SOUTH KOREA Law and Practice Contributed by: Yun Jae Baek, Jeonghye Sophie Ahn, Hyunah Park and Seyoung Choe, Yulchon LLC
For KCAB international arbitrations, Article 38 of the KCAB Rules provides a time limit for a final award (eg, within 45 days from the date the final submissions are made or the hearings are closed, whichever is later). Such time limit can be extended. 10.2 Types of Remedies The KAA does not place any restrictions on the types of remedies that an arbitral tribunal can render. In practice, when choosing the remedies, the arbitral tribunal must take into consideration the enforceabil - ity of its award in South Korea, if the award is to be enforced in South Korea. For example, South Korean courts do not allow puni - tive damages as a matter of public policy, unless expressly allowed under applicable laws, such as the South Korean Product Liability Act. Therefore, an arbitral award ordering punitive damages for breach of contract or tort liability would not be enforced in South Korean courts. Additionally, if the award is to be enforced in South Korea, the parties and the arbitral tribunal should be careful in specifying the relief in sufficient detail to allow enforcement under applicable South Korean laws (eg, specifying the exact asset to be transferred, the monetary amount to be paid or the actual action a party must perform). In one case, the Seoul High Court found that, although an award was enforceable, the decision of the arbitral tribunal was not specific enough to be actually executed by the execution offic - er. Thus the court did not pronounce the provisional execution in its judgment (Seoul High Court Judgment 2013Na13506). 10.3 Recovering Interest and Legal Costs With respect to interest, claimants generally seek interest on the principal claims and related costs from the respondent, and the arbitral tribunal must decide on such claims. Pursuant to Article 34 (3) of the KAA, the arbitral tribunal may order either party to pay pre- and/or post-award interest after considering all the circumstances of the relevant arbitration case if deemed appropriate – unless the parties have agreed otherwise.
As for arbitration costs, unless the parties have agreed otherwise, an arbitral tribunal has explicit authority under Article 34 (2) of the KAA to allocate arbitration costs between the parties, taking into consideration all pertinent circumstances of the case. The “loser pays” rule generally applies to arbitrations in South Korea, but the arbitral tribunal has discretion to decide otherwise in light of relevant factors.
11. Review of an Award 11.1 Grounds for Appeal
An arbitral award has the same effect on the parties as a “final and conclusive judgment of the court” under Article 35 of the KAA, unless the court refuses to rec - ognise or enforce the award under either Article 38 (awards made in South Korea) or Article 39 (awards made in foreign jurisdictions) of the KAA. This means that parties may not appeal an award per se. Nev - ertheless, parties may file a lawsuit to set aside the award under Article 36 of the KAA, which closely mir - rors Article 5 (1) of the New York Convention. In order to set aside an award, parties must file a law - suit with the court within three months of its receipt of the duly authenticated copy of the award (Article 36 (1) and (3) of the KAA) and state the grounds upon which the party seeks to set aside the award. Grounds for setting aside an award must be proven by the party seeking the setting aside and are limited to the fol - lowing. • A party to the arbitration agreement was incapaci - tated when the agreement was entered into, or the arbitration agreement is not valid under the law selected by the parties to govern the agreement (or, failing any such indication, under South Korean law). • The party making the application was not given proper notice of the appointment of arbitrators, or of the arbitral proceeding, or was otherwise unable to present its case. • The award deals with a dispute not contemplated by the parties or not subject to the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement.
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