Korea’s Potential as a Preferred Place of Arbitration and the Vision of KCAB Yun Jae Baek Board Director, KCAB __________________________________________________

Korea’s Potential as a Preferred Place of Arbitration Introduction Background of Arbitration in Korea Arbitration Friendly System Amendment of Arbitration Act Recent Trend in Court Decisions Concerning Arbitration Arbitration Industry Promotion Act (pending) Arbitration Institution: KCAB New KCAB International Arbitration Rules New KCAB Code of Ethics for Arbitrators Arbitration Facility: SIDRC

Introduction Increase of Korean parties in arbitration Why? In recent years, Korean parties have been the 3rd most represented parties in ICC arbitration in the South & East Asia region (after China and India) (source: ICC statistical data) Significant number of cases in SIAC and other international arbitration institutions More than 400 cases with the Korean Commercial Arbitration Board in 2015 Why? Exponential economic growth since the 1950s based notably on cross-border transactions: In 2014: 7th largest exporter of merchandise in the world (before Hong Kong, Russia or Singapore) (source: WTO) Korean companies have business activities throughout the world (Samsung, Hyundai, Daewoo, LG, Hanwha, etc.)

Background of Arbitration in Korea 1966 Enacted the Arbitration Act Established the KCAB 1967 Ratified the ICSID Convention 1973 Ratified the New York Convention 1999 Amended the Arbitration Act largely based on UNCITRAL Model Law on Int’l Commercial Arbitration of 1985 ⇒ First in East Asian jurisdiction to adopt the UNCITRAL Model Law 2013 Established Seoul IDRC (SIDRC) 2016 - Marks 50th Anniversary of KCAB - Amendment of Arbitration Act (just passed legislation) - Amended KCAB International Arbitration Rules (effective on June 1, 2016) - KCAB Code of Ethics for Arbitrators (effective on June 1, 2016)

Arbitration Friendly System Supervision of Court Arbitrations seated in Korea are supported by neutral, efficient and arbitration friendly judiciary Judicial Assistance Provided promptly where required Enforcement of Award per 1) New York Convention or 2) Civil Procedure Act & Civil Enforcement Act Harmonization of Civil Law and Common Law Traditional civil law country open to common law influence Appropriate neutral forum for countries with civil law background in Asia Pacific

Amendment of Arbitration Act Amended in 2016, will enter into effect on November 30, 2016 Focuses of the amendments Implementation of major features of 2006 version of the UNCITRAL Model Law Form of the arbitration agreement Enforcement of Tribunal’s interim measures Court’s assistance in Tribunal’s examination of evidence Tribunal’s authority to allocate costs and order penalties for delay Enforcement of award through court decision or court order, not a judgment

Recent Trend in Court Decisions Concerning Arbitration Continuing trend of the court’s pro-arbitration decisions in approving and enforcing arbitral awards Broad recognition of the existence of arbitration agreements and of the scope of disputes covered by arbitration agreements Arbitral Tribunal’s determinations on questions of fact and law are not reexamined at the trial court’s level and such non- reexamination is not grounds for refusing enforcement Argument that enforcement of (foreign) arbitral award violates public order and good morals in Korea is rarely accepted by the courts

Arbitration Industry Promotion Act (pending) Purpose - To promote the use of arbitration in resolving domestic and international disputes and to attract international arbitration to Korea Key Components Basic legislation for long-term planning and financial support to promote arbitration Provides a basis for promotion of the arbitration industry and for supporting the attracting of international arbitration to Korea Ensures independence and autonomy of arbitral institutions Envisions of consolidation of arbitration facilities Cultivation of experts in the area of arbitration

Arbitration Institution: KCAB Services Administration of arbitration proceedings Facilities with fully equipped hearing rooms and preparation rooms Assistance from experienced staff members Average duration of proceedings: 9 months Cost competitive ad valorem system (based on value of the claim) Assistance in appointment of arbitral tribunal General Panel of arbitrators (1108 arbitrators) Panel of International arbitrators (332 internationally renowned professional arbitrators of 27 different nationalities) Claim Amount: USD 5 Million Avg. ICC Arbitration Cost: USD 132,349 Avg. KCAB Arbitration Cost: USD 62,225* (*Currency rate: 1USD = 1,190.40KRW)

New KCAB International Arbitration Rules Purpose - To reflect the needs of parties and recent trends in the arbitration industry Key Components Emergency arbitrator Joinder of parties Consolidation of claims Confirmation of arbitrators Expedited procedure Effective as of June 1, 2016

New KCAB Code of Ethics for Arbitrators Purpose - To enhance the reliability of arbitration by securing arbitrators’ impartiality and independence Key Components Appointment of Arbitrators Impartiality and Independence of Arbitrators Duty of Disclosure Communication with Parties Arbitrators’ Fees Duty of Diligence and Fairness Confidentiality Effective as of June 1, 2016

The Vision of KCAB Vision 1 World’s Top 5 international arbitration institutions Vision 2 ADR-specialized comprehensive legal service provider Vision 3 Infrastructure for continuous growth

Vision 1: World’s Top 5 international arbitration institutions Global top 5 arbitration institutions on a par with ICC and AAA Arbitrators with international reputation Hiring the world’s top international arbitration experts Overseas network for international PR Planning to open more desks (offices) in Tokyo and Hanoi in addition to existing bases in Shanghai and LA Operating KCAB promotion commission (centering on KCAB arbitrators) in major regions around the world

Vision 2: ADR-specialized comprehensive legal service provider Comprehensive dispute resolution service provider Domestic arbitration case volume grows by over 20% annually Expansion of the service areas Disputes over the shop key money, housing lease and rental, deposit, the insurance, the guarantee, noise complaint issues, and medical accidents, etc. Arbitration services for disputes that may arise from our daily life Specialized arbitration service in specific fields Arbitration in the fields of sports, culture content and patent Dispute resolution service through mediation Laying the foundation for active mediation (by establishing the related laws as basis) Identity as a specialized legal service provider Changing its traditional identity as a trade support organization which may give an impression that the KCAB’s roles are limited to commerce

Vision 3: Infrastructure for continuous growth IT-based processes Digital transmission of documents, digital approval system of the arbitration decision, on-line system to update the on-going progress of cases Workforce expansion, specialization and globalization Establishment of the international arbitration unit, taking after the ICDR of AAA Improved workforce diversity (China, Japan, Vietnam, the U.S) Financial stability through profit increase and diversification Increase of arbitration fees by attracting more expensive cases Profit diversification besides the arbitration fee Legal competitiveness improvement Improve international competitiveness by providing the best service to clients and their representatives Virtuous cycle : Clients’ high satisfaction → Revisiting for the service Top 3 customer satisfaction ranking in surveys by GAR, Queen Mary University, etc.