The Korean National Assembly amended the Act on Contract to Which the State is a Party, partially, on December 1, 2017. The amendment was intended to encourage the Korean Government to arbitrate more disputes with parties that have contracted with the Korean Government. To date, few cases have been resolved via Arbitration when disputes occur between the Korean Government and parties to a contract with the Korean Government. The reason stems, mainly, from realities within many Korean-based law firms, within in house legal teams at government agencies and the lack of knowldge of the benefits of arbitration for the Korean court system, Korean government agencies and those doing business with the Korean government. For a general article on Arbitration in Korea, please see: Arbitration in Korea.
ACT ON CONTRACTS TO WHICH THE STATE IS A PARTY
Article 28-2 (Settlement of Dispute Resolution)
(1) The head of each central office or the contracting officer may establish a settlement method for the dispute between the contracting parties when concluding a contract to efficiently resolve a dispute arising from a contract with the state party.
(2) The dispute set forth in Paragraph (1) shall be settled by agreement among the Contracting Parties in any of the following subparagraphs:
1. Coordination of the National Contract Dispute Mediation Committee under Article 29
2. Arbitration under the Arbitration Act.
Few Korean government agencies have been proactive in encouraging arbitration. Arbitration, in many cases, is a benefit for both the Korean government agency and the party doing business with the Korean Government. This is especially true in the more sophisticated of cases and cases that may attract the attention of the media. Additionally, the Korean Courts are over burdened and the Korean Government willingness to arbitrate more cases shall assist in relieving some of this burden.
Korean Lawyers should not fear arbitration. Arbitration is not substantially more time consuming than having cases handled by the courts and, overwhelming, arbitrators tend to sophisticated in business matters and efficient in scheduling of hearings. For an article on the enforcement of arbitration awards in Korea, please see: Enforcement of Arbitration Awards in Korea.
Known for his proactive street-smart advice & non-conflicted advocacy, NY Attorney Sean Hayes works with leading retired Korean judges, prosecutors and experienced Korean attorneys in leading contentious and transactional matters in Asia. First non-Korean lawyer employed by the Korean Court System. SeanHayes@ipglegal.com
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