Experience of the Republic of Korea

Mr. Changwan Han, director of the International Dispute Settlement Division of Republic of Korea’s Ministry of Justice, talked about how international arbitration has contributed to increased economic activities and investment flows in South Korea. A stable and effective dispute resolution system plays an important role in promoting sustained economic growth and attracting foreign direct investment.

Mr. Han shared that after the 1997 Asian financial crisis, South Korea aimed to develop dispute resolution system alternatives to traditional courts in order to resolve grievances in a more cost-effective and expedient manner. In 1999, the Office of the Foreign Investment Ombudsman was established to provide all foreign investors with free and complete grievance resolution services including business consultation and assistance.

Likewise, the Government of South Korea revised the Korean Arbitration Act twice: first in 1999 to adopt the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration, and again in 2016 to implement international best practices reflected in the 2016 UNCITRAL Model Law on Secured Transactions. Further efforts to promote arbitration in South Korea took place in 2017 with the effectivity of the Arbitration Industry Promotion Act and in 2018 with the establishment of Korean Commercial Arbitration Board (KCAB) International. KCAB International successfully developed the arbitration industry in the country, particularly by professionalizing the industry, ensuring predictability in the practice, and growing the quality and diversity of the arbitrator pool. In 2019, it handled 443 arbitration cases, of which 373 were domestic and 70 were international cases. In 2020, the total arbitration cases and international arbitration cases increased by 12.7% and 12.9% respectively, as compared to 2019.

The Government of South Korea also promotes other alternative dispute resolution mechanisms, such as court-annexed conciliation and mediation. On 7 August 2019, the government signed the Singapore Convention on Mediation, which it now seeks to adopt and implement domestically. The government encourages other specialized dispute resolution processes through the E-Commerce Mediation Committee, the Personal Data Protection Center, the Internet Address Dispute Resolution Committee and the Financial Disputes Mediation Committee.

Lastly, Mr. Han highlighted the benefits of the government’s efforts to enhance dispute resolution processes: conflict resolution is speedy, convenient, comparatively cheaper and consensual. The World Bank’s Doing Business 2020 report, which evaluates regulations across 190 economies in 12 business regulatory areas to appraise the business environment in each country, gave the Republic of Korea a score of 84 out of a possible 100. The Republic of Korea also ranked fifth globally in terms of ease of doing business, second in contract enforcement, and 11th in insolvency resolution. He emphasized that an effective legal framework that provides for arbitration can greatly improve the business environment.