South Korea's global growth in key industries such as construction and technology has meant that South Korean companies are increasingly involved in transnational contracts comprising arbitration clauses.
We sat down with Jun Sang Lee, Partner and Co- Head of International Arbitration and Litigation at Yoon & Yang LLC, to discuss the latest amendments to the Arbitration Act, set to bolster the use of arbitration and to ensure increased efficiency of the arbitration process.
1. What has prompted amendments to the Arbitration Law in South Korea?
The Arbitration Act of Korea (the “Arbitration Act”) has adopted a number of amendments since its enactment in 1966. Crucially, it was amended in 1999 to adopt the UNCITRAL Model Law and in order to adequately reflect developments in the international community. More recently, after working level discussions were then initiated by the Ministry of Justice in 2012, the latest amendment was ratified by the National Assembly on 19 May 2016. The new amendment is expected to bring about an expedited enforcement procedure and to encourage the use of interim measures, thereby creating an arbitration-friendly environment in Korea.
2. When will the amended Arbitration Act be implemented?
The amended Arbitration Act will be enforced on 30 November 2016.
3. What are the key changes?
(1) Expansion of the scope of arbitration:
The scope of arbitration in the amended Arbitration Act has been expanded from: a "dispute in private law" to "any property dispute and non-property dispute which may be resolved by the parties' reconciliation" (Article 3(1)). This means that disputes relating to intellectual property rights and antitrust, traditionally classified as “non-property disputes”, can now be included.
(2) Arbitration agreement
Previously an arbitration agreement had to be in writing either as part of the main contract or as a separate agreement. The amended Arbitration Act has expanded the circumstances in and methods through which an arbitration agreement can be acknowledged as being valid, by relaxing the existing "in writing" requirement for an arbitration agreement and recognizing any instances in which an arbitration agreement is recorded regardless of its form (Article 8(3)).
(3) Expansion of Court's Cooperation in Examination of Evidence
The amended Arbitration Act guarantees the right of arbitrators or parties to participate in the court’s examination of evidence, and further enables the arbitral tribunal to request practical cooperation from the courts. The amended Arbitration Act provides that when cooperating with the arbitral tribunal in the examination of evidence a court may compel a witness to appear before the arbitral tribunal or compel a person to produce certain documents to the arbitral tribunal.
(4) Interim measures
Although article 18 of the current Arbitration Act provides interim measures in the form of an interim order, there were debates on whether such an ‘order’ is enforceable in the Korean courts under the current laws. In order to clarify the issue, the amended Arbitration Act provides that an interim measure issued by an arbitral tribunal shall be recognised as binding, and shall be enforced upon application to the competent court. The provisions of the Interim measures in the amended Arbitration Act actively embraced the amended article 17 of the UNCITRAL Model Law. Where recognition or enforcement of an interim measure is sought, the competent court may order appropriate measures. This amendment is considered to act for the convenience of the parties and further improve the efficacy of arbitration proceedings.
According to the amended Arbitration Act, a party can request that the court issue an order – which is more cost and time-efficient to obtain – in favour of enforcement of the arbitral award.
The amendment further alleviates the parties’ burden on enforcement by simplifying document requirements to a ‘copy of the award’ or a ‘Korean translation of the award’ and eliminating the existing requirement for an ‘original arbitration agreement or duly certified copy thereof’.
4. How do you expect the arbitration landscape to change following these developments? What are your predictions?
It is noteworthy that the amendment of the Arbitration Act reflects the major developments in the 2006 UNCITRAL Model Law’s in order to enhance parties’ convenience and efficacy of the proceedings, particularly the enforcement process.
In addition to the amendments of the Arbitration Act, The Korean Commercial Arbitration Board (KCAB) introduced its new international arbitration rules which came into full effect on 1 June 2016. In the coming year, there will continue to be developments in Korea, in particular the “Act Related to the Promotion of Arbitration Industry” provided by the Ministry of Justice. These new developments, together with the amendment of the Arbitration Act, serve as an assurance that Korea has an adequate system in place in order to be the next regional hub for international arbitration in the Asia-Pacific region.
Jun Sang Lee, Partner and Co-Head of International Arbitration and Litigation at Yoon & Yang LLC. His main practice areas are international arbitration and litigation, domestic corporate/civil/criminal litigation, corporate restructuring. He served as judge for 19 years until February 2013.
Jun Sang was also appointed as a member of the governmental delegate for the UNCITRAL Working Group 2 (Arbitration) during 2009 to 2011.
Since joining Yoon & Yang in 2013, he has been involved in international arbitration cases with the ICC, SIAC, HKIAC and AAA. He has also spoken widely at international arbitration events and assisted in the revision of the Arbitration Act.
Jun Sang received his legal education at Seoul National University College of Law (LLB, 1989) and at the University of California, Berkeley (visiting scholar, 2003–2004).