SOUTH KOREA Law and Practice Contributed by: Yun Jae Baek, Jeonghye Sophie Ahn, Hyunah Park and Seyoung Choe, Yulchon LLC
Pursuant to the Arbitration Industry Promotion Act, the Korean Ministry of Justice implemented the first Master Plan for Promotion of the Arbitration Indus - try for 2019–2023 (the “First Master Plan”). The First Master Plan aimed to promote the arbitration indus - try, provide support personnel to the KCAB, and cre - ate policies that will make South Korea an attractive potential arbitral seat or physical venue for hearings. Furthermore, on 27 December 2024, the Korean Min - istry of Justice launched the second Master Plan for Promotion of the Arbitration Industry for 2024-2028 (the “Second Master Plan”). The key initiatives under the Second Master Plan include (i) securing a stable operational foundation for KCAB; (ii) strengthening the internal capabilities of KCAB International; and (iii) establishing an Online Dispute Resolution (ODR) system to facilitate electronic arbitration. In line with these legislative initiatives to foster an arbitration-friendly environment, South Korean courts have also become increasingly supportive of arbitra - tion by consistently upholding arbitration agreements, assisting the arbitral tribunal in taking evidence and enforcing arbitral awards. Today, arbitration is not merely an alternative to tradi - tional court litigation, but the preferred dispute reso - lution mechanism for cross-border disputes in South Korea. 1.2 Key Industries Key industries in South Korea have been significantly influenced by ongoing global and geopolitical trans - formations. Nevertheless, as South Korea emerges as a North-East Asian international arbitration hub, certain industries – such as construction, commerce, IT, trade, entertainment, IP, real estate, maritime, M&A, joint venture and finance – are continuing to experi - ence growth in international arbitration activities. Investment treaty arbitrations involving the South Korean government have also experienced rapid growth since 2019. In 2019, the South Korean gov - ernment introduced the Regulation on International Investment Dispute Prevention and Response (the “ISDS Regulation”), a presidential directive that pro - vides for an effective prevention and response sys - tem and a channel facilitating co-operation among
relevant government departments. In particular, the Korean Ministry of Justice has created a response team composed of lawyers and high-ranking officials to effectively prevent and respond to international investment disputes. 1.3 Arbitration Institutions The KCAB remains the only officially recognised arbi - tral institution in South Korea and is often selected by parties for arbitrations seated in South Korea. It is statutorily empowered to settle all types of com - mercial disputes under the KAA. It also conducts and administers mediation. The KCAB was established in 1966 with the main purpose of resolving disputes quickly and impar - tially through arbitration, mediation and conciliation. In April 2018, the KCAB established a separate divi - sion, KCAB International, which exclusively manages international arbitration. The KCAB International is a relatively young arbitration institution in Asia, but is gradually progressing and steadily catching up with its neighbouring counterparts such as the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC). The KCAB has adopted separate rules for domestic and international arbitrations. Arbitrations between South Korean parties are usually conducted pursu - ant to the domestic arbitration rules of the KCAB in the absence of a specific agreement to the contrary. For international arbitrations in which at least one of the parties has its principal place of business outside South Korea, the KCAB International Arbitration Rules (the “KCAB Rules”) apply as the default rules. Parties choosing Seoul as the seat of arbitration often opt for the rules of other leading international arbitral institutions, such as the ICC, SIAC, and HKIAC. The SIAC and the HKIAC are more frequently used for arbi - trations seated outside South Korea between Asian parties. The ICC and the London Court of International Arbitration (LCIA) are also often used for arbitrations between a South Korean party and a Western party. Although less common, there are also ad hoc arbitra - tions under the UNCITRAL arbitration rules.
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