The Case for Arbitration over Litigation in Korea

Many of you are prospectively weighing the options of executing contracts with and without arbitration clauses in Korean contracts (aka setting yourself up for prospective litigation battles in Korean courts or resolving a dispute in Korea with the help of an arbitration panel). Thus, this article is intended to consider the option of arbitration over litigation in Korea. In most cases, IPG recommends arbitration over litigation for expat companies doing business in Korea and/or with Korean companies.

While of course every case is unique, we at IPG have found great success over the years fighting for our clients amidst the backdrop of arbitration. Our Korean International Arbitration Team was, recently, ranked the top Dispute Resolution Firm in Korea.

Korean Arbitration

Benefits of Korean Arbitration over Litigation in Korean Courts

  1. Language: If you are not a native to Korea, there is a high chance that you do not speak the Korean language fluently enough to testify in a Korean court, assist your attorney in understanding evidence or even understand the basic proceedings in the Korean court. Often, language, becomes, thus, a hurdle to defending your claim in court. All proceedings in Korean courts are in Korean. You may, however, testify in a Korean court via an interpreter. Thus, one key advantages of arbitration is that an arbitration clause, within a contract, can indicate the language under which a dispute shall be adjudicated. This is true even for cases heard before a panel at the Korean Commercial Arbitration Board. Further, Korea has no restrictions on foreign arbitral institutions administering proceedings under their own rules, while conducting an arbitration in Korea. Simply speaking, the Seoul International Dispute Resolution Center (SIDRC), hosts arbitration hearings that are overseen by foreign arbitral institutions as well as ad hoc arbitrations as according to UNCITRAL Arbitration Guidelines. Additionally, in most cases, arbitration proceedings, concerning matters related to Korean law and business in Korea, are not required to even been held in Korea.
  2. Thoroughness: Korean courts are, sometimes, criticized for not thoroughly analyzing a matter. This problem stems from an overburdened Korean court system that rewards judges in Korea for efficiently resolving disputes. This fact and other realities, often, leads to short hearings, the lack of a complete analysis of issues and even judges changing courts during the course of a proceedings.
  3. Confidentiality: Arbitration proceedings are held in private and are confidential. As such, arbitration often provides a better option for clients worried about a dispute resulting to public image issues or the revelation of confidential information. Civil court proceedings, in Korea, are typically open to the public and, in some cases, judgments are even discoverable in future proceedings.
  4. Flexibility: Arbitration cases can, usually, be scheduled around the needs and preferences of the parties. Korean courts operate via a hearing schedule. Thus, numerous hearings are conducted over many months. In contrast, most arbitration hearings are conducted over a couple of consecutive days.
  5. Arbitrator v. Korean Court Judge: Many parties consider arbitration preferable over a hearing by a Korean judge, since many arbitrators are more business savvy, specialized on areas of law and/or a certain industry. For example, many arbitrators are experts at construction delay analysis via the use of technologies such as Primavera. However, few judges are even aware of the existence of the Primavera program and most judges, in Korea, serve as a judge as their first employment, thus, not having experience at a law firm, corporation or in other industries. In many cases, an arbitrator that can be selected with substantial experience in even technical areas.
  6. Legal Fees: Since, no appeal is available in arbitration, often, litigation costs are greater than arbitration.

Detriments do exist, but in most cases IPG is of the opinion that arbitration is most useful for multinational companies doing business with Korean companies or doing business in Korea.

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.

by Wilson Melbostad (NY Attorney-at-Law)

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