Centre for Arbitration and Research, Maharashtra National Law University Mumbai organised an online lecture on the topic “Developments of Arbitration in Korea: Lessons for Emerging Arbitral Jurisdictions” by Mr. Kevin Kim, Senior Partner, Peter & Kim, Korea on 08 November 2021.
About the Speaker:- Mr. Kevin Kim is a senior partner at Peter & Kim in Seoul. Mr. Kim has acted as counsel, and arbitrator in more than 300 cases of international arbitration under various arbitration rules. Presently, he is involved in several investment and commercial arbitrations. The lecture was intended to give the participants a fair idea about the developments in arbitration law in Korea, the challenges it has faced, and how it has tackled those challenges to emerge as an arbitration friendly jurisdiction. The lecture was attended by legal practitioners, faculty members, research scholars, experts and students from different universities and colleges of India and abroad.
Welcome Note:- On behalf of the Centre for Arbitration and Research Maharashtra National Law University Mumbai, Mr. Chirag Balyan, Asst. Prof. (Law), MNLU Mumbai and the moderator of the event extended greetings to Mr. Kevin Kim. Mr. Balyan in his welcome address appreciated the efforts made by Mr. Kim for his contribution in development of arbitration practice in Korea.
Mr. Kim’s address:- Mr. Kim began his address by stating that there was a time when arbitration was almost non-existent in Korea. He said the reasons why arbitration was not perceived as an effective method of dispute resolution are many. Some of the primary reasons being:-
- Due to lack of transnational contractual arrangements between parties, international arbitration agreements were not common in Korea. - There was a perception that common law dominates international arbitration and Korea being a country that follows civil law, was hesitant about international arbitration. - The concept of arbitration was perceived as foreign which added to the hesitancy of Korean legal market in accepting arbitration as a preferred method of dispute resolution. - The domestic courts were effectively functioning when it came to handling international and domestic cases.
Mr. Kim then focused on what led to the growth of international arbitration in Korea. He said that the financial crisis in Korea which affected the country in the late 90s is one of the primary reasons for growth of international arbitration in Korea. The financial crisis led the IMF to bail out corporations which were hit by the financial crisis. The terms at which the bail outs were granted required disposal of non-core assets to other companies which resulted in large foreign investments. The disputes stemming from these investments were settled through arbitration as the agreements had arbitration clauses incorporated in them. Industry specific disputes allowed practitioners to gain expertise in exclusive industries/sectors which further helped in the growth of arbitration in those industries.
Mr. Kim stated that despite being a smaller economy than Japan and China, during the period from 1998 to 2008, the number of Korean parties that took part in arbitrations administered by ICC was larger than that from Japan and China. The involvement of Korean parties in arbitrations led to the regional law firms expanding their arbitration practice. Korean lawyers who were practicing abroad, and foreign lawyers (from India, USA, Australia, and UK, etc.), came back to Korea to cater to the needs of the parties involved in arbitrations. Consequently, the large number of arbitration practitioners and experts in Korea made the Korean clients very comfortable because of there being no cultural or linguistic gaps between the clients and the attorneys.
Regarding the role played by law firms in Korea and their contribution to arbitration practice, Mr. Kim stated that Korean law firms were well equipped not only to serve regional clients but also clients abroad. Since the opening up of legal markets, foreign firms have also started setting up their practice in Korea. He said that Korean law firms also helped by creating enough job opportunities for young arbitration practitioners. According to Mr. Kim, Korean law firms have definitely added value to the Korean arbitration landscape. This is evident from the fact that Korean law firms today feature in the top rankings in international practice published by reputed agencies.
Mr. Kim then focused on how significant it is to train young lawyers to bring them at par with their counterparts around the world. Seasoned arbitration practitioners played a crucial role in shaping these young lawyers. This is how knowledge sharing by the practitioners led to the growth of lawyers who were sufficiently trained in arbitration.
Mr. Kim also spoke about how the support from the government led to the growth of arbitration in Korea. Some of the vital steps taken by the government include enactment of Arbitration Industry Promotion Act, adoption of UNCITRAL Model Law in 1999, amendments to the arbitration law to keep up with changes taking place in the sector, and provision of sufficient training for the judges, to make them well equipped to handle arbitration cases, etc. As a result of these efforts, Korea is now seen as an arbitration friendly jurisdiction. Mr. Kim stated that no foreign arbitral award has been denied enforcement in Korea. This clearly shows that the sanctity of an arbitral award is given primacy in the Korean jurisdiction.
Mr. Kim also emphasised the role of ancillary factors which have helped arbitration practice grow in Korea. They include, transportation services, translation services, internet services, etc. Korea being a neutral jurisdiction has also helped the country immensely. Mr. Kim also mentioned that establishment of Korean Commercial Arbitration Board, which is the official arbitration institution of Korea, has played a huge role in making Korea a hub for international arbitration.
Mr. Kim pointed out an interesting fact that commercial disputes with North Korea are resolved through arbitration as there exists an agreement between North Korea and South Korea which mandates the disputes between South Korean and North Korean companies to be settled through arbitration. He also mentioned that North Korea has recently adopted CISG which will help in effective resolution of commercial disputes.
Mr. Kim mentioned that Korea has already caught the world’s attention through its pop culture and widely publicised movies and web series. Just like K-Pop depicts a blend of music from around the world, K-Arbitration (Mr. Kim likes to call the Korean arbitration practice, K-Arbitration) is a blend of the best arbitration practices from around the world put together.
He concluded the lecture by mentioning that cohesive effort from all stakeholders viz. arbitration practitioners, parties, institutions, judiciary, government, has helped in promotion of arbitration practice in Korea.
Mr. Kim then addressed the queries from Mr. Balyan and other participants. The first question posed to Mr. Kim was whether there was any particular reason why the domestic Korean courts have never refused enforcement of arbitral awards. Mr. Kim explained that Korean parties resort to arbitration only when they believe they have a strong case. In other situations, they prefer settling the dispute. The parties usually elect well-known and experienced arbitrators, and renowned arbitral institutions like the ICC, LCIA, HKIAC, SIAC for their disputes. Therefore, as a matter of public policy, the Korean courts, especially the Korean Supreme Court, respect the procedural decisions and the award rendered by the arbitral tribunal. In a few cases at the jurisdictional stage, Korean courts have assumed jurisdiction where they found that there was no arbitration agreement between the parties. But at the enforcement stage, they have always respected the tribunal’s decision so far.
As a follow up to this response, one of the participants asked Mr. Kim whether the Korean arbitration act contains any modifications to the setting aside provisions in the UNCITRAL Model Law to enable such a pro-enforcement attitude of the Korean courts. Mr. Kim answered that the Korean arbitration act is in fact a verbatim adaptation of the Model Law. The act does choose from the options that the Model Law provides for certain provisions, but it does not modify the content of the Model Law in any way. He also added that Korea has also adopted the New York Convention and the CISG without any modification. This is in line with the general attitude of the Korean society to embrace and adopt international standards. It was for this very reason that Korea adopted the Model Law in 1999, even five years before Japan, and was the first among East Asian countries to adopt the revised Model Law in 2016.
Mr. Kim was then asked whether arbitration is preferred over mediation in Korea. As mediation gains popularity around the world, it is also being practiced more frequently in Korea. Mr. Kim has himself dealt with cases where parties have requested mediation, before arbitration, even though mediation was not mentioned as the method of dispute resolution in the contract between the parties. There have also been cases where the arbitration has been bifurcated– first the liability is decided by the arbitral tribunal, and then the quantum is settled between the parties through mediation. However, parties have not adopted the practice of making mediation part of the dispute resolution clause in their agreements. Mediation usually occurs when it is voluntarily agreed to by the parties and mandatory mediation within the arbitration clause is not very popular. Mandatory mediation often delays the settlement of the dispute.
The next question posed to Mr. Kim was what was the practice in Korea if one of the parties opposed a virtual hearing, and if the tribunal continues with the proceeding in such a situation. Mr. Kim responded that tribunals in Korea would proceed with the virtual hearing, not just because of the pandemic, but because important meetings and court proceedings have been conducted virtually in Korea even before COVID-19, and therefore Korean parties are acquainted with virtual procedures. The only hindrance to a virtual hearing, according to him, would be if the institutional rules adopted by the parties explicitly mandate a physical hearing instead of a virtual hearing.
Mr. Kim has lawyers from various different nationalities and backgrounds in his law firm. He was lastly asked how this diversity within a law firm helps in the growth of international arbitration. He answered that diversity is very useful because when lawyers from different legal and cultural backgrounds collaborate on cases, they are able to understand and conceptualise the issues from different perspectives. For example, they learn how lawyers from common law and civil law jurisdictions deal with the dispute differently, or how a particular issue might be more important to a party based on its cultural background. It helps them transcend cultural and linguistic barriers. He commented that such collaboration and learning is the beauty of international arbitration, and enriches the work experience for every person in the firm.
The session ended with a vote of thanks by Mr. Chirag Balyan.
Bhumika Indulia News link: SCC online(2021.11.15.), https://www.scconline.com/blog/post/2021/11/15/mnlu-mumbai-lecture-by-kevin-kim-on-developments-of-arbitration-in-korea-lessons-for-emerging-arbitral-jurisdictions/ |
