The Korean Commercial Arbitration Board (KCAB) has released updated International Arbitration Rules (2016 Rules), which will apply to all KCAB-administered international arbitrations commenced on or after 1 June 2016, unless the parties agree otherwise. The previous version of the KCAB International Arbitration Rules was introduced on 1 September 2011 (2011 Rules).
The changes in the 2016 Rules are intended to increase the efficiency of the arbitral process, improve the process for constitution of a tribunal (particularly in relation to the impartiality and independence of arbitrators), and adopt innovations similar to those introduced in the rules of major international arbitration institutions in recent years.
The key changes include:
- Emergency arbitrator procedure (Appendix 3) – it is possible under the 2016 Rules to appoint an emergency arbitrator, before the constitution of a tribunal. Under the 2011 Rules, it is possible to apply for interim measures only to the tribunal after it is constituted or to the local courts. Within two days of receipt of an application for an emergency arbitrator, the KCAB Secretariat will appoint a sole emergency arbitrator. Once appointed, the emergency arbitrator must make a decision within 15 days of his or her appointment.
- Statement of independence and impartiality of arbitrators (Article 10) – the 2016 Rules require an arbitrator to submit a statement of impartiality and independence when accepting an appointment, which requires an arbitrator to disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. Arbitrators are usually subject to obligations of independence and impartiality under national arbitration laws and institutional rules (in the case of an institutionally administered arbitration). The quality of any disclosure under a statement of independence will still be dependent on the arbitrator, so it will be interesting to see if this innovation will have much practical effect.
- Appointment of arbitrators (Articles 12 & 13) – the 2016 Rules provide that party-appointed arbitrators shall be nominated rather than appointed by the parties. These nominations are subject to confirmation by the KCAB Secretariat. If the KCAB Secretariat determines, in its discretion, that a nomination is "clearly inappropriate", the KCAB Secretariat may refuse to confirm the nomination after giving the parties and the arbitrators an opportunity to comment. .
- Single arbitration under multiple contracts (Article 22) – the KCAB Secretariat can now allow submission of claims arising out of multiple contracts within a single Request for Arbitration, which would result in a single arbitration, provided that: (i) the Secretariat is satisfied that all of the contracts provide for arbitration under the KCAB arbitration rules; (ii) the arbitration agreements are compatible; and (iii) the claims arise out of the same transaction or series of transactions. This will be useful for parties involved in a dispute under multiple contracts, and avoids the need to commence separate arbitrations and apply to consolidate them. The introduction of this rule is consistent with best practice in international arbitration, with major institutions including the ICC, HKIAC and CIETAC including similar provisions in their rules.
- Joinder of additional parties (Article 21) - unlike the 2011 Rules, which are silent on this issue, the 2016 Rules provide that an arbitral tribunal may allow additional parties to be joined to existing arbitration proceedings, on the application of a party, provided that: (i) all parties and the additional party have agreed in writing to the joinder of the additional party; or (ii) the additional party is a party to the same arbitration agreement as the parties, and the additional party has agreed in writing to the joinder in the arbitration proceedings. This provision is applicable only where an arbitration is brought pursuant to an arbitration agreement that is entered into after 1 June 2016 (when the 2016 Rules come into force).
- Consolidation of claims (Article 23) – the arbitral tribunal may, at the request of a party, consolidate claims made in a separate but pending arbitration, if such arbitration is also under the 2016 Rules and between the same parties.
- Expedited procedure (Article 48) – the 2016 Rules increase the threshold for the application of the expedited arbitration procedure from KRW 200,000,000 to KRW 500,000,000 (approx.US$168,301 to US$420,751). This change is designed to allow more cases to be dealt with on an expedited basis. While the 2011 Rules required that an award under the expedited procedure be made within three months from the date of constitution of the arbitral tribunal, the 2016 Rules extend this to six months.
- Documentary Proceedings (Article 47) – the 2016 Rules provide that where neither party's claim exceeds KRW 50,000,000 (approximately US$42,000), the dispute shall be resolved on the basis of documentary evidence only. The threshold for documentary proceedings under the 2011 Rules was KRW 20,000,000 (approximately US$ 16,830).
- Use of electronic mail (Article 4(1)(b)) – the 2016 Rules expressly provide that all written communications and submissions, unless otherwise provided for in the Rules or directed by the Secretariat or the arbitral tribunal, may be submitted by electronic means, provided that there is a record of transmission. The 2011 Rules provide for telecommunication but not electronic communication as a means of communication between the parties. A first procedural order would usually contain provisions on electronic communications but this new provision may assist with inter partes communication prior to the issuance of such procedural order in the early stages of an arbitration.
- Publication of redacted awards (Article 57) – the 2016 Rules permit the KCAB Secretariat to publish an award, after redacting the names, places, dates and any other identifying information in relation to the parties or the dispute, provided that the parties do not object to such disclosure within the time limit determined by the KCAB Secretariat. .
The 2016 Rules include a number of significant improvements and ensure that the KCAB arbitration rules reflect best practice in international arbitration, as well as KCAB's own status as an up-and-coming Asian institution.
The 2016 Rules are available on the KCAB's website (click here for a copy).
For further information, please contact James Doe, Partner, Philip Kim, Legal Assistant, Briana Young, Professional Support Consultant or your usual Herbert Smith Freehills contact.
