KCAB unveils international rules
The Korean Commercial Arbitration Board has reinvigorated its approach to international arbitration with a revised set of rules that apply by default if one of the parties to a dispute is not Korean.
Tom Moxham, a former Freshfields Bruckhaus Deringer lawyer who was appointed as international counsel at the KCAB in March, says the rules "introduce a number of exciting innovations which will address the needs of both international and local parties and will promote reliable, timely and cost-effective dispute resolution services in Korea."
The changes to the rules took effect on 1 September and apply to arbitration agreements made after that date. Moxham says that the key motivation behind the revision was to create "a clear demarcation between the domestic and international rules so as to promote international arbitration." He explains that previously, when parties failed to nominate the international rules, the domestic arbitration rules were the default option regardless of whether one of the parties was foreign. GAR understands that only two cases were submitted under the previous international arbitration rules, which were introduced in 2007.
However, following the changes, the international rules now apply by default where one of the parties is not Korean, although parties will remain free to conduct their international arbitration under the domestic rules if they so choose.
Like many international arbitration rules used worldwide, the revised rules also offer an expedited procedure for resolving disputes. Moxham explains that last year 114 domestic cases were submitted to expedited procedures under the KCABís domestic rules. He hopes that by incorporating the expedited procedure into the international rules, the centre will encourage small to medium sized businesses that are involved in international trade to use arbitration.
With a view to reducing costs, the KCAB has also imposed a maximum cap of 150 million won (approximately US$150,000) on administrative fees payable by the parties. The original 150 million won cap on arbitratorsí fees, however, has been removed from the ad valorem fee scales. Moxham says: "To attract highly qualified, internationally recognised arbitrators, the compensation on offer must be internationally competitive."
Another important change embodied in the new rules concerns the role of the KCABís international arbitration committee. The committee will now assist the secretariat in dealing with arbitrator challenges and replacements, and in appointing arbitrators where necessary.
Appointed by the KCAB chairman, Jae-Moon Doh, the committee has recently been enlarged from seven to 18 members, including Doh himself, the secretary general of the International Council for Commercial Arbitration - Kevin Kim (a partner at Bae Kim & Lee in Seoul), Byung-Chol Yoon (a partner at Kim & Chang) and other Korean arbitration specialists. The committee now also counts among its members some leading international arbitration specialists, including Lucy Reed, Michael Pryles, Pierre Karrer, Philip Yang and Yu Jianlong.
The unveiling of the new rules follows a revision process conducted by an international advisory committee of eight foreign-licensed lawyers established by Doh earlier this year to promote the KCAB as a regional centre for international arbitration.
The committee was led by American Benjamin Hughes, a partner at Shin & Kim in Seoul, and included Moxham and James Morrison, an Australian former counsel at the ICC secretariat in Paris who now practises as a senior associate at Bae Kim & Lee in Seoul.
Other recent steps taken to increase the KCABís internationalism include 37 new appointments to the centreís international rules' panel of arbitrators on 1 June. The panel now includes 218 names in total: 108 Korean nationals and 110 foreign arbitrators.
Commenting on the revised rules and new appointments to the panel, Hughes says, "Both developments will dramatically improve the quality of the already excellent and cost-efficient dispute resolution services provided by the KCAB."
Changes to the KCABís domestic arbitration rules Ė which also took effect on 1 September Ė reflect those to the international arbitration rules. The domestic rules now apply by default in arbitrations where the domicile of the parties and the seat of arbitration is Korea.