02/11/2012

PLC - Arbitration: South Korea

Arbitration: South Korea

Resource type: Articles: know-how
Status: Law stated as at 01-Aug-2012
Jurisdiction: South Korea

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

The country-specific Q&A guide provides a structured overview of the key practical issues concerning
arbitration in this jurisdiction, including any mandatory provisions and default rules applicable under local
law, confidentiality, local courts' willingness to assist arbitration, enforcement of awards and the available
remedies, both final and interim.
For a full list of law firms and lawyers, recommended for their arbitration expertise in South Korea, please
visit PLC Which lawyer?
To compare answers across multiple jurisdictions visit the Arbitration Country Q&A tool.
This Q&A is part of the PLC multi-jurisdictional guide to arbitration. For a full list of jurisdictional Q&As
visit www.practicallaw.com/arbitration-mjg.

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

Contents
Use of arbitration and recent trends
Arbitration organisations
Legislative framework
Applicable legislation
Mandatory legislative provisions
The law of limitation
Arbitration agreements
Validity requirements
Separability
Joinder of third parties
Arbitrators
Number and qualifications/characteristics
Independence/impartiality
Appointment/removal
Procedure
Commencement of arbitral proceedings
Applicable rules
Arbitrator's powers
Evidence
Confidentiality

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Courts and arbitration

Remedies
Appeals
Costs
Enforcement of an award
Reform
Main arbitration organisation
The Korean Commercial Arbitration Board (KCAB)
Contributor details
Matthew J Christensen
Yunsoo Shin

Use of arbitration and recent trends

1. How is commercial arbitration used in your jurisdiction? What proportion of large
commercial disputes is settled through arbitration? What are the recent trends?
What are the general advantages and disadvantages of arbitration compared to
court litigation in your jurisdiction?
Use of commercial arbitration
In the past two decades, South Korean companies have become frequent users of commercial
arbitration, particularly for construction, real property and international commercial disputes. In 2011 for
example, the Korean Commercial Arbitration Board (KCAB) (www.k cab.or.k r) (For more information, see
box, Main arbitration organisation) administered a total of 315 arbitration cases of which 59 were
international arbitrations. South Korean parties have also been well represented in International Chamber
of Commerce (ICC) arbitrations. According to the latest available statistics for 2010, a total of 23 parties
to ICC arbitrations were from South Korea, making it the third most active jurisdiction in Asia in this
regard behind India (71 parties) and China (51 parties, of which 27 were from Mainland China and 24 were
from Hong Kong).
Construction, shipbuilding and advanced technology are just a few of the industries in which South
Korean companies are significant global players, and in which South Korean parties regularly enter into
arbitration agreements. Cross-border joint venture and M&A transaction agreements involving South
Korean parties also regularly feature arbitration clauses.
International commercial arbitrations seated in South Korea or involving South Korean parties cover a
wide spectrum of subject matters and amounts in dispute, ranging from routine commercial disputes to
complex, high-value, and multi-party disputes.

Recent trends
Commercial arbitration is now well established in South Korea as an alternative to civil litigation for
international commercial disputes, and the KCAB's caseload in recent years suggests that arbitration is
also becoming an accepted alternative for settling domestic commercial disputes. Recent amendments
to the KCAB's International Arbitration Rules (International Rules) are expected to substantially increase
the number of arbitrations heard under those rules (see Question 2).
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The arbitral process in South Korea is supported by strong and independent courts which rarely set
aside domestic arbitral awards and have only once refused to recognise or enforce a foreign arbitral
award under the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958
(New York Convention).

Advantages/disadvantages
The principal advantages of commercial arbitration in South Korea include:
Neutrality.
Confidentiality.
Party autonomy.
Finality.
Ease of enforcement.
Lower administrative fees of the KCAB than those of arbitral institutions in other jurisdictions.
Speed of KCAB arbitration proceedings:
domestic arbitration awards are typically rendered within 30 days of the closing of hearings;
international arbitration awards are typically rendered within 45 to 60 days of the closing of
hearings.

While not a disadvantage of arbitration, it should be noted that South Korean courts are generally
perceived to be swift and efficient, dispensing justice fairly and at a low cost, including where foreign
parties are concerned. Therefore, commercial arbitration in South Korea faces stiff competition from civil
litigation.

Arbitration organisations
2. Which arbitration organisations are commonly used to resolve large commercial
disputes in your jurisdiction?
While the KCAB is the only arbitral institution specifically authorised under the Arbitration Act (see
Question 3) to administer commercial arbitrations in South Korea; other arbitral institutions are not
restricted from administering arbitrations seated in South Korea or involving South Korean parties. ICC
arbitration is especially popular for large commercial disputes, although arbitrations before other
institutions are also common.
The KCAB administers arbitrations under two separate sets of rules, the Domestic Arbitration Rules
(Domestic Rules) and the International Rules. The latter were first issued in 2007 for use in growing
numbers of international arbitration cases filed with the KCAB. As originally promulgated the International
Rules were not automatically applicable to all international arbitration cases, but only to those in which
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the parties had agreed in writing to refer their disputes to the International Rules. As a consequence of
this opt-in requirement, the International Rules saw very little use during the first four years of their
existence. However, under amendments effective as of 1 September 2011, with respect to arbitration
agreements entered into after that date, the International Rules apply by default to all international
arbitrations (that is, all KCAB arbitrations in which any party is from a jurisdiction outside South Korea or
where the place of arbitration is situated outside South Korea (in the absence of contrary party
agreement)) (Articles 2(d) and 3(1) , International Rules). It is widely expected that this move to default
application will result in a significant increase in cases under the International Rules. (References to the
Domestic Rules or International Rules of the KCAB are to the 2011 versions.)

Legislative framework
Applicable legislation
3. What legislation applies to arbitration in your jurisdiction? To what extent has
your jurisdiction adopted the UNCITRAL Model Law on International Commercial
Arbitration 1985 (UNCITRAL Model Law)?
The Arbitration Act is the principal statute governing arbitration in South Korea. Originally enacted in
1966, the Act was fully amended in 1999 to adopt the UNCITRAL Model Law. The Arbitration Act is a
unitary regime, applicable to both international and domestic arbitrations. Consistent with the Model
Law's territorial criterion, most provisions of the Act apply only if the place of arbitration is located in
South Korea. However the following provisions apply, irrespective of the place of arbitration (Arbitration
Act):
Arbitration agreement and substantive claim before court (Article 9).
Arbitration agreement and interim measures by court (Article 10).
Recognition and enforcement of arbitral awards (Article 37).
Foreign arbitral awards (Article 39).
While the Arbitration Act adopts the UNCITRAL Model Law to a significant degree, the following
deviations are worthy of note (Arbitration Act):
Scope of the Act is not limited to commercial disputes but extends to all disputes under private law
(Article 3(1)).
An arbitration agreement is deemed to be in writing if one party alleges that the contents of a
document exchanged between the parties (that is, not only statements of claim and defence)
contains an arbitration agreement and the other party does not deny it (Article 8(3)(c)).
A party can challenge the appointment of an expert by the tribunal (Article 27(3)). In the absence of
a contrary party agreement, this challenge should be presented to the tribunal initially and, if
unsuccessful, can be presented to a court.
The original copy of the award must be sent to and deposited with the competent court,

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accompanied by a document verifying the delivery, with an authentic copy delivered to each party
(Article 32(4)). While this requirement can prove inconvenient in practice, its legislative purpose is to
enhance the enforceability of awards, particularly awards issued in ad hoc arbitrations, by providing a
mandatory record-keeping function.
Article 34(4) of the UNCITRAL Model Law, which permits a court to suspend proceedings in an
action to set aside an award to give the arbitral tribunal an opportunity to eliminate the grounds for
setting aside, is not incorporated into the Act.

Mandatory legislative provisions

4. Are there any mandatory legislative provisions? What is their effect?
The Arbitration Act embraces the principle of party autonomy and, accordingly, recognises the right of
parties to adopt arbitration rules and procedures that deviate from its default provisions, subject only to
any mandatory provisions (Article 20(1)). While these are not expressly identified in the Act, they are
generally understood to include provisions that directly implicate due process, such as the following
(Arbitration Act):
Obligation of arbitrators to disclose circumstances giving rise to justifiable doubts concerning their
independence and impartiality (Article 13).
Equal treatment of parties (Article 19).
Advance notice requirement for hearings (Article 25(2)).
As the scope of arbitrability under the Arbitration Act is restricted to disputes under private law, disputes
pertaining to criminal, constitutional, or administrative law matters are generally viewed as incapable of
settlement by arbitration.
While the Supreme Court has confirmed that tort claims and intellectual property disputes can be
resolved by arbitration, it has not resolved questions concerning the arbitrability of disputes arising under
civil or commercial laws with important public interest objectives, such as competition laws, bankruptcy
laws, and environmental laws. However, it is widely assumed that the private law consequences of these
laws would be arbitrable in South Korea as long as public policy is not otherwise violated.

The law of limitation

5. Does the law of limitation apply to arbitration proceedings?
While the Arbitration Act does not prescribe any limitation period for the commencement of arbitral
proceedings, the expiration of the limitation period that would apply in court proceedings may be raised
as a defence to a claim in an arbitration. Under South Korean law, claims for breach of a contract
between corporate entities generally must be raised within five years of the date of the alleged breach,
while tort claims generally must be asserted within three years of discovery of the claim or within ten
years from the date of the alleged wrongful act. (As there are exceptions to the general rules, it is
advisable to consult an attorney licensed to practice South Korean law in regard to any particular claim).

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Arbitration agreements
Validity requirements
6. What are the requirements for an arbitration agreement to be enforceable?
Substantive/formal requirements
The Arbitration Act requires an arbitration agreement to be in writing. An arbitration agreement is deemed
to be in writing where it is contained in (Article 8(3), Arbitration Act):
A document signed by the parties.
An exchange of letters, telegrams, telex or other means of telecommunication which provide a
record of the agreement.
An exchange of documents in which the existence of an agreement is alleged by one party and not
contested by the other.
Furthermore, a reference in a contract to a document containing an arbitration clause is deemed to
constitute an arbitration agreement, if the contract is in writing and the reference has the effect of making
the arbitration clause part of the contract.
The Arbitration Act has not yet adopted the 2006 amendments to the UNCITRAL Model Law concerning
the definition and form of an arbitration agreement, but these amendments are expected to be considered
for adoption in the near future.
Apart from the requirement that an arbitration agreement be in writing, there are no other formal
requirements to which an arbitration agreement must adhere as a condition of validity under South
Korean law.

Separate arbitration agreement

An arbitration agreement may be in the form of a separate agreement or an arbitration clause in a
contract (Article 8(1), Arbitration Act).

Separability
7. Does the applicable legislation recognise the separability of arbitration
agreements?
The doctrine of separability is expressly recognised under the Arbitration Act (Article 17(1)). Therefore,
even where a contract has been terminated or is alleged to be invalid, an arbitration clause within it can
still be binding.

Joinder of third parties

8. In what circumstances can a third party be joined to an arbitration, or otherwise
be bound by an arbitration award?
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A third party can be bound by an arbitration agreement through implied consent, by participating in
arbitral proceedings filed against it without raising a jurisdictional objection before or at the filing of its first
statement on the substance of the dispute (Article 17(2), Arbitration Act).
The Arbitration Act is otherwise silent on this point and South Korean courts have yet to set out the
circumstances under which a third party can be joined to an arbitration or otherwise bound by an arbitral
award. While the Supreme Court held in a recent case that an arbitration clause explicitly allowing a ship
owner to invoke an arbitration clause would be binding even between the ship owner and a third party
holder of the bill of lading, it did so applying Japanese law. It remains to be seen whether South Korean
courts will do likewise in similar cases applying South Korean law.

Arbitrators
Number and qualifications/characteristics
9. Are there any default provisions in the legislation relating to the number and
qualifications/characteristics of arbitrators?
Parties are free to agree on any number of arbitrators (Article 11(1), Arbitration Act). In the absence of
agreement, the default position is that three arbitrators must be appointed (Article 11(2), Arbitration Act).
The Arbitration Act is silent regarding the qualifications or characteristics of arbitrators except to state
that no one may be excluded from service as an arbitrator solely by reason of his nationality, unless
otherwise agreed by the parties (Article 12(1)).

Independence/impartiality
10. Are there any requirements relating to independence and/or impartiality of
arbitrators?
A person appointed or asked to serve as an arbitrator must promptly disclose to the parties any
circumstance likely to give rise to justifiable doubts as to his impartiality or independence (Article 13(1),
Arbitration Act).

Appointment/removal
11. Does the applicable legislation contain default provisions relating to the
appointment and/or removal of arbitrators?
Appointment of arbitrators
Parties are free to agree on a process for choosing arbitrators (Article 12(2), Arbitration Act). In the
absence of party agreement, the Arbitration Act provides for the following default procedures, which
largely follow those of the UNCITRAL Model Law.
Where there is to be a sole arbitrator and the parties are unable to agree on a candidate within 30 days
after a party has received a request from the other party to initiate the procedure for the arbitrator's
appointment, the arbitrator can be appointed by a court on request by either party.
Where there are to be three arbitrators, the claimant and respondent party can each appoint one
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arbitrator, and the two arbitrators must agree on the third. If a party fails to appoint its arbitrator within 30
days of receiving a request to do so from the other party, or if the two party-appointed arbitrators fail to
agree on the third arbitrator within 30 days of their appointment, the third arbitrator can be appointed by a
court, on request by either party.
Failing to appoint arbitrators in accordance with party agreement can give rise to grounds for setting
aside the final award. However, parties can request courts to intervene and make appointments where
there is an agreed method for appointing arbitrators, but:
A party fails to appoint an arbitrator according to the agreed procedure.
The parties or the two appointed arbitrators fail to appoint the third arbitrator according to the agreed
procedure.
The institution or other third party to whom appointment of an arbitrator has been delegated fails to
make an appointment.
Where an arbitrator is appointed by a court, the court's decision in the matter is not subject to appeal.

Removal of arbitrators
An arbitrator may be challenged only where circumstances exist that give rise to justifiable doubts
concerning his impartiality or independence, or where an arbitrator does not possess the qualifications
agreed by the parties (Article 13(2), Arbitration Act).
Parties are free to agree on procedures for challenging an arbitrator (Article 14(1), Arbitration Act). In the
absence of party agreement, the following default procedures apply (Arbitration Act):
The challenging party must submit an application in writing to the tribunal within 15 days of the date
on which the tribunal was constituted or the party became aware of circumstances meriting a
challenge under Article 13(2), as applicable. Unless the challenged arbitrator withdraws from office or
the other party agrees to the challenge, the tribunal must decide on the challenge (Article 14(2)).
If the challenge is rejected by the tribunal, the challenging party can submit an application
challenging the relevant arbitrator to court within 30 days after having received notice of the tribunal's
decision. In these cases, the tribunal can, even while the challenge is pending in court, continue the
arbitral proceedings or render an award (Article 14(3)).
The court's decision in these cases is not subject to appeal (Article 14(4)).
Where an arbitrator becomes incapable of performing his duties without undue delay, the arbitrator's
mandate will terminate if he withdraws from office or if the parties agree to terminate it (Article 15(1),
Arbitration Act). In the event of a dispute regarding the termination of an arbitrator's mandate, any party
can request a court to decide the matter (Article 15(2), Arbitration Act), in which case the court's
decision is not subject to appeal (Article 15(3), Arbitration Act).

Procedure
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Commencement of arbitral proceedings

12. Does the applicable legislation provide default rules governing the
commencement of arbitral proceedings?
Unless otherwise agreed by the parties, arbitral proceedings are deemed to commence on the date when
a request for a dispute to be referred to arbitration is received by the respondent (Article 22, Arbitration
Act). The request must describe the parties, the subject matter of the dispute and details of the operative
arbitration agreement.

Applicable rules
13. What procedural rules are arbitrators likely to follow? Can the parties
determine the procedural rules that apply? Does the legislation provide any
default rules governing procedure?
Applicable procedural rules
The parties are free to agree on procedural matters subject only to any mandatory provisions of the Act
(Article 20(1), Arbitration Act) (see Question 4).
In the absence of party agreement, the tribunal has extensive discretion to conduct the arbitration in the
manner it considers appropriate, subject to the provisions of the Act (Article 20(2), Arbitration Act).

Default rules
Rules governing arbitral procedure are set out in Chapter IV of the Arbitration Act. The rules require equal
treatment of the parties in arbitral proceedings and that each party be given "sufficient opportunity" to
present its case. Default rules are also provided for determining the following (Arbitration Act):
Place of arbitration (Article 21).
Language of arbitral proceedings (Article 23).
Commencement of arbitral proceedings (Article 22).
Submission of statements of claim and defence (Article 24).
Organising hearings (Article 25).
Party default (Article 26).
Expert witnesses (Article 27).
Court assistance in the taking of evidence (Article 28).

Arbitrator's powers

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14. What procedural powers does the arbitrator have? If there is no express
agreement, can the arbitrator order disclosure of documents and attendance of
witnesses (factual or expert)?
Arbitrators have the power to conduct the arbitration in the manner they consider appropriate subject to
any relevant party agreement and the provisions of the Act. In these cases, arbitrators have the power to
determine the admissibility, relevance, materiality and weight of any evidence (Article 20(2), Arbitration
Act).
Arbitrators are authorised to request court assistance in the taking of evidence, including the
examination of witnesses (Article 28, Arbitration Act).

Evidence
15. What documents must the parties disclose to the other parties and/or the
arbitrator(s)? How, in practice, does the scope of disclosure compare with
disclosure in litigation? Can the parties determine the rules on disclosure?
Scope of disclosure
As the Arbitration Act is silent on the issue of disclosure, the parties must determine its scope and any
applicable rules. In the absence of contrary party agreement, arbitrators retain broad discretion to order
disclosure of documents if deemed appropriate.
Domestic arbitrations. A formal document production process is not ordinarily encountered in domestic
arbitrations, where expectations are often dictated by the norms and practices of South Korean civil
procedure. Documents disclosed voluntarily by a party in its request for arbitration, answer, or other
written submissions are ordinarily limited to evidence on which the disclosing party relies. Requests to
produce are relatively rare and are typically limited to a small number of specifically identified
documents.
International arbitrations. However, in international arbitrations, document production is commonly
conducted on a broader scale than is typical for South Korean civil litigation, although without ever
approaching the scale of US-style discovery. It is now common to see fundamental principles of
international arbitration practice, including the International Bar Association (IBA) Rules on the Taking of
Evidence in International Arbitration and Redfern Schedules, being used in international arbitrations
seated in South Korea or involving South Korean parties.

Parties' choice
There are no particular limitations under South Korean law on the freedom of parties to determine the
rules on disclosure.

Confidentiality
16. Is arbitration confidential?
The Arbitration Act is silent on the matter of confidentiality and is not interpreted by South Korean courts
as imposing any implied duty of confidentiality. Therefore, there is no presumption of confidentiality under
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the Arbitration Act in the absence of a separate party agreement.

However, the Domestic Rules (Article 9) and the International Rules (Article 52) of the KCAB both provide
for the confidentiality of arbitration proceedings.

Courts and arbitration

17. Will the local courts intervene to assist arbitration proceedings?
The ability of South Korean courts to intervene in the arbitral process is limited to circumstances
specified in the Act (Article 6, Arbitration Act).
Parties can request a court grant interim measures of protection before, or during the arbitration (Article
10, Arbitration Act). This provision applies irrespective of the place of arbitration.
Courts must provide assistance in the taking of evidence on written request from an arbitral tribunal
(Article 28(3)-(4), Arbitration Act).
Courts are also authorised to intervene to assist arbitration proceedings in the following circumstances
(Arbitration Act):
To appoint arbitrators on request of either party in circumstances where the parties, a designated
appointing authority, or the party-appointed arbitrators, as applicable, have failed to do so (Article
12(3)-(5)).
To decide challenges to arbitrators on appeal from the tribunal (Article 14).
To decide requests for termination of an arbitrator's mandate (Article 15).
To review the jurisdiction of an arbitral tribunal on request of the objecting party in circumstances
where the tribunal has ruled as a preliminary question that it has jurisdiction (Article 17).
To decide challenges to experts appointed by the arbitral tribunal (Article 27(3)).
South Korean courts can decide applications for setting aside an arbitral award issued in South Korea
(Article 36, Arbitration Act) as well as applications for recognition or enforcement of domestic or foreign
arbitral awards (Article 37, Arbitration Act).

18. What is the risk of a local court intervening to frustrate the arbitration? Can a
party delay proceedings by frequent court applications?
Risk of court intervention
Court intervention in the arbitral process is restricted to a narrow group of circumstances specified in the
Arbitration Act (Article 6). Consequently, there is little risk of a South Korean court intervening to
frustrate an arbitration.

Delaying proceedings
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There is narrow scope for court intervention in the arbitral process under the Arbitration Act, and it is
therefore unlikely that a party would be able to delay arbitral proceedings through frequent court
applications. Furthermore, South Korean courts will not issue anti-arbitration injunctions and must
dismiss actions brought in breach of a presumptively valid arbitration agreement (see Question 19).

19. What remedies are available where a party starts court proceedings in breach
of an arbitration agreement, or initiates arbitration in breach of a valid jurisdiction
clause?
Court proceedings in breach of an arbitration agreement
Where a defendant in court proceedings pleads the existence of an arbitration agreement (which it must
do before or concurrently with submission of its first statement on the merits of the dispute), and the
court is satisfied that the alleged arbitration agreement is not null and void, inoperative, or incapable of
being performed, the court must dismiss the court proceedings without reviewing the merits of the
dispute (Article 9, Arbitration Act). There is no provision under South Korean law for staying the court
proceedings in these circumstances.

Arbitration in breach of a valid jurisdiction clause

The tribunal is authorised to rule on its own jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement, provided that the objection(s) are raised no later than at
the submission of the statement of defence on the merits (Article 17(1), Arbitration Act).
South Korean courts will not issue anti-arbitration injunctions. The Supreme Court has held that a party
cannot seek a preliminary injunction restraining an arbitration from proceeding based on its alleged
wrongfulness.

20. Will the local courts grant an injunction to restrain proceedings started
overseas in breach of an arbitration agreement?
South Korean courts will not grant an injunction to restrain court proceedings commenced overseas in
breach of an arbitration agreement. These injunctions are not expressly authorised under South Korean
law and are otherwise regarded as an impermissible interference with the jurisdiction of foreign courts.

21. What remedies are available where one party denies that the tribunal has
jurisdiction to determine the dispute(s)? Does your jurisdiction recognise the
concept of kompetenz-kompetenz? Does the tribunal or the local court determine
issues of jurisdiction?
The concept of kompetenz-kompetenz is recognised under South Korean law (Article 17(1), Arbitration
Act) (see also Question 19, Arbitration in breach of a valid jurisdiction clause). Where a party raises a
timely objection to the tribunal's jurisdiction, the tribunal can decide the issue as a preliminary matter or
in an award on the merits. If the tribunal rules as a preliminary matter that it has jurisdiction, the party
raising the objection can, within 30 days of receiving notice of the tribunal's decision, request a review of
the tribunal's jurisdiction from the competent court. This review is not subject to appeal. The granting of
this right to the objecting party represents a departure from the UNCITRAL Model Law.

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Remedies
22. What interim remedies are available from the tribunal?
Security
See below, Security or other interim measures.

Other interim measures

Unless otherwise agreed by the parties, the tribunal can, at the request of a party, issue a decision
granting the interim measures of protection that it considers necessary in respect of the subject matter
of the dispute (Article 18, Arbitration Act). In principle, these can include security for costs as well as
other interim, preservative or conservatory measures, provided they pertain to the subject matter of the
dispute. In these cases, the tribunal can determine the amount of security to be provided by the
respondent in lieu of the interim measure and can also order the party requesting the interim measure to
provide appropriate security.
Article 18 of the Arbitration Act only authorises the granting of interim measures in the form of a decision
(that is, not in the form of an award). Since recognition and enforcement under the Arbitration Act is
limited to arbitral awards, it is generally understood that interim measures issued under Article 18 are not
enforceable by South Korean courts.
The 2006 amendments to the UNCITRAL Model Law concerning interim measures and preliminary orders
have not yet been adopted in South Korea but may be considered for adoption in the near future.

Other

23. What final remedies are available from the tribunal?

Under the Arbitration Act, there is no express provision specifying the remedies that can be granted by
way of an arbitral award, and so, at least in principle, there is no legal restriction on the remedies on
which the parties can agree. As a result, the parties can even agree on remedies that are not available in
South Korean civil court proceedings.
In the absence of specific party agreement, it is generally accepted that the tribunal can order various
remedies in its arbitral award within the limits of the applicable law, including:
Monetary compensation.
Mandatory action or inaction.
Declaratory relief.
Payment of interest.
Payment of costs.
However, punitive damages, have been held by the Supreme Court to be in violation of public policy.
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A tribunal is not permitted to decide a case ex aequo et bono (basing its decision on what is just and
fair) or act as amiable compositeur (deciding the dispute according to the legal principles they believe to
be just, without being limited to any particular national law) unless the parties have expressly authorised
it to do so (Article 29, Arbitration Act).

Appeals
24. Can arbitration proceedings and awards be appealed or challenged in the local
courts? What are the grounds and procedure? Can the parties effectively exclude
any rights of appeal?
Rights of appeal/challenge
Arbitral awards have the same effect as a final and conclusive judgment of the court (Article 35,
Arbitration Act). An arbitral award is therefore not subject to appeal. An award can however, be
challenged through an application for setting aside the award filed with the competent court (Article 36(1),
Arbitration Act).

Grounds and procedure

An application for setting aside an award can be brought under any of the grounds set out as follows
(Article 36(2), Arbitration Act):
A party to the arbitration agreement was without legal capacity under the relevant governing law at
the time of the agreement.
The arbitration agreement is not valid under the law to which the parties have subjected it, or failing
any choice of law, under South Korean law.
The party seeking to set aside the award was:
not given proper notice of the appointment of an arbitrator or of the arbitral proceedings; or
otherwise unable to present its case.

The award deals with a dispute not subject to the arbitration agreement or a matter outside the
scope of the arbitration agreement; provided that if the award can be separated into portions dealing
with and not dealing with subjects of the arbitration agreement, only that portion of the award which
is not a subject of the arbitration agreement can be set aside.
The composition of the arbitral tribunal or the arbitral proceedings was not in accordance with the
agreement of the parties, (unless the agreement was in conflict with any mandatory provision) or
failing an agreement was not in accordance with the Arbitration Act.
In addition, the competent court can set aside an award if it finds on its own initiative that the subject
matter of the dispute is not arbitrable under South Korean law or is in conflict with the "good morals or
other forms of social order" of South Korea. In practice, arbitral awards issued in South Korea are rarely
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set aside under the Arbitration Act.

A party intending to challenge an award under the Act must file an application for setting aside with the
competent court within three months of the date on which it received a duly authenticated copy of the
award or a duly authenticated copy of any correction, interpretation or additional award, as applicable
(Article 36(3), Arbitration Act). Where a final and conclusive judgment for recognition or enforcement of
the relevant award has been issued by a South Korean court, no action for setting aside the award may
be raised (Article 36(4), Arbitration Act).

Excluding rights of appeal

The extent to which parties can agree to exclude or limit the right to appeal any decision of a tribunal
under the setting aside grounds of the Arbitration Act is unclear under South Korean law. Where an
agreement is entered into before the issuance of the award, it is possible that a court would view it as
contrary to public policy and refuse to enforce it. If, on the other hand, an agreement to exclude or limit
the right to apply for setting aside is entered into after the award has been issued (for example, as part of
a post-award settlement), it is more likely to be enforceable.

Costs
25. What legal fee structures can be used? Are fees fixed by law?
There are no particular restrictions on permissible legal fee structures. Hourly rate, task-based, and
success fee arrangements of various types are all frequently encountered.

26. Does the unsuccessful party have to pay the successful party's costs? How
does the tribunal usually calculate any costs award and what factors does it
consider?
Cost allocation
The Arbitration Act is silent on issues of cost allocation and recovery. In practice, arbitrators in
international arbitrations seated in South Korea tend to be open to awarding all or a significant portion of
a successful party's costs provided they are reasonable.

Enforcement of an award
27. To what extent is an arbitration award made in your jurisdiction enforceable in
the local courts?
Recognition or enforcement of an arbitral award is made by a recognition or enforcement judgment by a
court (Article 37(1), Arbitration Act). An application for the judgment is made by way of a complaint filed
with the competent court according to Article 249 of the Korean Civil Procedure Act (KCPA).
An application for recognition or enforcement must be accompanied by (Article 37(2), Arbitration Act):
A duly authenticated award (or a duly certified copy).

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

A duly certified translation of the agreement into the Korean language, if either the award or
arbitration agreement is not written in the Korean language.
The Supreme Court has held that a diplomatic or consular translation or verification is not necessary. In
practice, the accuracy of the translation will only be investigated if an objection is raised by the other
party.
Domestic awards must be recognised and enforced unless any of the grounds for setting aside found
under Article 36(2) exist (Article 38, Arbitration Act) (see Question 24, Grounds and procedure).

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

other jurisdictions? Is your jurisdiction party to international treaties relating to
this issue such as the UN Convention on the Recognition and Enforcement of
Foreign Arbitral Awards 1958 (New York Convention)?
South Korea acceded to the New York Convention on 8 February 1973 as the 43rd contracting state with
effect from 9 May 1973. As was the case with many other jurisdictions, South Korea's accession was
subject to the reciprocity and commercial reservations.
South Korea is also party to the Convention on the Settlement of Investment Disputes between States
and Nationals of Other States 1965 (ICSID Convention) since 1967, having signed without reservation.

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

Article 39 of the Arbitration Act, which provides for recognition and enforcement of foreign arbitral awards,
distinguishes between foreign awards rendered in jurisdictions that are party to the New York Convention
and foreign awards rendered in jurisdictions that are not party to the New York Convention.
Foreign awards governed by the New York Convention, are awards:
Rendered in a country outside of South Korea that is a signatory to the New York Convention.
Not considered domestic in South Korea.
Which dispose of differences arising out of legal relationships, whether contractual or not, that are
considered commercial under South Korean law.
These awards can be refused recognition or enforcement only on the grounds listed in Article V of the
New York Convention (Article 39(1), Arbitration Act).
Awards from jurisdictions not party to the New York Convention are recognised and enforced according
to the rules and procedures applicable to the recognition and enforcement of foreign court judgments in
South Korea (Article 39(2), Arbitration Act).

30. How long do enforcement proceedings in the local court take? Is there any
expedited procedure?
Assuming that the defendant party is resident in South Korea, it ordinarily takes approximately three to
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six months to obtain an enforcement judgment from the first instance court. If the defendant does not
respond, a default judgment can be obtained in approximately two months. In case of a vigorous defence,
it may take about six months to a year to obtain an enforcement judgment from the first instance court.
An enforcement judgment issued by a South Korean court is typically accompanied by a provisional
enforcement order which permits the judgment to be enforced in practice without regard to any pending
appeal.
There is no expedited procedure for recognising or enforcing arbitral awards under South Korean law.

Reform
31. Is the legal framework in relation to the above likely to change in the next
decade?
The legal framework of commercial arbitration in South Korea, which is firmly grounded in the New York
Convention and the UNCITRAL Model Law, is unlikely to change significantly in the next decade. To the
extent that changes are implemented, these will inevitably be intended only to enhance the already
strong level of support in South Korea for commercial arbitration and to expand its adoption of
international best practice. For example, the 2006 amendments to the UNCITRAL Model Law are
expected to be considered for adoption in the near future along with certain other provisions that have
recently been adopted in other leading UNCITRAL Model Law jurisdictions in Asia.

Main arbitration organisation

The Korean Commercial Arbitration Board (KCAB)
Main activities. The KCAB is the only arbitral institution expressly authorised under South Korean
law to administer commercial arbitrations in South Korea. The KCAB administers arbitrations under
two separate sets of rules, the Domestic Rules and the International Rules. The KCAB also provides
mediation, conciliation and other alternative dispute resolution services.
W www.k cab.or.k r

Contributor details
Matthew J Christensen
Bae, Kim & Lee LLC

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T +82 2 3404 0227

F +82 2 3404 7306
E mjc@bk l.co.k r
W www.bk l.co.k r
Qualified. New York, 2006
Areas of practice. International arbitration; international litigation.
Recent transactions
Represented a Korean company engaged in the welding products industry in an ICC arbitration
seated in Zurich brought by a Dutch affiliate of a multi-national welding products conglomerate in
a dispute over control of a Chinese joint venture company.
Acted for a US-based private equity firm against a major Korean bank and its US-based majority
shareholders in an ICC arbitration seated in Singapore involving claims of fraud, duress and other
tortious conduct.
Defended a Korean automobile maker in liquidation in an ICC arbitration seated in Paris brought
by a US automobile maker and its Korean subsidiary, seeking indemnification for automobile
recall costs and various third party claims. This was the second of two related arbitrations
involving the same large-scale M&A transaction.
For more details of recent transactions, publications, and so on, see full PLC Which lawyer? profile
here.

Yunsoo Shin
Bae, Kim & Lee LLC

T +82 2 3404 6533

F +82 2 3404 7306
E yss@bk l.co.k r
W www.bk l.co.k r
Qualified. Korea, 2008
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Areas of practice. International arbitration; international litigation.

Recent transactions
Acted for a Korean welding products supplier in an ICC arbitration seated in Zurich against a
Dutch affiliate of a multi-national welding products conglomerate in relation to the termination of
the parties' Chinese joint venture for an alleged failure to pay agreed capital contributions.
Represented the leading consortium member in the relocation of a major US military base from
downtown Seoul to a nearby city, in an ad hoc proceeding before a Dispute Resolution Board
against a Korean government agency in relation to reimbursement claims and significant future
payments under the US Federal Acquisition Regulation (FAR). This is believed to be one of the
very few cases in which a dispute was referred to a Dispute Resolution Board in Korea.
Represented one of Korea's largest heavy construction companies in related ICC arbitrations
seated in London and Zurich under English and Swiss law, respectively, against a major French
contractor in relation to delays and defects in power plant and water treatment projects in the
Middle East.

Resource information
Resource ID: 8-381-2907
Law stated date: 01-Aug-2012
Products: Arbitration multi-jurisdictional guide, PLC Arbitration - England and Wales, PLC Arbitration International, PLC Cross-border, PLC EU, PLC UK Corporate, PLC UK Dispute Resolution, PLC UK Law
Department, PLC US Law Department
Series: Country Q&A

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