SOUTH KOREA Trends and Developments Contributed by: Yun Jae Baek, Jeonghye Sophie Ahn, Jae Hyong Woo and Seyoung Choe, Yulchon LLC
receipt of the award and continuing until full pay - ment. The tribunal based its conclusions primarily on Articles 7.1 and 7.5 of the SPA, which impose indemnification obligations for losses arising from breaches of repre - sentations, warranties, and covenants. These provi - sions stipulate the following: Article 7.1: “Each Seller and the Purchaser, acting severally and not jointly, shall indemnify and hold harmless the Pur - chaser or each of the Sellers, as the case may be, from and against any and all losses incurred or suffered by the Indemnified Party as a result of or in connection with any breach or inaccuracy of any representation, warranty, or covenant.” Article 7.5: “Notwithstanding any other provision of this Agree - ment, and subject to Articles 7.2, 7.3, 7.4 and 7.1 (2), each Seller, acting severally and not jointly, shall indemnify and hold harmless the Indemnified Party, including the Purchaser, for any losses incurred, in their capacity as the Indemnifying Party.” Based on these provisions, the tribunal found that the respondents were contractually obligated to indemni - fy the claimants for the losses arising from breaches of the representations, warranties, and covenants con - tained in the SPA. Seoul High Court’s Decision Following the issuance of the final award, the claim - ants applied to the Korean courts for recognition and enforcement of certain portions of the award. The Respondents opposed the application, contending that the award failed to clearly delineate the scope of claims attributable to each claimant, as well as the specific liabilities assigned to each Respondent. On this basis, they argued that the award was ambigu - ous to the extent that it was either unenforceable or lacked legal effect, and accordingly, the application for enforcement should be dismissed or denied. The application was considered by the Seoul Central District Court (Judgment No 2021KaGi449) and the Seoul High Court (Judgment No 2022Ra20034, ren -
dered on 18 May 2023). Citing Article 37 of the Korean Arbitration Act (KAA), the Seoul High Court empha - sised that judicial review in enforcement proceed - ings is limited to determining whether the statutory requirements for enforcement are satisfied. Accord - ingly, Korean courts are not permitted to revise, sup - plement, or re-evaluate the merits of an arbitral award. Nonetheless, the court acknowledged that where the scope or content of the dispositive section is ambigu - ous, it may be appropriate to clarify the dispositive section by interpreting it in light of the reasoning pro - vided in the award. Even in such cases, the court must not revisit the merits of the dispute or alter the award in a manner that would effectively re-adjudicate issues determined by the arbitral tribunal. Moreover, applying the foregoing legal principles, the Seoul High Court held that the arbitral award was to be interpreted in accordance with English law, as the governing law of the SPA and escrow agreement, and Hong Kong law, as the lex arbitri applicable to the arbitral proceedings. Upon such interpretation, the court found that the dispositive portions of the award – specifically those relating to the payment of damages, allocation of legal and expert costs, and the imposition of interest – could be sufficiently clari - fied by reference to the tribunal’s reasoning. The court concluded that these elements of the award exhibited a sufficient degree of specificity and determinacy to permit recognition and enforcement under Korean law. Accordingly, it rejected the respondents’ objec - tions concerning the alleged ambiguity of the award and dismissed their request to deny or dismiss the claimants’ application for an enforcement decision. As a result, the Seoul High Court granted the claim - ants’ application for enforcement, adding a proviso to limit the aggregate amount of damages, the allocation of legal and expert costs, and the applicable inter - est subject to compulsory execution. In response, the respondents filed an appeal to the Supreme Court, contending that the arbitral award lacked sufficient specificity to be enforceable, and that the lower court erred in granting the enforcement decision despite such deficiency.
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