International arbitration in South Korea: overview of KCAB International's Statistic for 2019

The Korean Commercial Arbitration Board (“KCAB”) is the sole arbitration institution in South Korea that administers various international arbitration, conciliation and mediation. In April 2018, KCAB and the Seoul International Dispute Centre (“SIDRC”) were consolidated to form “KCAB International”, which is an independent division of KCAB aimed at meeting the increasing demand for cross-border commercial dispute resolution and promoting South Korea as an international arbitration hub.

In 2019, KCAB published its Annual Report (the “2019 Report”) sharing various statistics on the arbitration cases it has handled last year. In this update, we discuss some key statistics highlighted by the KCAB in the 2019 Report.

Caseload

In 2019, KCAB administered a total of 443 arbitration cases, out of which 70 cases were international arbitration cases (about 15.8% of the total number of cases). Overall, KCAB saw a growth of 12.9% in the number international cases compared to 2018when it administered 62 international cases.

Arbitrator Appointment

The majority of the international arbitration cases administered by KCAB in 2019 was heard before a sole arbitrator (71.4%) rather than a three-member tribunal (28.6%). Further, the majority of the arbitrators were selected by the parties themselves (72% of the total number of arbitrators appointed in 2019) rather than the KCAB International Secretariat.

KCAB International also announced that it had a total of 489 arbitrators in its Panel of Arbitrators as of 2019. South Korea formed the largest number of arbitrators constituting this Panel (31.9%), followed by the United States (14.7%) and the United Kingdom (8.8%). However, by continents, Asia Pacific had the largest number of the arbitrators, taking up more than 50% of the KCAB International’s Panel of Arbitrators. Overall, KCAB was comprised of a diverse panel, with arbitrators from 40 different countries in 2019.

Applicable Law

Among the users of KCAB International, 66.7% of them selected Korean law (i.e. the Korean Arbitration Act) as the applicable law in their contracts. This was followed by 18.1% of the users whose applicable law was “undefined”. The next most commonly used applicable laws were the United States Arbitration Act (2.8%), Vietnam Arbitration Act (2.8%) and the CISG (2.8%).

Users by Country

The above figures are reflective of the nationality of the parties to KCAB arbitration cases. In the previous year, the United States and Vietnam ranked the top two largest users of KCAB, constituting 15.1% and 12.3% of the total number of users respectively. The United States and Vietnam were also the top two countries in terms the dispute amounts, with KRW 28.3 billion and KRW 24.6 billion respectively. In particular, the number of Vietnamese users of KCAB has increased significantly from the previous year, as they only constituted approximately 6.45% of the total international users in 2018. On the whole, the top five user countries of KCAB in 2019 were the United States (15.1%), Vietnam (12.3%), China (9.6%), Indonesia (6.8%) and Japan (6.8%).

Commentary

There has been a steady increase in the volume of cases handled by KCAB over the years, proving the success of South Korea’s efforts to promote its arbitration-friendly environment for international parties. The increase in the number of international arbitration cases in South Korea could be attributed to: (1) the updates to the KCAB International Arbitration Rules in 2016 which reflect some of the best practice in international arbitration, including emergency arbitrator procedures and expedited procedures; and (2) the establishment of KCAB International in 2018 which reflects the increased volume of international arbitration cases in South Korea.

While the COVID-19 outbreak may have impacted the global economy, the KCAB’s ability to administer international arbitration proceedings remain unaffected. For example, KCAB International has announced in April this year of its alliance with other renowned arbitration institutions to promote efficiency and certainty in arbitration proceedings during these challenging times. In light of the KCAB’s proactive positioning in the market, we would expect KCAB and KCAB International to continue its growth trajectory as a global arbitration hub.