The Arbitration Agreement - Chapter 3 - Arbitration Law of Korea: Practice and Procedure

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Arbitration Law of Korea: Practice and Procedure - Hardcover

Arbitration Law of Korea: Practice and Procedure - Electronic

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CHAPTER 3
THE ARBITRATION AGREEMENT

The arbitration agreement is the foundation and indispensable element of
an arbitration proceeding.1 Arbitration is a creature of contract in that its
validity and binding effect depends, fundamentally, on the parties' mutual
consent to arbitrate their dispute. The arbitration agreement is the expression
of that consent and, accordingly, the source of an arbitrator's authority to
exercise jurisdiction over a dispute and to render a binding decision in the
form of an enforceable arbitral award. In this chapter, the arbitration
agreement is considered in detail from the perspectives of Korean law and
arbitral practice.

3.1 PRELIMINARY MATTERS

3.1.1 Definitions

Article 3(b) of the Arbitration Act defines an "arbitration agreement"
(jungje habui in Korean) as "an agreement between2 the parties to resolve, by
arbitration, all or a part of disputes which have already arisen or which may
arise in the future in respect of a defined legal relationship, whether
contractual or not."3

The key elements of this definition are (i) an agreement to resolve all or
a portion of present or future disputes by arbitration, (ii) a requirement that
any such dispute must concern "a defined legal relationship," and (iii) the
absence of any requirement that the dispute must be a contract dispute. Each
of these elements is addressed below.

Prior to its amendment in 1999 to substantially adopt the UNCITRAL
Model Law 1985, the Arbitration Act (1966) defined an "arbitration
contract" (jungje kyeyak in Korean)4 as an "agreement between the parties
concerned to settle through an arbitration the whole or part of any dispute
which has arisen or will arise in the future between them with respect to any
legal relationship under the private law."5 Thus, in contrast to the approach
traditionally taken in some jurisdictions,6 Korean arbitration law has
permitted arbitration agreements dealing with existing disputes7 as well as
arbitration agreements dealing with future disputes8 without drawing any
substantive distinction between the two in terms of legal effect.9

Chapter 3 The Arbitration Agreement

3.1 Preliminary Matters

3.1.1 Definitions 
3.1.2 Types of Arbitration Agreements

3.1.2.1 Arbitration Clauses and Submission Agreements
3.1.2.2 Standing Offers to Arbitrate under Investment Treaties

3.1.3 A Defined Legal Relationship 
3.1.4 Subject Matter Capable of Settlement by Arbitration
3.1.5 Separability of Arbitration Agreement 

3.2 Law Applicable to Arbitration Agreement

3.2.1 Law Applicable to Procedural Matters
3.2.2 Substantive Law Governing the Contract as a Whole
3.2.3 Substantive Law Governing the Arbitration Agreement

3.3 Parties to an Arbitration Agreement

3.3.1 Capacity of Parties to Enter into an Arbitration Agreement

3.3.1.1 Individuals
3.3.1.2 Legal Persons
3.3.1.3 State Entities
3.3.1.4 Agents
3.3.1.5 Insolvency

3.3.2 Determining the Parties to the Arbitration Agreement
3.3.3 Implied Consent to Arbitrate by Third Parties
3.3.4 Succession and Delegation 

3.4 Scope of an Arbitration Agreement 

3.4.1 Disputes Covered by the Arbitration Agreement
3.4.2 Counterclaims and Set-off 

3.5 Effects of a Valid Arbitration Agreement 

3.5.1 Positive Effects 
3.5.2 Negative Effects 

3.6 Validity of Arbitration Agreements under Korean Law

3.6.1 Formal Validity: Writing Requirement

3.6.1.1 Writing Requirement under the Arbitration Act 
3.6.1.2 Relevant Court Precedents 
3.6.1.3 No Other Requirements of Form under Korean Law 

3.6.2 Substantive Validity: Intent to Submit Dispute to Arbitration

3.6.2.1 References to Standard Terms and Conditions Containing an Arbitration Clause
3.6.2.2 Multi-tier Dispute Resolution Clauses
3.6.2.3 No Requirement that Recourse to Court Litigation Be Expressly Waived

3.6.3 Pathological Arbitration Clauses

3.6.3.1 The Unwilling Arbitrator 
3.6.3.2 The Non-existent Arbitral Institution 
3.6.3.3 The "Split" or "Elective" Dispute Resolution Clause

3.7 Basic Elements of an Arbitration Agreement

3.7.1 Place of Arbitration 
3.7.2 Arbitral Institution
3.7.3 Number of Arbitrators 
3.7.4 Language of Arbitration 
3.7.5 Confidentiality 

3.8 Termination or Revocation of an Arbitration Agreement

About the firm:

Bae, Kim & Lee's International Arbitration and Litigation Group has earned worldwide respect for its forceful and uncompromising representation of clients. In a field where experience counts, BKL boasts Korea's first dedicated international arbitration practice group. Having been at the forefront of the field in Korea for the past 10 years, the team is now composed of 16 attorneys from several jurisdictions plus paralegals and staff, and includes a former Counsel of the ICC Secretariat and several members listed in leading publications including Who's Who Legal, Chambers, and Asia-Pacific Legal 500. This year, reflecting the team's progress and current international standing, BKL received the Arbitration Win of the Year award from Global Arbitration Review (GAR) and had the honor of being the first and only Korean firm ever listed in the "GAR 30," awarded to the 30 top arbitration practices worldwide.

General Editors:

Kap-You (Kevin) Kim is Head of the International Arbitration and Litigation Practice Group and Partner of Bae, Kim & Lee LLC. Mr. Kim has the distinct honor of being a Court Member of the ICC Court of Arbitration and the London Court of International Arbitration, listed ICSID arbitrator, Senior Advisor to the Korean Commercial Arbitration Board, Vice Chair of the IBA Arbitration Committee and a Board Member of the American Arbitration Association.

John P. Bang is Partner (foreign legal adviser) and co-founder of Bae, Kim & Lee's International Arbitration and Litigation Practice Group. Mr. Bang has acted as counsel in over 75 commercial arbitral proceedings in Asia, Europe and the US under the rules of all major international arbitral institutions including, among others, the ICC, ICSID, LCIA, SIAC, JCAA, and KCAB (Korean Commercial Arbitration Board) and numerous litigation proceedings in various foreign jurisdictions. He was named in the Global Arbitration Review's "45 under 45" for 2011, which lists the leading figures of the international arbitration bar under the age of 45.

Contributing Authors:
Seungwoo (Sean) Cho
Matthew J. Christensen
Kyongwha Chung
Seung Il Hong
Woochul Hwang
Eun Ah Jeung
Byoung Pil Kim
Hong-Joong Kim
Junu Kim
Sue Hyun Lim
David W. MacArthur
James Morrison
JongKwon Ryoo
Yunsoo Shin
Sung Woo Yang
Seokchun Yun