court decides on the challenge.

Grounds for setting aside an arbitral award

12     What are the grounds on which an arbitral award may be set aside?

Under Article 36(2), Subsection 1 of the KAA, an arbitral award may be set aside by the court if the party making the application proves that:

• a party to the arbitration agreement lacked capacity at the time of the arbitration agreement under the applicable law, or the arbitration agreement is not valid under the law selected by the parties to govern the agreement (or, failing any such indication, under Korean law);
• the party making the application was not given proper notice of the appointment of the arbitrators or of the arbitral proceedings, or was otherwise unable to present its case;
• the award deals with a dispute not contemplated by or subject to the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement; or
• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or the KAA.

In addition, under Article 36(2), Subsection 2 of the KAA, the court may also set aside the award if it finds on its own initiative that:

• it is not possible to settle the subject matter of the dispute by arbitration under Korean law; or
• the recognition and enforcement of the award are in conflict with the good morals or other public policy of Korea.

Decision on the setting-aside application

13     What is the effect of the decision on the setting-aside application in your jurisdiction? What challenges are available?

An application to set aside an arbitral award is filed at a district court. The decision of the district court may be appealed to the High Court and thereafter to the Supreme Court.

If the court’s decision to set aside an arbitral award becomes final, the arbitral award becomes void. Under Article 38 of the KAA, an arbitral award that has been set aside cannot be recognised or enforced.

A court’s decision on the setting-aside application can be subject to an appeal pursuant to the KCPA. A party can file an appeal against the first court’s decision on setting aside an arbitral award or its dismissal of the application (KCPA, Article 390) and the appellate court will re-examine the application. The appellate court’s decision can be brought before the Supreme Court only when the appellate court violates the Constitution, laws, rules and regulations (KCPA, Article 423).

Effects of decisions rendered in other jurisdictions

14     Will courts take into consideration decisions rendered in the same matter in other jurisdictions or give effect to them?

Korean law does not address the issue of arbitral decisions rendered on the same matter in other jurisdictions. The Korean Supreme Court has held that recognition and enforcement of a foreign judgment that are contrary to res judicata of a Korean court judgment would be in violation of public policy and, thus, the recognition and enforcement of such a foreign judgment should be refused (Korean Supreme Court, Decision 93Mui1051, 1068).

Applicable procedural law for recognition and enforcement of arbitral awards

Applicable legislation for recognition and enforcement

15     What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction? Is your jurisdiction party to treaties facilitating recognition and enforcement of arbitral awards?

The recognition and enforcement of arbitration proceedings are governed both by the KAA and by treaties ratified by Korea, such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).

Since amendments that entered into effect on 30 November 2016, the KAA (as amended by Act No. 14176 of 2016) closely follows the language of the UNCITRAL Model Law. Among other things, the 2016 amendments to the KAA further simplify the recognition and enforcement process. In other words, the process of recognition and enforcement will be carried out in the form of a court order (rather than a formal judgment), encouraging more expeditious enforcement proceedings.

Although there have not been many cases on recognition or enforcement of arbitral awards since the 2016 amendments have taken effect, in light of the few cases so far, it appears that courts are attempting to expedite the process and swiftly render orders. Notably, a district court decided to recognise and enforce a foreign arbitral award as swiftly as within three months of the application, despite an annulment proceeding that was pending at the seat of the arbitration outside Korea (Changwon District Court, Decision No. 2017 Kagi824 rendered on 24 August 2017).

Korea is a party to the 1966 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) and to multiple regional or bilateral investment promotion and protection agreements that guarantee enforcement of arbitral awards relating to disputes between a host country and an investor. Therefore, foreign arbitral awards, including ICSID awards that are subject to these conventions, are recognised and enforced in Korea in accordance with these conventions.

The New York Convention

16     Is the state a party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under Article I(3) of the Convention?

Korea acceded to the New York Convention on 8 February 1973, and the Convention entered into force in Korea on 9 May 1973. Korea has made reservations for both reciprocity and commercial relationships. As a result of these two reservations, an arbitral award is treated as a New York Convention award under the KAA only if it was rendered in a country that is also a party to that Convention and it involves a commercial dispute as determined by Korean law. This apparent limitation is not so relevant in practice, however, as the vast majority of foreign arbitral awards presented for enforcement in Korea are rendered in countries that are parties to the New York Convention and concern commercial matters. Furthermore, awards rendered outside Korea that are not subject to the Convention may still be enforced in Korea under Article 39(2) of the KAA.

Recognition proceedings

Time limit

17     Is there a time limit for applying for the recognition and enforcement of an arbitral award?

There is no time limit for applying for the recognition and enforcement of an arbitral award under the KAA.

Competent court

18     Which court has jurisdiction over an application for recognition and enforcement of an arbitral award?

The Korean judiciary is based on a three-tier court system. There are no separate courts that handle the recognition and enforcement of arbitral awards. The first instance court (which are the district courts) that has jurisdiction over the recognition and enforcement of both domestic and foreign arbitral awards in accordance with Article 7(4) of the KAA will be the court:

• that is designated by an arbitration agreement;
• that has jurisdiction over the place of arbitration;
• that has jurisdiction over the place where the respondent’s assets are located; or
• that has jurisdiction over the respondent’s domicile or place of business, or the place of abode if neither of those can be found, or the last known domicile or place of business if the respondent’s place of abode cannot be found

Jurisdictional and admissibility issues

19     What are the requirements for the court to have jurisdiction over an application for recognition and enforcement and for the application to be admissible? Must the applicant identify assets within the jurisdiction of the court that will be the subject of enforcement for the purpose of recognition proceedings?

Under Article 7(4) of the KAA, an application for the recognition and enforcement of an arbitral award (both domestic and foreign) must be filed with one of the following courts, as appropriate:

• a court designated by arbitration agreement; or
• a court that has jurisdiction over:
  • the place of arbitration;
  • the place where the respondent’s property is located;
  • the respondent’s domicile or place of business;
  • the respondent’s place of abode if neither the domicile nor the place of business can be found; or
  • the respondent’s last known domicile or place of business if his or her place of abode cannot be found.

The applicant need not identify assets within the jurisdiction of the court unless he or she files the application based on Subsection 3 of Article 7(4) of the KAA (jurisdiction over the place where the respondent’s property is located).

Form of the recognition proceedings

20     Are the recognition proceedings in your jurisdiction adversarial or $!? What are the different steps of the proceedings?

Recognition proceedings in Korea are adversarial, although under the 2016 amendments to the KAA, a formal hearing, at which each party should appear and present its arguments before the court, is no longer required. However, the court may summon the parties to a brief hearing at its discretion, during which the court would ask the questions necessary for rendering its order, depending on the level of complexity of the case. Although there have not been many cases since the 2016 amendments to the KAA took effect, it appears that the number of hearings is usually limited to one or two.

Form of application and required documentation

21     What documentation is required to obtain recognition?

Under Article 37(3) of the KAA, an application to obtain a recognition order must be filed before the relevant competent court, accompanied by the original award or a copy thereof and, if the award is made in a foreign language, a translation of the award in Korean. The arbitral award does not have to be duly certified or authenticated, and the Korean translation of the award does not have to be duly certified.

Translation of required documentation

22     If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with an application to obtain recognition? If yes, in what form must the translation be?

Under Article 37(3) of the KAA, a translation of the award in Korean must be filed with the application if the award is made in a foreign language. The translation does not have to be certified by a sworn translator.

Other practical requirements

23     What are the other practical requirements relating to recognition and enforcement? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

As well as the written application and the required documents, the applicant must submit a receipt for payment of the process fee and the stamp fee, and, if the party has appointed legal counsel to act on its behalf, a document evidencing power of attorney. Pursuant to Article 69-4 of the Rules for Civil Proceedings, absent exceptional circumstances, the submissions made by the parties must not exceed 30 pages, unless the parties and the court have agreed otherwise.

Recognition of interim or partial awards

24     Do courts recognise and enforce partial or interim awards?

The KAA does not limit the types of awards that can be recognised or enforced. There is a district court decision stating that a partial arbitral award that was valid under the UK Arbitration Act can be recognised pursuant to Article 217 of the KCPA as long as it is a final decision to a certain portion of the dispute (Seoul Civil District Court, Case No. 82Gahap5372, 7489, rendered on 30 December 1982). However, it is a general and prevailing view that for an arbitral award to be recognised and enforced, it should be final, and therefore a partial or interim award that is not a final decision cannot be recognised or enforced.

Grounds for refusing recognition of an arbitral award

25     What are the grounds on which an arbitral award may be refused recognition? Are the grounds applied by the courts different from those provided under Article V of the New York Convention?

Korean courts have advanced a strong pro-arbitration policy. They will refuse recognition or enforcement of arbitral awards only if one of the grounds for the refusal of enforcement under Article 38 of the KAA (for domestic awards) or Article V of the New York Convention (for foreign awards) exists.

The grounds for refusal of enforcement provided by Article 38 of the KAA are almost identical to those provided by Article V of the New York Convention, except that an award that has been suspended is not listed as a ground for refusal of recognition and enforcement.

It should also be noted that Korean courts have narrowly interpreted the grounds for refusal of enforcement and have only refused recognition of arbitral awards on very rare occasions. Most notably, the Korean Supreme Court held in 2018 that an arbitral award ordering the losing party to pay a daily monetary penalty for non-performance of an injunctive order, which is not allowed in judgments under the Korean Civil Execution Act (KCEA), was not against Korean law or public policy (Supreme Court, Decision No. 2016Da18753, rendered on 29 November 2018). This decision clearly shows that the Korean courts are strongly inclined to recognise and enforce arbitral awards, except in exceptional cases.

Effect of a decision recognising an arbitral award

26     What is the effect of a decision recognising an arbitral award in your jurisdiction?

Under Article 35 of the KAA, an arbitration award has the same effect as a final and conclusive court judgment. Thus, if the court recognises an arbitral award, it will have res judicata effect. The award will not become automatically enforceable as a result, however, and a separate enforcement order is necessary (KAA, Article 37(2)). A party can seek both recognition and enforcement in one action. When the court issues an order for recognition or enforcement of an arbitration award (or both), it must include the grounds for its decision, although it may choose to include only a summary of its grounds if it did not hold oral hearings (KAA, Article 37(5)).

Challenges against an order recognising an arbitral award can be made through an immediate appeal (KAA, Article 37(6)). When an order is rendered by the first instance court, the losing party may appeal the order by submitting a petition of appeal within one week of being notified of the order (KCPA, Article 444(1)). The appellate decision is also subject to further appeal to the Supreme Court, which must be filed within one week of notification of the lower appellate decision. However, a further appeal to the Supreme Court may be filed only when a violation of the Constitution, laws or regulations has affected the lower appellate decision (KCPA, Article 442).

Although an immediate appeal does not have the effect of suspending the execution of the enforcement order, the appellate court may still suspend execution, either with or without requiring the losing party to post security or allow the execution (KAA, Article 37(7)).

Decisions refusing to recognise an arbitral award

27     What challenges are available against a decision refusing recognition in your jurisdiction?

Challenges against a decision refusing to recognise an arbitral award can be made in the same way as challenges against a decision recognising an arbitral award, that is, by way of immediate appeal under Article 37(6) of the KAA and further appeal under Article 442 of the KCPA.

Recognition or enforcement proceedings pending annulment proceedings

28     What are the effects of annulment proceedings at the seat of the arbitration on recognition or enforcement proceedings in your jurisdiction?

There is no explicit rule in Korea that regulates a situation in which an annulment proceeding is still pending at the seat of the arbitration and a proceeding seeking recognition or enforcement is simultaneously sought in Korea. The Korean court has the discretion to adjourn the recognition or enforcement proceeding when an annulment proceeding is pending at the seat of the arbitration. The court also has discretion to suspend the recognition or enforcement proceeding by not setting the next hearing date until the annulment proceeding has been finalised. In deciding whether to adjourn or suspend a proceeding to recognise or enforce an award, the court will consider factors such as the likelihood of annulment or of a party suffering irreparable damages if the award is annulled at the seat of the arbitration after the court has recognised or enforced the award.

However, a Korean court recognised and enforced a foreign arbitral award while an annulment proceeding was pending at the seat of the arbitration, in Finland. Despite the fact that the annulment proceeding was pending in Helsinki District Court, Changwon District Court swiftly decided to recognise and enforce the arbitral award (Decision No. 2017Kagi824, rendered on 24 August 2017).

Security

29     If the courts adjourn the recognition or enforcement proceedings pending annulment proceedings, will the defendant to the recognition or enforcement proceedings be ordered to post security?

In the case of foreign awards governed by the New York Convention, it is possible to order security in accordance with Article VI of the Convention. However, it rarely happens in practice.

Recognition or enforcement of an award set aside at the seat

30     Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? If an arbitral award is set aside after the decision recognising the award has been issued, what challenges are available?

Domestic awards

If an award had been set aside, one cannot obtain an order for recognition and enforcement of the award. The grounds for setting aside an award under the KAA are the same as those for refusing recognition or enforcement and, therefore, enforcement of such an award will be refused. Article 38, Subsection 1(b) of the KAA clearly provides that if an arbitral award was set aside by the court, the award cannot be recognised or enforced.

Foreign awards governed by the New York Convention

Pursuant to Article V.1(e) of the New York Convention, the fact that the award has been set aside at the seat of the arbitration may qualify as a ground to reject the recognition or enforcement of the award. However, there is no record of a Korean court granting enforcement of such an award.

Foreign awards not governed by the New York Convention

Foreign awards not governed by the New York Convention should fulfil the requirements of recognition according to Article 217 of the KCPA. Recognition and enforcement of an award that has been set aside at the seat of the arbitration could be rejected on any of the following grounds

• the award is not ‘a final and conclusive judgment’;
• recognition or enforcement of the award violates Korean public policy; or
• there is no mutual guarantee.

Appealing a recognition or enforcement order

When an award has been set aside following the recognition or enforcement of an award, if an order recognising or enforcing that award has not been finalised, one can appeal to a higher court by way of immediate appeal or further appeal as it can be a valid ground to refuse recognition and enforcement of the award.

If the recognition or enforcement order has been finalised, the only recourse available is to apply for a quasi-retrial (KCPA, Article 461). However, it is only allowed under the exceptional circumstances prescribed by Article 451(1) of the KCPA.

Service

Service in your jurisdiction

31     What is the procedure for service of extrajudicial and judicial documents to a defendant in your jurisdiction? If the extrajudicial and judicial documents are drafted in a language other than the official language of your jurisdiction, is it necessary to serve these documents with a translation?

The Korean courts handle service of process and arrange delivery of judicial documents.

There is no particular procedure regarding service of extrajudicial documents. Service is made directly on the recipient by registered mail to his or her residence or place of business. One may also obtain service of process by delivering the documents to a representative or an employee of the recipient at his or her residence or office, delivering the document directly to the recipient at the court on the hearing date, posting in the Official Gazette, or serving the party electronically by allowing the documents to be accessed through the court website, pursuant to Articles 187 to 196 of the KCPA.

Service out of your jurisdiction

32     What is the procedure for service of extrajudicial and judicial documents to a defendant outside your jurisdiction? Is it necessary to serve these documents with a translation in the language of this jurisdiction?

Korea is a signatory to the 1965 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Hague Service Convention). Korea is also a signatory to bilateral treaties regarding judicial assistance in civil and commercial matters with Thailand, Uzbekistan, Mongolia, China and Australia. In addition, the Act on International Judicial Mutual Assistance in Civil Matters (the Judicial Assistance Act) specifically provides for service when the relevant country is neither a party to the Hague Service Convention nor a party to any bilateral treaties with Korea. The Judicial Assistance Act can also be applied on a supplementary basis to service in contracting states of the Hague Service Convention. In certain circumstances, the KCPA is also applied, but usually on a supplementary basis.

Identification of assets

Asset databases

33     Are there any databases or publicly available registers allowing the identification of an award debtor’s assets within your jurisdiction?

Real estate, automobiles, vessels, aeroplanes and intellectual property rights are registered with a publicly available registry. Thus, ownership or security rights for these types of assets may be verified by checking the public record. However, as the registrations are not classified by the owner but are separately prepared for each property, it is not possible to identify an award debtor’s assets by checking the debtor’s name on the public records. Therefore, a creditor must first identify an award debtor’s assets by other means.

A creditor can hire an asset investigation company to identify a debtor’s assets that are registered on the publicly available registry, including real estate, automobiles, vessels, aeroplanes and intellectual property rights, and the existence of a debtor’s bank accounts. However, an asset investigation company cannot identify the actual value of these properties or the balance of a debtor’s bank account.

Information available through judicial proceedings

34     Are there any proceedings allowing for the disclosure of information about an award debtor within your jurisdiction?

According to Article 61 of the KCEA, when an enforcement order is finalised, the winning party may file a request for ‘specification of the debtor’s property’ with the first instance court that has jurisdiction over the award debtor’s domicile, residence, office or property.

A proceeding on a request for specification of a debtor’s property will proceed as a written proceeding, without a hearing date or questioning of the debtor.

When such a request is granted by the court and the court orders the debtor to specify the property, the court will also fix a date for specifying the property and ask the debtor to appear on that date. According to Article 64(2) of the KCEA, on the date set for the debtor to specify its property, the debtor must appear before the court and submit a list of the properties subject to a compulsory execution, as well as the following matters:

• non-gratuitous transfer of immovable property performed by the debtor up to one year before the service of an order to specify the property;
• onerous transfer of property, other than immovable property, performed by the debtor to members of the family or other relatives up to one year before the service of an order to specify the property; and
• gratuitous disposition in respect of property performed by the debtor up to two years before the service of an order to specify the property.

The award debtor should also take an oath on the date of specifying property that the content of the property list is correct.

Enforcement proceedings

Attachable property

35     What kinds of assets can be attached within your jurisdiction?

Pursuant to the KCEA, immovable property, vessels, vehicles, machinery, movable assets, monetary claims and other tangible and intangible rights with monetary value can be attached.

Availability of interim measures

36     Are interim measures against assets available in your jurisdiction?

Under the KCEA, three types of interim measures against assets are readily available through the courts: (1) provisional attachment; (2) provisional injunction on property under dispute; and (3) provisional injunction to set preliminary status.

In addition, the 2016 amendments to the KAA adopted all the interim measures available under the UNCITRAL Model Law, except for preliminary orders. Under Article 18-7 of the KAA, any party seeking recognition of an interim measure ordered by an arbitral tribunal may file an application with a court asking the court to approve the interim measure. A party seeking to enforce an interim measure also may file an application asking a court to confirm enforceability of the interim measure. Further, Article 18-8 of the KAA prescribes an exhaustive list of limited circumstances in which recognition or enforcement of an interim award may be refused.

Assets owned by the Korean government may be classified as either administrative property (i.e., for official or public use) or general property (i.e., any state property other than administrative property), according to its purpose of use.

Interim measures against administrative property are not available. Although interim measures against general property are permitted, ‘an urgent need for preservation’ must be proven. If a creditor is seeking satisfaction of his or her monetary claim in a preliminary attachment against general property, the requirement of an urgent need for preservation is not easily satisfied as the debtor is the Korean government.

Administrative property of foreign states is subject to diplomatic privilege. Thus, it would be difficult to obtain any interim measures affecting that property. Theoretically, general property of a foreign state can be subject to interim measures but, similar to general property of the Korean government, it is difficult to satisfy the requirement of an urgent need for preservation if the creditor’s claim is a monetary claim.

Procedure for interim measures

37     What is the procedure to apply interim measures against assets in your jurisdiction?

There are three types of interim measures available, as described below.

Provisional attachment

Provisional attachment is a means of preserving a monetary claim. Assets subject to a provisional attachment include real estate, accounts receivable and chattels. The requirements for a provisional attachment are the probability of success in the case on merits and an urgent need for preservation of the assets to be attached.

To obtain a provisional attachment, an applicant must file an application with the district court that has jurisdiction over the location of the assets to be attached, or the court that has jurisdiction over the merits. The attachment application will be reviewed and determined on an ex parte basis. Usually, the court will require the submission of security (in cash or surety bonds) before issuing an attachment order.

Provisional injunction on property under dispute

This type of injunction is a means of preserving a direct claim on property under dispute (real estate, account receivables, chattels and so on). The requirements for this provisional injunction are the probability of success in the case on the merits of the underlying dispute and an urgent need for preservation of the assets under dispute.

An applicant seeking a provisional injunction must file an application with the court that has jurisdiction over the merits of the underlying claim or the district court that has jurisdiction over the location of the property under dispute. The application for injunction will be reviewed and determined on an ex parte basis, and usually the court will require the submission of security (in cash or surety bonds) before issuing an injunction order.

Provisional injunction to set preliminary status

This type of injunction is used to preserve various claims when specific performance or injunctive relief is sought. The requirements are the probability of success on the merits of the underlying claim and an urgent need for preservation, including irreparable harm. The threshold for the second requirement is very high.

To obtain a provisional injunction to set preliminary status, an applicant must file an application with the court that has jurisdiction over the merits of the underlying claim or the district court that has jurisdiction over the location of the objects in dispute. The application for this provisional injunction will be determined after the court has heard from both parties. The court will usually require the submission of security (in cash or surety bonds) before issuing an injunction order. When ordering certain specific performance or injunctive relief, the court may also order indirect compulsory performance (i.e., an order to pay a daily monetary penalty for non-performance of an injunctive order, to compel compliance with the order).

Interim measures against immovable property

38     What is the procedure for interim measures against immovable property within your jurisdiction?

Interim measures are categorised by purpose, not by the type of assets against which the interim measures are applied. There are three types of interim measures available against immovable property: (1) provisional attachment; (2) provisional injunction on property under dispute; and (3) provisional injunction to set preliminary status. There is no specific procedure for interim measures against immovable property. To obtain a provisional attachment against immovable property, an applicant must file an application with the district court that has jurisdiction over the location of the assets to be attached, or the court that has jurisdiction over the merits. The requirements for a provisional attachment are the probability of success in the case on the merits and an urgent need for preservation of the assets to be attached.

Interim measures against movable property

39     What is the procedure for interim measures against movable property within your jurisdiction?

Interim measures are categorised by purpose, not by the type of assets against which the interim measures are applied. There are three types of interim measures available against movable property: (1) provisional attachment; (2) provisional injunction on property under dispute; and (3) provisional injunction to set preliminary status. There is no specific procedure for interim measures against movable property. To obtain a provisional attachment against movable property, an applicant must file an application with the district court that has jurisdiction over the location of the assets to be attached, or the court that has jurisdiction over the merits. The requirements for a provisional attachment are the probability of success in the case on the merits and an urgent need for preservation of the assets to be attached.

Interim measures against intangible property

40     What is the procedure for interim measures against intangible property within your jurisdiction?

Interim measures are categorised by purpose, not by the type of assets against which the interim measures are applied. There are three types of interim measures available against intangible property: (1) provisional attachment; (2) provisional injunction on property under dispute; and (3) provisional injunction to set preliminary status. There is no specific procedure for interim measures against intangible property. To obtain a provisional attachment against intangible property, an applicant must file an application with the district court that has jurisdiction over the location of the assets to be attached, or the court that has jurisdiction over the merits. The requirements for a provisional attachment are the probability of success in the case on the merits and an urgent need for preservation of the assets to be attached.

Attachment proceedings

41     What is the procedure to attach assets in your jurisdiction?

When an enforcement order has become final and conclusive, or when there is a declaration of provisional execution by the court, the prevailing party can obtain a writ of execution on a certified copy of the order.

With the writ of execution, a party can commence a procedure for compulsory enforcement by commencing attachment proceedings on relevant assets. These proceedings are ex parte but debtors are allowed to raise objections after attachment.

Attachment against immovable property

42     What is the procedure for enforcement measures against immovable property within your jurisdiction?

There are two types of enforcement measures against immovable property:

• compulsory auction, which is a way of obtaining satisfaction by selling the property (KCEA, Chapter 2, Part 2); and
• compulsory administration, which is a way of obtaining satisfaction by taking advantage of the property (by using the property) (KCEA, Chapter 2, Part 3).

In practice, a creditor rarely exercises compulsory administration. A creditor may opt to have execution effected by either of these measures, or by concurrently exercising both. A court will attach the property when it orders the compulsory auction or the compulsory administration.

Attachment against movable property

43     What is the procedure for enforcement measures against movable property within your jurisdiction?

After attaching the movable property, an execution officer should make a sale of the attached objects by bidding or by means of a quoted auction, and deliver the proceeds to the creditor under Article 199 of the KCEA. However, seized money should be delivered directly to the creditor under Article 201 of the KCEA.

Attachment against intangible property

44     What is the procedure for enforcement measures against intangible property within your jurisdiction?

Under Chapter 4, Part 3 of the KCEA, a winning party can attach an obligor’s accounts receivable by submitting an enforcement application to the court. The attachment order is then sent to a third-party debtor of the obligor. As well as the attachment order, the winning party can seek an order for either (1) collection on behalf of the obligor (in which case the winning party will collect the obligor’s claim and report it to the court for distribution among the creditors), or (2) transfer of the claim (in which case the claim will be transferred to the winning party as a payment under the enforcement).

Attachments against bank accounts

45     Is it possible in your jurisdiction to attach bank accounts opened in a branch or subsidiary of a foreign bank located in your jurisdiction or abroad? Is it possible in your jurisdiction to attach the bank accounts opened in a branch or subsidiary of a domestic bank located abroad?

The Supreme Court of Korea has held that bank accounts opened in a branch or subsidiary of a domestic bank located abroad cannot be subject to attachment under the National Tax Collection Act, since in such cases the law of the country where the bank is located should apply (Decision No. 2013da205198, rendered on 27 November 2017).

However, scholars and practitioners are of the view that the above-mentioned case applies only to an attachment under the National Tax Collection Act for disposition of national taxes in arrears, and an application for attachment against bank accounts located outside Korea should be allowed as long as it satisfies the requirements under the KCEA. The attachment order needs to be served to the garnishee (i.e., the bank holding the accounts) for the seizure to become effective (KCEA, Article 227).

Enforcement against foreign states

Applicable law

46     Are there any rules in your jurisdiction that specifically govern recognition and enforcement of arbitral awards against foreign states?

Under Korean law, there is no general provision governing the recognition and enforcement of arbitral awards against foreign states.

Availability of interim measures

47     May award creditors apply interim measures against assets owned by a sovereign state?

Under Korean law, there is no general provision governing interim measures against assets owned by a sovereign state.

In 2011, the Supreme Court held that Korean courts can have jurisdiction to order a seizure and collection order against a foreign state as a garnishee only under one of a limited set of circumstances that, subject to the seizure, is a result of a private act of the state and the state explicitly either consents to the jurisdiction of the Korean courts or waives its immunity (Decision No. 2009Da16766, rendered on 13 December 2011).

Service of documents to a foreign state

48     What is the procedure for service of extrajudicial and judicial documents to a foreign state? Is it necessary to serve extrajudicial and judicial documents with a translation in the language of the foreign state?

Korean law does not address a special procedure for service of extrajudicial or judicial documents to a foreign state, so the laws and regulations regarding service outside Korea will apply. Korea is a signatory to the Hague Service Convention and to bilateral treaties regarding judicial assistance in civil and commercial matters with Thailand, Uzbekistan, Mongolia, China and Australia. The Judicial Assistance Act can also be applied on a supplementary basis to service in contracting states of the Hague Service Convention. In certain circumstances, the KCPA is also applied, but usually on a supplementary basis.

Immunity from enforcement

49     Are assets belonging to a foreign state immune from enforcement in your jurisdiction? Are there exceptions to immunity?

In general, a foreign state (or assets belonging to it) is considered to be immune from the jurisdiction of Korean courts unless:

• the state has explicitly consented to the jurisdiction of the Korean courts or waived its immunity from jurisdiction in an international treaty, an arbitration agreement, any other written agreement, or by an oral statement made before the Korean courts; or
• the proceedings relate to private acts (e.g., commercial transaction) and not sovereign acts. (Supreme Court, Decision No. 97Da39216, rendered on 17 December 1998).

In 2011, the Supreme Court opined that Korean courts can exercise jurisdiction over a foreign country as a garnishee, except under special circumstances, such as the judicial act in question falling under the scope of or bearing close relation to the sovereignty of the foreign country, thus posing the risk of unfairly interfering with the sovereignty of the foreign country (Decision No. 2009Da16766, rendered on 13 December 2011).

Waiver of immunity from enforcement

50     Is it possible for a foreign state to waive immunity from enforcement in your jurisdiction? What are the requirements of waiver?

It is possible for a foreign state to waive its immunity from enforcement in Korea. However, there are no special requirements for the waiver of immunity. A foreign state may waive its immunity from jurisdiction by explicitly expressing its waiver in a written arbitration agreement, in an international treaty, in any other written agreement, or in an oral statement.

Piercing the corporate veil and alter ego

51     Is it possible for a creditor of an award rendered against a foreign state to attach the assets held by an alter ego of the foreign state within your jurisdiction?

An established ruling of the Supreme Court is that the corporate veil may be pierced when a company either (1) maintains the external appearance of a legal person, while in substance it merely takes the form of a legal person and it is equivalent to another person’s private enterprise behind the corporate veil, or (2) is used without justifiable reason to circumvent the application of laws against the person behind the corporate veil. The denial of any responsibility of the person behind the corporate veil (i.e., the alter ego), based on the ground that the person is a separate entity and the legal effect of the action is attributed only to the company, cannot be permitted.

The Korean Supreme Court also held (in Case No. 2007Da90982, rendered on 9 November 2008) that in deciding whether the corporate veil may be pierced, the courts should take into consideration, among other things, whether:

• the assets were commingled between a shareholder and the company;
• corporate formalities were not observed;
• the assets were transferred to another company controlled by a dominate shareholder;
• siphoning of corporate funds by a dominant shareholder occurred; or
• two or more companies acted as a single economic unit.

In light of the above, it appears that piercing the corporate veil or alter ego can only be recognised under very limited circumstance in Korea. There has not yet been any Korean court decision or judgment that directly deals with the issue of whether there can be an alter ego of a foreign state whose assets can be subject to enforcement.

Notes