SPECIAL REPORT 23
SEOUL
LIKE SINGAPORE, SOUTH KOREA HAS LONG-ESTABLISHED ARBITRATION INFRASTRUCTURE AND HAS BEEN MAKING EFFORTS TO POSITION ITSELF AS A LEADING ARBITRATION CENTRE IN ASIA, HAVING BEING TIPPED AS “ARBITRATION’S RISING STAR”. 2 THOUGH IT CONTINUES TO MAKE STEADY GROWTH, SUPPORTED BY KOREA’S FORMIDABLE EXPORT SECTOR, SEOUL IS YET TO BECOME A SERIOUS ALTERNATIVE TO SINGAPORE FOR A COMPANY WITH A BIG ARBITRATION BURNING A HOLE IN THE CORPORATE POCKET. SOME MIGHT ARGUE THAT KUALA LUMPUR HAS STOLEN ITS CLOTHES (SEE PAGE 24). South Korea’s arbitration infrastructure has age on its side: its state- established arbitral body, the Korean Commercial Arbitration Board (KCAB), was established in 1970 under an Arbitration Act dating from 1966. Regular revisions to the Arbitration Act, based upon the UNCITRAL model law, have kept it fresh. The latest crop of proposed revisions would strengthen a tribunal’s ability to order interim relief and simplify the enforcement process. This is complemented by domestic courts with power to grant interim relief in support of arbitration and which are generally happy to do so. The KCAB’s arbitration rules, overseen by the Supreme Court and last revised in 2011, are also about to be updated again to institute an emergency arbitrator system and to develop existing provisions on joinder and the KCAB’s confirmation of arbitrators.
There are signs that these efforts are paying off, buoyed at least in part by South Korea’s large and active international trade links and, to a lesser extent, by its maritime (including shipbuilding) and financial industries. International arbitrations commenced annually at KCAB have crept up, from an average of 47 per year in 2001-9 to 76 per year in 2010-2014, though the rate of growth year-on-year has been far from consistent. Of those arbitrations commenced in 2014, 70% concerned international trade, while finance and maritime came in at 9% and 8% respectively. 3 In 2013, and again in a move reminiscent of Singapore, Seoul got its own state-sponsored ADR hearing centre, the Seoul International Dispute Resolution Center (Seoul IDRC). Unlike Singapore, it is not clear that Seoul is yet attracting very high value, high complexity or fully international arbitrations. The average claim value of an international arbitration commenced at the KCAB in 2014 was less than USD 2.6 million and 54% concerned payment issues. 4 On the other hand, partly owing to the simple nature of the disputes that are administered by the KCAB, the average duration of the centre’s international cases completed in 2014 was a very respectable 12 months. There will be many, including clients of the authors, who wish some of KCAB’s Western counterparts were as fast. Anecdotal evidence, however, suggests that the KCAB has some way to go to convince all of its potential users – beginning with domestic users – that it is a reliable and consistent option for resolution of complex international disputes. When it is able to do so, the infrastructure is in place for success.
THE AVERAGE DURATION OF THE CENTRE’S INTERNATIONAL CASES COMPLETED IN 2014 WAS A VERY RESPECTABLE 12 MONTHS.
2 Article by Kanishk Verghese published on 1 October 2013 and available at: http://www.legalbusinessonline.com/features/seoul-arbitration’s-rising-star/57823. 3 KCAB 2014 Annual Report, p.11; “Trends in International Arbitration: A New World Order” (FTI Consulting, February 2015), p.3. 4 KCAB 2014 Annual Report, pp.13-14
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