1. Energy Arbitration: The View from Korea & NE Asia
Benjamin Hughes
Associate Professor
Seoul National University Law School

2. Energy Market in NE Asia
China is world’s largest oil importer, second largest consumer.
China, Korea and Japan together import more than half of global LNG
Korea and Japan import 95% of their energy needs
Decreased reliance on nuclear power after Fukushima disaster and safety scandals in Korea.
Heavy reliance on LNG and high demand in region leads to high prices despite buying power (KOGAS)
Increasing reliance on coal in Korea, causing untenable environmental and political problems.
LNG power plant operators suffering from competition.

3. Competition and Cooperation
Intense competition for resources, including South China Sea
See E&P disputes between China and Vietnam, Philippines, Japan
Could also adversely affect energy transport (see maps)
Increased demand in other regional markets
However, China, Korea and Japan exploring LNG buyer’s alliance between CNOOC, KOGAS and JERA (MOU)
Other factors leading to potential price review include increased production from US shale gas (Henry Hub prices), Australian LNG projects, Russia, Canada, Indonesia, etc.

4. Types of Disputes Long-term LNG SPAs
Take-or-pay clauses
Price review
Price formula indexed to oil prices, with periodic and/or trigger review
Difficult to predict outcome (see Gas Natural v. Atlantic LNG)
Baseball Arbitration
Hardship clauses
Seldom go all the way to arbitration (tiered clauses)
Korean (Chinese and Japanese) principle of good faith
Construction (LNG Terminals, drilling rigs, refineries, power plants)
Termination
Post-completion claims
Shareholder and JV disputes

5. Arbitration in Korea
Korean parties are among most active users of arbitration in Asia, including ICC, SIAC, HKIAC and UNCITRAL. Also investment arbitrations on the rise.
Korea adopted UNCITRAL Model Law (1985) in 1999, in wake of IMF Crisis, wholly revising its previous Arbitration Act. Revised and updated in to incorporate UML 2006 amendments.
Includes appeals of negative jurisdictional decisions by tribunal.
Allows designation of KCAB as appointing authority.
Simplified procedures for recognition and enforcement.
KCAB International Arbitration Rules (2016)
Emergency Arbitrator, Expedited procedures, Joinder and Consolidation
Korean Supreme Court faithfully applies New York Convention.

6. South China Sea Territorial Disputes