Korean Arbitration has come a long way since the ratification of the New York Convention in 1973. The Korean Commercial Arbitration Board (KCAB) went from a small organization handling a handful of cases to, now, and organization handling hundred of arbitration cases each year. The number of international arbitrations is, also, on the rise. This article shall give readers the backstory of how Korean arbitration as a dispute mechanism tool has developed over the years in Korea; review the key industries involved in arbitration; and provide a quick overview of the mainstay arbitration institution in Korea: the KCAB.
1973 – 2020: Arbitration in Korea Over the Years
The Korea Arbitration Act was enacted into law in 1966. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, aka the “New York Arbitration Convention” or “New York Convention,” is the Magna Carta of international arbitration. The New Arbitration Convention was ratified by Korea in 1973.
Even though passing arbitration legislation in Korea and signing the New York Convention opened up Korea to potential international arbitration proceedings in Korea – few international arbitrations in Korea occurred until recent years. The reason for more international arbitration in the last decade versus prior decades is, in part, the presence of more Korean companies doing active business abroad. These companies are, often, demanding the placing into agreements, dispute resolution clauses designating arbitration in Korea.
It wasn’t until the Asian Financial Crisis of 1998 that international arbitration started to make waves in Korea. Foreign investors rushed onto the scene buying up bankrupt Korean companies and, amidst the chaos, began including arbitration clauses into these colossal mergers the investors were overseeing, setting a precedent for future Korean business transactions. Many Korean lawyers and international lawyers working in Korea, with lawyers from firms from abroad, became more aware of the benefits of arbitration for their Korean chaebol (conglomerate) clients.
The Korean government also jumped into action and completely revamped the 1966 Arbitration Act of Korea so as to be compliant with the 1985 United Nations Commission on International Trade Law Model (the UNCITRAL Model). Korea’s Arbitration Act was then again amended in 2016 to incorporate UNCITRAL’s 2006 revisions to its model and in 2017 Korea passed the Arbitration Industry Promotion Act which laid groundwork to secure the future progress of arbitration in Korea. As the Korean National Assembly continued on its pro-arbitration trend so too did the Korean courts by confirming arbitration clauses in contracts and upholding the legitimacy of arbitral awards.
Industries Utilizing Korean Arbitration
Through the years the number of industries that utilize arbitration has grown. These days, we can see many construction, entertainment, IT and manufacturing disputes handled via arbitration at the Korean Commercial Arbitration Board. IPG shall be updating the Korean Law Blog over the course of the next few weeks with insight on some of the most interesting and noteworthy cases. Please check back often at: Korean Arbitration Posts.
The Mainstay Arbitration Tribunal in Korea: the KCAB
The Korean Commercial Arbitration Board is the only officially recognized arbitration tribunal in Korea. Under the Korean Arbitration Act, the KCAB is permitted to hear and settle commercial disputes of all sorts and sizes and also has the capacity to oversee mediation. Founded in 1966, the KCAB maintains a panel of both Korean and foreign arbitrators who are well versed in the board’s own KCAB rules, but also rules of other leading international arbitral institutions in case such guidelines dictate the flow of proceedings. It should be noted that KCAB has two sets of rules – Domestic Arbitration Rules of the KCAB and International Arbitration Rules of the KCAB. Please take a look at an article we posted on KCAB’s International Arbitration Rules at: KCAB’s International Rules.
IPG has an active Arbitration and Dispute Resolution Practice handling international commercial arbitration disputes. We shall be writing more articles on 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.
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