Seoul High Court
South Korean companies prefer international arbitration bodies over domestic ones to resolve disputes even for the cases that can be resolved at home, said a renowned arbitration specialist, which could place them at a disadvantage by exposing them to unfamiliar foreign laws.
For local dispute cases with domestic peers, an increasing number of Korean firms resort to foreign arbitrators, causing an increase in settlement costs and delays in the arbitration proceedings.
Further, they may not be able to persuade foreign arbitrators enough to reflect the business environment in Korea in settling their cases.
Chiann Bao, a vice president of the International Council for Commercial Arbitration (ICCA)
Touching on such concerns, Chiann Bao, a vice president of the International Council for Commercial Arbitration (ICCA), said that South Korean arbitrators are highly qualified to handle corporate disputes.
“South Korea is an important player in the international arbitration community. It could be bigger, by convincing your corporate users to negotiate Seoul as the seat of arbitration,” she told The Korea Economic Daily this week, when asked about the qualifications needed for South Korea to become a competitive arbitration place.
“Strengths are its people. Most of the law firms in the Korean market are known to the international arbitration community. The Korean arbitration practitioners participate in the international arbitration community,” she said on the sidelines of the biennial conference of the ICCA, the world’s leading arbitration institution.
Si-On Park is a reporter for The Korea Economic Daily
HOME GROUND ADVANTAGE
Bao co-chaired the ICCA 2024 Hong Kong, which took place on May 5-8 under the theme of “International Arbitration: A Human Endeavor.” She is also a vice chair of the International Bar Association’s International Arbitration Committee.
Companies choose the governing laws and an arbitration body when entering contracts with other companies in case disputes arise between them.
Settlement through international arbitrators come at the expenses of home ground advantages and leave them vulnerable to foreign laws, which could work in favor of foreign business partners.
Still, Korea falls behind in the priority of governing laws and place of arbitration.
The number of arbitration cases handled in South Korea has decreased.
In 2022, 38 arbitration cases between domestic and foreign companies were filed with the Korea Commercial Arbitration Board, about half of the 70 cases filed in 2019.
“In the global market, our companies have sufficient bargaining power but they overlook the importance of an arbitration place,” said Jung Hong-sik, a law professor and head of the International Legal Affairs Bureau at South Korea’s justice ministry.
The Ministry launched the legal affairs bureau last year to better cope with corporate disputes and oversee arbitration proceedings.
Companies can freely choose the arbitration body and governing laws to settle disputes. But they may make good use of South Korea’s arbitration capabilities, highly recognized by the arbitration specialist Bao.
By Si-On Park
ushire908@hankyung.com
Yeonhee Kim edited this article
