International arbitration law and rules in South Korea

Over the last 20 years, Korea has grown into an arbitration hub in Northeast Asia. This is because Korea, one of the first Asian countries to adopt the UNCITRAL Model Law, has implemented a legal framework that makes it a reliable place for arbitration and because it has state-of-the-art hearing facilities for conducting both in-person and virtual arbitrations. The Korean Commercial Arbitration Board (KCAB) has also recently set up an international wing to meet the growing demand for cross-border dispute resolution.

With thanks to Peter & Kim for their contribution to the Guide.

1.1.1 The legislative framework governing arbitration in Korea is the Korean Arbitration Act. This statute was originally enacted in 1966 and was fully amended in 1999 to incorporate the UNCITRAL Model Law 1985.

1.1.2 In 2016, this act was further amended to adopt the changes and developments made in the UNCITRAL Model Law 2006. The Korean Arbitration Act in its current form (KAA) became effective as of 30 November 2016. As the legal framework for arbitration in Korea largely reflects the features of the latest UNCITRAL Model Law, Korea is known to provide a reliable and predictable environment for conducting arbitration.

1.1.3  The Korean Commercial Arbitration Board (KCAB), which is the sole arbitral institution in Korea that is statutorily authorised to settle disputes under the KAA, was founded in 1966. It provides for two sets of different arbitration rules: the Domestic Arbitration Rules for purely domestic arbitration cases and the International Arbitration Rules for any other arbitration cases. The latter was recently revised and became effective as of 1 June 2016 (KCAB International Arbitration Rules 2016). In April 2018, KCAB launched its independent division – KCAB International, to focus solely on the administration of international arbitration cases. The International Arbitration Committee of KCAB International ensures the application of international best practices in the handling of arbitrations, including the appointment of suitable arbitrators where KCAB constitutes the tribunal. As of May 2021, KCAB International has a total of 515 arbitrators (from 40 different countries) in their International Panel of Arbitrators.

1.1.4 Korean courts are also known to be friendly when enforcing a foreign arbitration award made under the New York Convention. Korea acceded to the New York Convention in 1973.

1.1.5 In addition, the Arbitration Industry Promotion Act which became effective on 27 December 2016 allows the Korean government to fund and support arbitral institutions, facilities and practitioners in Korea. This adds to the robust legislative framework Korea has to offer in support of arbitration.

2.1.1 The KAA applies, in principle, to cases where the seat of arbitration is located in the Republic of Korea. 1 KAA, art 2(1). This reflects the territorial criterion set out in the UNCITRAL Model Law. 2 UNCITRAL Model Law 2006, art 1(2).  

2.1.2 However, some provisions relating to the role of Korean courts are applicable irrespective of the seat/place of arbitration. 3 KAA, art 2(1).  For example, Article 9 of the KAA, under which a defendant in court proceedings can seek dismissal of the case on the ground that an arbitration agreement exists between the litigants, is not restricted to arbitrations seated in Korea. In addition, Article 10 on interim measures by the courts and Articles 37 and 39 on the recognition and enforcement of arbitral awards by the courts are applicable regardless of the territorial criterion.

2.2.1 KAA Article 3 defines “arbitration” as “a procedure to resolve disputes relating to property rights or non-property rights which the parties can resolve through settlement by an award of an arbitrator/arbitrators and not by court proceedings”. 4 KAA, art 3.  Given this definition, it is generally understood that a proceeding on a non-disposable right by a party, such as criminal proceedings, family law disputes or administrative proceedings, will not be arbitrable in Korea.

2.2.2 It is however worth noting that the definition of arbitration in the KAA includes cases that relate to non-property rights provided such disputes involve claims that can be resolved through settlement (ie are disposable). The KAA therefore allows parties to arbitrate claims for civil law remedies (such as damages) for the infringement of intellectual property rights or violations of competition law.

2.3.1 The KAA enshrines some general principles that are intended to promote fairness and party autonomy in arbitral proceedings.

Fairness

2.3.2 The KAA expressly sets out that the parties to an arbitration should be treated equally and provided with a sufficient opportunity to present their case. 5 KAA, art 19.  On that basis, an arbitral tribunal is obliged to provide the parties sufficient advance notice of oral hearings and other meetings for the purpose of inspecting evidence. 6 KAA, art 25(2).

Party autonomy

2.3.3 The KAA allows the parties to freely agree on arbitral proceedings subject to the mandatory provisions of the act. 7 KAA, art 20(1).  Accordingly, parties have the autonomy to agree how an arbitration should be conducted.

2.3.4 Such mandatory provisions, although not expressly identified in the KAA, are considered to include the provisions on fairness (see paragraph 2.3.2 above) and the provision that an arbitrator is obliged to disclose to the parties any circumstances likely to give rise to justifiable doubts as to his/her impartiality or independence. 8 KAA, art 13(1).  The provisions of the KAA regarding the role of the Korean courts in an arbitration also cannot be excluded by party agreement.

2.4.1 The current KAA entered into force on 30 November 2016, when the existing version of the statute was revised to incorporate the latest provisions of the UNCITRAL Model Law 2006 and other changes. The key amendments in the 2016 revision are as follows: 9 J Bang/D MacArthur, Korean Arbitration Act to Adopt Key Features of 2006 Model Law Amendments, Journal of International Arbitration, pp 568-569.  

1. the definition of “arbitration” has been broadened with the effect that disputes such as those relating to intellectual property and fair trade are covered by the KAA (Article 3);
2. the formal requirements for an arbitration agreement have been relaxed (article 8);
3. detailed provisions concerning the arbitral tribunal's power to issue interim measures have been added (Articles 18 to 18-8);
4. the Korean courts have been granted more flexibility in the process used for taking evidence in aid of an arbitration (Article 28);
5. arbitral tribunals have been given the express power to award costs and interest (Article 34); and
6. the procedure for enforcing awards has been changed so that a court can grant enforcement by issuing a court order (as opposed to a judgment, which would require an oral hearing) (Article 37(1)).

2.4.2  The KAA also deviates  from the UNCITRAL Model Law 2006 in a number of respects:

1. under the KAA, a party can challenge the appointment of an expert by the tribunal (Article 27(3)); and
2. according to article 34(4) of the UNCITRAL Model Law 2006, the court, when asked to set aside an award, may suspend the proceedings for a period of time in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings and take such action as will eliminate the grounds for setting aside the award. This provision has not been incorporated in the KAA.

3.1.1 The term “arbitration agreement” is defined in the KAA as an agreement between the parties to settle, by arbitration, all or some disputes which have already occurred or might occur in the future with regard to defined legal relationships, whether contractual or not. 10 KAA, art 3.  The question of whether or not an optional arbitration agreement falls under this definition is addressed in paragraph 3.4 below.

3.2.1 The KAA requires that an arbitration agreement be in writing. 11 KAA, art 8(2).  As long as an arbitration agreement is in writing, it will be deemed valid and enforceable irrespective of whether it is in the form of a separate agreement or is formulated as an arbitration clause contained in a contract.

3.2.2 The KAA provides guidance on what can be considered a written arbitration agreement. Article 8(3) of the KAA sets out that a written arbitration agreement should be deemed to have been made in the following instances:

1. where terms and conditions of an arbitration agreement have been recorded in writing;
2. where parties' intentions communicated by telegram, telex, facsimile, electronic mail or any other means of communication contain an arbitration agreement; and
3. where either party asserts that an application or a written answer exchanged between the parties contains an arbitration agreement, and the other party does not contest this.

3.2.3  An arbitration agreement is deemed to exist where a contract cites a document containing an arbitration clause thereby having the effect of making such an arbitral clause part of the contract. 12 KAA, art 8(4).  

3.2.4  Other than the foregoing requirements, no other formalities need to be met to constitute a valid arbitration agreement in Korea.

3.3.1 Korean law acknowledges the doctrine of separability of an arbitration agreement. The KAA sets out that when an arbitral tribunal is ruling on any objections with respect to the existence or validity of the arbitration agreement, such agreement should be treated as an agreement independent of the rest of the contract. 13 KAA, art 17(1).  This means that even if a contract has been terminated or has become invalid, the arbitration clause contained in such contract could still be binding and enforceable.

3.4.1 An optional arbitration agreement is an agreement or clause under which the parties are given a choice on how to finally resolve the dispute under the contract. For instance, the Korean Supreme Court has held that a clause stating that “the dispute shall be referred to adjudication/arbitration in accordance with the laws of the Purchaser’s country” is an optional arbitration agreement because the clause did not clearly opt for arbitration as the dispute resolution mechanism, to the exclusion of the courts (a necessary requirement for an arbitration agreement under the KAA). Also, dispute resolution clauses under which a dispute could be finally resolved by “arbitration or court proceedings” will likely be considered optional arbitration agreements by the Korean courts.

3.4.2 The Korean Supreme Court ruled in 2003 that an optional arbitration agreement is considered invalid provided that a respondent raises an objection to its validity on time. 14 Korean Supreme Court Judgment 2003Da318 dated 22 August 2003.  Under the KAA, a party who wishes to challenge the validity of an optional arbitration agreement must do so (as it would have to with any other objections) by no later than its first submission on the merits, 15 KAA, art 9(2). which is commonly the Answer to the Request for Arbitration. The Korean lower courts have subsequently followed this ruling.

3.4.3 Particular attention also needs to be paid when incorporating the Korean standard form general conditions promulgated by the Korean government for domestic construction projects. This is because many of those standard forms contain dispute resolution clauses that could be considered optional arbitration agreements that would be rendered invalid and unenforceable if challenged by the opposing party in a timely manner.

3.5.1 If a party initiates court proceedings in breach of an arbitration agreement, the opposing party may raise an objection to the court and seek a dismissal of the proceedings. 16 KAA, art 9(1). If the court is satisfied that the arbitration agreement is valid and enforceable, it will dismiss the claimant's claims on the ground that the court has no jurisdiction over those claims. 17 Ibid.  

3.5.2 In Korea, there is no mechanism equivalent to a 'stay' of court proceedings of the type often used in common law jurisdictions. Furthermore, there is no record of the Korean courts ever issuing any type of anti-suit injunction, including those meant to enjoin suits that are considered to be in breach of an arbitration agreement. 18 On a related point, the Korean Supreme Court has expressly ruled that anti-arbitration injunctions are impermissible in Korea. See Korean Supreme Court Judgment 2017Ma6087 dated 2 February 2018.  It is not certain whether the Korean courts would have the power to issue such anti-suit injunctions under the law as it presently stands.

4.1.1 The parties are free to agree on the number of arbitrators. 19 KAA, art 11(1).  In the absence of such agreement, the default number of arbitrators is three. 20 KAA, art 11(2).  If the parties have agreed to administer the arbitration under the KCAB International Arbitration Rules 2016, an arbitration will be heard by a sole arbitrator unless otherwise agreed by the parties 21 KCAB International Arbitration Rules 2016, art 11. or where the KCAB Secretariat decides that the dispute would be more suitably heard by a three-member panel, taking into consideration the parties' intentions, the amount in dispute, the complexity of the dispute and other relevant circumstances. 22 Ibid.

4.1.2 The parties are also free to agree on a procedure for the appointment of the arbitral tribunal. In the absence of such agreement, the KAA sets out the following default rules:

1. where the tribunal should consist of a sole arbitrator, and the parties have failed to agree on the arbitrator within 30 days of a party receiving a request from the other party to appoint an arbitrator, any party can request the court to appoint the arbitral tribunal. 23 KAA, art 12(3)1.  Under the KCAB International Arbitration Rules 2016, the Secretariat must appoint a sole arbitrator at this stage; 24 KCAB International Arbitration Rules 2016, art 12(1). and
2. where the tribunal should consist of three arbitrators, each party can appoint one arbitrator and these two arbitrators should appoint the third arbitrator by agreement. If a party fails to appoint an arbitrator or if the two party-appointed arbitrators fail to appoint the third within a given time, any party can request the court to appoint the missing arbitrator(s). 25 KAA, art 12(3)2.  Under the KCAB International Arbitration Rules 2016, the Secretariat must appoint the missing arbitrator(s) at this stage. 26 KCAB International Arbitration Rules 2016, art 12(2).    

4.1.3  Even if there is an agreement on the appointment of the arbitral tribunal, the court can be asked to appoint one or more members of the arbitral tribunal in the following instances: 27 KAA, art 12(4).  

1. if a party fails to appoint an arbitrator according to the procedure agreed upon;
2. if the parties or two arbitrators fail to appoint an arbitrator according to the procedure agreed upon; and
3. if an institution or any other party, entrusted to appoint an arbitrator, fails to do so.

4.1.4 A decision by the court on the appointment of an arbitrator is not appealable. 28 KAA, art 12(5).  

4.2.1 An arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to his/her impartiality or independence or if he/she does not possess qualifications agreed to by the parties. 29 KAA, art 13(2).  

4.2.2 The parties are free to agree on the procedure for a challenge of an arbitrator. 30 KAA, art 14(1).  Article 14 of the KCAB International Arbitration Rules 2016, for instance, sets out a procedure for challenging an arbitrator. 31 KCAB International Arbitration Rules 2016, art 14.  

4.2.3 Where there is no such agreement, the following rules apply. A party who wishes to challenge an arbitrator should submit a written statement to the arbitral tribunal with the reasons for the challenge. 32 KAA, art 14(2). The arbitral tribunal must issue a decision on such challenge. 33 Ibid  If the arbitral tribunal rejects a challenge, the challenging party may, within 30 days of being notified of the tribunal's decision, request the court to make a decision on the challenge. 34 KAA, art 14(3). The arbitral tribunal, however, is not prevented from continuing the proceedings while the challenge is pending at the court. 35 Ibid.  Once a decision has been made by the court, such decision is not subject to appeal. 36 KAA, art 14(4).  

4.2.4 If an arbitrator becomes unable to perform his/her function or fails to act without undue delay, the parties can agree to terminate the mandate of that arbitrator. 37 KAA, art 15(1).  In such cases, a substitute arbitrator should be appointed in accordance with the procedure applicable to the appointment of an arbitrator. 38 KAA, art 16.  If a dispute arises concerning the termination of an arbitrator's mandate, the court may, upon request by a party, render a decision on such dispute. 39 KAA, art 15(2).  This court decision cannot be appealed. 40 KAA, art 15(3).  

4.3.1 A person who has been approached as a possible arbitrator or who has already been appointed as an arbitrator has the duty to disclose to the parties any circumstance likely to give rise to justifiable doubts as to his/her impartiality or independence. 41 KAA, art 13(1). The KAA does not provide examples as to which circumstances are likely to give rise to justifiable doubts as to an arbitrator's impartiality or independence. For that purpose, the IBA Guidelines on Conflicts of Interest in International Arbitration 2014, although not binding per se, are commonly taken into account in an international arbitration conducted in Korea.

4.4.1 The KAA is silent on the payment of arbitrators’ fees and other expenses by the parties. The KCAB International Arbitration Rules 2016 provide that the parties should be jointly and severally liable for the payment of the Arbitration Costs to the Secretariat. 42 KCAB International Arbitration Rules 2016, art 50(2).  Arbitration Costs as defined in these rules include the filing fees, the administrative fees, the fees and expenses of the arbitrators and any other expenses incurred during the arbitration proceedings. 43 KCAB International Arbitration Rules 2016, art 50(1).  

4.5.1 There are no express provisions in the KAA on arbitrator immunity. Prior to the amendment of the KAA in 2016, there was some academic debate as to whether such a provision should be included in the KAA. 44 Ho-Won Lee, Recent Discussions on the Revision of Korean Arbitration Act, Korea International Trade Law Journal (2013), Vol. 22(1), p 8.  However, it was not ultimately included. To date, there are no court precedents addressing whether an arbitrator has immunity and if so to what extent. Therefore, in the absence of an express agreement on arbitrator immunity between the parties and the arbitrators (which is rather uncommon in practice), it remains unclear whether arbitrators are exposed to any liability in negligence in arbitrations seated in Korea.

4.5.2 The KCAB International Arbitration Rules 2016 provide that an arbitrator should not be held liable for any act or omission in connection with an arbitration conducted under the KCAB Rules unless proven that the arbitrator's conduct constitutes willful misconduct or was reckless. 45 KCAB International Arbitration Rules 2016, art 56.  

5.1.1 The arbitral tribunal is authorised to rule on its own jurisdiction (Kompetenz-Kompetenz). 46 KAA, art 17(1).  Matters of jurisdiction include objections by a party to the existence or validity of an arbitration agreement. 47 Ibid.  Such jurisdictional objections must be made by no later than the submission of the statement of defence. 48 KAA, art 17(2).  Failure to comply with this deadline will deprive a party of its right to challenge the jurisdiction of the arbitral tribunal. 49 KAA, art 5.

5.1.2 The arbitral tribunal can rule on a jurisdictional objection either as a preliminary question or in an arbitral award on the merits. 50 KAA, art 17(5).  If it makes a decision on jurisdiction as a preliminary question, a party not satisfied with such decision may file a petition with the court. 51 KAA, art 17(6).  The court’s decision on the petition is not subject to appeal. 52 KAA, art 17(8).  If the court rules that an arbitral tribunal has jurisdiction, then that tribunal shall in principle continue with the arbitral proceedings. 53 KAA, art 17(9).  However, if the arbitrators are unable or unwilling to continue, they should be replaced and substituted as if their mandate had been terminated. 54 Ibid.

5.2.1 The KAA allows a party to an arbitration to seek interim measures from the arbitral tribunal. 55 KAA, art 18 to 18-8.  The grounds for application, which reflect the relevant provision in the UNCITRAL Model Law 2006, are as follows 56 KAA, art 18(2). : 

1. maintaining or restoring the status quo until an arbitral award is made on the merits of the case;
2. preventing current or imminent harm or prejudice to the arbitral proceedings, or prohibiting actions that may cause such harm or prejudice;
3. providing methods for preserving assets subject to the execution of an arbitral award; and
4. preserving evidence relevant and essential to the resolution of the dispute.   

5.2.2 Not all of the provisions on interim measures in the UNCITRAL Model Law 2006 have been adopted in the Korean legislation. For example, the articles on preliminary orders (Articles 17B and 17C of the UNCITRAL Model Law 2006) are not incorporated in the KAA.

5.2.3 Interim measures granted by an arbitral tribunal are not automatically enforceable. In order to enforce an interim measure, a court must issue a writ of execution upon application of a party. 57 KAA, art 18-7(1).  In certain circumstances described in the KAA, a court can refuse to issue a writ of execution for an interim measure. 58 KAA, art 18-8(1). This article fully incorporates Article 17 I.(1) of the UNCITRAL Model Law 2006 regarding the grounds for refusing recognition or enforcement of an interim measure. In particular, recognition or enforcement of an interim measure may be refused by the Korean courts on the following grounds: (i) if a party to the arbitration agreement was under some incapacity or the arbitration agreement was otherwise invalid, (ii) if the composition of the arbitral tribunal was in violation of the parties' agreement or relevant provisions of the KAA, (iii) if the party subject to the interim measure was not able to present his or her case due to lack of proper procedural notice, (iv) if the subject matter of the interim measure is found to be not arbitrable, (v) where an asset has not been provided as security for the interim measure according to an order issued by the court or the arbitral tribunal, (vi) where the interim measure has been terminated or suspended by the arbitral tribunal, (vii) where the court has no authority to execute the interim measure, or (viii) if the interim measure is in violation of public policy in Korea.  

5.2.4 A party to an arbitration can also seek an interim measure of protection or other interim remedies such as a preliminary injunction or a provisional attachment from the courts. 59 KAA, art 10.  This can be done even prior to the commencement of an arbitral proceeding. 60 Ibid.  This power of the court to issue interim measures in aid of arbitration is not limited to arbitrations seated in Korea. 61 KAA, art 2(1).  It is generally understood that a provisional attachment order, the effect of which is in some ways similar to a freezing order in common law jurisdictions, can be obtained relatively quickly and easily from the Korean courts provided that the applying party is willing to deposit a certain amount (or an equivalent guarantee) with the court. This remedy often helps a successful party to an arbitration to enforce its award against the 'frozen' assets of the other party.

6.1.1 Unless agreed otherwise, under the KAA, an arbitral proceeding commences on the date on which a request for arbitration has been received by the respondent to that dispute. 62 KAA, art 22(1).  The request must contain the subject matter of the dispute and details of the arbitration agreement. In practice, however, the request often also includes details of facts, legal arguments and references to evidence supporting the claimant's position. 63 KAA, art 22(2).

6.1.2 In particular, the KCAB International Arbitration Rules 2016 require that a request for arbitration should include the following 64 KCAB International Arbitration Rules 2016, art 8(3). : 

• the full name and address, telephone and facsimile numbers and e-mail address of the claimant;
• a description of the claimant; 
• the full name and address, telephone and facsimile numbers and e-mail address of the respondent; 
• a statement describing the nature and circumstances of the dispute giving rise to the claims; 
• a statement of the relief being sought; 
• a statement of matters related to the proceedings; 
• if the arbitration agreement calls for party nomination of an arbitrator, the full name and address, telephone and facsimile numbers and e-mail address of the arbitrator nominated by the claimant; 
• the relevant agreements, including the written arbitration agreement on which the request is based; and 
• the full name and address, telephone and facsimile numbers and e-mail address of the claimant’s representatives.

6.1.3 Commencing an arbitration has the effect of suspending the limitation period of a claim under Korean law.

6.2.1 Party autonomy is a key principle of conducting arbitral proceedings. 65 KAA, art 20(1). However, in the absence of an agreement by the parties on a procedural matter, the arbitral tribunal has broad discretion to decide the procedure of an arbitration. 66 KAA, art 20(2). For some matters, the KAA also contains default rules that may apply if there is no party agreement and no decision from the tribunal. For example, in the absence of party agreement and a decision from the arbitral tribunal, the language of the arbitration will be Korean (Article 23).

6.2.2 A guiding principle is that parties to an arbitration must be treated equally and given a sufficient opportunity to present their case. 67 KAA, art 19.  

6.2.3 A party who wishes to raise a procedural objection must do so without delay and, where a time limit is specified for raising an objection, within the specified time period. 68 KAA, art 5.  If a party fails to do so, it will be deemed to have waived its right to object. 69 Ibid.

6.2.4 Korea is a civil law jurisdiction (as opposed to common law). Litigation proceedings in the Korean courts are generally conducted in a continental European style under which a party's obligation to produce documents is often limited. However, international arbitration proceedings held in Korea are not bound by this practice (or indeed, by other rules or practices applicable to domestic litigation). It is standard practice for the IBA Rules on the Taking of Evidence in International Arbitration (2010) to be relied on by tribunals and parties when determining the scope and procedure of document production.

6.3.1 The parties are free to agree on the seat of arbitration. 70 KAA, art 21(1).  In the absence of such agreement, the seat of arbitration will be determined by the arbitral tribunal. 71 KAA, art 21(2).  When doing so, all the circumstances of the case including the convenience of the parties must be considered. 72 Ibid.  The seat of arbitration is important in that it decides whether most provisions of the KAA will be applicable to an arbitral proceeding. 73 KAA, art 2(1). Furthermore, only arbitration awards in which the seat of arbitration is in Korea are subject to setting-aside proceedings by a Korean court.

6.3.2 The seat of arbitration does not determine where the hearing or other procedural events physically take place. The arbitral tribunal has discretion to conduct consultations among arbitrators, examinations of witnesses, expert witnesses and the parties, and the inspection of evidence at a place other than the seat of arbitration. 74 KAA, art 21(3). This discretion can however be limited if the parties agree otherwise. 75 Ibid.  

6.3.3 The language to be used in arbitral proceedings is subject to the parties' agreement. 76 KAA, art 23(1).  In the absence of such agreement, the arbitral tribunal may decide the language of the arbitration. 77 Ibid.  If no decision on language is made, provided the arbitration is seated in Korea and thus governed by the KAA, the language of the arbitration will be Korean by default. 78 Ibid.  Once the language of the arbitration has been decided, it must be used, in principle, for any written statements, any oral statements at the hearing, the award and any other communications with the arbitral tribunal. 79 KAA, art 23(2). The arbitral tribunal may, if deemed necessary, order a party to submit a translation of documentary evidence that is not originally in the language of the arbitration. 80 KAA, art 23(3).  

6.4.1 Once the request for arbitration by the claimant has been filed (normally followed by an answer from the respondent), it is common that parties will then exchange one or two rounds of further written submissions. 81 KAA, art 24(1). In those submissions, facts and legal arguments in support of each party's position are set out in more detail. These written submissions are often accompanied by documentary evidence. 82 KAA, art 24(2).  

6.4.2  Unless agreed otherwise, either party may amend or supplement the claim or defence during the course of the arbitration. 83 KAA, art 24(3). However, the arbitral tribunal may reject such an amendment if it considers that allowing the amendment might cause a considerable delay to the arbitral proceedings. 84 Ibid.  

6.5.1 The arbitral tribunal can decide whether an oral hearing should be held or whether the proceedings should be conducted based on written submissions only. 85 KAA, art 25(1).  The general rule is that if a party requests the arbitral tribunal to hold an oral hearing, the arbitral tribunal must schedule a hearing at an appropriate stage of the proceedings. 86 Ibid.  The parties are free to agree otherwise. 87 Ibid.  

6.5.2  If an oral hearing or a meeting for the inspection of any evidence is held, the arbitral tribunal must notify the parties sufficiently in advance. 88 KAA, art 25(2).  This is to ensure that the parties are treated equally and have a sufficient opportunity to present their case. 89 KAA, art 19.  Also, for that purpose, any submissions or evidence submitted by a party must be conveyed to the other party 90 KAA, art 25(3). and any expert reports that the arbitral tribunal wishes to rely on must be conveyed to the parties. 91 KAA, art 25(4).

6.6.1 An arbitral tribunal may continue with an oral hearing and issue an award based on the evidence submitted before it, even if a party does not appear at the hearing or fails to produce documentary evidence within a given time. 92 KAA, art 26(3). The KCAB International Arbitration Rules 2016 qualify this power of the arbitral tribunal by requiring that a party must have duly received notice of the hearing and should have failed to show sufficient cause for its failure to participate in the hearing. 93 KCAB International Arbitration Rules 2016, art 33(2).  

6.6.2 The consequences of failing to submit a written statement within the time period agreed by the parties or determined by the arbitral tribunal are set out in the KAA. If the claimant fails to submit a statement of claim within such time, the arbitral tribunal must terminate the arbitral proceedings. 94 KAA, art 26(1).  In contrast, if the respondent fails to submit the statement of defence within the relevant time period, the arbitral tribunal must continue the proceedings without treating such failure of the respondent as an admission of the claimant's allegations. 95 KAA, art 26(2).

6.7.1 An arbitral tribunal has wide powers to determine the admissibility, relevance and weight of any evidence. 96 KAA, art 20(2). The arbitral tribunal may convene a meeting for the inspection of evidence provided that sufficient advance notice to the parties has been given of such meeting. 97 KAA, art 25(2).  If deemed necessary, or upon party request, an arbitral tribunal may request a court to take evidence or cooperate in the taking of evidence. 98 KAA, art 28(1).  

6.7.2 The KAA is silent on the issue of document production. It is comparatively rare in domestic arbitration proceedings that a document production order is issued by the arbitral tribunal. However, in international arbitration proceedings seated in Korea, it is more common to see document production being ordered by tribunals. This is often done in light of the provisions on document production in the IBA Rules on the Taking of Evidence in International Arbitration (2010). 99 See para 6.2.4 above.  

6.8.1 In international arbitration, experts are generally appointed by the parties. In addition, an arbitral tribunal may appoint one or more experts to consult on specific issues. 100 KAA, art 27(1).  If the tribunal decides to appoint an expert, it may order the parties to provide the expert with relevant information, documents or goods for the expert to inspect. 101 Ibid.  

6.8.2 The arbitral tribunal may also, on its own initiative or if so requested by a party, order the expert to participate in a hearing and to answer questions from the parties. 102 KAA, art 27(2).

6.8.3 Tribunal-appointed experts can be challenged by the parties if circumstances exist that give rise to justifiable doubts as to his/her impartiality or independence. 103 KAA, art 27(3). The procedure for challenging such experts follows that for challenging an arbitrator under Article 14 of the KAA. 104 Ibid.

6.9.1 The KAA is silent on the issue of confidentiality in arbitral proceedings. The Korean courts have not yet recognised an implied duty of confidentiality in the context of arbitration. This gap is filled by the KCAB International Arbitration Rules 2016 which state that arbitration proceedings and the records of those proceedings are not open to public. 105 KCAB International Arbitration Rules 2016, art 57(1). These rules further provide that the arbitral tribunal, the KCAB Secretariat, the parties, and their representatives and assistants may not disclose facts relating to the arbitration or facts learned through the arbitration. 106 KCAB International Arbitration Rules 2016, art 57(2). This prohibition does not apply if the parties have consented to disclosure or if disclosure is required by law or in court proceedings. 107 Ibid.

6.10.1 An arbitral tribunal cannot compel witnesses to give evidence. Instead, it may, at its own discretion or upon request of a party, seek assistance from a court to compel a witness to appear and provide testimony. 108 KAA, art 28(1).  If a court examines the witness, the arbitrators or the parties may attend this court session with permission of the presiding judge. 109 KAA, art 28(3). The court may also order a witness to appear before the arbitral tribunal, if so requested by an arbitral tribunal. 110 KAA, art 28(5).

7.1.1 The parties are free to choose the governing law of the dispute. 111 KAA, art 29(1).  Normally, such choice of law is made by way of including a governing law provision in the contract. In the absence of such agreement, the arbitral tribunal should decide which law applies to the issues in the case. 112 KAA, art 29(2). The relevant test is to apply the law that in the arbitral tribunal’s view has the closest connection to the subject matter of the dispute. 113 Ibid.

7.1.2 The arbitral tribunal may decide ex aequo et bono only if the parties have expressly conferred this authority on the tribunal. 114 KAA, art 29(3).  

7.2.1 A three-member tribunal must reach any decision by the resolution of a majority of its members unless agreed otherwise by the parties. 115 KAA, art 30. Procedural decisions, however, may be solely decided by a presiding arbitrator if the parties have so agreed or if all members of the arbitral tribunal have authorised the presiding arbitrator to do so. 116 Ibid.  

7.2.2 An arbitral award must be in writing and, in principle, signed by all arbitrators. 117 KAA, art 32(1).  If one arbitrator in a three-member panel cannot or does not sign the award, the signature of the two remaining arbitrators is deemed sufficient provided that the reason for the one missing signature is stated in the award. 118 Ibid.  

7.2.3 An arbitral award must contain the date of the award and the seat of the arbitration. 119 KAA, art 32(3).  An award should also contain the reasons on which it is based. 120 KAA, art 32(2).  The parties are free to agree that an arbitral tribunal need not provide reasons in the award. 121 Ibid.  No reasons are needed for a consent award. 122 Ibid. The most common remedy to be granted in an award is monetary payment or compensation. However, the tribunal can also make an order for specific performance by a party or issue a declaration.

7.2.4 An authentic copy of the arbitral award must be delivered to each party. 123 KAA, art 32(4).  Upon request of the parties, the arbitral tribunal may send the original copy of the arbitral award to the competent court along with a document certifying such delivery. In doing so, the tribunal will discharge its duty to send a copy of the award directly to the parties. 124 Ibid.

7.3.1 Parties may settle their dispute at any time during the arbitral proceedings. If they do so, the arbitral tribunal must terminate the proceedings. 125 KAA, art 31(1). The parties can request the arbitral tribunal to record the settlement in the form of an arbitral award on agreed terms. Such an award must be enforced by the court like any other award on the merits. 126 KAA, art 31(3).  

7.4.1 The KAA has newly-adopted express provisions for the award of costs and interest by the arbitral tribunal. Unless agreed otherwise by the parties, the arbitral tribunal has the power to allocate the costs of the arbitration between the parties. 127 KAA, art 34-2.  When exercising this power, the tribunal must consider all circumstances of the case at hand. 128 Ibid.  Arbitral tribunals in Korea commonly award all or a significant portion of the costs incurred in the arbitration to the successful party. The KCAB International Arbitration Rules 2016 expressly state that the costs of an arbitration should in principle be borne by the unsuccessful party. 129 KCAB International Arbitration Rules 2016, art 52(1).  

7.4.2 As to the award of interest, the KAA states that the arbitral tribunal, unless agreed otherwise by the parties, has the power to award pre-award interest to a party if it finds it appropriate to do so. 130 KAA, art 34-3. In practice, it is common that a party who wishes to obtain an award for interest will expressly state in its written submission (often in a separate section titled “Relief Sought” or “Request for Relief”) that it seeks an order for pre-award interest.

7.4.3 The KAA is silent as to whether an arbitral tribunal may order a party to pay post-award interest. Such a claim is not uncommon if the governing law of the relevant contract is Korean law. In such cases, the Korean Civil Act provides by default that the rate of interest on a pecuniary claim, unless agreed otherwise, is 5% per annum for a transaction between private persons 131 Korean Civil Act, art 379. and 6% per annum for a transaction between merchants. 132 Korean Commercial Act, art 64.  

7.5.1 If a party, normally the claimant, withdraws all claims from an arbitration, the arbitral tribunal must in principle terminate the proceedings. 133 KAA, art 33(2)1.  However, if the respondent objects to the termination of the proceedings and the arbitral tribunal recognises that the respondent has a legal interest in obtaining a final award, the tribunal will proceed with the arbitration and issue a final award on the merits. 134 Ibid.  

7.6.1 An arbitral award rendered in Korea has the same legal effect on the parties as a final and conclusive judgment of a court. 135 KAA, art 35.  Accordingly, an arbitral award, once issued, is considered final and can only be challenged if any of the limited statutory grounds for setting aside an award exist. 136 KAA, art 36(2). Furthermore, an order made in an arbitral award has res judicata effect. This means that an arbitral tribunal or court is bound by the ruling in an award made in a previous arbitration in which the same parties had disputed the same subject matter.

7.7.1 If an award contains an error in computation or any clerical or typographical errors, a party may, within 30 days of receipt of the award, request the arbitral tribunal to make a correction. 137 KAA, art 34(1)1. The arbitral tribunal may also correct an award at its own initiative within 30 days of the date of the award, provided that the error being corrected is clerical, computational or typographical in nature. 138 KAA, art 34(4).

7.7.2 If the parties are in agreement, they may jointly request the tribunal to give an interpretation of a specific point or part of the award. 139 KAA, art 34(1)2.  If the tribunal subsequently provides such an interpretation, it is deemed to form part of the award. 140 KAA, art 34(3).  

7.7.3 If the arbitral tribunal has omitted in its award to make a decision on a claim which had been presented in the arbitral proceedings, a party may request the arbitral tribunal to issue a supplemental award on that particular omitted claim. 141 KAA, art 34(1)3. In such case, the arbitral tribunal must give a decision on that claim within 60 days of the request being made. 142 KAA, art 34(3).  If necessary, the arbitral tribunal may extend this period. 143 KAA, art 34(5).

8.1.1 Korean courts may only intervene in an arbitration in limited circumstances which are expressly stipulated in the KAA. These include the following:

1. deciding on the appointment of an arbitrator or the designating body to appoint an arbitrator (Article 12(3), 12(4));
2. deciding a challenge against an arbitrator (Article 14(3));
3. deciding a request for terminating an arbitrator's authority (Article 15(2));
4. deciding on the arbitral tribunal's authority or jurisdiction (Article 17(6));
5. deciding a challenge against an expert (Article 27(3)); and
6. assisting the tribunal in taking evidence (Article 28). 

8.1.2 In addition, a Korean court will be responsible for the following:

1. receiving and retaining the original copy of an arbitral award if so requested by the parties (Article 32(4));
2. recognition or enforcement of an arbitral award in Korea (Articles 37, 39);
3. recognition or enforcement in Korea of an interim measure made by an arbitral tribunal (Article 18-7); and
4. setting aside an arbitral award in an arbitration seated in Korea (Article 36(1)).  

8.2.1 Unless otherwise agreed by the parties, the competent court of first instance for an arbitration seated in Seoul, Korea is usually the Seoul Central District Court. This court has the power to intervene or assist in an arbitration to the extent expressly permitted under the KAA (see paragraph 8.1 above).

8.2.2 If the designated seat of arbitration is a city other than Seoul, the court having jurisdiction over that place will be the competent court. 144 KAA, art 7(1).  

8.3.1 Under Korean civil procedure, unlike court proceedings in several common law jurisdictions, a court proceeding cannot be 'stayed'. Instead, if a party raises a procedural objection to the court’s jurisdiction on the ground that an arbitration agreement exists that covers the immediate dispute, the court must dismiss the legal action for lack of jurisdiction. 145 KAA, art 9(1).  Such an objection can only be raised by a respondent in or before it files its first written submission on the merits. 146 KAA, art 9(2).  The court has no inherent jurisdiction to dismiss a claim on its own initiative even if it discovers that an arbitration agreement exists between the parties. A jurisdictional objection must be raised by a party to be considered by the court. 147 KAA, art 9(1).  

8.3.2 If the court considers that the relevant arbitration agreement in question is null and void, inoperative or incapable of being performed, it may continue with the court proceedings. 148 Ibid.

9.1.1 As set out in paragraph 7.6.1 above, once an award has been issued by the arbitral tribunal and is no longer subject to further requests for correction or interpretation, the award becomes final and binding. Such an award cannot be further appealed before the Korean courts.

9.1.2 An action to set aside an award must be initiated by a dissatisfied party within three months from the date on which it has received a “duly authenticated copy” of the award. 149 KAA, art 36(3).  If the court finds that a ground for setting aside an award exists, it has the power to set aside the award in whole or in part. However, the KAA does not confer on the court the power to resubmit the award to the tribunal for reconsideration.

9.1.3 The Korean Supreme Court has ruled that only an award in which a decision on the merits has been made can be set aside by the court. 150 Supreme Court Judgment 2003Da70249 dated 14 October 2004.  In other words, an award in which the tribunal has dismissed all claims on the grounds of a lack of jurisdiction (and has not given a ruling on the merits of the case) is not subject to a set aside proceeding by the court.

9.2.1 An award can only be challenged before a Korean court if one of the grounds for setting aside an award is met. 151 KAA, art 36(2).  These grounds are as follows:

1. a party to the arbitration agreement was under some incapacity;
2. the arbitration agreement is not valid under the law applicable to it;
3. the party was not given proper notice of the appointment of arbitrators or of the arbitral proceeding or was otherwise unable to present its case;
4. the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;
5. the composition of the arbitral tribunal or arbitral procedure was not in accordance with the agreement of the parties or the KAA;
6. the subject-matter of the dispute is not arbitrable under Korean law; and
7. the award violates the good morals and other forms of social order of Korea. 

9.2.2 The Korean Supreme Court has clarified that a “violation of the good morals and other forms of social order” under KAA Article 36(2)2(b) does not include a mere error of fact or law made by the tribunal. 152 Supreme Court Judgment 2007Da73918 dated 24 June 2010.  

9.2.3  The failure to state reasons in an award was recognised as a ground for setting aside an award in the KAA prior to its amendment in 1999. This ground was removed in 1999. That removal notwithstanding, the Korean Supreme Court ruled in 2010 that a failure to state reasons in an award, absent party agreement, can be a ground for setting aside an award since it would violate the formal requirement under Article 32(2) of the KAA to state the reasons for the award (see paragraph 7.2.3 above). 153 Ibid.  

10.1.1 An arbitral award made in Korea must be recognised or enforced by a Korean court upon the request by a party, unless a ground for refusal under KAA article 36(2) exists. 154 KAA, art 38, 37(1).  It is worth noting that article V.1.(e) of the New York Convention, which provides that the recognition and enforcement of an award may be refused if “the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made,” has not been incorporated into the KAA and is therefore not a ground for refusing enforcement of domestic arbitral awards in Korea.

10.1.2 Prior to its amendment in 2016, the (former) KAA provided that a court decision enforcing an award should be made in the form of a judgment. The amended KAA now states that a decision enforcing an arbitral award must be made by way of a court order (and not a judgment). 155 KAA, art 37(2). The purpose of the amendment is to enable the court to render a decision on the enforcement of an award more promptly.

10.2.1 Korea is a member state of the New York Convention. Accordingly, the recognition or enforcement of an award made in another New York Convention jurisdiction is subject to enforcement in Korea under that convention. 156 KAA, art 39(1). The grounds for refusing enforcement of such a foreign award are set out in article V of the New York Convention, and are referred to in the KAA for the recognition and enforcement of foreign awards. It is rare for a Korean court to refuse to enforce a foreign arbitral award that is subject to the New York Convention. In particular, the Korean Supreme Court has ruled that the “contrary to public policy” ground under article V.2. of the New York Convention must be interpreted in a narrow manner, in accordance with international standards of public policy that take into consideration not only domestic affairs but also the stability of international trade. 157 Supreme Court Judgment 2001Da20134 dated 11 April 2003.  

10.2.2 Any foreign award that is not subject to the New York Convention must be recognised or enforced by the Korean court under the law applicable to the recognition of foreign judgments. 158 KAA, art 39(2).  In such a case, the court must consider reciprocity between the seat of the award and Korea, in terms of the conditions for recognising a foreign judgment. 159 Civil Procedure Act, art 217(1)4.