Damages for Breach of an Arbitration Agreement: A Korean Law Perspective

Abstract

With the continued growth of international and cross border trade, there has also been an exponential growth in the use of international arbitration as a dispute resolution mechanism. However, there are unfortunately still many instances in which a party breaches an arbitration agreement and brings a claim in another forum and jurisdiction causing a significant time and cost burden to the other party. One of the possible deterrents of such behaviour is the ability in some jurisdictions to bring a damages claim against the party that breaches the arbitration agreement. Civil and common law jurisdictions have sometimes had different approaches to whether such a claim was possible. Korean law has very limited jurisprudence in relation to this issue despite Korean companies being one of the leading users of international arbitration and Korean law frequently applied in arbitrations. This article assesses how Korean law should deal with a damages claim for breach of an arbitration agreement by examining other civil and common law jurisdictions, namely Germany and England, as well as Korean law on damages. The article concludes that a claim for damages for a breach of an arbitration agreement is possible and the traditional Korean view that arbitration agreements are of purely procedural in nature and have no substantive rights and obligations arise from them does not fit with the realities of international commercial transactions and the parties’ intentions. international commercial arbitration, breach of arbitration agreement, damages claim, Korean law, civil law jurisdiction