DISPUTE RESOLUTION IN KOREA I.
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Dispute Resolution in Korea
DISPUTE RESOLUTION IN KOREA
I. Introduction
Korean civil procedure is basically modelled after the German Civ Procedure Code of 1877,
which was itself derived from the Code Napoleon. Therefore, Korean civil procedure exhibits
certain general features prevalent among civil law jurisdictions.
The court largely guides the course of the proceedings. Trials are heard by judges only,
typically in panels of three judges. Trial involves a series of intermittent hearings, typically at
intervals of three to four weeks. There are no juries, and therefore factual as well as legal
findings are made by judges. In addition, there are no separately designated criminal and civil
courts, nor are there separate courts for specific types of commercial litigation. However,
certain Korean courts maintain separate panels for international commercial disputes. In
addition, consistent with modern international trends, alternative dispute resolution is also
available in Korea, and a substantial number of disputes are resolved through arbitration,
mediation or conciliation procedures.
II. Court Proceedings
A. Structure of Korean Courts
The highest level Korean court is the Supreme Court. The Supreme Court is the ultimate court
of appeal, reviewing decisions of the intermediate appellate courts. Cases are heard by panels
of three judges, or by 13 judges en banc. The Supreme Court has original jurisdiction only in
a few types of matters involving electoral disputes.
Appeals to the Supreme Court must be based on a constitutional defect or other legal error.
Immediately below the Supreme Court are the High Courts, which are intermediate appellate
courts. Below the High Courts are the District Courts. The District Courts are the courts of
first instance having general jurisdiction. The nation is divided into 13 judicial districts, and
there is one District Court for each of them. District Courts hear the full range of civil (as well
as criminal) matters, including administrative and bankruptcy cases. Smaller cases may be
heard by a single judge, but most cases are heard by a panel of three judges. A judgment by a
single judge may be appealed first to a three-judge panel of the District Court; in such cases
the three-judge panel will be the intermediate appellate tribunal, from which further appeal
would go to the Supreme Court.
One important thing to note about Korean litigation is that a decision of the Supreme Court is,
in principle, not binding precedent in subsequent cases involving similar issues. Therefore, the
common law concept of stare decisis does not exist under Korean law. However, Supreme
Court decisions are highly persuasive in subsequent court proceedings, and parties frequently
cite prior Supreme Court decisions to support their arguments. Furthermore, the Supreme
Court‘s interpretation of a certain law in a particular case is binding upon a lower court when
the lower courts judgment is reversed and the Supreme Court remands the case to the lower
court.
B. Necessary Documents for Litigation
As in most jurisdictions, the plaintiff initiates the action by filing a written complaint with the
court (a District Court in Korea). Where the plaintiff (whether an individual or a corporation)
is of foreign nationality, the plaintiff must submit documents evidencing nationality and legal
status, such as a certificate of incorporation, articles of incorporation, commercial registry
certificate, and so on. Such documents must be notarized and consularized by a Korean consul
1Dispute Resolution in Korea
and must be accompanied by Korean translations. If legal counsel files the complaint on
behalf of the plaintiff, a power of attorney is also required.
C. Costs and Security Deposit
When filing a complaint, a plaintiff is required to pay certain court costs. At the District Court
level, court costs include a filing fee in the amount of about 0.5 percent of the claim amount
and a small additional amount as administrative costs. Court costs are usually paid by
purchasing revenue stamps in the relevant amount, which are then affixed to the complaint. In
an appeal to the intermediate appellate court or the Supreme Court, the court costs are 1.5
times and 2 times higher, respectively.
If the plaintiff (whether a domestic or foreign national) has no address or place of business in
Korea, the court may, upon application by the defendant, order the plaintiff to provide a
security deposit. The deposit is to cover possible claims by the defendant for reimbursement
of litigation costs if the defendant prevails.
The amount of the deposit is for the court to determine, based on an estimate of costs likely to
be incurred. The deposit may be paid in cash. If specifically permitted in the order (as is often
the case), the plaintiff may submit a surety bond or negotiable instrument in lieu of cash. The
deposit is refundable to the plaintiff, minus costs (if any) awarded to the defendant, following
the conclusion of the proceedings in the relevant court.
Upon an order for a security deposit, the defendant may refuse to reply in the action until the
plaintiff complies with such order. Also, in ordering a security deposit, the court will specify a
deadline by which it must be furnished, and if the plaintiff fails to comply with the deadline,
the court may dismiss the complaint without prejudice.
D. Pre-Trial Procedures and Discovery
During the pre-trial stage, the court will first fix a period within which to receive preliminary
briefs from the parties. This will be followed by review and examination of the issues in an
effort to better define them.
During this period, the court will conduct preliminary hearings. However, matters presented at
such hearings, or otherwise in the pre-trial stage period, cannot serve as a basis for judgment
unless introduced again (or deemed to be introduced) during the main trial that follows this
period.
Historically, Korean civil procedure has not provided for systematic ‘pre-trial discovery’ such
as depositions or interrogatories. However, as a general rule, evidence is to be presented in the
pre-trial stage. Under recent amendments to the Korean Civil Procedure Act, the evidence-
gathering is further concentrated in the pre-trial stage, and at the same time, pre-trial
examination procedures have been expanded.
E. Tria Procedure
Following the conclusion of the pre-trial procedures, the court will immediately schedule a
first trial hearing date. Trial consists of a series of intermittent hearings, during which the
arguments and evidence are submitted ‘for the record’ as a basis for the court’s judgment.
Motions, such as requests for examination of witnesses and supplementary briefs, may be
submitted orally at hearings or in writing during the intervals.
i. Timing
The presiding judge sets the first hearing date at his or her own initiative, or upon application
by the parties at the close of the pre-trial stage. In principle, the court should try to conclude
the trial at the first hearing, but commonly civil actions span several hearings. The interval
2Dispute Resolution in Korea
between hearings is typically three to four weeks. Scheduled hearing dates may be changed by
the court at its discretion, on its own initiative or upon application by either party.
ii. Timely Submissions
Arguments and evidence must be presented in a timely and efficient manner, according to the
progress of the action as guided by the court. Where a party fails to assert its arguments or
submit evidence in a timely manner, the court may bar such party from making further
submissions at the request of the other party or on its own initiative, unless the party at fault
can show justification for the delay.
iii. Presentation of Evidence and Examination of Witnesses
At each hearing, the parties present their arguments and introduce evidence orally. The court
may direct the parties to address particular issues and is entitled to question the parties and
witnesses. Where (as usual except for small matters) the action is before a panel of judges,
one of them will serve as ‘presiding judge’, and most of the court’s questions and instructions
will be articulated by such presiding judge. However, the other judges may also be entitled to
address the parties on the court’s behalf.
Evidence may be presented by testimony of witnesses or experts in person, by submission of
documents, or other means. The court must maintain a list of all evidence presented. An
application to present evidence may be made, either orally or in writing, on or before a
hearing in the pre-trial stage or during trial. The court may accept or reject the application at
its discretion.
While it is basically up to the parties to obtain and present evidence, the court may play an
active role. The court may question the parties or request arguments or evidence on particular
issues of fact or law if it finds this necessary to clarify or substantiate the parties’ statements.
In Korean litigation proceedings, the court is the fact finder.
An important characteristic of Korean trial procedure is that the standards for the admissibility
of evidence are extremely loose and lenient when compared to common law jurisdictions such
as the United States. Virtually any type of evidence can be presented at trial (subject to the
court‘s discretion), including hearsay evidence, evidence that has been improperly obtained
and so on.
iv. Requirements of Proof
The plaintiff has the overall burden of proof in establishing its cause of action by a
preponderance of the evidence. Each party has the burden of proof to produce evidence in
support of its specific factual allegations.
Any allegation by one party that is not expressly contested by the other party will be deemed
admitted. Once an allegation is deemed admitted, or expressly admitted, the admission will be
conclusive for the court, and the alleging party need not otherwise prove it. Therefore the
court must treat the allegation as a factual finding regardless of what the court may believe
subjectively. Once an admission is made or deemed made by a party, it cannot be revoked
unless the party proves that it resulted from some misunderstanding and that the allegation is
false, or unless the other party for some reason consents to the revocation.
F. Judgment
Following the closing of the hearings, the court renders a written judgment containing its
ruling and the grounds for such ruling, including the main factual findings. Typically the
judgment is issued two to four weeks after the last hearing, but it can take considerably longer
in more complex litigation.
3Dispute Resolution in Korea
Strictly speaking, a judgment is not enforceable until exhaustion of appeals. However, in
connection with a judgment, the court will in most cases simultaneously issue a decree of
provisional enforcement of the judgment. The court may in its discretion permit the affected
party to, alternatively, furnish a security deposit in an amount equal to the claims awarded, in
which case the provisional decree will be suspended if the deposit is made.
Throughout the course of the action, the court may on its own initiative, at any time, suggest
to the parties that they try to negotiate a compromise. In fact, courts do this often, typically
expecting at least some meaningful concessions from each side. Judges may themselves
attempt to mediate such negotiations in court. Where a compromise is reached, and a formal
settlement agreement is properly entered into the record, the settlement enjoys the same effect
as a final judgment on the merits.
G. Appeals
Upon issuance of the judgment, each litigant is entitled to institute an appeal. In support of an
appeal to the intermediate appellate court, it suffices to assert that the first judgment lacked
adequate grounds, without specifying any particular type of error on the part of the first court.
Therefore, the appellant need not assert that the court for example erred as a matter of law as
opposed to fact-finding. Fact-finding is not concluded finally in the trial of first instance, but
may be revisited in the intermediate appellate trial. Therefore, the scope of appeals is
considerably broader than in common law jurisdictions.
An appeal to the intermediate appellate court, or thereafter to the Supreme Court, must be
filed within two weeks after receipt of the copy of the judgment being appealed. If no appeal
is filed within such time, the judgment becomes final.
To file an appeal, a party must submit a written notice of appeal to the court that issued the
underlying judgment. Costs of Appeal are noted above.
The appellate forum depends on whether a single judge or three-judge panel heard the action
in the first instance. A judgment handed down by a single judge of the District Court is first
appealed to a three-judge appellate panel of the same District Court. The next level of appeal
would be directly to the Supreme Court, skipping the High Court. But, if the action in the first
instance was before a three-judge panel of the District Court, the judgment is appealed to the
High Court, and then subject to final appeal to the Supreme Court.
Appellate hearings, whether before a High Court or a three-judge District Court panel, are
generally subject to the same pre-trial and trial procedures as the first trial. The allegations
and evidence entered into the record during the original trial are carried over and remain
valid, but the intermediate appellate court is entitled to conduct further examination and
Therefore to make new findings of fact or law. Therefore, the proceedings function as if they
were a continuation of the original trial, punctuated by the judgment of the first court.
For an appeal to the Supreme Court, unlike an intermediate appeal, the appellant must assert
constitutional or legal questions as to the grounds for the judgment of the intermediate
appellate court.
H. Enforcement
Enforcement of civil judgments is broadly governed by the Civil Suit Enforcement Act (the
CSEA), which came into effect on July 1, 2002. The Act provides for detailed conditions for
enforcement and the methods to be applied, categorized according to the nature of the claim
and the type of assets involved.
i. Judgments Eligible
4Dispute Resolution in Korea
Judgments eligible for enforcement are as follows: (i) a final judgment (i.e., a judgment that is
subject to no further possibility of appeal), (ii) a judgment for which a provisional
enforcement decree has been issued, (iii) an enforcement order of a foreign judgment that is
final, and (iv) an enforcement order for a final domestic or foreign arbitration award.
ii. Enforcement Procedure Generally
Enforcement procedures vary depending on the nature of the claim underlying the judgment
and on the type of asset or object as to which the enforcement will be carried out. Therefore,
there are different procedures with respect to monetary claims and claims for delivery of
certain other types of property, and different procedures for personal property, real property,
vessels, aircraft, and other types of assets. In the case of monetary claims, enforcement will
generally involve (i) seizure of properties of the defendant, (ii) public auction of such
properties and (iii) distribution of proceeds to the plaintiff.
Normally, execution of a judgment is carried out by a court-appointed marshal. Court-
appointed marshals, despite being so appointed, serve the claimants as clients and are
compensated directly by them for their services. Therefore, they are not truly court officers.
However, they are supervised by the courts in view of their quasi-official functions. In any
event, the applicant must deposit in advance an amount equal to the costs of enforcement. The
deposit is reimbursable from the proceeds of the enforcement.
iii. Disclosure of Assets
Where a party has obtained a final judgment based on a monetary claim, such creditor may
request the court to order the debtor in the judgment to produce a list of its assets. If the
debtor refuses to produce such a list of assets, the court may inquire instead with public
agencies or financial institutions keeping Information about the debtors assets.
iv. Enforcement of Foreign Judgments
Procedures for enforcement of foreign judgments in Korea are governed by the Korean Civil
Procedure Act. Under these statutes, foreign judgments must meet the following requirements
in order to be recognised and enforced in Korea:
Final and Conclusive: The foreign judgment must be final, that is not subject to possible
appeal. The party applying for enforcement of the judgment bears the burden of proof to show
that under the applicable law, all appeals have been exhausted or deadlines for appeal have
lapsed.
Jurisdiction of Foreign Tribunal: The foreign court or arbitral tribunal that rendered the
judgment must have had proper jurisdiction over the dispute.
Notice to Korean Defendant in Default Judgment: In the case of a foreign default judgment
against a Korean defendant, it must be shown that proper notice was provided to the
defendant. However, proper notice will be deemed to have been given if it was affected
according to the laws of the foreign jurisdiction (so long as the notice was not by means of
publication only), or if the defendant made a voluntary appearance before the foreign tribunal.
Not Contrary to Public Policy: Recognition of the foreign judgment must not be found
contrary to the ‘public policy or good morals’ of Korea. This requirement is understood to
have a fairly broad meaning which may cover a range of aspects of the foreign judgment,
from its substantive content to the procedural background.
Reciprocity: lt must be shown that Korean judgments would be similarly recognised and
enforced in the foreign jurisdiction. Korean courts have recognised the existence of mutual
assurances with Japan, Germany, and the States of New York and Minnesota in the United
States.
5Dispute Resolution in Korea
Enforcement of Foreign Arbitral Award: Regarding foreign arbitral awards, Korea is a
signatory to the UN Convention on the Recognition and Enforcement of Foreign Arbitration
Awards (the ‘New York Convention‘), but with two reservations: (i) the award must be for a
dispute of a commercial nature, and (ii) the country where the arbitration is conducted must
also be a signatory to the New York Convention. Subject to these reservations, Korean courts
will enforce foreign arbitral awards in accordance with the New York Convention.
I. Provisional Relief
i. Provisional Attachment
Upon application of a claimant, a court may issue an order of provisional attachment of
property if it determines this to be necessary as a precaution to prevent substantial or
irreparable damages, or to avoid imminent violation of legal rights. Upon an adequate
showing by the claimant, such an order may be issued at any point, including before a
complaint for the underlying claim is filed or while proceedings on the underlying claim are
pending. However, a provisional attachment is allowed only where future enforcement would
otherwise be impossible.
Provisional attachment is commonly used to secure execution against movable or immovable
property of the debtor. In this situation, arrest may be affected by sequestering the property.
As a prerequisite for a provisional attachment order, the applicant must furnish a security
deposit to the court. As with a regular complaint, the deposit may be in cash, or in the form of
a surety bond or negotiable instrument. Alternatively, the applicant may submit evidence of a
suitable payment guarantee, or any method agreed to by the debtor. Even if there is some
deficiency in the applicant‘s showing of grounds for the provisional attachment, the court may
issue the order once the security deposit is furnished.
ii. Provisional Disposition Injunction
A person who has a claim other than a monetary claim may apply for provisional disposition
with respect to his or her claim, even if the suit on the merits of the case is still pending or yet
to be instituted. The most typical form of provisional disposition is an injunction, which
prohibits an owner or holder of personal or real property from delivering possession of the
property to any third party, or from disposing of the property by assignment, create any
security interest in it, or otherwise.
J. Recovery of Litigation Expenses
The general rule is that litigation expenses, including legal fees, are to be borne by the losing
party. But, in practice, the amount of legal fees that may be awarded to the prevailing party is
relatively small because such amount is subject to quite modest caps promulgated by the
Supreme Court. In the case of a judgment awarding only a portion of a claim, the court may
apportion costs between the parties at its discretion, taking into account the relevant
circumstances of the litigation. Where a suit is terminated without a decision on the merits,
such as by dismissal for lack of jurisdiction or by withdrawal, the court will, at the request of
either party, issue a decision as to allocation of costs to one party or the other, or
apportionment between them.
III. Arbitration
A. Applicable Statutes
Commercial arbitration in Korea is based on the Arbitration Law. The Arbitration Law,
originally enacted in 1966, was revised in 1973 following Korea‘s ratification of the New
6Dispute Resolution in Korea
York Convention. The law was again amended extensively in 1999 to incorporate various
elements of the UNCITRAL Arbitration Rules. The Arbitration Law only applies where
Korea is specified as the place of arbitration in the arbitration agreement.
Separately, in private disputes arising from commercial transactions (or generally
‘commercial acts’ as defined in the Commercial Code), the parties may resort to the
Commercial Arbitration Rules (the ‘KCAB Rules‘) of the Korean Commercial Arbitration
Board (the ‘KCAB‘).
B. Agreement to Arbitrate
One party may require another to submit to arbitration only where there is an arbitral
agreement between them including an express submission to arbitration (in French, acte de
compromis). An arbitral agreement may be validly entered into at any time, to submit a
pending dispute or future disputes to arbitration. An arbitral agreement is only binding on the
parties to it, in relation to their own legal rights and obligations. To be effective, the arbitral
agreement must be in writing. Oral agreements to arbitrate are invalid.
C. Arbitrators
Any domestic or foreign person who is fit to render a ‘virtuous judgment’ in arbitration is
eligible to serve as arbitrator, except those who are specifically disqualified by law.
Parties may directly appoint arbitrators according to their agreement. In commercial
arbitrations subject to the KCAB Rules, if the agreement neither identifies particular
arbitrators nor specifies the number or method of selection, the KCAB will determine whether
a sole arbitrator or panel of three arbitrators is appropriate. Then, the KCAB will provide
parties with a short list of 10 candidates. Next, the parties place numbers next to the names of
such candidates based on their order of preference, and the KCAB designates the arbitrators
from the list.
Foreign arbitrators are available to the parties. When foreign parties are involved in the
arbitration, the KCAB rules provide that the proceedings should be conducted in both English
and Korean. But, due to practical considerations and since foreign arbitrators are usually on
the tribunal in such cases, the proceedings are normally conducted only in English when
foreign parties are involved. Also, if the arbitration is between a Korean party and a foreign
party, the chairperson of the tribunal would be appointed from a neutral, third country.
D. Arbitration Procedure Generally
lf the arbitral agreement specifies the procedures for arbitration, these will be given effect.
Therefore, designation of International Chamber of Commerce rules, for example, is effective.
To the extent the procedures are not provided for in the arbitral agreement, the KCAB Rules
will govern. The KCAB Rules contain detailed provisions with respect to administrative
arrangements, scheduling of hearings and other procedural matters. In principle the arbitral
tribunal may vary the procedure as it deems necessary, but in any event it must afford full and
equal opportunity to both parties for the presentation of their cases.
E. Evidence
Each party may offer, and the arbitral tribunal may request, any evidence it sees fit. Each
party may request any witness or expert witness to voluntarily appear at the hearings. All
evidence submitted must be examined in the presence of all the arbitrator(s) and both parties.
If a witness is unwilling to appear, the arbitral tribunal may file an application with a
competent court to have the witness appear before the court and be examined by the court.
7Dispute Resolution in Korea
F. Interim Measures of Protektion
Before or during arbitral proceedings, a party to an arbitration agreement may petition a court
to order an interim measure of protection. Further, the arbitrate tribunal, upon the request of a
party, may issue such interim measures of protection as it considers necessary to safeguard
any property that is the subject matter of the arbitration, without prejudice to the rights of the
parties or to the final determination of the dispute. In such a case, the arbitral tribunal may
require the other party to furnish some security in hue of application of such interim
measures.
G. Award
In a commercial arbitration, the award must be rendered within 30 days after the chosing of
the hearings unless otherwise agreed by the parties or specified by law. The award need not be
unanimous. Under the KCAB Rules, the award must state the grounds for the decision, among
other things.
H. Effect and Enforcement of Award
Generally an arbitral award, in either a commercial or non-commercial arbitration, has the
same effect between the parties as a final and conclusive judgment by the court except where
there is a procedural or other serious legal defect. If a party falls to comply with the award,
the other party may petition a court to grant a judgment of execution. On the other hand, the
non-complying party may challenge the award at the time of the application for a judgment of
execution.
A party may petition the court to set aside an arbitral award. In practice, however, such
applications are rarely granted, and courts will only set aside arbitration awards under
extraordinary circumstances, such as the invalidity of the arbitration agreement, illegality,
fraud, and so on.
I. Fees and Costs
In commercial arbitration, the claimant must make an advance deposit of arbitration costs
with the KCAB when submitting the initial statement of claim. The amount will follow a cost
schedule set by the KCAB. All fees, costs and expenses incurred in connection with the
arbitration are to be borne by one or both parties, as the arbitrators may determine in their
discretion.
IV. Mediation
Mediation is also available at the request of both parties to the dispute. Formal mediation will
generally be conducted by third parties outside the judicial system. However, parties to a
dispute, whether or not already engaged in litigation, may also apply to a court to undertake
mediation. During litigation, the court may order the parties to submit their dispute to
mediation.
By:
Kap-You (Kevin) Kim
Partner
Head of International Arbitration & Litigation
Practice Group
Bae, Kim & Lee
8Dispute Resolution in Korea
647-15 Yoksam-dong
Gangnam-gu
Seoul Korea 135-723
(T) +82-2-3404-0333
(F) +82-2-3404-0806
kyk@bkl.co.kr
Mr. Kap-You (Kevin) Kim is head of the international litigation and arbitration practice group
at Bae, Kim & Lee. He has served as a chairman or member of the tribunal in numerous
domestic and international arbitration proceedings in Korea; and has served as lead or co-
counsel in numerous international arbitration proceedings (ICC, LCIA, UNCITRAL and
KCAB). Mr. Kim has also served as an adjunct professor of law at Seoul National University,
and is a co-author of a commentary on the Korean Civil Code published by the Korea Judicial
Administrative Society. Mr. Kim had been appointed as Chair of the International Committee
of the Korean Bar Association from 2001 through 2003.
Having received a bachelor’s degree in law in 1985 and an LLM in 1988 from Seoul National
University, Kim went on to receive on LLM from Harvard Law School in 1994. He has been
a member of the Korean Bar since 1988 and the New York Bar since 1995.
9Dispute Resolution in Korea
DISPUTE RESOLUTION IN KOREA ..................................................................................... 1
I. Introduction ........................................................................................................................ 1
II. Court Proceedings .............................................................................................................. 1
A. Structure of Korean Courts............................................................................................ 1
B. Necessary Documents for Litigation ............................................................................. 1
C. Costs and Security Deposit............................................................................................ 2
D. Pre-Trial Procedures and Discovery.............................................................................. 2
E. Tria Procedure................................................................................................................ 2
F. Judgment ........................................................................................................................ 3
G. Appeals.......................................................................................................................... 4
H. Enforcement .................................................................................................................. 4
I. Provisional Relief........................................................................................................... 6
J. Recovery of Litigation Expenses........................................................................................ 6
III. Arbitration ............................................................................................................................ 6
A. Applicable Statutes............................................................................................................ 6
B. Agreement to Arbitrate...................................................................................................... 7
C. Arbitrators.......................................................................................................................... 7
D. Arbitration Procedure Generaily ....................................................................................... 7
E. Evidence............................................................................................................................. 7
F. Interim Measures of Protection.......................................................................................... 8
G. Award ................................................................................................................................ 8
H. Effect and Enforcement of Award..................................................................................... 8
I. Fees and Costs..................................................................................................................... 8
IV. Mediation ............................................................................................................................. 8
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