The Korean Commercial Arbitration Board (KCAB) has been going allout to play a center role for arbitration of trade and commerce disputes in Northeast Asia, a top official of the board said.
"To become a center of trade and logistics in Northeast Asia, Korea should operate a system that can solve trade and logistics disputes fairly and promptly at low cost. In line with this, KCAB should take a leading role for arbitration of such disputes occurring in the region," said Kim Jae-hyun, president of the KCAB.
Along with this, arbitration and Alternative Dispute Resolution (ADR) systems should be settled down in Korea, rather than litigation which is complicated and requires much time and expenses, he said.
"By settling down such systems, Korean people can use fairer and more convenient dispute settlement system and the work load of the court, which has been increased rapidly, will be reduced substantially," Kim said.
Trade disputes can be settled fairly through arbitration
With the shift to diversified industrial society in the wake of rapid economic growth, various disputes are occurring endlessly in such fields as trade, maritime affairs and construction, he said. In particular, small and medium-sized trading companies are suffering from a growing number of legal problems such as technology tie-up and infringement of patent rights following higher trade barriers and stiff competition in technology development.
Accordingly, such smaller trading companies file legal lawsuits in a struggling effort to protect their rights and defend themselves, but in many cases, they are facing difficulties because of poor financial structure and shortage of legal knowledge. Then, is there any effective way to solve such problems at low cost, except a trial, which requires high expenses, including the cost for designating lawyer, and long period
Experts solve disputes conveniently and promptly
In addition to arbitration, KCAB employs other methods to solve disputes, including a mediation system that seeks amicable settlement through advice and compromise, a conciliation that recommends solution through proper adjustment and arbitration between South and North trade affairs and in economic free zone.
It employed experts from various fields, including e-commerce and environment, as arbitrators to expand the scope of arbitration and enact rules on international arbitration. Like this, KCAB is striving to build a foundation as an arbitration hub of East Asia and a third country international arbitration institution.
Widely different from litigation that leads to first, second and third trials, arbitration has a single ruling, resulting in time and expense saving. As it is carried out behind closed doors, enterprises and individuals can keep secrets related to business and trade can be continued through amicable dispute settlements.
Arbitrators decide arbitration ruling. And applicants for settlement of dispute appoint one to three arbitrators among about 1,000 experts selected from judiciary, academic and business circles under their agreement. As all these procedures can be decided only by agreement made between those concerned, they can earn rational results and both sides can satisfy ruling results.
In addition, court litigation has legal force only in the country. But the KCAB ruling is approved by not only Korea and foreign country and has legal force as KCAB joined the New York agreement, a U.N. pact concerning approval and execution of foreign arbitration ruling.
Great help for small and mediumsized trading companies
KCAB is actively engaging in its arbitration business with 215 cases for arbitration and 534 cases for mediation received in 2006. Thanks to its aggressive PR and marketing activities, KCAB saw its business soar this year from a year ago. "The best way to solve disputes is an agreement between those concerned. KCAB is a sole standing legal arbitration institution in Korea that was established to solve disputes in methods other than litigation. Its decision has more public trust and is more rational than ruling by any other institutions," Kim Jae-hyun, president of the KCAB, said.
Trouble-solving broker of trade disputes
Established in 1966, KCAB is well established to assist those international parties who may find themselves in a conflict during the performance of their commercial business. An institution such as the KCAB must be neutral, unbiased and independent in order to administer and conduct international arbitration, conciliation and mediation, viable alternatives to transnational litigation. Litigation can be costly, time-consuming and lead to a permanent breakdown in business relationships.
Among the three resolution systems offered by KCAB, arbitration is the most commonly used.
In summary, arbitration is an alternative way of producing impartial and fair resolutions to business disputes. But unlike litigation, parties select their own place of arbitration, their own adjudicators and even their own arbitration procedure based on their specific needs as long as each party agrees to the procedure.
Another popular and very effective resolution procedure is mediation. Mediation is requested as a claim without arbitral agreement between parties in disputes. This is an entirely risk-free process in which a neutral member of KCAB helps the parties in dispute negotiate their own settlement. Its cost-free administrative process encourages both parties to communicate, negotiate and reach their own mutually agreed upon conclusion. Also available within KCAB is conciliation services whereby proceedings are conducted before a dispute is presented for arbitration.
This last-chance proceeding gives both parties the ability to work out an agreement before the much more formal arbitration proceedings commence. The results of a conciliation is binding and is used many times by parties in disputes in the hopes of settling a conflict quickly. KCAB offers free consultation services and conducts research and surveys as well.
KCAB has offices in Seoul and Busan and is an internationally recognized arbitration board. Korea signed and ratified the U. N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards. KCAB has signed more than 30 international arbitration agreements and cooperation agreements with similar organizations throughout the world.
It is dedicated to the prevention and settlement of commercial disputes and we sincerely hope this site will help you understand the various alternative resolution systems available for your use whenever the situation arises, Kim said.
Role of KCAB in era of globalization
Asked about a contract case that includes an arbitration clause by KCAB, Kim said, "Of course, not only in domestic transactions but also in international transactions, many trading companies include the clause in their contract. However, there are still difficulties in persuading foreign trade partner to insert the clause in the contract because of insufficient recognition of the arbitration system."
"Global business environment is changing rapidly. In March 1966 when KCAB started its business, the government employed export-oriented policy to activate the economy. At that time, KCAB greatly contributed to settling trade claims through mediation and arbitration, enhancing Korea's credit status and international competitiveness of Korean products," said Kim. In the 2000s, those engaged in trade usually settled disputes through bilateral agreement thanks to matured contract culture. In the era, KCAB focused its efforts on removing factors that may cause disputes in advance through education on working out contract or insertion of an arbitration clause in contract.
As international transactions have been complicated and diversified owing to Internet development since the 21st century, KCAB employed international arbitration experts residing in foreign countries to solve disputes promptly and fairly. To faithfully play its role as the third country international arbitration center, KCAB is now developing and offering services related to various types of disputes by holding international arbitration contests and enacting new international arbitration rules.
In particular, it plans to actively use an Alternative Dispute Resolution (ADR) system rather than general litigation in terms of settling disputes. "In keeping with global trend to solve trade disputes fairly and rapidly, KCAB will further develop the ADR sector and play its key role in solving disputes amicably," the KCAB head added.