In our last post we discussed, at length, the benefits of arbitration in Korea over litigation in a Korean court. We shall be updating the reader of numerous issues related to arbitration over the next couple of weeks. The following posts concerns challenging of an arbitrator at the Korean Commercial Arbitration Board. Thus, what happens in a situation when you, as a party in a Korean arbitration, feel that the arbitrator is acting in a manner inconsistent with his or her duties as an arbitrator? At a minimum, all arbitrator should be “independent and impartial” and “capable” – the vast majority of arbitrators are independent, impartial and capable. However, issues can sometimes arise that require the challenging of the arbitrator – we suggest proceeding with caution and care – an unsuccessful challenge can, of course, prejudize your case.
Impartiality/Independence of an Arbitrator in Korea
Korean Law lays out the duties for arbitrators within a few key pieces of legislation and guidelines. Firstly, the impartiality and independence of an arbitrator is codified, in a general, within Article 13 of the Korean Arbitration Act, which reads as follows:
“When a person is approached in connection with his/her possible appointment as an arbitrator or has already been appointed as such, he/she shall, without delay, disclose any circumstance likely to give rise to justifiable doubts as to his/her impartiality or independence to the parties.”Korean Arbitration Act, Article 13, Paragraph 1
The Korean Commercial Arbitration Board (KCAB) International Arbitration Rules and corresponding rules governing domestic arbitration (Article 18 of the KCAB Domestic Arbitration Rules).
“An arbitrator who accepts an appointment or nomination shall sign and submit a Statement of Acceptance and a Statement of Impartiality and Independence in the form provided by the Secretariat”Korean Commercial Arbitration Board (KCAB) International Arbitration Rules, Article 10
Article 2 of the KCAB Code of Ethics expands further on what specifics would give rise to violations of those duties. The Code of Ethics of the KCAB provides some potential scenarios whereby you, the party to a dispute, may prevail in a challenge to the independence or impartiality of an arbitrator.
An arbitrator’s impartiality and independence may be questioned under circumstances including, but not limited to, the following:
(i) The arbitrator is a manager, director or supervisor of a party, or is in a similar position of influence upon a party;
(ii) The arbitrator has a significant financial interest vis-à-vis a party or in the outcome of the case;
(iii) The arbitrator currently represents or advises a party or an affiliate of a party;
(iv) The arbitrator regularly advises a party or an affiliate of a party, and derives a significant financial income therefrom;
(v) The arbitrator is a lawyer within the same law firm as the counsel representing a party;
(vi) The arbitrator’s law firm currently has a significant commercial relationship with a party or an affiliate of a party;
(vii) The arbitrator has served as counsel against a party or an affiliate of a party in a matter related to the dispute within the past three years;
(viii) The arbitrator was in a partnership with a co-arbitrator or counsel of a party during the same arbitration case within the past three years; or
(ix) The arbitrator was associated with a party or an affiliate of a party in a professional capacity, such as an employment relationship, within the past three years.KACB Code of Ethics, Article 2.2
Challenging an Arbitrator at the KCAB
Article 14 of the Arbitration Act allows for the parties to create their own procedures for how to submit challenges of the arbitrator(s). Should the parties be unable to agree on such terms, the challenging party must send a written objection to the KCAB secretariat within:
- 15 days of when said party became aware of the appointment of the arbitrator; or
- 15 days of becoming aware of the grounds to challenge such arbitrator.
Following challenge submission, the challenged arbitrator or arbitrators may reply to the statement within 15 days of receipt. Should the Secretariat deny the challenge, the challenging party may file to a Korean court within 30 days of receiving notice of the denial of the challenge to the arbitrator(s) to overturn the holding of the Secretariat. In the majority of cases, that we are aware of, an arbitrator would, typically, resign.
In recognition of our Korean International Arbitration Team recently being ranked the top Dispute Resolution Firm in Korea, we are writing a series of articles on Korean arbitration over the next couple of weeks. Please check back often. To schedule an appointment with an Arbitration Attorney in Korea please schedule at call at: Schedule a Call with an Attorney.
- Korean Arbitration: An Introduction
- The Case for Arbitration over Litigation in Korea
- Enforcement of Arbitral Awards in Korean Courts: Arbitration Law Basics
- Arbitration against Korean Government Agencies in Korea: Korean Arbitration Law Basics.
- Leading Commercial Arbitration Law Firm in Korea
- English-Speaking Arbitration Attorneys in Korea
- Licensee has Standing to Challenge the Validity of a Patent in Korea. Korean Licensing & Royalty Law Updates
- Mergers & Acquisition Arbitration Matters under Korean Law at the KCAB
- U.S. Court Refuses to Enforce Taiwan Arbitral Award: Lesson for Drafting Arbitration Clauses in Korea
- Suing Directors for Company Loses in Korea: Korean Corporate Compliance Basics